Angermeir et al v. Cohen et al
Filing
24
OPINION AND ORDER: the Court grants Defendants' Motion To Dismiss in part and denies it in part. It thus dismisses Plaintiffs' § 349 claim, but it does not dismiss either of Plaintiffs' civil RICO claims brought under 18 U.S.C. § 1964(c). The Clerk of Court is respectfully requested to terminate the pending Motion. (Dkt. No. 14.) SO ORDERED. (Signed by Judge Kenneth M. Karas on 3/27/2014) (See OPINION AND ORDER AS SET FORTH) (lnl)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ARTHUR ANGERMEIR, NITESH
BHAGWANANI, BECKY D. GLYNN,
LOUIS MARROU, DR. SHIVA NANCY
SHABNAM, KEN ELDER, RAJAT
GOYAL, KRISTINA GREENE, and
MARILYN MURRELL,
Plaintiffs,
No. 12-CV-55 (KMK)
v.
JAY COHEN, LEONARD MEZEI, SARA
KRIEGER, LOUIS CUCINOTTA, LEASE
FINANCE GROUP, LLC, MBF LEASING
LLC, NORTHERN LEASING SYSTEM,
INC., JENNIFER CENTENO, RICARDO
BROWN, ROBERT TAYLOR, JOSEPH I.
SUSSMAN, and JOSEPH I. SUSSMAN,
P.C.,
OPINION AND ORDER
Defendants.
Appearances:
Krishnan Shanker Chittur, Esq.
Chittur & Associates, P.C.
New York, NY
Counsel for Plaintiffs
Robert D. Lillienstein, Esq.
Jordan Daniel Greenberger, Esq.
Scott Evan Silberfein, Esq.
Moses & Singer LLP
New York, NY
Counsel for Defendants
KENNETH M. KARAS, District Judge:
Arthur Angermeir (“Angermeir”), Nitesh Bhagwanani (“Bhagwanani”), Ken Elder
(“Elder”), Becky D. Glynn (“Glynn”), Rajat Goyal (“Goyal”), Kristina Greene (“Greene”), Louis
Marrou (“Marrou”), Marilyn Murrell (“Murrell”), and Dr. Shiva Nancy Shabnam (“Shabnam”)
(collectively, “Plaintiffs”) filed the instant Complaint against Jay Cohen (“Cohen”); Sara Krieger
(“Krieger”); Jennifer Centeno (“Centeno”); Louis Cucinotta (“Cucinotta”); Ricardo Brown
(“Brown”); Robert Taylor (“Taylor”) (collectively, “Individual Defendants”); Joseph I. Sussman
(“Sussman”); Joseph I. Sussman, P.C. (“Sussman, P.C.”) (collectively, “Sussman Defendants”);
Lease Finance Group, LLC (“LFG”); MBF Leasing LLC (“MBF”); and Northern Leasing
Systems, Inc. (“NLS”) (collectively, “Corporate Defendants”) (with Individual Defendants and
Sussman Defendants, collectively, “Defendants”), alleging one count of a violation of the
Racketeer Influence and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1964(c), one count of
conspiracy to violate RICO, 18 U.S.C. § 1964(d), and one count of a violation of New York’s
General Business Law § 349, N.Y. Gen. Bus. Law § 349. (See Am. Compl. (“Compl.”) (Dkt.
No. 8).) Before the Court is Defendants’ Motion To Dismiss the Complaint pursuant to Federal
Rules of Civil Procedure 8(a), 9(b), and 12(b)(6). (See Mot. (Dkt. No. 14).) For the following
reasons, Defendants’ Motion is granted in part and denied in part.
I. Background
A. Factual Background
The following facts are drawn from Plaintiffs’ Complaint and are taken as true for the
purposes of resolving the instant Motion. Defendant NLS is a New York corporation that has
“employees, bank accounts, offices, office equipment, and other assets,” and that “controls and
services” various “pass through” entities, including Defendants MBF and LFG. (Compl. ¶¶ 21–
23.) Each of the Individual Defendants is a “principal, an officer, and [a] controlling person” of
the Corporate Defendants. (Id. ¶¶ 13–18.) Individual Defendants Cohen and Krieger are
“masterminds” of an alleged “racketeering enterprise” (“Enterprise”), the former as President
2
and Chief Executive Officer of Defendant NLS, and the latter as Vice President of Operations for
Defendant NLS and “some of the shell entities through which the Enterprise is conducted.” (Id.
¶¶ 13–14.) Individual Defendants Centeno, Cucinotta, Brown, and Taylor are each “active,
wilful participants in the Enterprise” as, respectively, Legal Administrative Manager, Legal
Collections Manager, Director of Legal Collections, and Legal Collections Manager for
Corporate Defendants. (Id. ¶¶ 15–18.) Defendant Sussman is an attorney, and Defendant
Sussman, P.C., Sussman’s law firm, is a New York Professional Corporation that shares offices
and resources with the Corporate Defendants. (Id. ¶¶ 19–20.) Sussman Defendants are “fully
integrated with Defendants’ operations” and are “wilful” and “active participant[s] in the
Enterprise.” (Id. ¶ 19.)
“Defendants are ostensibly engaged in the business of leasing small business equipment,
mostly credit card processing machines.” (Id. ¶ 24.) But Defendants are also engaged in a
“racketeering scheme to intimidate out of state individuals into paying unwarranted sums of
money,” (id. ¶ 1), which the Complaint describes as a “systematic and repeated . . . ‘shakedown’
effort . . . to bully [individuals] into paying the Enterprise monies to which the Enterprise was
never entitled,” (id. ¶ 25). Specifically, the Complaint alleges that Defendants used equipment
leases “[b]ased on forged documents, which Defendants knew were forged,” to “intimidate
Plaintiffs with dunning letters and phone calls” demanding payment pursuant to the terms of the
fraudulent leases. (Id. (emphasis removed); see also id. ¶ 1 (alleging that “Defendants were
aware . . . that the documents underlying [their] claims against Plaintiffs were forged”).) When
Plaintiffs, none of whom lived in New York, contested the validity of the leases and refused to
comply with Defendants’ payment demands, Defendants would “harass, intimidate, and thereby
extort money from Plaintiffs through threats of expensive long-distance litigation [in New York
3
state court], of damage to credit rating, and/or entry of default judgments.” (Id. ¶ 1; see also id.
¶ 25 (alleging that Defendants “sought to intimidate Plaintiffs . . . [by] telling them that it would
be more expensive for them to dispute the Enterprise’s claims in New York City Civil Court than
it would be to pay tribute to the Enterprise”).) When making these threats, Defendants “were
well aware” that “[t]he relatively small amounts at issue would have . . . prevented these
Plaintiffs from obtaining counsel or from otherwise developing their defense,” given the
“additional expenses and inconveniences of long-distance litigation.” (Id. ¶ 26.) Defendants’
“scheme” was thus “designed to ensure that Plaintiffs had no real opportunity to raise defenses to
the Enterprise’s bogus lawsuits, so that the entry of a default judgment was all but certain.” (Id.)
Although none of the Plaintiffs alleges that he or she succumbed to Defendants’ threats
and paid money directly to Defendants, all of them allege that Defendants filed fraudulent
lawsuits against them in New York state court. (See id. ¶¶ 37, 47, 58, 71, 82, 95, 108, 117, 122.)
Five of the Plaintiffs allege that the lawsuits resulted in default judgments. (See id. ¶¶ 38, 47, 58,
99, 123.)1 But all of the Plaintiffs allege that “Defendants . . . made derogatory entries in [their]
personal consumer credit report[s],” that they “had to waste considerable time and effort” in
dealing with these lawsuits, that they “retain[ed] attorneys and incurr[ed] legal expenses in New
York,” and that they were “subjected to considerable annoyance, embarrassment, emotional
distress, and mental anguish.” (Id. ¶¶ 40, 52, 60, 75, 88, 102, 110, 120, 129 (emphasis
removed).)
1
Plaintiffs Glynn, Marrou, and Murrell allege that they retained counsel and that their
lawsuits have been stayed. (Compl. ¶¶ 74, 109 n.4, 119 n.6.) Plaintiff Goyal alleges that he
retained counsel and that Defendants “withdrew their complaint” after he filed a motion to
dismiss. (Id. ¶ 87.) Moreover, although Defendants obtained a default judgment against
Bhagwanani, he alleges that he subsequently retained counsel, and that his counsel successfully
moved the state court to vacate the judgment and dismiss the lawsuit. (Id. ¶ 51.)
4
B. Procedural History
Plaintiffs filed the initial Complaint in January 2012. (See Dkt. No. 1.) The Court held a
pre-motion conference in June 2012 and set a briefing schedule for a motion to dismiss. (See
Dkt. No. 7.) Before Defendants filed a motion, however, Plaintiffs filed an Amended Complaint
in August 2012, alleging the same three counts as the original Complaint, adding four new
plaintiffs and five new defendants, and dropping one defendant.2 (See Dkt. No. 8.) The Court
then held another pre-motion conference in November 2012 to discuss Defendants’ renewed
request to file a motion to dismiss. (See Dkt. (minute entry for Nov. 20, 2012).) Pursuant to the
scheduling order entered after that conference, (see Dkt. No. 10), the Parties filed their papers in
March 2013. (See Mot.; Mem. of Law in Supp. of Defs.’ Mot. To Dismiss the First Am. Compl.
(“Mem.”) (Dkt. No 16); Mem. of Law in Opp’n to Defs.’ Mot. To Dismiss (“Opp’n”) (Dkt.
No. 22); Reply Mem. of Law in Further Supp. of Defs.’ Mot. To Dismiss the First Am. Compl.
(“Reply”) (Dkt. No. 17).)
II. Discussion
A. Standard of Review
The Supreme Court has held that although a complaint “does not need detailed factual
allegations” to survive a motion to dismiss, “a plaintiff's obligation to provide the ‘grounds’ of
his [or her] ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (second alteration in original) (citations omitted). Instead, the Court has
emphasized that “[f]actual allegations must be enough to raise a right to relief above the
2
The Amended Complaint added, as plaintiffs, Elder, Goyal, Greene, and Murrell, and,
as defendants, Centeno, Brown, Taylor, and both Sussman Defendants, and it dropped, as a
defendant, Leonard Mezei. (See Compl.)
5
speculative level,” id., and that “once a claim has been stated adequately, it may be supported by
showing any set of facts consistent with the allegations in the complaint,” id. at 563. Plaintiffs
must allege “only enough facts to state a claim to relief that is plausible on its face.” Id. at 570.
But if a plaintiff has “not nudged [his or her] claims across the line from conceivable to
plausible, the[] complaint must be dismissed.” Id.; see also Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009) (“Determining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience and
common sense. But where the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the
pleader is entitled to relief.’” (alteration in original) (citation omitted) (quoting Fed. R. Civ. P.
8(a)(2))).
In considering Defendants’ Motion To Dismiss, the Court is required to consider as true
the factual allegations contained in the Complaint. See Ruotolo v. City of New York, 514 F.3d
184, 188 (2d Cir. 2008) (“We review de novo a district court’s dismissal of a complaint pursuant
to Rule 12(b)(6), accepting all factual allegations in the complaint and drawing all reasonable
inferences in the plaintiff’s favor.” (internal quotation marks omitted)); Gonzalez v. Caballero,
572 F. Supp. 2d 463, 466 (S.D.N.Y. 2008) (same). Moreover, “[i]n adjudicating a Rule 12(b)(6)
motion, a district court must confine its consideration to facts stated on the face of the complaint,
in documents appended to the complaint or incorporated in the complaint by reference, and to
matters of which judicial notice may be taken.” Leonard F. v. Isr. Disc. Bank of N.Y.,
199 F.3d 99, 107 (2d Cir. 1999) (internal quotation marks omitted).
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B. Analysis
Plaintiffs allege three counts in connection with Defendants’ alleged fraudulent scheme.
They bring two civil RICO claims under 18 U.S.C. § 1964(c), which establishes a cause of action
for “[a]ny person injured in his business or property by reason of a violation of [18 U.S.C.
§ 1962].” 18 U.S.C. § 1964(c). First, Plaintiffs allege a violation of § 1962(c), which makes it
“unlawful for any person employed by or associated with any enterprise . . . to conduct or
participate . . . in the conduct of such enterprise’s affairs through a pattern of racketeering
activity.” Id. § 1962(c). (See Compl. ¶ 146.) In this context, they allege four types of
racketeering activity: mail fraud, in violation of 18 U.S.C. § 1341, (see Compl. ¶¶ 147–52), wire
fraud, in violation of 18 U.S.C. § 1343, (see id. ¶¶ 153–59), federal-law extortion, in violation of
18 U.S.C. § 1951, (see id. ¶¶ 160–75); and state-law extortion, in violation of N.Y. Penal Law
§ 155.05, (see id. ¶¶ 176–80).3 Second, Plaintiffs allege a violation of § 1962(d), which makes it
“unlawful for any person to conspire to violate [§ 1962(c)].” 18 U.S.C. § 1962(d). (See Compl.
¶¶ 190–96.) Finally, Plaintiffs bring a claim under New York’s General Business Law § 349,
which makes unlawful “[d]eceptive acts or practices in the conduct of any business, trade or
commerce or in the furnishing of any service in [New York] state.” N.Y. Gen. Bus. Law §
349(a); see also id. § 349(h) (establishing private right of action for violations of § 349(a)). (See
Compl. ¶¶ 197–201.)
3
Although not at issue in this Motion, the Court notes that all of these types of activity
satisfy the statute’s definition of a “racketeering activity.” See 18 U.S.C. § 1961(1) (defining
“racketeering activity” to include “any act or threat involving . . . extortion . . . which is
chargeable under State law and punishable by imprisonment for more than one year,” or “any act
which is indictable” under 18 U.S.C. §§ 1341 (mail fraud), 1343 (wire fraud), or 1951
(extortion)); see also DeFalco v. Bernas, 244 F.3d 286, 306 (2d Cir. 2001) (“‘Racketeering
activity’ is broadly defined to encompass a wide variety of state and federal offenses including . .
. extortion.”); Chanayil v. Gulati, 169 F.3d 168, 170 (2d Cir. 1999) (“Predicate acts for purposes
of RICO include . . . mail fraud[ and] wire fraud . . . .”).
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Defendants move to dismiss the Complaint for multiple reasons. First, they argue that the
Complaint generally fails to meet the notice-pleading requirements of Rule 8(a) because it
“lump[s] defendants together” and thereby fails “to distinguish between the conduct of each of
the defendants.” (Mem. 7–9 (some alterations omitted).) Second, they similarly argue that,
where the Complaint alleges fraudulent acts, it fails to meet the “heightened pleading standard of
Rule 9(b)” because it “lumps . . . defendants together” and thus “does not plausibly allege that
each defendant engaged in acts of . . . fraud.” (Id. at 10–13.) Third, they argue that Plaintiffs do
not allege an “injury to business or property,” as required to plead a claim under 18 U.S.C.
§ 1964(c). (See id. at 13–15.) Fourth, they argue that the Complaint “does not allege predicate
acts of extortion,” because “the commencement of even meritless litigation does not amount to
extortion under federal or state law.” (Id. at 16–18 (internal quotation marks and alterations
omitted).) Fifth, they argue that Plaintiffs failed to plead a RICO conspiracy claim because their
“allegations of conspiracy are entirely conclusory.” (Id. at 18–19.) Sixth, they argue that
Plaintiffs fail to plead a claim under New York’s General Business Law § 349 because that
statute does not provide a remedy for Plaintiffs’ alleged injuries resulting from business-account
deductions that occurred outside of New York. (See id. at 19–23.) Finally, they argue that
Plaintiff Greene’s claims are time-barred. (See id. at 23.) The Court will address each argument
in turn.
1. Rule 8(a)
Defendants first argue that the Complaint fails to meet Rule 8(a)’s notice-pleading
standard, which requires, inter alia, that a complaint “must contain . . . a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
Defendants cite a number of cases standing for the proposition that, “[w]here a complaint names
8
multiple defendants, that complaint must provide a plausible factual basis to distinguish between
the conduct of each of the defendants.” (Mem. 8–9 (citing Marcilis v. Twp. of Redford, 693 F.3d
589 (6th Cir. 2012); Atuahene v. City of Hartford, 10 F. App’x 33, 34 (2d Cir. 2001); Ochre LLC
v. Rockwell Architecture Planning & Design, P.C., No. 12-CV-2837, 2012 WL 6082387
(S.D.N.Y. Dec. 3, 2012); Elias v. City of New York, No. 10-CV-5495, 2010 WL 5475809
(E.D.N.Y. Dec. 30, 2010); Southerland v. N.Y.C. Housing Auth., No. 10-CV-5243, 2010 WL
4916935 (E.D.N.Y. Nov. 23, 2010); Medina v. Bauer, No. 02-CV-8837, 2004 WL 136636
(S.D.N.Y. Jan. 27, 2004)).)4 In most of the cases Defendants cite, the court dismissed the
complaint because it failed to distinguish at all between any of the Defendants in claims alleging
discrimination or constitutional-rights violations. See, e.g., Marcilis, 693 F.3d at 596 (dismissing
a complaint raising a Bivens claim where the complaint “ma[de] only categorical references to
‘Defendants’” (emphasis added)); Atuahene, 10 F. App’x at 34 (noting that the complaint
“alleging a host of constitutional and state common law claims” initially “failed to differentiate
among the defendants, alleging instead violations by ‘the defendants,’” and then later “still
fail[ed] to identify which defendants were alleged to be responsible for which alleged violations”
when the plaintiff “replaced the allegations against ‘the defendants’ with the names of all of the
defendants”); Elias, 2010 WL 5475809, at *3 (dismissing complaint that “attribute[d]
discrimination, retaliation, and disparate treatment generally to ‘Defendants,’ without
distinguishing their individualized conduct” (internal citation omitted)); Southerland, 2010 WL
4916935, at *3 (dismissing complaint alleging constitutional-rights violations where the
4
Defendants cite Atuahene v. City of Harford, a Second Circuit summary order from
2001. The Court notes that, under the Local Rules for the Court of Appeals for the Second
Circuit, summary orders do not have precedential effect, and parties may not cite a summary
order issued prior to January 1, 2007, except in two circumstances, neither of which is present
here. See 2d Cir. R. 32.1.1(a), (b)(2).
9
complaint failed “[to] allege facts against any individual defendant” (emphasis added)). In one
case, the court dismissed a copyright-infringement claim where the plaintiff sued four entirely
separate entities—a design firm, an architect, a hotel, and a procurement agent—and the
complaint “fail[ed] to isolate the key allegations against each defendant.” See Ochre, 2012 WL
6082387, at *6. And in the lone case addressing a RICO claim, the court dismissed the RICO
claim against three of the defendants because the complaint contained only one allegation
specific to each defendant, and each allegation “fail[ed] to give adequate notice to th[o]se
defendants as to what they did wrong.” See Medina, 2004 WL 136636, at *6.
Defendants argue that, like the courts in those cases, this Court should dismiss the
Complaint because it fails to “provide a plausible factual basis to distinguish between the
conduct of each of the defendants.” (Mem. 8.) But Defendants mischaracterize the Complaint.
Unlike the complaints in each of the cases Defendants cite, this Complaint contains numerous
allegations specific to each of the Defendants. For example, it generally alleges that Sussman
“commences and conducts all of the litigation in the New York City Civil Court on behalf of the
Enterprise,” (see Compl. ¶ 138; id. ¶¶ 143–44), and it specifically alleges that the Sussman
Defendants filed all of the allegedly fraudulent lawsuits against Plaintiffs, (see id. ¶¶ 37, 47, 58,
71, 82, 95, 108, 117, 122), and that they caused the mailing of legal documents to many of the
Plaintiffs, (see id. ¶¶ 147(o), 147(p), 147(y)). For each of the nine Plaintiffs, it alleges facts
supporting a plausible inference as to which Corporate Defendant injured the Plaintiff. (See id.
¶¶ 30–40, 53–75, 161, 163–64 (factual allegations involving Defendant MBF and Plaintiffs
Angermeir, Elder, and Glynn); id. ¶¶ 41–60, 76–120, 147(z), 162, 165, 167–68 (factual
allegations involving Defendant NLS and Plaintiffs Bhagwanani, Elder, Goyal, Greene, Marrou,
and Murrell); id. ¶¶ 121–29, 169 (factual allegations involving Defendant LFG and Plaintiff
10
Shabnam).) And it specifically alleges the role each Individual Defendant played in the scheme.
(See id. ¶¶ 13, 133 (alleging that Cohen was President and CEO of NLS, and that he “was in
charge of all its day-to-day operations”); id. ¶¶ 14, 95, 134 (alleging that Krieger was the Vice
President of Operations for NLS, that she verified complaints filed by Sussman Defendants, and
that “[s]he was responsible for several aspects of [the Enterprise’s] day-to-day operations, lease
originations, and sales”); id. ¶¶ 15, 37, 47, 58, 82, 108, 118, 122, 147(h) (alleging that Centeno
was a Legal Administrative Manager, that she verified and notarized complaints filed by
Sussman Defendants, and that she mailed a copy of a summons and complaint to Plaintiff Elder);
id. ¶¶ 16, 37, 47, 122, 135 (alleging that Cucinotta was a Legal Collections Manager, that he
verified complaints filed by Sussman Defendants, and that he “was responsible for collection
aspects of the Enterprise”); id. ¶¶ 17, 49, 85, 136 (alleging that Brown was a Director of Legal
Collections, that he verified complaints filed by Sussman Defendants, and that he submitted false
affidavits and a false audio recording to a New York state court); id. ¶¶ 18, 58, 82, 108, 137
(alleging that Taylor was a Legal Collections Manager and that he verified complaints filed by
Sussman Defendants).)
Plaintiffs’ Complaint therefore does not simply “lump” Defendants together, as
Defendants argue. Instead, it “satisfies the requirements of Rule 8(a) because it gives
[Defendants] fair notice of the basis for [Plaintiffs’] claims.” Swierkiewicz v. Sorema N.A., 534
U.S. 506, 514 (2002); see also Erickson v. Pardus, 551 U.S. 89, 93 (2007) (“[Rule 8(a)(2)]
requires only a short and plain statement of the claim showing that the pleader is entitled to
relief. Specific facts are not necessary; the statement need only give the defendant fair notice of
what the claim is and the grounds upon which it rests.” (internal quotation marks and alterations
omitted)); Wynder v. McMahon, 360 F.3d 73, 79 (2d Cir. 2004) (noting that “[t]he key to Rule
11
8(a)’s requirements is whether adequate notice is given,” and that “fair notice” is “that which
will enable the adverse party to answer and prepare for trial, allow the application of res judicata,
and identify the nature of the case so that it may be assigned the proper form of trial” (internal
quotation marks omitted)). And it does so even though it includes certain allegations against
“Defendants” collectively. See Hudak v. Berkley Grp., Inc., No. 13-CV-89, 2014 WL 354676, at
*4 (D. Conn. Jan. 23, 2014) (“Nothing in Rule 8 prohibits collectively referring to multiple
defendants where the complaint alerts defendants that identical claims are asserted against each
defendant.”); Harris v. NYU Langone Med. Ctr., No. 12-CV-454, 2013 WL 3487032, at *7
(S.D.N.Y. July 9, 2013) (“In order to comply with Rule 8, [a] complaint should offer
specification as to the particular activities by any particular defendant . . . . Rule 8(a) . . .
requires that a complaint against multiple defendants indicate clearly the defendants against
whom relief is sought and the basis upon which the relief is sought against the particular
defendants.” (internal quotation marks and citations omitted) (alterations in original)), adopted
by 2013 WL 5425336 (S.D.N.Y. Sept. 27, 2013); Howard v. Municipal Credit Union, No. 05CV-7488, 2008 WL 782760, at *12 (S.D.N.Y. Mar. 25, 2008) (“While Rule 8 does not prohibit
‘collective allegations’ against multiple defendants, it does require that the allegations be
sufficient to put each [d]efendant on notice of what they allegedly did or did not do.” (some
internal quotation marks and citations omitted) (alteration in original)). The Court therefore
denies Defendants’ Motion To Dismiss under Rule 8(a).
2. Rule 9(b)
Defendants next argue that the Complaint fails to satisfy Rule 9(b)’s heightened pleading
standard, which requires Plaintiffs “alleging fraud” to “state with particularity the circumstances
constituting fraud . . . .” Fed. R. Civ. P. 9(b). In the context of a civil RICO claim, “all
12
allegations of fraudulent predicate acts[] are subject to the heightened pleading requirement of
[Rule 9(b)].” First Capital Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 178 (2d Cir.
2004). This includes allegations of predicate acts of mail and wire fraud. See Spool v. World
Child Int’l Adoption Agency, 520 F.3d 178, 185 (2d Cir. 2008) (holding that the plaintiff’s mail
and wire fraud allegations were not “pled with the requisite particularity” under Rule 9(b)). But
Rule 9(b), notably, does not govern allegations of § 349 violations, extortion, and RICO
conspiracy, which are subject only to the more liberal notice-pleading requirements of Rule 8.
See Pelman ex rel. Pelman v. McDonald’s Corp., 396 F.3d 508, 511 (2d Cir. 2005) (“[A]n action
under [N.Y. Gen. Bus. Law] § 349 is not subject to the pleading-with-particularity requirements
of Rule 9(b), but need only meet the bare-bones notice-pleading requirements of Rule 8(a).”
(internal citations omitted)); McLaughlin v. Anderson, 962 F.2d 187, 194 (2d Cir. 1992) (holding
that “the more lenient pleading standards” of Rule 8(a) apply to claims of extortion alleged as
RICO predicate acts); Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 26 n.4 (2d Cir.
1990) (“On its face, Rule 9(b) applies only to fraud or mistake, not to conspiracy. [A] pleading
of a conspiracy, apart from the underlying acts of fraud, is properly measured under the more
liberal pleading requirements of Rule 8(a).”).
“The essential elements of a mail or wire fraud violation are (1) a scheme to defraud,
(2) money or property as the object of the scheme, and (3) use of the mails or wires to further the
scheme.” United States v. Shellef, 507 F.3d 82, 107 (2d Cir. 2007) (internal quotation marks
omitted). In general, “[p]laintiffs must plead . . . mail [or wire] fraud with particularity, and
establish that the [communications] were in furtherance of a fraudulent scheme.” Lundy v.
Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 119 (2d Cir. 2013). This normally
requires that “[a]llegations of predicate mail and wire fraud acts . . . state the contents of the
13
communications, who was involved, [and] where and when they took place, and [should] explain
why they were fraudulent.” Spool, 520 F.3d at 185 (internal quotation marks omitted) (third and
fourth alterations in original). However, courts in the Second Circuit have applied a different
standard in cases where “[a] plaintiff claims that . . . mails or wires were simply used in
furtherance of a master plan to defraud,” but does not allege that “the communications
[themselves] . . . contained false or misleading information.” In re Sumitomo Copper Litig., 995
F. Supp. 451, 456 (S.D.N.Y. 1998). In such cases, including “complex civil RICO actions
involving multiple defendants, Rule 9(b) does not require that the temporal or geographic
particulars of each mailing or wire transmission made in furtherance of the fraudulent scheme be
stated with particularity.” Id. Instead, “Rule 9(b) requires only that the plaintiff delineate with
adequate particularity in the body of the complaint, the specific circumstances constituting the
overall fraudulent scheme.” Id.; see also Curtis & Assocs., P.C. v. Law Offices of David M.
Bushman, Esq., 758 F. Supp. 2d 153, 177 (E.D.N.Y. 2010) (“[I]n cases where plaintiffs allege
that the mails or wires were simply used in furtherance of a master plan to defraud, . . . .
particularity as to the mailings themselves is unnecessary . . . .” (internal quotation marks and
citations omitted)); Serin v. N. Leasing Sys., Inc., No. 06-CV-1625, 2009 WL 7823216, at *7
(S.D.N.Y. Dec. 18, 2009) (“In applying Rule 9(b) to predicate acts of mail or wire fraud,
Southern District of New York courts have articulated different requirements to apply in
. . . [the] ‘in furtherance of fraud’ context.” (citing In re Sumitomo Copper, 995 F. Supp. at
456)); Am. Med. Ass’n v. United Healthcare Corp., 588 F. Supp. 2d 432, 442 (S.D.N.Y. 2008)
(“Allegations said to be in furtherance of fraud are held to a different pleading standard
entirely.”); Evercrete Corp. v. H-Cap Ltd., 429 F. Supp. 2d 612, 624 (S.D.N.Y. 2006) (“[W]here
the plaintiff claims that the mail or wires were simply used in furtherance of a scheme to defraud,
14
the complaint need not be specific as to each allegation of mail or wire fraud as long as the
nature of the RICO scheme is sufficiently pleaded so as to give notice to the defendants.”
(internal quotation marks omitted)); Spira v. Nick, 876 F. Supp. 553, 559 (S.D.N.Y. 1995)
(“Once the plaintiff alleges with particularity the circumstances constituting the fraudulent
scheme, neither the reputational interests nor the notice function served by Rule 9(b) would be
advanced in any material way by insisting that a complaint contain a list of letters or telephone
calls.”); cf. Schmuck v. United States, 489 U.S. 705, 710–11 (1989) (“To be part of the execution
of [a] fraud . . . the use of the mails need not be an essential element of the scheme. It is
sufficient for the mailing to be incident to an essential part of the scheme or a step in the plot.”
(internal quotation marks, citations, and alterations omitted)). As one court has explained,
[t]he rationale for this approach is twofold: one, mailings made only in
furtherance of a scheme are not technically allegations of fraud within the
meaning of Rule 9(b); and two, the very purpose of applying Rule 9(b) to
mailings in furtherance of the scheme is obviated where a plaintiff alleges the
wider scheme with the requisite particularity.
Crabhouse of Douglaston Inc. v. Newsday Inc., 801 F. Supp. 2d 64, 88 (E.D.N.Y. 2011).
Here, Plaintiffs allege an overall scheme to defraud individuals based on forged leases
and fraudulent litigation resulting in default judgments. (See Compl. ¶ 1 (“This action arises out
of Defendants’ racketeering scheme to intimidate out of state individuals into paying
unwarranted sums of money by commencing fraudulent lawsuits in New York City Civil Court
for relatively small sums of money . . . .”).) In arguing that the Complaint fails to satisfy Rule
9(b), Defendants do not challenge the sufficiency of the allegations as to the nature of the
scheme. (See Reply 3 n.1 (commenting on a section of Plaintiffs’ Memorandum of Law
“address[ing] the requirements of pleading a fraudulent RICO scheme with particularity, an
argument that Defendants do not make in this case”).) Instead, they contend that the Complaint
15
is insufficient “[b]ecause the role of each Defendant in the alleged civil RICO scheme has not
been pleaded.” (Mem. 11.)
“Where multiple defendants are asked to respond to allegations of fraud, the complaint
should inform each defendant of the nature of his alleged participation in the fraud.” DiVittorio
v. Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987); see also Mills v. Polar
Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993) (“Rule 9(b) is not satisfied where the
complaint vaguely attributes the alleged fraudulent [acts] to ‘defendants.’”). Rule 9(b) does not
require Plaintiffs to allege a “specific connection between fraudulent representations . . . and
particular defendants . . . where . . . defendants are insiders or affiliates participating in the
[allegedly fraudulent conduct] in question.” DiVittorio, 822 F.2d at 1247 (internal quotation
marks omitted) (quoting Luce v. Edelstein, 802 F.2d 49, 55 (2d Cir. 1986)). However, a bare
allegation of an individual defendant’s affiliation with entities allegedly committing fraudulent
acts is not enough to satisfy Rule 9(b). See id. at 1248–49 (noting that a complaint’s
identification of certain defendants “only as an affiliate” of other defendants were “inadequate to
charge [those] defendants with liability for misrepresentations”); see also Mills, 12 F.3d at 1175
(“The mere fact that the Directors were controlling persons . . . does not link them to the
[fraudulent acts] . . . .”); Ouaknine v. MacFarlane, 897 F.2d 75, 80 (2d Cir. 1990) (holding that
an allegation that one defendant was an “affiliate” of another defendant “alone [was] insufficient
to link [the defendant] to the misrepresentations”). At a minimum, therefore, Plaintiffs must
“allege that the [each Defendant] personally knew of, or participated in, the fraud.” Mills, 12
F.3d at 1175 (emphasis in original); see also Potter v. Retail Automation Prods., Inc., No. 13CV-4506, 2014 WL 494521, at *2 (S.D.N.Y. Feb. 5, 2014) (“Where allegations of fraud involve
multiple defendants, the complaint must set forth allegations specifically attributable to each
16
individual defendant.”); Pullman v. Alpha Media Pub., Inc., No. 12-CV-1924, 2013 WL
1290409, at *23 (S.D.N.Y. Jan. 11, 2013) (dismissing complaint under Rule 9(b) because
plaintiff “[did] not specifically connect [a defendant] to the fraud in [the] complaint’s recitation
of the allegations for fraud,” but instead made specific allegations with respect to certain
defendants and otherwise “refer[red] to ‘defendants’ in general”), adopted by 2013 WL 1286144
(S.D.N.Y. Mar. 28, 2013); DeFazio v. Wallis, No. 05-CV-5712, 2006 WL 4005577, at *2
(E.D.N.Y. Dec. 9, 2006) (“Where there are multiple defendants, Rule 9(b) requires that the
plaintiffs allege facts specifying each defendant’s contribution to the fraud.”); Odyssey Re
(London) Ltd. v. Stirling Cooke Brown Holdings Ltd., 85 F. Supp. 2d 282, 293 (S.D.N.Y. 2000)
(“When fraud is alleged against multiple defendants, a plaintiff must plead with particularity by
setting forth separately the acts or omissions complained of by each defendant.”); Daly v. Castro
Llanes, 30 F. Supp. 2d 407, 414 (S.D.N.Y. 1998) (“Where multiple defendants are involved, the
complaint is required to describe specifically each defendant’s alleged participation in the
fraud.”). Ultimately, the Court determines whether the Complaint’s allegations are
sufficiently particular to serve the three goals of Rule 9(b), which are (1) to
provide a defendant with fair notice of the claims against him or her; (2) to protect
a defendant from harm to reputation or goodwill by unfounded allegations of
fraud; and (3) to reduce the number of strike suits.
Am. Fin. Int’l Grp.-Asia, L.L.C. v. Bennett, No. 05-CV-8988, 2007 WL 1732427, at *6
(S.D.N.Y. June 14, 2007) (internal quotation marks omitted) (citing DiVittorio, 822 F.2d at
1247)).
The Complaint’s allegations of mail and wire fraud satisfy Rule 9(b) as to each
Defendant. The Court has already discussed various allegations specific to each Defendant that
are sufficient to give Defendants fair notice of the claims against them under Rule 8(a).
However, the Complaint goes further and includes multiple allegations specific to each
17
Defendant that satisfies Rule 9(b)’s requirement that Plaintiffs allege each Defendant’s
knowledge of or participation in the fraudulent scheme. First, the Complaint alleges that
Sussman, and by extension the Sussman Firm, has obtained default judgments while “routinely
disregard[ing]” and “affirmatively conceal[ing]” the existence of a 2005 New York state court
order allegedly undermining Defendants’ legal claim to the judgments. (See Compl. ¶¶ 1, 19.)
Based on the 2005 order, the Complaint alleges that “Sussman Defendants knew at least since
2005 that judges in the New York City Civil Court had refused to exercise jurisdiction in New
York over the lawsuits brought by the Enterprise, and that commencing such boilerplate lawsuits
here were . . . attempts to deprive Plaintiffs and others of their day in court,” but that “Sussman
Defendants have [nevertheless] commenced and continued to commence these lawsuits in New
York City Civil Court, presumably in the hopes of default judgments, without informing that
Court in such subsequent lawsuits of these precedents refusing jurisdiction.” (Id. ¶¶ 143–44.) It
also specifically alleges that Sussman Defendants used “interstate mails” to “cause[] the mailing”
of letters and legal documents to Plaintiffs Goyal and Greene. (Id. ¶¶ 147(o)–(p), (y).)
Second, the Complaint specifically alleges that Individual Defendants Cohen and Krieger
and Corporate Defendant NLS knew about and participated in the alleged fraud because, “the
scheme at issue has continued despite several racketeering and class actions in various courts
throughout the country impugning Defendants’ deceptive business practices over the past several
years.” (Id. ¶¶ 140–41 (citing Pludeman v. N. Leasing Sys., Inc., 890 N.E.2d 184 (N.Y. 2008)).)
In one case in particular, these Defendants were accused of perpetrating “a nationwide scheme
that took place over a number of years” and that involved allegations of fraud in connection with
Defendants’ small-business-machine-leasing business. See Pludeman, 890 N.E.2d at 185–86,
18
188. The Complaint also alleges that “[e]ach Defendant knew, or should have known, of all
these legal proceedings, and the decisions therein.” (Compl. ¶ 145.)
Third, contrary to Defendants’ argument that “there are virtually no allegations in the
[Complaint] that specify what role, if any, each of the eleven Defendants is alleged to have had
in committing the RICO predicate acts that are alleged in the Complaint,” (Mem. 11), the
Complaint does specify each Defendant’s role in the scheme. As discussed, the Complaint
pleads each Individual Defendant’s job title, which is much more specific than pleading a mere
“affiliation.” See DiVittorio, 822 F.2d at 1248–49 (dismissing complaint under Rule 9(b) where
the complaint identified certain defendants “only as an affiliate” and did not “even allege[]
[them] to have been an officer or director of any non-individual [corporate] defendant”). And it
specifically alleges that Defendant Cohen was “in charge of all [of NLS’s] day-to-day
operations” and that he “set up, orchestrated, and supervised the entire racketeering scheme at
issue,” (Compl. ¶ 133); that Defendant Krieger “was responsible for several aspects of [the
Enterprise’s] day-to-day operations, lease originations, and sales,” and “routinely verified most
of the fraudulent complaints,” (id. ¶¶ 14, 134), including one filed against Plaintiff Greene, (id.
¶ 95); that Defendant Centeno was a “Legal Administrative Manager for the Defendants” who
verified and notarized a number of fraudulent complaints, (id. ¶ 15), including ones filed against
Plaintiffs Angermeir, Bhagwanani, Elder, Goyal, Marrou, Murrell, and Shabnam, (id. ¶¶ 37, 47,
58, 82, 108, 118, 122), and who personally “mailed a copy of [a] summons and complaint” to
Plaintiff Elder, (id. ¶ 147(h)); that Defendant Cucinotta was a “Legal Collections Manager for
the Defendants” who “was responsible for collection aspects of the Enterprise” and who
“routinely verified many fraudulent complaints,” (id. ¶¶ 16, 135), including ones filed against
Plaintiffs Angermeir, Bhagwanani, and Shabnam, (id. ¶¶ 37, 47, 122); that Defendant Brown was
19
a “Director of Legal Collections” who also verified fraudulent complaints, (id. ¶ 17, 136), and
who submitted false affidavits in connection with the allegedly fraudulent lawsuits against
Plaintiffs Bhagwanani and Goyal, (id. ¶¶ 49–50, 85–86); and that Defendant Taylor was a “Legal
Collections Manager” who also verified fraudulent complaints, (id. ¶¶ 18, 137), including ones
filed against Plaintiffs Elder, Goyal, and Marrou, (id. ¶¶ 58, 82, 108).
Defendants argue that the Complaint implausibly alleges “that all eleven defendants
either mailed or ‘caused the mailing’ of the same [38] documents” and that all Defendants
“engaged in the same use of interstate wires on [37] occasions.” (Mem. 12.) Defendants are
correct that the Complaint alleges numerous times that “Defendants” caused a particular mailing
to a particular Plaintiff on a particular date, and that it makes numerous similar allegations with
respect to “use of interstate wire communication[s].” (See Compl. ¶¶ 147(a)–(oo), 153(a)–(kk).)
However, “in the context of a RICO action, the complaint need not be specific as to each
allegation of mail or wire fraud when the nature of the RICO scheme is sufficiently pleaded so as
to give notice to the defendants.” Allstate Ins. Co. v. Rozenberg, 771 F. Supp. 2d 254, 264
(E.D.N.Y. 2011) (internal quotation marks omitted). Instead, it need allege only that each
defendant “directly participated in the scheme and could reasonably foresee that the mails would
be used in furtherance of the same.” Rothstein v. GMAC Mortg., LLC, No. 12-CV-3412, 2013
WL 5437648, at *16 (S.D.N.Y. Sept. 30, 2013); see also In re Sumitomo Copper Litig., 995
F. Supp. at 456 (“In complex civil RICO actions involving multiple defendants . . . Rule 9(b)
does not require that the temporal geographic particulars of each mailing or wire transmission
made in furtherance of the fraudulent scheme be stated with particularity. In such cases, Rule
9(b) requires only that the plaintiff delineate, with adequate particularity in the body of the
complaint, the specific circumstances constituting the overall fraudulent scheme.” (internal
20
citation and footnote omitted)). Here, the Complaint plausibly alleges that each Defendant
“directly participated in the scheme,” and because the scheme involved multiple communications
with individuals outside of New York, each participant could “reasonably foresee” that mails and
interstate wires “would be used in furtherance” of the scheme. Rothstein, 2013 WL 5437648, at
*16; see also United States v. Amico, 486 F.3d 764, 781 (2d Cir. 2007) (“To prove that a
defendant caused a mailing, it is sufficient to prove that he could have reasonably foreseen that
the mailing would take place.”); SKS Constructors, Inc. v. Drinkwine, 458 F. Supp. 2d 68, 76
(E.D.N.Y. 2006) (noting that even “[t]he fact that a third party may have caused the use of the
mails does not render the pleading defective, so long as the defendants could reasonably have
foreseen that the third-party would use the mails in the ordinary course of business as a result of
defendants’ act” (internal quotation marks omitted)). Furthermore, while Defendants are correct
that the Complaint contains a number of allegations against all Defendants in general, the
Complaint’s other allegations specific to each Defendant are sufficient to give Defendants fair
notice of the claims against them and to accomplish the other goals of Rule 9(b). See GEM
Advisors, Inc. v. Corporacion Sidenor, S.A., 667 F. Supp. 2d 308, 332 n.9 (S.D.N.Y. 2009)
(“Although the [complaint] repeatedly charge[d] the [fraudulent acts] to ‘Defendants,’ and [did]
not charge the [acts] to one in particular, this was simply due to [p]laintiff’s understanding that
[the defendants] should be treated as the same entity. At this stage of the proceedings, then,
[p]laintiff fairly charge[d] both [d]efendants with the [acts]. Accordingly, there can be no doubt
that the [c]omplaint [gave] each defendant notice of precisely what he [was] charged with. No
more is required by Rule 9(b).” (internal citations and some internal quotation marks omitted));
Green v. Beer, No. 06-CV-4156, 2009 WL 911015, at *6 n.13 (S.D.N.Y. Mar. 31, 2009)
(“[E]lsewhere in the . . . complaint, Plaintiffs specify the who, what, when, and where of their
21
fraud claim with sufficient particularity to cure any confusion these scattered clumped
allegations may cause.”); Allstate Ins. Co. v. Ahmed Halima, No. 06-CV-1316, 2009 WL
750199, at *5 (E.D.N.Y. Mar. 19, 2009) (finding that, because “requiring [p]laintiffs to plead
with more particularity would not further any of the policy goals of Rule 9(b),” the plaintiffs
“properly pled a civil RICO claim under § 1964(c)”).
In holding that the Complaint satisfies Rule 9(b)’s heightened pleading requirements, this
Court agrees with Judge Gwin’s ruling in a similar case brought against Defendants NLS, Cohen,
and Krieger. In Serin v. Northern Leasing Systems, Inc., No. 06-CV-1625, 2009 WL 7823216
(S.D.N.Y. Dec. 18, 2009), the plaintiffs alleged that the defendants “engaged in a pattern of
racketeering activity by extorting money from the [p]laintiffs by threatening and initiating
lawsuits against them in New York City to recover on fraudulent leases.” Id. at *6. The
defendants argued that the Complaint’s allegations of predicate acts of mail and wire fraud failed
to satisfy Rule 9(b). Id. at *4, 6. Judge Gwin rejected the defendants’ argument, finding that
allegations in that complaint similar to Plaintiffs’ allegations in this Complaint met Rule 9(b)’s
heightened pleading standard:
The [p]laintiffs in this case do not allege that the letters and/or wire transmissions
themselves contained misrepresentations. Rather, the [p]laintiffs argue that the
communications are part of an ongoing scheme by the [d]efendants to defraud
them. The [p]laintiffs describe with the required amount of particularity the
details of the racketeering scheme: they describe in detail how the [d]efendants
allegedly forged leases in each [p]laintiff’s name; how the [d]efendants made
electronic deductions from the bank accounts of [certain plaintiffs]; how the
[d]efendants then called and/or mailed letters to each [p]laintiff demanding
payment on the leases and threatening litigation if the [p]laintiffs refused to pay;
how the [d]efendants initiated litigation in New York City Civil Court against
[certain Plaintiffs]; how these [p]laintiffs personally appeared and defended these
allegedly meritless lawsuits; and how the [d]efendants allegedly made adverse
entries in all of the [p]laintiffs’ personal credit reports. The general allegations of
mail fraud in . . . the [complaint], when read in the context of the specific
allegations the [p]laintiffs ma[d]e earlier in the [complaint], are sufficient to
adequately plead mail fraud.
22
Moreover, it is also unnecessary for the [p]laintiffs to allege that each of the
individual [d]efendants personally committed at least two of the predicate acts of
mail and/or wire fraud. It is sufficient that the [p]laintiffs allege that the
individuals committed the predicate acts of mail and wire fraud by directing NLS
and its employees to use the mails and/or wires to further the fraudulent scheme.
Because the [complaint] alleges that the individual [d]efendants, by nature of their
positions within [NLS], orchestrated, supervised, monitored, and/or oversaw the
day-to-day operations of the alleged scheme, the Plaintiffs’ allegations against all
of the [d]efendants are sufficient to allege a pattern of racketeering activity for
purposes of RICO. Based upon the information contained in the [complaint], the
[p]laintiffs have adequately met their pleading requirement with respect to their
mail and wire fraud claims under Rule 9(b).
Serin, 2009 WL 7823216, at *8 (internal citations omitted) (citing Pereira v. United States, 347
U.S. 1, 8–9 (1954); City of New York v. Smokes-Spirits.com, Inc., 541 F.3d 425, 446 (2d Cir.
2008), rev’d on other grounds, Hemi Grp., LLC v. City of New York, 559 U.S. 1 (2010); In re
Sumitomo Copper Litig., 995 F. Supp. at 457)). Here, the Court similarly finds that Plaintiffs’
allegations of Defendants’ use of the mails and wires satisfies their obligation under Rule 9(b) to
plead a fraudulent scheme with particularity, and that, combined with Plaintiffs’ specific
allegations against each Defendant, the Complaint gives Defendants fair notice as to Plaintiffs’
claims against them.
3. Injury to Business or Property
Defendants next contend that the Complaint fails to plead an “injur[y] [to] business or
property by reason of a” predicate act of racketeering activity, as required for any claim brought
under § 1964(c). See 18 U.S.C. § 1964(c); Lundy, 711 F.3d at 119 (“To establish a civil RICO
claim, a plaintiff must allege . . . injury to business or property as a result of the RICO
violation.’” (internal quotation marks omitted)).
In general, monetary damages constitute an “injury to . . . property.” See First
Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 768 (2d Cir. 1994) (noting that “[t]he
23
general rule of fraud damages is that the defrauded plaintiff may recover out-of-pocket losses
caused by the fraud,” and that this rule “has been adopted by [the Second Circuit] in the context
of deciding whether a defrauded plaintiff has standing under RICO”); Bankers Trust Co. v.
Rhoades, 741 F.2d 511, 516 (2d Cir. 1984) (“[The plaintiff] has alleged that it has been deprived
of various sums of money by the defendants’ activities. There is no question that this constituted
injury in its business or property, and that [the plaintiff] has adequately pleaded an injury of the
type contemplated by § 1964(c).” (internal quotation marks and alterations omitted)), vacated
and remanded on other grounds, 473 U.S. 922 (1985). However, “[i]t is beyond dispute that
personal injuries are not injuries to ‘business or property.’” Zimmerman v. Poly Prep Country
Day Sch., 888 F. Supp. 2d 317, 329 (E.D.N.Y. 2012); see also Laborers Local 17 Health &
Benefit Fund v. Philip Morris, Inc., 191 F.3d 229, 241 (2d Cir. 1999) (finding that “RICO causes
of action could not be asserted by the [plaintiffs] . . . because the RICO statutes requires an
injury to ‘business or property,’ whereas the [plaintiffs’] injuries are personal in nature”).
Defendants are correct that many of the injuries alleged in the Complaint do not
constitute an “injury” within the meaning of § 1964(c). For example, each of the Plaintiffs
claims that he or she “had to waste considerable time and effort” in response to the fraudulent
lawsuits, and that he or she “was subjected to considerable annoyance, embarrassment,
emotional distress, and mental anguish.” (See Compl. ¶¶ 40, 52, 60, 75, 88, 102, 110, 120, 129.)
None of these constitutes an “injury” under § 1964(c). See Gross v. Waywell, 628 F. Supp. 2d
475, 488 (S.D.N.Y. 2009) (noting that “personal or emotional damages do not qualify” as
“injur[ies] to business or property” (internal quotation marks omitted)); Williams v. Dow Chem.
Co., 255 F. Supp. 2d 219, 225 (S.D.N.Y. 2003) (“RICO . . . does not provide recovery for
physical and emotional injuries.”); Tsipouras v. W&M Props., Inc., 9 F. Supp. 2d 365, 368
24
(S.D.N.Y. 1998) (“[M]ere injury to character, business reputation, and/or the intentional
infliction of emotional distress are not actionable under civil RICO.”). Each Plaintiff also alleges
that “Defendants . . . made derogatory entries in [his or her] personal consumer credit report,”
and that he or she “suffered the usual consequences of such adverse reports.” (See Compl. ¶¶ 40,
52, 60, 75, 88, 102, 110, 120, 129.) But an adverse entry in a personal consumer credit report, by
itself, does not constitute an injury to business or property. See Summerfield v. Strategic Lending
Corp., No. 09-CV-2609, 2010 WL 1337726, at *2–3 (N.D. Cal. Apr. 2, 2010) (holding that the a
plaintiff had “failed to establish that [he had] standing to assert a RICO claim” where he claimed
“damage[] . . . [to] his credit score”) (report and recommendation); Walter v. Palisades
Collection, LLC, 480 F. Supp. 2d 797, 805 (E.D. Pa. 2007) (“Injury to one’s credit score is
analogous to injury to one’s reputation, and is not actionable [under RICO].”). And although
Plaintiffs have generally alleged that adverse credit-report entries may lead to a “significant
impact on credit availability to Plaintiffs, including . . . denial of credit opportunities, increase in
interest rates, and other diverse consequences,” (Compl. ¶ 28), Plaintiffs’ credit-report
allegations do not constitute an injury under § 1964(c) because none of the Plaintiffs has alleged
that he or she has actually suffered such an injury. See Warnock v. State Farm Mut. Auto. Ins.
Co., No. 08-CV-01, 2008 WL 4594129, at *4 (S.D. Miss. Oct. 14, 2008) (“[D]amage to [a]
plaintiff’s credit score . . . is speculative and not properly recoverable in the instant [civil RICO]
action.”); cf. First Nationwide Bank, 27 F.3d at 768 (“Because plaintiff’s collection efforts were
ongoing and the actual amount of its injury was indefinite and unprovable, plaintiff did not yet
have standing under RICO.”); World Wrestling Entm’t, Inc. v. Jakks Pac., Inc., 530 F. Supp. 2d
25
486, 521 (S.D.N.Y. 2007) (“If the damages cannot be ascertained, then there is no lawful way to
compensate plaintiff.”).5
But the Court does not dismiss the Complaint on this ground because the Plaintiffs do
allege a sufficient injury to business or property to the extent that they allege monetary losses in
the form of legal fees they had to pay in response to Defendants’ allegedly fraudulent lawsuits.
(See Compl. ¶¶ 39, 48, 59, 74, 83, 101, 109, 119, 128.) As many courts have found, such
damages may constitute injuries to business or property under § 1964(c) so long as they were
“proximately caused by a RICO violation.” See Stochastic Decisions, Inc. v. DiDomenico, 995
F.2d 1158, 1167 (2d Cir. 1993) (finding legal fees spent in response to defendants’ illegal actions
to be RICO injuries because “legal fees may constitute RICO damages when they are
proximately caused by a RICO violation”); Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1105
(2d Cir. 1988) (allowing recovery of “an unspecified amount in legal fees and other expenses
incurred in fighting defendants’ frivolous lawsuits in New York state court”); Chevron Corp. v.
Donziger, 871 F. Supp. 2d 229, 253 & n.130 (S.D.N.Y. 2012) (“[Plaintiff] more than sufficiently
has alleged at least that it has sustained substantial attorneys’ fees and professional costs in
responding to defendants’ allegedly fraudulent statements to U.S. courts . . . .”); Sykes v. Mel
Harris & Assoc., LLC, 757 F. Supp. 2d 413, 427–28 (S.D.N.Y. 2010) (“[D]efendants’ pursuit of
default judgments and attempts to enforce them against plaintiffs proximately caused their
injures, which include the . . . incurring of legal costs to challenge those default judgments.”
(internal citation omitted)); Ritter v. Klisivitch, No. 06-CV-5511, 2008 WL 2967627, at *8
5
The one case Plaintiffs cite for the proposition that adverse credit-report entries
“indisputably . . . may result in monetary damages” addressed claims brought under the Fair
Debt Collections Practices Act and a related Connecticut law, and although the plaintiff in that
case alleged that she suffered monetary damages, the court did not address that issue. (See
Opp’n 19 (citing Walsh v. Law Offices of Howard Lee Schiff, No.11-CV-1111, 2012 WL
4372251 (D. Conn. Sept. 24, 2012)).)
26
(holding that “legal fees and other expenses incurred” as a result of defendant’s alleged RICO
violations constituted a RICO injury); First Capital Asset Mgmt., Inc. v. Brickellbush, Inc., 218
F. Supp. 2d 369, 382 (S.D.N.Y. 2002) (finding attorneys’ fees and expenses incurred in
connection with fraudulent legal proceedings to be sufficient RICO injuries), aff’d, 385 F.3d 159
(2d Cir. 2004). The Court therefore finds that Plaintiffs have sufficiently pled an “injury to . . .
property by reason of” a RICO violation.6
4. Extortion
Defendants next argue that the Complaint fails to allege predicate acts of extortion
because “the commencement of even ‘meritless litigation’ does not amount to extortion under
federal or state law.” (Mem. 16.) The Court need not address this argument at this time,
however, because even if Defendants were correct, Plaintiffs’ independent allegations of mail
and wire fraud—which Defendants do not directly challenge in their Motion—are enough to
satisfy Plaintiffs’ burden to plead predicate acts. See Serin, 2009 WL 7823216, at *9 (“Because
the Court finds that the Plaintiffs have adequately pleaded a pattern of racketeering in which the
alleged enterprise committed multiple predicate acts of mail and/or wire fraud in further[ance] of
6
The Court notes that five of the Plaintiffs—Angermeir, Bhagwanani, Elder, Goyal, and
Murrell—allege that Defendants made unauthorized deductions from their business bank
accounts. (See Compl. ¶¶ 31, 43, 55, 77, 113.) But the Court does not consider these to satisfy
Plaintiffs’ burden to plead an injury to business or property because Plaintiffs concede that these
injuries did not result from the alleged RICO violations. (See Mem. 15 (arguing that the “alleged
deductions took place long before any RICO violation took place,” and, therefore, “they were not
proximately caused by the alleged RICO violation”); Opp’n 18–20 (arguing only that Plaintiffs
suffered RICO damages from “legal expenses” resulting from “Defendants’ fraudulent lawsuits”
and “monetary damages” from “adverse entries in credit reports”).) For the same reason, the
Court does not consider as possible RICO injuries the allegations of three of the Plaintiffs—
Bhagwanani, Elder, and Greene—that Defendants’ actions resulted in the freezing of a bank
account. (See Compl. ¶¶ 48, 58, 100.) Moreover, the Court notes that two of those Plaintiffs—
Elder and Greene—alleged only that Defendants froze bank accounts controlled by a third party.
(See id. ¶¶ 58, 100.)
27
its allegedly fraudulent and extortionate scheme, it finds that it is not necessary to consider
whether the filing of lawsuits could itself be considered a predicate act of extortion for RICO
purposes.”); Mezzonen, S.A. v. Wright, No. 97-CV-9380, 1999 WL 1037866, at *9 (S.D.N.Y.
Nov. 16, 1999) (finding plaintiff’s allegations of mail and wire fraud “sufficient to uphold [a]
RICO claim against [defendants],” and consequently noting that it “need not analyze the
allegations of money laundering”).
5. Conspiracy
Defendants next argue that the Complaint fails to plead a RICO conspiracy claim under
18 U.S.C. § 1962(d), (see Mem. 18–19), which makes it “unlawful for any person to conspire to
violate any of the provisions of [§ 1962(c)],” 18 U.S.C. § 1962(d). To the extent that Defendants
base this argument on their challenges to the substantive RICO claim under § 1962(c), (see
Mem. 18 (“[B]ecause plaintiffs have failed to plead a legally sufficient substantive RICO claim,
their conspiracy claim also fails.”)), this argument fails because the Court has declined to dismiss
the substantive RICO claim. See SKS Constructors, Inc. v. Drinkwine, 458 F. Supp. 2d 68, 81
(E.D.N.Y. 2006) (“Because the court holds that Plaintiff has properly alleged a RICO claim, the
court denies the motion to dismiss the conspiracy claim.”). But Defendants also argue that
“[P]laintiffs’ allegations of conspiracy are entirely conclusory” because they “have not even
attempted to specify how each of the Individual Defendants ‘manifested an agreement to commit
two predicate acts in furtherance of a common purpose of a RICO enterprise.’” (Mem. 19
(quoting Allen v. New World Coffee, Inc., No. 00-CV-2610, 2001 WL 293683, at *9 (S.D.N.Y.
Mar. 27, 2001)).) This challenge also fails.
“To establish a RICO conspiracy, a plaintiff must plead that a defendant agreed to
participate in the affairs of the enterprise through a pattern of racketeering activity.” N.Y. Dist.
28
Council of Carpenters Pension Fund v. Forde, 939 F. Supp. 2d 268, 282 (S.D.N.Y. 2013). In
doing so, a defendant need not agree specifically to commit at least two predicate acts; instead, a
defendant may violate § 1962(d) if he or she “commit[s] at least two acts of racketeering
activity” and “knew about and agreed to facilitate the scheme.” Salinas v. United States, 522
U.S. 52, 66 (1997); accord United States v. Yannotti, 541 F.3d 112, 122 (2d Cir. 2008) (“Salinas
held that to be found guilty of RICO conspiracy, a defendant need only know of, and agree to,
the general criminal objective of a jointly undertaken scheme.” (citing Salinas, 522 U.S. at 63));
United States v. Zichettello, 208 F.3d 72, 100 (2d Cir. 2000) (“To be convicted as a conspirator,
one must be shown to have possessed knowledge of only the general contours of the
conspiracy.”). Therefore, Plaintiffs “must allege some factual basis for a finding of a conscious
agreement among the defendants.” Picard v. Kohn, 907 F. Supp. 2d 392, 400 (S.D.N.Y. 2012)
(quoting Hecht, 897 F.2d at 26 n.4)). But “a defendant’s agreement to join a conspiracy can be
inferred from circumstantial evidence of the defendant’s status in the enterprise or knowledge of
wrongdoing.” N.Y. Dist. Council of Carpenters Pension Fund, 939 F. Supp. 2d at 282 (internal
quotation marks omitted). And the Court analyzes the Complaint’s allegations of a § 1962(d)
conspiracy under the “more liberal pleading requirements of Rule 8(a).” Hecht, 897 F.2d at 26
n.4.
Here, the Complaint satisfies this standard. Although Plaintiffs do allege, in somewhat
conclusory fashion, that “Defendants . . . knowingly agreed and conspired to conduct or
participate . . . in the affairs of an enterprise,” (Compl. ¶ 191), they also allege facts that support
an inference that such an agreement did exist. See U.S. Fire Ins. Co. v. United Limousine Serv.,
Inc., 303 F. Supp. 2d 432, 454 (S.D.N.Y. 2004) (denying motion to dismiss RICO conspiracy
claim where “conclusory statements [in the complaint] [were] buttressed by . . . more specific
29
allegations”). For example, the Complaint alleges that each Defendant committed at least two
predicate acts “with the knowledge that [those acts] were in furtherance of [a] pattern of
racketeering activity.” (Id. ¶ 192.) The Court has already held that Plaintiffs have alleged such
knowledge with respect to Defendants NLS, Cohen, and Krieger, all of whom were defendants in
multiple lawsuits filed in federal and state courts and involving allegations of fraud similar to
those made in the Complaint. The Complaint therefore also supports a plausible inference that
the other Defendants were aware of the overall scheme and understood that they were taking
actions in furtherance of that scheme. See De Sole v. Knoedler Gallery, LLC, — F. Supp. 2d —,
2013 WL 5452669, at *25 (S.D.N.Y. Sept. 30, 2013) (denying motion to dismiss a RICO
conspiracy claim where the complaint “pled facts demonstrating . . . that each of the individual
defendants, by nature of their positions in the alleged racketeering enterprise, knew of the
general nature of the conspiracy and facilitated the furtherance of the conspiracy”); Crabhouse of
Douglaston Inc. v. Newsday Inc., 801 F. Supp. 2d 64, 90 (E.D.N.Y. 2011) (denying motion to
dismiss RICO conspiracy claim where the plaintiff alleged that each defendant “agreed to
participate in a scheme whose ultimate objective must have been known to its participants, or so
a jury could reasonably conclude,” and where one defendant, “who operated solely at the behest
of his superiors, would have known that the purpose behind his task” was to further the
fraudulent scheme); Metro. Transp. Auth. v. Contini, No. 04-CV-104, 2005 WL 1565524, at *5
(E.D.N.Y. July 6, 2005) (denying motion to dismiss RICO conspiracy claim where the plaintiff
“alleged [an individual defendant] to have been in charge of the day-to-day operations of [a
corporate defendant],” such that the individual was alleged to be “a sufficiently high level
employee to impute knowledge of the wrongdoing on [the corporate defendant]”); State Farm
Mut. Auto. Ins. Co. v. CPT Med. Servs., P.C., 375 F. Supp. 2d 141, 151 (E.D.N.Y. 2005)
30
(denying motion to dismiss conspiracy claim against defendants whom plaintiffs alleged to have
played a “‘support’ role . . . in furtherance of the pattern of racketeering activity,” including
mailing fraudulent documents). Moreover, the Complaint alleges that “Defendants have . . .
continued filing . . . perjurious affidavits under oath” even after these lawsuits were filed,
(Compl. ¶ 193), and it specifically alleges a number of such false filings with respect to each
Plaintiff, (id. ¶¶ 37, 47, 58, 71, 82, 85–86, 95, 108, 117, 122, 161–72). Finally, the Complaint
alleges that each Defendant benefitted financially from the scheme in the form of profits and
income derived directly from their participation in the scheme. (See id. ¶¶ 184 (“Defendants
benefitted enormously by the profits they made from the scheme, and the various amounts
collected unlawfully.”), 185 (“Defendants received income from these patterns [of racketeering
activity] in the form of unwarranted payments. Defendants disbursed these funds amongst
themselves in a manner known only to them.”); see also id. ¶¶ 13–18 (alleging that each
Individual Defendant has “received, and continues to receive, income directly and/or indirectly
from the racketeering Enterprise at issue”); id. ¶ 19 (alleging that Sussman has “received, and
continues to receive, a portion of the amounts collected by the Enterprise”); id. ¶ 24 (“Each of
the Individual Defendants has personally profited . . . from [the alleged] activities.”).) This
supports an inference that Defendants knowingly participated in the conspiracy. See United
States v. Heras, 609 F.3d 101, 111 (2d Cir. 2010) (holding that “anticipated compensation”
based on the possible “achievement of [a] . . . scheme” may “support[] a jury inference that a
defendant knows and has adopted the conspiracy’s goals”); United States v. Aleskerova, 300 F.3d
286, 292–93 (2d Cir. 2002) (“A defendant’s knowing and willing participation in a conspiracy
may be inferred from . . . . evidence that the defendant . . . received or expected to receive a share
of the profits from the conspiracy.”). The Court therefore denies Defendants’ Motion To
31
Dismiss the conspiracy claim. See Serin, 2009 WL 7823216, at *14 (“The [p]laintiffs allege that
the [d]efendants conspired with others to commit predicate acts of mail fraud in furtherance of
their scheme to extort money from the [p]laintiffs; that each of the individual [d]efendants, by
nature of their positions at [NLS], knew of the general nature of the conspiracy and facilitated
the furtherance of the conspiracy; and that none of the [d]efendants have withdrawn or otherwise
dissociated themselves from the conspiracy or the other conspirators. Furthermore, the
knowledge of [d]efendants Cohen . . . and Krieger can be imputed to the corporate entity they
allegedly controlled and utilized to further the conspiracy, [d]efendant NLS. Thus the Plaintiffs
have sufficiently alleged their RICO conspiracy claim against all of the [d]efendants under the
liberal pleadings requirements of Rule 8(a) . . . .” (citation omitted)).
6. Section 349
New York’s General Business Law § 349(a) makes unlawful “[d]eceptive acts or
practices in the conduct of any business, trade or commerce or in the furnishing of any service in
[New York].” N.Y. Gen. Bus. Law § 349(a). New York courts have held that, “[t]o successfully
assert a [§ 349] claim, a plaintiff must allege that a defendant has engaged in (1) consumeroriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result
of the allegedly deceptive act or practice.” City of New York v. Smokes-Spirits.com, Inc., 911
N.E.2d 834, 838 (N.Y. 2009); accord Wilson v. Nw. Mut. Ins. Co., 625 F.3d 54, 64 (2d Cir.
2010). Plaintiffs’ § 349 claim arises out of their allegations that Defendants “nonchalantly
misused the court system of the State of New York and the City of New York, and routinely
made false and baseless statements with reckless abandon, . . . even after knowing the falsity of
such statements.” (Compl. ¶ 199.) This “misuse” of the court system results in injury
cognizable under § 349, they argue, because “[l]itigants depend on the integrity of the conduct of
32
participants in civil proceedings through disputing the validity of their opponents’ claims to
impose or resist civil liability,” and because “concoct[ing] testimony [and] mak[ing] false
statements under oath . . . is an unacceptable fraud on the court.” (Id.)
“As a threshold matter, in order to satisfy [§ 349], plaintiffs’ claims must be predicated
on a deceptive act or practice that is ‘consumer oriented.’” Gaidon v. Guardian Life Ins. Co. of
Am., 725 N.E.2d 598, 603 (N.Y. 1999). To be “consumer oriented,” the alleged conduct “must
have a broad impact on consumers at large.” N.Y. Univ. v. Cont’l Ins. Co., 662 N.E.2d 763, 770
(N.Y. 1995). Section 349, therefore, requires that the conduct bear some relationship to
consumer transactions. See N. State Autobahn, Inc. v. Progressive Ins. Grp. Co., 953 N.Y.S.2d
96, 102 (App. Div. 2012) (“The requirement that the consumer-oriented conduct be materially
misleading limits the availability of [§ 349] to cases where the deception pertains to an issue that
may bear on a consumer’s decision to participate in a particular transaction. As such, the statute
is limited in its application to those acts or practices which undermine a consumer’s ability to
evaluate his or her market options and to make a free and intelligent choice.”). And it does not
apply to private disputes between individual parties with no bearing on the overall marketplace.
See Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 647 N.E.2d 741,
744 (N.Y. 1995) (“Private contract disputes, unique to the parties . . . would not fall within the
ambit of [§ 349].”); see also Richmond v. Nat’l Grid, Brooklyn Union Gas Co., — F. App’x —,
2014 WL 322063, at *2 (2d Cir. Jan. 30, 2014) (“[Plaintiff] allege[d] . . . that [defendant] acted
improperly only with respect to [plaintiff]. Accordingly, [plaintiff] failed to plead a claim under
[§ 349].” (internal citations omitted)).
Here, Plaintiffs have failed to plead conduct related to consumer transactions, and they
have failed to plead conduct that impacts consumers at large. In pleading this claim, the
33
Complaint itself characterizes Defendants’ conduct as a “fraud on the court.” (Compl. ¶ 199.)
And although it does plead, in conclusory fashion, that Plaintiffs are “‘consumers’ for purposes
of consumer protection statutes,” it does not plead injuries arising out of a consumer-oriented
transaction. (Id. ¶ 198.) In fact, the Complaint appears to plead the opposite of what § 349
requires when it alleges that “[n]one of the Plaintiffs had any commercial or other relationship
with Defendants.” (Id.) In any event, the Court finds that Plaintiffs’ allegations concerning
“false statements” and “fraud on the court[s]” fail to plead a consumer-oriented conduct. See
Schlessinger v. Valspar Corp., 991 N.E.2d 190, 193 (N.Y. 2013) (“Section 349 does not grant a
private remedy for every improper or illegal business practice, but only for conduct that tends to
deceive consumers.”); cf. City of New York v. Smokes-Spirits.com, Inc., 541 F.3d 425, 456 (2d
Cir. 2008) (“[W]e are aware of no case extending protection under [§ 349[ to an entity that was
neither harmed as a competitor nor a consumer.”).
Moreover, Plaintiffs have failed to plead that Defendants’ conduct affects consumers in
general or the public at large. See Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 264
(2d Cir. 1995) (“[T]he gravamen of [a § 349 claim] must be consumer injury or harm to the
public interest.”). Plaintiffs’ allegations primarily concern injuries they sustained from the
allegedly fraudulent lawsuits Defendants filed against them individually. See Silverman v.
Household Fin. Realty Corp. of N.Y., — F. Supp. 2d —, 2013 WL 4039381, at *3 (E.D.N.Y.
Aug. 5, 2013) (dismissing § 349 claim because “[p]laintiffs’ allegations [were] specific to them
and their individual . . . transaction,” such that “[t]heir claims derive[d] from the particular
circumstances of [an individual] loan,” and “the allegedly deceptive practices . . . [did] not
universally apply to other [transactions] or impact the public at large”). And although Plaintiffs
refer to “[l]itigants” in the abstract and “integrity . . . in civil proceedings” in general, (Compl.
34
¶ 199), these allegations are based entirely on Plaintiffs’ individual claims. See Wilson, 625 F.3d
at 65 (affirming summary judgment dismissing a § 349 claim where plaintiff “argue[d] that
[defendant’s] conduct would have a direct effect on consumers at large,” but the argument was
“based on [plaintiff’s] claim that [defendant] breached . . . the policies as they were applicable to
[an individual] situation—not that [defendant] ha[d] a policy of issuing policies that are
deceptive”). The Court therefore finds that Plaintiffs have failed to plead a claim under New
York’s General Business Law § 349, and it grants Defendants’ Motion To Dismiss that claim.7
7. Plaintiff Greene’s Claims
Defendants finally argue that Plaintiff Greene’s RICO claims are barred by the statute of
limitations. The statute of limitations for such claims is four years. See Cohen v. S.A.C. Trading
Corp., 711 F.3d 353, 361 (2d Cir. 2013) (“The statute of limitations for a civil RICO claim is
four years.”). Moreover, to determine whether a civil RICO claim is timely, courts in the Second
Circuit apply “a discovery accrual rule, under which the limitations period begins to run when
the plaintiff discovers or should have discovered the RICO injury.” Id. (internal quotation marks
omitted). But the Second Circuit has also recognized a “separate accrual rule” whereby “a new
claim accrues, triggering a new four-year limitations period, each time plaintiff discovers, or
should have discovered, a new injury caused by the predicate RICO violations.” Bingham v.
Zolt, 66 F.3d 553, 559 (2d Cir. 1995). As a result, “[a]s long as separate and independent
injuries continue to flow from the underlying RICO violations—regardless of when those
violations occurred—[a] plaintiff may wait indefinitely to sue, but may then win compensation
Because the Court has dismissed Plaintiffs’ claim in the entirety, it need not consider
Defendants’ separate argument that Plaintiffs’ allegations of unauthorized bank-account
deductions are not cognizable under § 349 because they occurred outside of New York. (See
Mem. at 20–23.)
7
35
only for injuries discovered or discoverable within the four-year ‘window’ before suit was filed
. . . .” Id. at 560.
Plaintiffs filed their initial Complaint in January 2012. (See Dkt. No. 1.) Defendants are
therefore correct that “[a]ny RICO claims that arose [four years] prior to” filing the Complaint
would be time barred. (Mem. 23.) And Plaintiff Greene does allege that Defendants
fraudulently sued her over four years prior to the filing of the Complaint. (See Compl. ¶¶ 95,
99–100 (alleging that Defendants obtained a default judgment against her “[a]bout [four-and-ahalf years]” before February 2012).) However, Defendants are incorrect when they argue that
“all of Plaintiff Greene’s claims arose . . . when she learned that she had been sued by [NLS].”
(Mem. 23.) Even if Defendants sued Greene more than four years before she brought her claim,
it is the RICO injury that triggers the accrual, not the RICO violation. See Bankers Trust, 859
F.2d at 1105 (“[E]ach time plaintiff discovers or should have discovered an injury caused by
defendant’s violation of § 1962, a new cause of action arises as to that injury, regardless of when
the actual violation occurred.”). In this context, the Court has already held that legal expenses
can constitute a RICO injury, and Greene alleges that she incurred such expenses at some point
after February 2012. (See Compl. ¶¶ 99–101 (alleging that Defendants obtained a default
judgment against Greene, that they subsequently froze her mother’s bank account in February
2012, and that Greene thereafter “had to retain a lawyer and incur legal expenses in New York to
vacate the default judgment”).) Under the separate accrual rule, therefore, her claims for those
damages are not time-barred. See Bankers Trust, 859 F.2d at 1105 (holding, “[u]nder [the] rule
of separate accrual,” and in the context of the plaintiff’s claim for “past legal fees and other
expenses,” that the plaintiff “may recover any of these expenses which it discovered or should
36
have discovered" within four years of bringing the action). The Court therefore denies
Defendants ' Motion To Dismiss Greene's RICO claims. 8
III. Conclusion
In light of the foregoing analysis, the Court grants Defendants' Motion To Dismiss in
part and denies it in part. It thus dismisses Plaintiffs ' § 349 claim , but it does not dismiss either
of Plaintiffs ' civil RICO claims brought under 18 U.S.C . § 1964(c) . The Clerk of Court is
respectfully requested to terminate the pending Motion. (Dkt. No. 14.)
SO ORDERED.
DATED:
Marcha-=t, 2014
White Plains, New York
8
Because the Court has already dismissed Greene 's § 349 claim on alternate grounds, it
need not address Defendant' s argument that it should dismiss her§ 349 claim as time-barred.
(See Mem. 23.)
37
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