GERSHON, District Judge:
This action arises out of the competing claims of ownership to three pieces of real property located in New York City. The allegations set forth in the First Amended Complaint include assertions of assault, battery and deception, as well as extortion, bank fraud and sham conveyances. Plaintiffs contend that the allegations asserted against the defendants are sufficient to establish a civil claim for violation of the Racketeer Influenced and Corrupt Organizations (RICO) statute, 18 U.S.C. § 1961 et seq., and that this court should exercise supplemental jurisdiction over the litany of state law claims also asserted. Defendants
Also consolidated for disposition herein is plaintiffs' motion for a preliminary injunction, by which they seek to stay several proceedings commenced in state court.
For the reasons set forth below, defendants' motion to dismiss is granted and plaintiffs' motion is denied as moot.
The following is a brief synopsis of the procedural history and claims, as culled from the First Amended Complaint (the "Complaint")
Plaintiffs Janina Davis ("Davis") and Subhana Rahim ("Rahim") are both female United States citizens residing in Brooklyn. Davis and defendant Aswad Ayinde, a.k.a Arune Destula, a.k.a. Eric McGill, also referred to as "Baku" (hereafter "Baku") are the parents of a minor child, Altria Ayinde, who is, thankfully," not involved in this action. (See Compl. ¶¶ 4-5, 9, 13, 18-19.) The nature of the relationship between Rahim and Baku is not described in this Complaint, but it appears that, together, they were at one point the owners of the premises located at 187 Gates Avenue, in Brooklyn.
Defendants Morad Yeroushalmi ("Morad") and Moussa Yeroushalmi, a.k.a. Moishe Yeroushalmi ("Moussa"), are brothers. Defendant Farzaneh Yeroushalmi ("Farazaneh") is the wife of Moussa. (Id. ¶¶ 20-21.) Also named as defendants are several limited liability companies, all operating out of 683 Middle Neck Road, in Great Neck, New York: M & M Developer, LLC ("M & M"), the members of which are Morad and Moussa; MBM Development, LLC ("MBM-D"), whose members are Davis and M & M, and Altria Development, LLC ("Altria"), whose members are Davis, Moussa and Morad; MBM Entertainment, LLC ("MBM-E"), owned and operated by Morad and Farzaneh; and PSY Trading, Inc. ("PSY"), which is owned and operated by Baku. (See id. ¶¶ 13-17, 22-26.)
The three pieces of real property that are at issue in this lawsuit are located at 187 Gates Avenue and 139 Clinton Avenue, both in Brooklyn ("Gates" and "Clinton,"
Plaintiffs also allege that, in April 2005, Davis, the owner of W127, entered into an agreement with M & M, which resulted in the formation of MBM-D and the transfer of title in W127 from Davis to MBM-D. The goal of this arrangement was the development of W127: M & M was to pay the costs of the "rehabilitation" and a fee of $150,000 to Davis, and Davis was to convey title to MBM-D, become a 50% partner with the entity, and ultimately share in the net profits made by the joint venture. (Id. ¶ 39.) However, plaintiffs allege that defendants never intended to make such payment or to become Davis's partner, but rather, that the arrangement was merely a scheme to take the property without due consideration. (Id ¶¶ 40-42.) Plaintiffs make similar allegations with respect to Clinton: that Davis, Moussa and Morad entered into an agreement in April 2005 resulting in the formation of defendant Altria for the purpose of developing Clinton; that Moussa and Morad would pay the costs of development as well as $200,000 to Davis; that Davis would transfer title to the property, become a 50% partner and ultimately share in the profits of Altria; and that Moussa and Morad never intended to make such payment to Davis. (Id ¶ 47.)
According to the complaint, Davis "allegedly executed" deeds conveying both
In May 2006, title of W127 was conveyed from MBM-D to MBM-E (an entity in which Davis did not have an interest); and in October 2006, from MBM-E to MBM-E and Baku as tenants in common. (See Compl. ¶ 54(a), (c); Exs. H, J.) Also in October 2006, Baku conveyed his interest in W127 to PSY, resulting in a tenancy in common between PSY (1/3) and MBM-E (2/3). (Id ¶ 54(d); Ex. K.) Then, in March 2007, PSY and MBM-E transferred title to Morad and Farzaneh, resulting in a tenancy in common by the two parties, each with a 50% interest. (Id ¶ 54(h); Ex. O.)
These transfers form the backdrop for the substantive and conspiracy civil RICO claims asserted. Plaintiffs allege that Moussa, Morad, Farzaneh and their attorney, defendant James Guy ("Guy"), along with Baku, comprised the Yeroushalmi Clan, which constituted an enterprise within the meaning of 18 U.S.C. § 1961(4), the purpose of which was to strip Davis of her equity in the three properties, and the operation of which was conducted through a pattern of racketeering activity. (See Compl. ¶¶ 60-64.) Alternatively, plaintiffs allege that the corporate defendants (M & M, MBM-D, MBM-E, Altria and PSY), acting with non-party entities Ishopnomarkup.com and 23 East 39th Street Developer, LLC, constitute a corporate enterprise having the same purpose and operation via the same pattern of racketeering activity. (Id ¶¶ 65-66.) As still another alternative theory of liability, plaintiffs allege that each of the corporate defendants constituted a separate enterprise whose affairs were each conducted and managed by the individual defendants through a pattern of racketeering activity. (Id ¶ 70.) The pattern of racketeering activity alleged in connection with each of these purported enterprises consists of extortion, bank fraud, identification fraud and robbery. (Id ¶¶ 63, 69, 70.) Plaintiffs also assert a claim for RICO conspiracy, alleging that Moussa, Guy and Baku conspired with Morad and Farzaneh in an effort to further or facilitate their criminal endeavor. (Id. ¶ 145.)
With respect to the purported extortion, plaintiffs allege that, between 2002 and 2005, they were both subjected to regular physical and emotional abuse by Baku, and that the conveyance of Gates from Rahim to Davis and the conveyance of Clinton from Davis to MBM-D, were effectuated by Baku's violence. (See id. ¶¶ 71-72, 74-79.) Plaintiffs further allege that Baku became a member of and began conspiring with the Yeroushalmi Clan in 2002, and that Baku received his first payment in April 2005 for his duties as "enforcer" and for delivery of the properties. (Id. ¶¶ 73, 82.) Plaintiffs allege that Morad, Moussa
With respect to the purported bank fraud, plaintiffs allege that, between May 2006 and March 2007, Morad and Farzaneh borrowed $1.3 million against the title to Clinton, $1.1375 million against the title to Gates, and $975,000 against the title to W127, without the knowledge or consent of Davis. (See id. ¶¶ 87-105.) Plaintiffs allege that defendants "knew or should have known that Davis would assert her claim" to each of the properties and that defendants' representations as to their ownership of the properties and the absence of competing claims amounted to fraud upon the bank in violation of 18 U.S.C. § 1344(2). (See id. ¶¶ 90-91, 97-98, 103-04.)
The final RICO predicate act that Plaintiffs allege is that defendants engaged in identification fraud in July 2012. Specifically, plaintiffs allege, on information and belief, that the defendants Moussa, Morad and Guy, along with the John Doe and Jane Doe defendants, appeared at the Clinton premises with a locksmith, whom they directed to change the locks to the front door of the building and of apartments 1 and 3.
Plaintiffs allege that the pattern of racketeering activity took place between 2003 and 2007, "with the most recent act occurring in 2007," and that the common purpose of the alleged predicate acts was to defraud Davis of money and property. (Id. ¶¶ 118-19.) Plaintiffs further allege that the defendants' participation in certain other, unrelated legal proceedings provide evidence of "the Yeroushalmi [C]lan's continuous, ongoing pattern of criminal behavior" and is "also highly indicative of a specific threat by the Yeroushalmi Clan to extend this criminal conduct indefinitely into the future." (Id. ¶ 130.)
Plaintiffs allege that the defendants' activities resulted in the loss, by Davis, of $3,412,500 in equity in the three properties, and that she is entitled to damages of three times that amount, plus attorneys' fees and costs. (See id. ¶¶ 132-43.) This is the only injury plaintiffs allege to have been caused by the defendants' RlCO-related activities.
The rest of the claims asserted arise under state law and include quiet title and replevin claims relating to all three properties and conversion relating to W127 and Clinton
This matter was commenced in August 2012 by way of order to show cause, by which plaintiffs sought to stay certain proceedings that were pending in New York State Court and to restrain defendants from taking any action with respect to the subject properties.
Defendants base their motion on both Rule 12(b)(1) and Rule 12(b)(6) of the Federal Rules of Civil Procedure, asserting both a lack of subject matter jurisdiction and that plaintiffs have failed to state a claim upon which relief can be granted.
Jurisdiction in the federal courts is limited to matters in which there is a federal question or diversity of citizenship.
Whether the motion to dismiss is made pursuant to Rule 12(b)(1) or 12(b)(6), the court construes the complaint in plaintiffs favor and accepts as true the allegations contained therein. See, e.g., Mazzocchi v. Windsor Owners Corp., 2013 WL 5295089, at *5 (S.D.N.Y., Sept. 17, 2013). However, even though the court may draw inferences in its favor, a plaintiff seeking to defeat a Rule 12(b)(1) motion must make an affirmative showing of jurisdiction, "and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." APWU v. Potter, 343 F.3d 619, 623 (2d Cir.2003). The plaintiff bears the burden of proving by a preponderance of the evidence that jurisdiction is proper. Makarova, 201 F.3d at 113. Moreover, while the court is bound by the pleadings and certain other limited evidence when ascertaining the sufficiency of the complaint with respect to a Rule 12(b)(6) motion, a motion under Rule 12(b)(1) permits examination of additional, extrinsic evidence. See Mazzocchi 2013 WL 5295089, at *5; see also Makarova, 201 F.3d at 113.
"Whether a federal court possesses federal-question subject matter jurisdiction and whether a plaintiff can state a claim for relief under a federal statute are two questions that are easily, and often, confused." Carlson v. Principal Financial Group, 320 F.3d 301, 305-06 (2d Cir. 2003). This is because "the very statute that creates the cause of action often confers jurisdiction as well — that is, the claim `arises under' the same federal law that gives the plaintiff a cause of action." Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir.1996). The "more-than-occasional difficulties in parsing a claim alleging federal question jurisdiction to determine whether it fails to state a claim or fails to meet jurisdictional requirements" has led to "a general practice of granting jurisdiction in most cases and dismissing for lack of subject matter jurisdiction only under narrow circumstances." Id. at 1188. Such "narrow circumstances" exist "where the alleged claim under the Constitution or federal statutes clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous." Bell v. Hood, 327 U.S. 678, 682-83, 66 S.Ct. 773, 90 L.Ed. 939 (1946). However, "if the plaintiff really makes a substantial claim under an act of Congress, there is jurisdiction whether the claim ultimately be held good or bad." The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 57 L.Ed. 716 (1913); accord TAGC Management, LLC v. Lehman, Lee & Xu, Ltd., 536 Fed.Appx. 45, 48 (2d Cir.2013) (summary order) (If, "`[o]n its face ... the complaint is drawn so as to seek recovery under federal law or the Constitution,'" there is "`sufficient basis for jurisdiction,' even though dismissal of the federal claims on the merits" may be appropriate) (ellipsis in original). Accordingly, when confronted with a motion to dismiss based on both 12(b)(1) and 12(b)(6), the court asks "only whether — on its face — the complaint is drawn so as to seek recovery under federal law or the
Here, there can be no dispute that the Complaint — on its face — is drawn to seek recovery under federal law. Although defendants argue that there is no federal claim asserted, the first two claims clearly set forth alleged violations of federal statutes, specifically, 18 U.S.C. § 1962(c) and (d). (See Compl. ¶¶ 160-147.) As discussed above, the plaintiffs have alleged that the individual and corporate defendants comprise an enterprise whose purpose is to deprive Davis of her alleged interest in the subject properties and that this purpose was accomplished through a pattern of activity consisting of robbery, bank fraud and identification fraud. (See pp. 353-55, supra; see also Compl. ¶¶ 60-143.) Plaintiffs have also alleged that defendants Moussa, Guy and Baku have conspired to participate in the conduct of these alleged enterprises and that they intended to further and facilitate the alleged "criminal endeavor." (Compl. ¶ 45.)
In this case, the factual allegations that purport to breathe life into plaintiffs' conclusory assertions are insufficient to rise to the level of plausibility required under Iqbal and Twombly.
A complaint will be dismissed pursuant to Rule 12(b)(6) if the factual allegations, when credited, fail to state a claim for relief that is "plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting and citing Twombly, 550 U.S. at 556-57, 127 S.Ct. 1955).
As previously noted, a court deciding a motion to dismiss construes the Complaint in plaintiffs favor and accepts as true the allegations contained within. See, e.g., Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. This "tenet," however, "is inapplicable to legal conclusions, and threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."
Claims may also be dismissed under Rule 12(b)(6) where it is clear from the complaint that the claims are untimely. See, e.g., Staehr v. Hartford Financial Services Group., Inc., 547 F.3d 406, 425 (2d Cir.2008) ("Dismissal under Fed. R.Civ.P. 12(b)(6) is appropriate when a defendant raises ... [a statutory bar] as an affirmative defense and it is clear from the face of the complaint, and matters of which the court may take judicial notice, that the plaintiffs claims are barred as a matter of law") (emphasis and alteration in original).
Where a complaint contains allegations of fraud, "a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). This requirement applies to allegations of fraudulent predicate acts under the RICO statute. First Capital Asset Management, Inc. v. Satinwood Inc., 385 F.3d 159, 178 (2d Cir.2004). To satisfy this heightened pleading standard, the allegations relating to the fraudulent acts must "(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent." Rombach v. Chang, 355 F.3d 164, 170 (2d Cir.2004) (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir.1993)). Furthermore, the plaintiff must also "allege facts that give rise to a strong inference of fraudulent intent." First Capital Asset Management, 385 F.3d at 179 (emphasis in original) (citation omitted); accord Cohen v. S.A.C. Trading Corp., 711 F.3d 353, 359 (2d Cir. 2013) (the plaintiff must also "plead those events which give rise to a strong inference that the defendant! ] had an intent to defraud, knowledge of the falsity, or a reckless disregard for the truth") (alteration in original) (citation omitted).
Section 1962(c), the substantive RICO statute, provides that "[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in... interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt." 18 U.S.C. § 1962(c). In order to state a plausible claim under 18 U.S.C. § 1962(c):
Gross v. Waywell, 628 F.Supp.2d 475, 485 (S.D.N.Y.2009) (internal citations omitted).
Defendants argue not only that the allegations here are insufficient to give rise to a plausible claim for violation of § 1962(c), but also that the purported RICO claim fails on statute of limitations grounds. Review of the Complaint makes clear that the plaintiffs have not provided sufficient allegations relating to, inter alia, relatedness and continuity, nor as to each defendant's direction or control over the alleged enterprise, nor have they alleged with sufficient particularity the events giving rise to the claims of bank fraud.
"The statute of limitations for a civil RICO claim is four years." Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143, 156, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987). "The limitations period begins to run when the plaintiff discovers or should have discovered the RICO injury." In re Merrill Lynch Ltd. Partnerships Litigation, 154 F.3d 56, 58 (2d Cir.1998) (per curiam). The present action was initiated in August 2012, and accordingly, if plaintiffs became aware of the alleged injury prior to August 2008, "their RICO claims are time-barred unless an exception to the limitations period applies." Id. at 59. One such exception is the "separate accrual" rule, whereby "a new claim accrues and the four-year limitation period begins anew each time a plaintiff discovers or should have discovered a new and independent injury." Id. (emphasis added).
Here, the injury plaintiffs allege to have suffered as a result of defendants' racketeering is the deprivation of Davis's equity in the three subject properties, totaling $3,412,500. (Compl. 11143.
A review of the complaints filed by Davis in 2007, however, reveals that she was aware, at that time, of the alleged fraud perpetrated against her by the defendants. Plaintiffs refer to these complaints in the Amended Complaint (see
In Davis v. M & M Developer, LLC, Moussa Yeroushalmi Morad Yeroushalmi Farzaneh Yeroushalmi and MBM Development, LLC, Index No. 25292/2007, filed July 9, 2007 ("2007 Action # 1"), Davis alleges that she entered into an agreement with M & M, Morad and Moussa, but that she did not know at the time that Moussa "was a professional con artist" or that "Defendants were not real estate developers and that they never intended to develop" Gates, or that "[t]he real estate development idea was a cleverly designed scheme to defraud, worked out by Defendants to separate Plaintiff from her property." (Morad Yeroushalmi Aff. Ex. 7, at ¶¶ 11-13,
Although plaintiffs offer no arguments against dismissal on this basis in the papers submitted in connection with the motion to dismiss, they do assert, in the brief filed in support of their motion for preliminary injunction, that the defendants' efforts to change the locks and evict plaintiffs in July 2012 amounted to another predicate act under RICO, which "trespassed upon and injured [plaintiffs'] possessory interests in 139 Clinton Ave., Brooklyn, NY." (PI Mem. in Supp. 5-6.
Accordingly, the substantive RICO claim has not been timely brought and is dismissed.
Plaintiffs also assert a claim, pursuant to 18 U.S.C. § 1962(d), of conspiracy to violate the RICO statute. In support of this claim, they allege that "Moussa, Guy and Baku conspired with Morad and Farzaneh, to conduct or participate, directly or indirectly, in the conduct of the affairs of the enterprises through a pattern of herein described racketeering activity," and that "Moussa, Guy and Baku intended to further an endeavor of Morad and Farzaneh which, if completed, would satisfy all of the elements of a substantive RICO criminal offense ... and adopted the goal of furthering or facilitating the criminal endeavor." (Compl. ¶ 145.) They further allege that "Davis was injured by Moussa, Guy and Baku's overt acts that are acts of racketeering or otherwise unlawful under the RICO statute," and that the alleged loss of Davis's equity in the properties is the "direct and proximate result of ... the activities of Moussa, Guy and Baku, and their conduct in violation of 18 U.S.C. § 1962(d)." (Id. ¶¶ 146-47.) Plaintiffs offer no other factual allegations in support of these assertions, which are wholly conclusory and insufficient to allege a plausible RICO conspiracy claim. See, e.g., Hoyle v. Dimond, 612 F.Supp.2d 225, 233 (W.D.N.Y.2009) ("In order to state a claim under section 1962(d), the complaint should state with specificity what the agreement was, who entered into the agreement, when the agreement commenced, and what actions were taken in furtherance of it. Conclusory allegations concerning the conspiracy are insufficient") (internal quotation marks and citation omitted). The conspiracy allegations here, as set forth above, provide no such specifics. It is clear, however, that plaintiffs rely on the same factual allegations, occurring on the same timeline, as for their substantive RICO claim. Since the statute of limitations for a RICO conspiracy claim is also four years, see World Wrestling Entertainment, Inc. v. Jakks Pacific, Inc., 530 F.Supp.2d 486, 530 (S.D.N.Y.2007), aff'd, 328 Fed.Appx. 695 (2d Cir.2009) (summary order), the conspiracy claim is dismissed as time-barred as well.
There is no dispute that, of the 18 claims asserted in the amended complaint, only the two civil RICO claims arise under federal law. Although plaintiffs contend that the court may exercise supplemental jurisdiction over the state law claims because they "involve the same parties, properties, transactions and occurrences" as the RICO claims, they also appear to recognize that dismissal of the RICO claims is likely to bring dismissal of the state law claims, stating that "Defendants correctly assert only that supplemental jurisdiction should not be had if original jurisdiction fails." (Mem. in Opp.
Indeed, 28 U.S.C. § 1367(a) provides, "in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related ... that they form part of the same case or controversy under Article III
In light of my conclusions set forth above, the plaintiffs' motion for a preliminary injunction is denied as moot.
Accordingly, defendants' motion to dismiss the Amended Complaint is GRANED. Plaintiffs' RICO claims (set forth in the Amended Complaint as the First and Second Causes of Action) are dismissed.
The remainder of plaintiffs' claims — the state law claims — are dismissed without prejudice.
Plaintiffs' motion for a preliminary injunction is DENIED as moot.
SO ORDERED.