MARTIN GLENN, UNITED STATES BANKRUPTCY JUDGE
Before the Court is The ResCap Borrower Claims Trust's Objection to Proofs of Claim Filed by Caren Wilson (Claim Nos. 4754 and 7181) (the "Objection," ECF Doc. # 6268). The ResCap Borrower Claims Trust (the "Trust") seeks to disallow and expunge Claim Nos. 4754 and
On February 20, 2014, the Court held a hearing on the Objection. The Court, on the record and by Order, denied Nora's motion to strike or seal documents. (See ECF Doc. # 6507.) The Court reserved decision on the Objection. For the reasons that follow, the Court
On March 21, 2013, the Court entered an order approving procedures for the filing of objections to proofs of claim filed in these Chapter 11 Cases (the "Procedures Order," ECF Doc. # 3294), applicable to objections to claims filed by current or former borrowers (collectively, the "Borrower Claims," and the procedures relating thereto, the "Borrower Claim Procedures"). The Procedures Order includes specific protections for borrowers and sets forth a procedure the Debtors must follow before objecting to certain categories of Borrower Claims. Specifically, before objecting to a borrower's claim, the Debtors must furnish the borrower with a letter requesting additional documentation in support of the purported claim (the "Request Letter"). (Procedures Order at 4.)
The Debtors sent a Request Letter to Wilson on June 21, 2013. (Delehey Decl. ¶ 12 n.5, Ex. F.) Wilson did not respond. (Id. ¶ 12 n.5.) Thereafter, the Debtors objected to Claim No. 4754 in the Debtors' Omnibus Objection to Claims (No Liability Borrower Claims — Books and Records) (the "Thirtieth Omnibus Objection," ECF Doc. # 4887). Three weeks after the Debtors filed the Thirtieth Omnibus Objection, Wilson, through her counsel, filed an "amendment" to Claim No. 4754 by submitting Claim No. 7181. At a hearing on October 9, 2013, the Debtors withdrew the Thirtieth Omnibus Objection as it related to Claim No. 4754 and the Court approved an adjournment of the matter to allow the Debtors to address both of Wilson's Claims together. (Oct. 9, 2013 Tr. 145:8-9.)
On December 11, 2013, the Court entered an Order Confirming Second Amended Joint Chapter 11 Plan Proposed by Residential Capital, LLC, et al. and The Official Committee of Unsecured Creditors (the "Confirmed Plan," ECF Doc. # 6065). The Confirmed Plan established the Trust, (id.), and became effective
On December 13, 2006, Wilson obtained a home mortgage loan (the "Loan"), evidenced by a note (the "Note") in favor of Debtor Homecomings Financial, LLC ("Homecomings"). (Delehey Decl. ¶ 4.) The Note was secured by a deed of trust ("DOT") on property located at 211 W. Chandler Street, Culpeper, Virginia 22701 (the "Property") and was endorsed from Homecomings to Debtor Residential Funding Company, LLC ("RFC"), and then from RFC to Deutsche Bank Trust Company America as Trustee. (Id. ¶ 4, n.2.) The Property was subject to four foreclosure referrals
Before the foreclosure sale, Wilson filed two lawsuits in Virginia state court related to the Property. First, Wilson filed an emergency motion in the Culpeper County Circuit Court
While the First State Action was pending, Wilson filed a second complaint (the "Second Wilson Complaint," Delehey Decl. Ex. C) against the eight identified defendants (the "Defendants")
The Defendants removed the Second State Action to the United States District Court for the Western District of Virginia, Charlottesville Division (the "District Court") on federal question and supplemental jurisdictional grounds (the "Federal Action").
The First State Action remained pending after the Federal Action was dismissed. After finding that Wilson's original complaint in the First State Action did not comply with pleading standards, Virginia State Judge John G. Berry issued a letter to the parties on November 8, 2011
Specifically, the Amended Wilson Complaint alleged that, after Wilson investigated the securitization process of her mortgage, Wilson "was not fully informed of the facts surrounding what she thought to be a loan provided to her from HOMECOMINGS FINANCIAL LLC, AKA, GMAC BANK." (Amended Wilson Complaint at 2-3.) Wilson claimed to have investigated the "Defendants['] history," concluding that "it was clear that they were at the top of the list which named several banks that are currently under investigation in numerous jurisdictions with regard to mortgage and foreclosure fraud." (Id. at 3.) Due to this investigation, Wilson argued there may be clouded title to her Property. (Id.) Wilson placed a great deal of weight on the Forensic Report, from which Wilson concluded that "she ... has been a victim of deceptive practices and that there is a preponderance of evidence that cloud on her title exists." (Id. at 3.) Consequently, she requested that the State Court require the Defendants to present to the court "any original evidence of indebtedness (i.e. Promissory Note) with [Wilson's] wet ink autograph upon it for forensic examination" along with tax histories and live witness testimony. (Id. at 4 (emphasis in original).) Wilson asserted that under the law of the case doctrine, the "instrument" (presumably, the Note) should be cancelled.
On December 16, 2011, the Debtors filed a motion to dismiss (the "Motion to Dismiss") the Amended Wilson Complaint in the First State Action on the grounds that it was barred by res judicata by virtue of the Dismissal Order. (Delehey Decl. ¶ 10.) Before ruling on the Motion to Dismiss, the State Court nonsuited the First State Action on February 28, 2012, as a dismissal without prejudice at Wilson's request. (Id. Ex. E.)
According to KCC's records, Claim No. 4754 asserts a $5,050,000 million secured claim against ResCap
Wilson filed Claim No. 4754 pro se. In Box 2 on the face of the proof of claim, Wilson asserted as the basis for the claim: "My note was sold as unregistered and unregulated to an investor as a bond." Wilson attached: (1) a copy of her birth certificate, (2) the Forensic Report by Wilson's alleged expert that was attached to the Amended Wilson Complaint and the Second Wilson Complaint, (3) the DOT, and (4) the Note.
Following the Debtors' objection to Claim No. 4754 in the Thirtieth Omnibus Objection, and nearly a year after she first filed the claim (as well as 311 days after the Bar Date passed), Wilson filed Claim No. 7181 by counsel, apparently to "amend" her original claim. Box 2 on the face of the "amended" claim states that the claim seeks "disgorgement of profits from sale of note, RICO, fraud, etc. Does not include post-petition civil rights claims v. Ocwen and state actors for which Ally Financial Inc. may be liable." Nothing in the "amended" claim describes the factual basis for these alleged claims and no documents are attached to Clam No. 7181. Furthermore, Claim No. 7181 does not discuss how, if at all, it relates to Claim No. 4754.
The Trust initially objected to the original Wilson claim as part of the Thirtieth Omnibus Objection. But after Wilson filed Claim No. 7181, she argued that the Thirtieth Omnibus Objection was moot because Claim No. 7181 amended the original claim. (See Response to Objection to Claim #4754 in the Record of Kurtzman Carson Consultants, LLC (KCC LLC) of Caren Wilson Amended as Claim 18 in These Proceedings ("Original Wilson Response," ECF Doc. # 5222) ¶ 24.) Consequently, the Debtors withdrew their pending objection and filed a new objection addressing both of the Wilson Claims. (See Debtors' Omnibus Reply in Support of Debtors' Thirtieth Omnibus Objection to Claims (No Liability Borrower Claims — Books and Records), ECF Doc. # 5297.)
The Trust asserts that the allegations in the First State Action and the Federal Action arise from the same underlying nucleus of facts. (Id. ¶ 20.) Since the District Court dismissed the Federal Action pursuant to Federal Rule of Civil Procedure 41(b), which Wilson did not appeal, that action was adjudicated "on the merits."
To the extent that the "amended" Claim No. 7181 is not based on the same underlying nucleus of facts as the original Claim No. 4754, the Trust argues that it must be disallowed as late-filed, and to the extent it does relate to the same underlying nucleus of facts, it is barred by res judicata for the same reasons Claim No. 4754 is barred.
Finally, the Trust argues that the Wilson Claims fail to appropriately plead facts to support a RICO claim under Federal Rule of Civil Procedure 8(a) or a fraud claim under Federal Rule of Civil Procedure 9(b). The Trust asserts that Claim No. 7181 fails to state any facts and that Claim No. 4745 fails to provide a "short and plain statement of facts" giving rise to relief under RICO. The Trust also argues that Wilson fails to allege any specific facts necessary to plead a fraud claim under Federal Rule of Civil Procedure 9(b).
Wilson's Response does not address the Trust's arguments why the Claims should be disallowed and expunged. Instead, Wilson argues that Claim No. 4754 "has been amended and replaced" by Claim No. 7181 and is "moot." (Response ¶ 1.) The Response then argues what appear to be the merits of the First State Action and Federal Action, asserting that the Debtors (1) attempted to "illegally foreclose on her home through forged and perjured documents," and (2) took profits "by the theft of her identity consisting of her mortgage loan documents to be sold and re-sold in the `securitization' process without her knowledge and consent." (Id. ¶ 2.) Wilson alleges that when Homecomings originated her Loan, it was "not the real party in interest" but was instead acting as a "`straw man' ... on behalf of the real party in interest, a securitization trust, which had already been funded by investors." (Id. ¶ 21.) Consequently, the loan closing was not actually a loan closing but a "concealed securities transaction intended to deceive Ms. Wilson into believing that Homecomings was a mortgage lender, when, in fact, Homecomings was purchasing the securities which had already been sold" to the securitization trust. (Id. ¶ 22.) Eventually, Wilson's Note was indorsed by Judy Faber, whose signature line indicated she was a Vice President of RFC. Wilson contends that Judy Faber "never had any duties beyond that of a `Records Services Manager'" and attaches as an exhibit a deposition transcript of Faber from August 14, 2009 in another matter. (Id. ¶ 23, Ex. B.) Since Faber later testified in yet another case (a copy of the transcript is provided at id. Ex. C) that she was a Vice President at RFC, Wilson argues, "[a] reasonable inference arises that ... Residential Funding Company, LLC and GMAC Mortgage, LLC decided that she should identify herself in the fictitious capacity of a Vice President because her position as `Director of Records Management' did not conform to the capacity in which her signature had appeared." (Id. ¶ 25.)
Wilson also asserts that she has filed a post-petition civil rights claim related to "state action in the illegal confiscation of her home by foreclosure proceedings founded on forged, perjured and fictitious documents as well as for illegal eviction... after the date of the filing of the Debtors' bankruptcy proceedings and which was ultimately completed after the date of the sale of the Debtors' servicing rights to Ocwen." (Id.) According to Wilson, her post-petition state and federal law claims include (but are not limited to): violations of her First, Fourth, Fifth, and Fourteenth Amendment rights; RICO violations; state claims for "abuse of legal process," conversion of her Property, and
Wilson makes a variety of arguments concerning the Debtors' original Thirtieth Omnibus Objection. First, Wilson contends that omnibus objections based on the grounds that the Debtors' books and records show no liability are unlawful because they are not listed in Bankruptcy Rule 3007(e). (Id. ¶ 12.) Second, she claims that she did not receive a copy of the Debtors' original Thirtieth Omnibus Objection but was instead instructed to "serve herself" by looking up the objection on ECF. (Response ¶¶ 13-14.) Wilson therefore argues that the Debtors violated Bankruptcy Rule 3007(a), which provides that "[a] copy of the objection with notice of the hearing thereon shall be mailed or otherwise delivered to the claimant ... at least 30 days prior to the hearing." FED. R. BANKR.P. 3007(a). Third, Wilson argues that the notice regarding the hearing on the Debtors' Thirtieth Omnibus Objection, which indicates that it was mailed to Wilson, "is a fraudulent document transmitted by mail with the intent to defraud them [apparently borrowers whose claims were objected to in the Thirtieth Omnibus Objection, but it is unclear] into believing there are grounds to disallow their Proof of Claims [sic]." (Response ¶ 18.) According to Wilson, this constituted wire fraud.
Wilson further alleges that she was never served with either the "Roseboro Notice" or the Dismissal Order in the Federal Action. (Id. ¶¶ 42-43.) According to Wilson, the Dismissal Order was only placed electronically on the Court's docket and was not mailed to her. (Id. ¶ 43.) Wilson claims that she did not know how the Federal Action had been dismissed until her counsel in these chapter 11 cases inspected the District Court's docket. (Id.) Wilson contends that the Dismissal Order was therefore fraudulently obtained by the Debtors.
Finally, the Response attaches as Exhibit C the "Confidential Declaration of Attorney Wendy Alison Nora," "believed to be confidential as pertaining to a confidential settlement agreement and is filed under seal." (Response ¶ 33.) The declaration is apparently meant to corroborate a claim in the Response that the "Debtors have not returned a single
In the Reply, the Trust reiterates its bases for objecting to Wilson's Claims. The Trust correctly notes that Wilson did not respond to any of the Trust's arguments advanced in the Objection. The Trust further argues that the Wilson Claims are unsupported by competent evidence, asserting that after the Trust successfully shifted the burden to Wilson through the Objection, Wilson failed to carry her burden to establish the enforceability of the Claims by a preponderance of the evidence. For example, Wilson failed
(Id. (emphasis in original).) The Trust contends that the Dismissal Order itself required that the Clerk of the Court in Virginia serve the Dismissal Order on Wilson. (Id. ¶ 10.) Furthermore, the Trust argues that whether Wilson received notice of the Dismissal Order is irrelevant because, under federal law, the District Court's judgment in the Federal Action is final for res judicata purposes even if it had been appealed. (Id. ¶¶ 10-11.)
Finally, the Trust provides an affidavit of service indicating that Wilson was properly served with notice and a copy of the Thirtieth Omnibus Objection. (Id. ¶ 15.) Pursuant to the Procedures Order, the Debtors were authorized to serve notice of an omnibus objection without a copy of the entire objection on the affected claimant. (Procedures Order at 7.) Moreover, the Trust argues that the Thirtieth Omnibus Objection is irrelevant because the Debtors withdrew the Thirtieth Omnibus Objection as it related to the Original Wilson Claim. (ECF Doc. # 5297.) And the Trust also argues that it served Wilson and her counsel with the notice of the Thirtieth Omnibus Objection as well as the objection itself in its entirety, as indicated in the Affidavit of Service attached to the Reply at Exhibit 2. (Id. at Ex. 2.)
At the February 20, 2014 hearing, the Court denied Nora's motions to seal various documents, to strike the Objection, and to disqualify the Trust's counsel, as well as Wilson's request for an adjournment to allow her time to vacate the Dismissal Order. (Feb. 20, 2014 Tr. 13:13-14; 24:23-24; 31:2-4.) Wilson's attorneys claimed that she had not had an opportunity to object to removal, had not received proper Roseboro Notice related to the Motion to Dismiss, had not received notice of the Dismissal Order, and was unaware that the Federal Action had been dismissed. (Id. at 31:15-16; 32:14, 16; 33:24; 34:1, 3-7.) Wilson did know that the action had been removed to federal court, but she contends that she did not object to removal within the thirty day time frame because she believed there would be a hearing. (Id. 34:13-15.) Wilson's counsel indicated to the Court that they would seek to have the Western District of Virginia's Dismissal Order vacated but agreed that, if the Dismissal Order stands, Wilson's Claims are barred by res judicata. (Id. 38:7-11.)
The Court took the Objection under submission.
Federal Rule of Bankruptcy Procedure 3007 permits a debtor to make omnibus objections to disallow up to 100 claims per motion. Parties making omnibus objections may object to proofs of claim on the following grounds:
FED. R. BANKR.P. 3007(d). Pursuant to the Procedures Order, the Debtors may object to proofs of claim on the following additional grounds:
(Procedures Order at 2-3.)
Rule 3007(e) requires omnibus objections to conform to procedural requirements. Specifically, an omnibus objection must:
FED. R. BANKR.P. 3007(e).
Correctly filed proof of claims "constitute prima facie evidence of the validity and amount of the claim.... To overcome this prima facie evidence, an objecting party must come forth with evidence which, if believed, would refute at least one of the allegations essential to the claim." Sherman v. Novak (In re Reilly), 245 B.R. 768, 773 (2d Cir. BAP 2000). By producing "evidence equal in force to the prima facie case," an objector can negate a claim's presumptive legal validity, thereby shifting the burden back to the claimant to "prove by a preponderance of the evidence that under applicable law the claim should be allowed." Creamer v. Motors Liquidation Co. GUC Trust (In re Motors Liquidation Co.), No. 12 Civ. 6074(RJS), 2013 WL 5549643, at *3, 2013 U.S. Dist. LEXIS 143957, at *12-13 (S.D.N.Y. Sept. 26, 2013) (internal quotation marks omitted). If the objector does not "introduce[] evidence as to the invalidity of the claim or the excessiveness of its amount, the claimant need offer no further proof of the merits of the claim." 4-502 COLLIER ON BANKRUPTCY ¶ 502.02 (16th rev. ed.2013).
Bankruptcy Code section 502(b)(1) provides that claims may be disallowed if "unenforceable against the debtor and property of the debtor, under any agreement or applicable law." To determine whether a claim is allowable by law, bankruptcy courts look to "applicable nonbankruptcy law." In re W.R. Grace & Co., 346 B.R. 672, 674 (Bankr.D.Del.2006).
"The preclusive effect of a judgment is defined by claim preclusion and issue preclusion, which are collectively referred to as `res judicata.'" Taylor v. Sturgell, 553 U.S. 880, 892, 128 S.Ct. 2161, 171 L.Ed.2d 155 (2008). The doctrine of res judicata precludes the same parties from litigating claims in a subsequent suit based on the same cause of action if there has been a final judgment on those claims. Id. When federal jurisdiction in a prior case is based on federal question jurisdiction, with the court exercising supplemental — not diversity — jurisdiction over the plaintiff's remaining claims, federal preclusion doctrine applies. See U.S. v. Ringley, 750 F.Supp. 750, 755 (W.D.Va.1990) ("`Federal law governs the question whether a prior federal court judgment based on federal question jurisdiction is res judicata in a [subsequent] case also brought under federal question jurisdiction.'") (quoting 21 Fed. Proc., L.Ed. § 51:211 (1985)); Chudacoff v. Univ. Med. Ctr., 525 Fed.Appx. 530, 531 (9th Cir.2013) (applying federal common law rules of res judicata to a judgment rendered by a federal court exercising federal-question jurisdiction and supplemental jurisdiction over state law claims); Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency, 322 F.3d 1064, 1077 (9th Cir.2003) (federal rule of res judicata applied when court in federal question case exercised supplemental jurisdiction over some state law claims); In re Zaharescu, Case Nos. CV 12-9767-CAS, CV 12-9773-CAS, 2013 WL 3762285 (C.D.Ca. Jul. 11, 2013) (same).
The Federal Action was removed from state court to federal district court in the Western District of Virginia based on federal question jurisdiction over the federal claims and supplemental jurisdiction over the state law claims. See 28 U.S.C. § 1367(a). As further explained below, this Court applies federal res judicata law to the federal claims for which jurisdiction was based on federal question jurisdiction and also to the state law claims on which the federal court exercised supplemental jurisdiction.
Res judicata "applies to preclude later litigation if the earlier decision was (1) a final judgment on the merits, (2) by a court of competent jurisdiction, (3) in a case involving the same parties or their privies, and (4) involving the same [claim, or] cause of action." In re Teltronics Servs., Inc., 762 F.2d 185, 190 (2d Cir. 1985). The Trust asserts that the causes of action asserted in Claim No. 4754 are barred by res judicata because: (1) they were decided in the Federal Action; (2) by the District Court; (3) are between the same parties as in the Federal Action, or their privies; and (4) are based on the same cause of action and the same nucleus of operative facts as in the dismissed Federal Action and based on legal theories that might have been raised in the Federal Action.
There is no question that the parties are the same. Both Wilson and the Debtors identified in Wilson's documentation attached to Claim No. 4754 were parties to the prior Federal Action. Additionally, Wilson has not pointed to any reason that would indicate the District Court was not a court of "competent jurisdiction" to render a judgment. Thus, the Court need only analyze the first and fourth prongs.
The Dismissal Order constitutes a final judgment on the merits. Under Rule 41(b) of the Federal Rules of Civil Procedure, plaintiffs have an obligation to diligently prosecute their case. See Lyell Theatre Corp. v. Loews Corp., 682 F.2d 37, 43 (2d Cir.1982); see also Plaut v. Spendthrift Farm, 514 U.S. 211, 228, 115 S.Ct. 1447, 131 L.Ed.2d 328 (1995) ("The rules of finality, both statutory and judge made, treat a dismissal ... for failure to prosecute[] as a judgment on the merits.") (citing FED. R. CIV. P. 41(b)); Lucien v. Breweur, 9 F.3d 26, 29 (7th Cir.1993). "[A] dismissal for failure to prosecute an action `operates as an adjudication upon the merits,' unless the court specifies otherwise." La Societe Anonyme des Parfums le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1275 (2d Cir.1974) (citing FED.R.CIV.P. 41).
The District Court's Dismissal Order granting the Defendants' Motion to Dismiss stated that the Federal Action was dismissed under Rule 41(b) for "failure to prosecute this action or otherwise respond to court orders." (Dismissal Order at 1.) The order did not specify that the dismissal did not operate as an adjudication on the merits. Because a dismissal for failure to prosecute under Rule 41 is an "adjudication on the merits" by its own terms, the Dismissal Order constitutes a final judgment for res judicata purposes. Moreover, the Dismissal Order did not provide that any claims were dismissed without prejudice and, therefore, the Court interprets the Dismissal Order as a dismissal of all of Wilson's Federal Action claims with prejudice.
Res judicata applies "not only as to what was pleaded, but also as to what could have been pleaded." Teltronics, 762 F.2d at 193. Therefore, res judicata bars cases that arise from the same "operative nucleus of fact." Olmstead v. Amoco Oil Co., 725 F.2d 627, 632 (11th Cir.1984). "New legal theories do not amount to a new cause of action so as to defeat the application of the principle of res judicata." Teltronics, 762 F.2d at 193. "To ascertain whether two actions spring from the same `transaction' or `claim,' we look to whether the underlying facts are `related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations....'" Interoceanica Corp. v. Sound Pilots, Inc., 107 F.3d 86, 90 (2d Cir.1997)
Where material factual allegations overlap, "the facts essential to the barred second suit need not be the same as the facts that were necessary to the first suit. It is instead enough that `the facts essential to the second were [already] present in the first.'" Waldman v. Vill. of Kiryas Joel, 207 F.3d 105, 110-11 (2d Cir. 2000) (emphasis in original) (citations omitted). "[A] plaintiff cannot avoid the effects of res judicata by `splitting' his claim into various suits, based on different legal theories (with different evidence `necessary' to each suit)." Id. at 110 (citations omitted). The essential question is whether the overlapping facts sufficiently relate to each other to constitute a single transaction or series of transactions. Id. at 111.
Wilson's Claim No. 4754 is based upon the same nucleus of facts that were or could have been alleged in the Federal Action, and the claim relies upon the same Forensic Report attached to the Second Wilson Complaint. Consequently, the fourth and final prong of the federal res judicata analysis is satisfied, and Claim No. 4754 is barred by res judicata.
Though Wilson contends that she did not receive her mail — either because it was not delivered or because she was out of town — that argument does not alter the Court's decision. This Court does not review the decisions of the Western District of Virginia. The Court has reviewed the docket for the Federal Action; there is no indication that the Roseboro Notice or the Dismissal Order were undelivered or returned by mail. Instead, the entries on the docket indicate that the notices were "mailed." This Court does not determine the sufficiency of any notice — or alleged lack thereof — sent to Wilson by the District Court. In any event, Wilson did not appeal the District Court's dismissal and the time to do so has expired. Whether Wilson will file a motion in the Western District of Virginia to have the Dismissal Order vacated for lack of notice is another matter and, should the District Court grant such a motion, Wilson could move to have her Claims reinstated under Bankruptcy Code section 502(j).
Federal Rule of Bankruptcy Procedure 3003(c)(3) directs bankruptcy courts "to establish a bar date beyond which proofs of claim are disallowed in a chapter 11 case." In re Enron Creditors Recovery Corp., 370 B.R. 90, 94 (Bankr. S.D.N.Y.2007). The bar date "is critically important to the administration of a successful chapter 11 case for it is intended to be a mechanism providing the debtor and its creditors with finality." Id. (internal quotations omitted). Where the bar date has passed and a creditor seeks to file an amended proof of claim, "the decision to allow the amendment of the claim is committed to the discretion of the bankruptcy judge." In re Asia Global Crossing, Ltd., 324 B.R. 503, 507 (Bankr.S.D.N.Y.2005) (internal citations omitted).
In the Second Circuit, while amendment to a claim is
Integrated Res., Inc. v. Ameritrust Co., N.A. (In re Integrated Res., Inc.), 157 B.R. 66, 70 (S.D.N.Y.1993) (citations omitted).
If this "relation back" inquiry is satisfied, courts then examine whether it would be equitable to allow the amendment. Id.; Integrated Res., 157 B.R. at 70. Courts consider the following five equitable factors in determining whether to allow an amendment:
Integrated Res., 157 B.R. at 70 (citation omitted); Enron, 419 F.3d at 133. "The critical consideration is whether the opposing party will be unduly prejudiced by the amendment." Integrated Res., 157 B.R. at 70 (citation omitted).
Wilson argues that Claim No. 7181 amends and supersedes Claim No. 4754. But to the extent Claim No. 7181 is not based on the same underlying nucleus of facts as the original claim, it must be disallowed as having been late-filed because it does not "relate back" to Claim No. 4754. To the extent it does relate back to the original claim (which is unclear because Claim No. 7181 merely contains a one-sentence statement that the claim relates to "disgorgement of profits from sale of note, RICO, fraud, etc."), it is barred by res judicata as discussed above.
In addition to being barred by res judicata, Wilson's Claims are deficiently pled. Specifically, Wilson fails to allege any facts or submit any documents that would support a RICO claim. To establish a claim under RICO, a plaintiff must allege (1) a person who engages in (2) a pattern of racketeering activity
Moss v. Morgan Stanley Inc., 719 F.2d 5, 17 (2d Cir.1983) (emphasis in original) (citations omitted); see also Zavalidroga v. Cote, 395 Fed.Appx. 737, 740-41 (2d Cir. 2010) (applying Moss).
Even if a plaintiff can demonstrate a substantive RICO violation, the plaintiff must also show "injury to the plaintiff's business or property" and "that such injury was by reason of the substantive RICO violation." Catholic Health Care W. v. U.S. Foodserv. (In re U.S. FoodServ. Pricing Litig.), 729 F.3d 108, 117 (2d Cir.2013). The "enterprise" complained of in a civil RICO action must be "distinct from those persons or entities who stand accused of conducting that racketeering activity." Allstate Ins. Co. v. Rozenberg, 590 F.Supp.2d 384, 390 (E.D.N.Y.2008). Additionally, courts have found that failure to file a RICO case statement may warrant dismissal of RICO claims. See Barrus v. Dick's Sporting Goods, Inc., 732 F.Supp.2d 243, 259 (W.D.N.Y.2010); Pierce v. Ritter, Chusid, Bivonia & Cohen, 133 F.Supp.2d 1344, 1346 (S.D.Fla.2001); Walker v. Stanton, No. EDCV 08-24, 2008 WL 4401388, at *5-6 (C.D.Cal. Sept. 2, 2008); see also Lui Ciro, Inc. v. Ciro, Inc., 895 F.Supp. 1365, 1377-78 (D.Haw.1995) (analyzing dismissal of RICO claim for failure to file RICO case statement under Rule 41(b)).
Here, Claim No. 7181 (the only claim purporting to raise a RICO claim) provides no allegations necessary to support a civil RICO claim and does not present any evidence of a pattern of racketeering activity, definition of any enterprise, or a RICO case statement. Indeed, Claim No. 7181 fails to state any facts beyond a reference to the original documentation, none of which supports a RICO claim. Claim No. 7181, even if not barred by res judicata or as a late-filed claim, fails to support a RICO claim.
Additionally, Rule 9(b) imposes heightened pleading standards for fraud-based claims. Pursuant to Rule 9(b), "a party must state with particularity the circumstances constituting fraud or mistake" if making allegations of fraud. FED. R.CIV.P. 9(b). "In order to meet the `particularity' requirement of Rule 9(b), a plaintiff [must] allege the time, place, and content of the alleged misrepresentations on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud." Ind. State Dist. Council v. Omnicare, Inc., 719 F.3d 498, 503 (6th Cir.2013) (internal quotation marks omitted). "The purpose of Rule 9(b) is to provide fair notice to the defendant so as to allow him to prepare an informed pleading responsive to the specific allegations of fraud." Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 176 F.3d 315, 322 (6th Cir.1999). Wilson fails to state her fraud allegations against the Debtors with the particularity required to plead a fraud claim under Rule 9(b). Simply alleging fraud without detail, as Wilson has done here, does not suffice.
For the foregoing reasons, the Court
Wilson's two lawyers in this Court have argued that they (or still other counsel) plan to challenge the Dismissal Order in the Virginia District Court. If the challenge to the Dismissal Order at this late date is successful, Wilson may move to reinstate those claims dismissed under this Order as barred by res judicata. See 11 U.S.C. § 502(j) ("A claim that has been allowed or disallowed may be reconsidered for cause...."). To the extent necessary, the Court
FED. R. CIV. P. 41(b).
MS. NORA: Yes, Your Honor.
(Feb. 20, 2014 Tr. 38:7-11.)
