UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
February 27, 1986
PAUL C. SOPER and DAVID N. DAOUD, Plaintiffs,
SIMMONS INTERNATIONAL, LTD., THONET INDUSTRIES, INC., and XENEL INDUSTRIES LTD., all Corporations, and JAMES A. RIDDERING, JOHN E. RIEDERER, DENNIS P. FITZGERALD, MANFRED J. SOBEK, HISHAM A. ALIREZA, ABDULLAH A. ALIREZA, Individually, Defendants. PAUL C. SOPER and DAVID N. DAOUD, Plaintiffs, vs. SIMMONS CO., SIMMONS U.S.A. CORP., and SIMMONS UNIVERSAL CORP., Defendants.
The opinion of the court was delivered by: SAND
Plaintiffs, Paul Soper and David Daoud, filed their complaints in the Northern District of New York in 1983 alleging common law conspiracy to defraud and violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 ("RICO"). In a Memorandum Decision and Order of December 21, 1983, the Honorable Howard G. Munson, Chief Judge, (1) denied defendants' motion to dismiss plaintiffs' RICO claim for failure to state a claim upon which relief can be granted; (2) denied "without prejudice" all other motions including defendants' motion to dismiss plaintiffs' first cause of action (id. at n.1); and (3) transferred the case to this Court.
On February 13, 1984, Judge Munson denied a motion brought by defendants Xenel Industries, Ltd., Hisham Alireza and Abdullah Alireza (the "Xenel defendants") for reconsideration of their motion for dismissal of the RICO claims. In an Opinion dated May 30, 1984, this Court granted defendants' motion for summary judgment pursuant to F.R.Civ.P. 56 as to plaintiffs' first claim and denied summary judgment as to plaintiffs' second claim, with leave to renew this motion in twenty (20) days. The renewal of defendants' motion was to be limited solely to the question of whether plaintiffs had adequately alleged violation of the mail and wire fraud statutes and injury resulting therefrom.
On August 22, 1984, the case was placed on this Court's suspense docket pending completion of appellate review in a trilogy of Second Circuit cases: Sedima, S.P.L.R. v. Imrex Co., 741 F.2d 482 (2d Cir. 1984), rev'd, 473 U.S. 479, 105 S. Ct. 3275, 87 L. Ed. 2d 346 (1985); Bankers Trust Co. v. Rhoades, 741 F.2d 511 (2d Cir. 1984, vacated and remanded, 473 U.S. 922, 105 S. Ct. 3550, 87 L. Ed. 2d 673 (1985); Furman v. Cirrito, 741 F.2d 524 (2d Cir. 1984), vacated and remanded sub nom. Joel v. Cirrito, 473 U.S. 922, 105 S. Ct. 3550, 87 L. Ed. 2d 672 (1985). Thus, although defendants renewed their motion in a timely fashion, this Court did not hear oral argument until September 19, 1985, after the case had been returned to its active docket.
In an Order dated November 4, 1985, this Court dismissed plaintiffs' complaint with leave to file within twenty days a new complaint that satisfied the requirements of F.R.Civ.P. 9(b). As noted, plaintiffs had failed to supply any factual basis for the alleged "fraudulent scheme" underlying the mail and wire fraud (18 U.S.C. §§ 1341; 1343) contentions serving as "predicate acts" for their RICO claim. Plaintiffs filed their amended complain
in a timely fashion.
On December 9, 1985, defendants moved pursuant to F.R.Civ.P. 12(b)(6) and 56 for an order dismissing plaintiffs' amended complaint. Defendants allege that (1) plaintiffs' amended complaint also fails to satisfy F.R.Civ.P. 9(b); (2) plaintiffs have not pleaded mail or wire fraud because a scheme to deprive them of an "unenforceable expectation" does not rise to the level of an interest protected by these statutes; (3) plaintiffs have failed to allege an injury to "their business or property by reason of a violation of section 1962," 18 U.S.C. § 1964(c); and (5) plaintiffs have not pleaded a "pattern of racketeering activity" because the alleged predicate acts arise from the same allegedly fraudulent scheme to deprive plaintiffs of their hoped-for commissions. See generally Defendants' Joint Memorandum of Law.
Hisham A. Alireza and Abdullah A. Alireza (collectively "the Alirezas") also have renewed their motion, pursuant to F.R.Civ.P. 12(b)(2) and 56, for an order dismissing the now amended complaint against them for lack of personal jurisdiction.
For the foregoing reasons, this Court grants defendants' motion for an order dismissing plaintiffs' amended complaint on the grounds that it fails to satisfy F.R.Civ.P. 9(b). This Court also finds that plaintiffs have failed to adequately plead a "pattern of racketeering activity."
The facts underlying this action already have been elaborated in previous rulings rendered by this Court and by the Northern District of New York. See, e.g., Soper v. Simmons International, Ltd., No. 84-70; 71; 72 (S.D.N.Y. May 30, 1984). Briefly, plaintiffs allege that on February 2, 1977, an agent of the Xenel defendants solicited plaintiffs' services in the procurement of a source of institutional furnishings under a possible joint venture agreement with the Xenel defendants. The plaintiffs identified defendant Thonet Industries, a wholly-owned subsidiary of the defendant Simmons companies, as a possible source of the sought-after merchandise, and then arranged later meetings with Thonet representatives at which the latter expressed interest in this proposal.
At a meeting on February 20, 1977, defendants James A. Riddering, the president of Thonet, and Dennis P. Fitzgerald, a Simmons executive, orally agreed that if an agreement between Thonet and Xenel was consummated, plaintiffs would receive a commission representing 10% of the gross sales generated over a period of ten years. Plaintiff Soper advised them that he had with him a proposed written commission agreement; however, Mr. Riddering assured him that no writing was necessary "and that there was nothing to worry about for he was dealing with honorable people at Simmons/Thonet." Amended Complaint P 22; see also Complaint P 14.
As this Court noted in its prior Opinion, plaintiffs alleged that "[t]hese statements were the first of a series of representations that 'were made with the intent to defraud plaintiffs of their commissions.' (Complaint P 26)."
The next day, plaintiffs introduced Riddering and Fitzgerald to the Alirezas, owners of the Xenel Company. While advising plaintiffs that they would honor whatever bargain had been struck, the Xenel defendants "maliciously plotted and schemed to insure that it would be them, not the plaintiffs, who would benefit from the introduction with Simmons/Thonet arranged by the plaintiffs." Plaintiffs' Memo. of Law in Opp. to Joint Motion at 4. Thus, plaintiffs claim that, pursuant to the alleged conspiracy, they were continuously and falsely assured by all the defendants, both orally and in writing, that they would be taken care of, when, in reality, the defendants had arranged to divert compensation to the Xenel defendants and to disavow the bargain plaintiffs had been led to believe existed.
Notwithstanding the Xenel defendants' representations in two telegrams that plaintiffs' presence was not required, plaintiff Daoud attended a meeting defendants had scheduled for April 14 in London for the execution of a contract. At the meeting, defendant Fitzgerald, in the presence and with the assent of defendants Manfred J. Sobek (Vice-President of Marketing of Simmons International, Ltd.) and Hisham Alireza, "attempted to disavow the existence of any commission arrangement with the plaintiffs." Amended Complaint 51. Hisham Alireza, "consciously adopting a less hostile ... approach ... and in furtherance of the scheme and conspiracy to defraud, decided to lull the plaintiffs, stating that he would discuss the matter with Simmons/Thonet and would see that the plaintiffs were protected." Plaintiffs' Memo. of Law in Opp. to Joint Motion at 5. Defendants allegedly repeated these misrepresentations in subsequent conversations. See Amended Complaint PP 53; 55; 58.
The agreement between Simmons/Thonet and Xenel Industries, Inc. was publicly announced on May 6, 1977. Subsequently, these parties in fact entered into an agreement whereby the Xenel defendants would receive 10% commission on gross sales in return for promoting Simmons/Thonet's products in Saudi Arabia. Amended Complaint P 59. Sales have since taken place in Saudi Arabia from which defendants all have allegedly profited; the plaintiffs, on the other hand, have not been paid any commissions. Amended Complaint PP 60; 66.
Defendants' joint motion to dismiss plaintiffs' amended complaint is based upon F.R.Civ.P. 12(b)(6) and 56. A motion for summary judgment, F.R.Civ.P. 56, may be made solely on the basis of the complaint, in which case the motion is to be treated as the functional equivalent of a motion to dismiss for failure to state a claim under F.R.Civ.P. 12(b)(6). 6 J. Moore, Moore's Federal Practice P 56.11 (2d ed. 1982). Defendants' motion is thus governed by the standard enunciated in Conley v. Gibson : "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957). This Court therefore must construe the complaint liberally in favor of the plaintiffs, taking the facts as alleged as true; defendants' motion must be denied if a claim has been pleaded. See Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir. 1984), cert. denied, 470 U.S. 1084, 105 S. Ct. 1845, 85 L. Ed. 2d 144 (1985).
1. The Adequacy of Plaintiff's Complaint
The defendants allege that once plaintiffs' fraud claim is "stripped of all [the] excess verbiage and conclusory allegations" present in the amended complaint, it again fails to satisfy the pleading requirements of F.R.Civ.P. 9(b). See Defendants' Joint Memo. of Law at 11-15. Although the amended complaint contains over fifty more paragraphs than the original complaint, some of which catalogue more occasions on which defendants allegedly made false representations, none of these additions demonstrate through specific facts that defendants never intended to honor their alleged promise to pay plaintiffs a commission. Plaintiffs merely allege in a conclusory manner that defendants falsely promised to protect and "take care" of them "in furtherance of one or more agreements, conspiracies and schemes to defraud, and with the intent to defraud and lull the plaintiffs into a false sense of security, postpone discovery and insure inaction on the part of the plaintiffs'" See generally Amended Complaint.
As noted in Rich Taubman Associates v. Stamford Restaurant, 587 F. Supp. 875, 878 (S.D.N.Y. 1984), "F.R.Civ.P. 9(b) requires that allegations of fraud be set forth with 'particularity,' ... and the rule applies with equal force to allegations of mail and wire fraud as predicate RICO civil offenses." (Citations omitted).
Moreover, despite F.R.Civ.P. 9(b)'s caveat that "[m]alice, intent, knowledge, and other condition[s] of mind of a person may be averred generally," courts still have required plaintiffs to provide some factual basis for conclusory allegations as to state of mind. See Soper v. Simmons International, Ltd., No. 84 Civ. 70; 71; 72 (S.D.N.Y. Nov. 4, 1985) (order dismissing complaint with leave to replead) (citing River Plate Reinsurance Co. v. Jay-Mar Group Ltd., 588 F. Supp. 23, 26-27 (S.D.N.Y. 1984); Songbird Jet Ltd. v. Amax, Inc., 581 F. Supp. 912, 924-25 (S.D.N.Y. 1984); O'Connor & Associates v. Dean Witter Reynolds, Inc., 529 F. Supp. 1179, 1197 (S.D.N.Y. 1981)). Thus, plaintiffs make a meritless argument when they assert that their complaint, as governed by the federal pleading rules, adequately pleads scienter.
None "of the facts of which plaintiffs are aware reasonably support their claim that defendants acted with scienter." Gibbons v. Udaras na Gaeltachta, 549 F. Supp. 1094, 1124 (S.D.N.Y. 1982).
Moreover, mere failure of promised performance has never permitted a factual finding that defendants never intended to perform. Hotel Constructors, Inc. v. Seagrave Corp., 574 F. Supp. 384, 387 (S.D.N.Y. 1983) (citing Cranston Print Works Co. v. Brockmann International A.G., 521 F. Supp. 609, 614 (S.D.N.Y. 1981) (Conner, J.)). Although one who makes a contractual promise with the undisclosed intention to breach it can be held liable for fraud, proof of such intention must be based on more than a mere showing of nonperformance. Cauble v. Mabon Nugent & Co., 594 F. Supp. 985, 993 (S.D.N.Y. 1984); see also DiRose v. PK Management Corp., 691 F.2d 628, 632-33 (2d Cir. 1982), cert. denied, 461 U.S. 915, 77 L. Ed. 2d 285, 103 S. Ct. 1896 (1983); Federal Deposit Insurance Corp. v. Borne, 599 F. Supp. 891, 895 (E.D.N.Y. 1984); Hotel Constructors, Inc., supra, 574 F. Supp. at 387; Sherkate Sahami Khass Rapol v. Henry R. Jahn and Son, Inc., 531 F. Supp. 1048, 1061 (S.D.N.Y. 1982), modified on other grounds, 701 F.2d 1049 (2d Cir. 1983). In the instant case, plaintiffs have not articulated anything beyond mere nonperformance.
Plaintiffs also argue that because the mens rea requirement of the federal mail and wire fraud statutes is distinguishable from the scienter requirement of common law fraudulent inducement, their allegations sufficiently charge the defendants with fraudulent intent. Plaintiffs' Memo. in Opp. to Joint Motion at 7-10. In other words, because "[t]he intent element under the federal statutes is that the defendant[s] willfully, knowingly or intentionally devised, joined, participated in or executed a scheme that at least contemplated or had as its objective some harm or injury" (id. at 7, citing United States v. London, 753 F.2d 202, 205-07 (2d Cir. 1985); United States v. Panza, 750 F.2d 1141, 1149 (2d Cir. 1984), etc.), plaintiffs allege that whether any representation was made with a fraudulent intent should not be the focal point of this Court's inquiry. Besides, they also contend that in their case, fraudulent intent can be inferred from a host of sources -- e.g., from the fact that the scheme resulted in actual harm or injury; from lulling and other guilty actions; from a contract that is the product of a scheme to defraud; etc. See Plaintiffs' Memo. in Opp. to Joint Motion at 8-9.
Despite plaintiffs' contentions, however, "the term 'scheme to defraud' connotes some degree of planning by the perpetrator[s], [making] it essential that the evidence show the defendant[s] entertained an intent to defraud." United States v. McNeive, 536 F.2d 1245, 1247 (8th Cir. 1976); see also United States v. Gelb, 700 F.2d 875, 889 (2d Cir.), cert. denied, 464 U.S. 853, 78 L. Ed. 2d 152, 104 S. Ct. 167 (1983); United States v. Von Barta, 635 F.2d 999, 1005-06 n.14 (2d Cir. 1980), cert. denied, 450 U.S. 998, 68 L. Ed. 2d 199, 101 S. Ct. 1703 (1981). Again, nothing in plaintiffs' amended complaint manifests such fraudulent intent. See Rojas v. First National Bank Association, 613 F. Supp. 968, 971 (E.D.N.Y. 1985) (plaintiff's failure to adduce facts supporting a finding of fraud warranted dismissal of plaintiff's civil RICO claim) and n.12 infra.
2. Pattern of Racketeering Activity
Even if plaintiffs had satisfied F.R.Civ.P. 9(b),
defendants still would prevail, warranting dismissal of plaintiffs' amended complaint." To state a claim for a civil RICO violation, plaintiffs must prove that they were injured in their business or their property by reason of defendants' conduct of an enterprise through a "pattern of racketeering activity." Rojas, supra, 613 F. Supp. at 971 (citing Sedima, S.P.L.R. v. Imrex Co., 473 U.S. 479, 105 S. Ct. 3275, 87 L. Ed. 2d 346 (1985)); see also 18 U.S.C. § 1964(c). While rejecting the requirements of prior criminal convictions and of a special RICO injury, the Supreme Court in Sedima acknowledged the "increasing divergence" between civil RICO and the "original conception of its enactors," and blamed this, in part on "the failure of Congress and the courts to develop a meaningful concept of 'pattern'".
The Court stressed that "the definition of a 'pattern of racketeering activity' differs from the other provisions in § 1961 in that it states that a pattern 'requires at least two acts of racketeering activity,' Section 1961(5) (emphasis added), not that it 'means' two such acts. The implication is that while two acts are necessary, they may not be sufficient." Sedima, 105 S. Ct. at 3285, n.14. The Court also quoted legislative history indicating that it is "'continuity plus relationship [that] combines to produce a pattern.' " Id. (quoting S.Rep. No. 91-617, p.158 (1969) (emphasis added)).
As was predicted, Sedima has brought to the forefront a new focus in civil RICO litigation -- the "pattern of racketeering activity" requirement. See Nathan & Bograd, RICO Litigation's New Battleground: "Pattern" and "Enterprise," CIVIL RICO LITIGATION after Sedima, ALI-ABA Video Law Review 145, 145 (Oct. 10, 1985). One of the first post-Sedima cases
to take to this challenge was Northern Trust Bank/O'Hare, N.A. v. Inryco Co., Inc., 615 F. Supp. 828 (N.D.Ill. 1985).
In Inryco, plaintiff's complaint specified two mailings that were made in connection with defendant's and others' construction contract kickback scheme. Id. at 833. The court held that, as per Sedima, plaintiff had failed to establish a "pattern of racketeering activity." Id. Judge Shadur reasoned that:
"[P]attern" connotes a multiplicity of events. Surely the continuity inherent in the term presumes repeated criminal activity, not merely repeated acts to carry out the same criminal activity. It places a real strain on the language to speak of a single fraudulent effort, implemented by several fraudulent acts, as a "pattern of racketeering activity."
Id. at 831 (emphasis in original). He further noted that "even if the three added kickback payments alleged in [plaintiff's] Complaint P 15 involved the use of the mails, they still implemented the same fraudulent scheme as the first two mailings -- and the single scheme does not appear to represent the necessary 'pattern of racketeering activity.'" Id. (emphasis in original).
Many other courts have followed suit. In Professional Assets Management, Inc. v. Penn Square Bank, N.A., 616 F. Supp. 1418 (W.D.Okl. 1985), civil RICO claims based upon defendant accounting firm's (Peat, Marwick, Mitchell & Co.) preparation and issuance of the December 31, 1981 audit report were held "not [to be] based on a 'pattern', as that term was elaborated in Sedima and Inryco, but [to] arise simply from one engagement to perform one audit ...." Id. at 1422.
The court thus denied plaintiff's motion to vacate its pre-Sedima order dismissing these claims. Id. at 142. In Allington v. Carpenter, 619 F. Supp. 474 (C.D.Cal. 1985), the district court held that each act of wire fraud alleged in the complaint was part of the same criminal transaction: "a telephone call to induce [plaintiff] to send $100,000 to Switzerland, on the understanding the the [sic] money plus a finder's fee would be delivered a short time later to the Grand Cayman Islands; [plaintiff]'s wiring of the money to Switzerland the next day; and a telephone call six weeks later to the Grand Cayman Islands to set up the account into which the money was to be transferred." Id. at 478. Noting that the legislative history revealed an intent to exclude from RICO liability single criminal events, the Allington court concluded that "a 'pattern' of racketeering activity must include racketeering acts sufficiently unconnected in time or substance to warrant consideration as separate criminal episodes." Id.
In Kredietbank N.V. v. Joyce Morris, Inc., (D.N.J. Oct. 11, 1985) (available on Lexis, Genfed Library, Dist. file), the district court concluded that "in light of this clarification offered by Sedima, ... the mere allegation of two instances of submitting a false affidavit to a court in connection with a single matter under litigation does not, without more, constitute a pattern of racketeering activity." The court noted that while an enterprise that made a practice of submitting false affidavits in lawsuits might very well indicate a pattern of unlawful activity, such actions in the context of a single lawsuit "do not necessarily constitute a 'pattern' ... as contemplated in RICO because the end of the litigation will spell the limit of the enterprises' fraudulent scheme." Id.
As noted by one of the most recent "pattern" cases, however, Fleet Management Systems, Inc. d/b/a Logistic Systems v. Archer-Daniels-Midland Co., 627 F. Supp. 550 (C.D.Ill. 1986) (available on Lexis, Genfed Library, Dist. file), "many courts continue to hold that Sedima 's broad language mandates a conclusion that any two related acts can constitute a pattern." See Conan Properties, Inc. v. Mattel, Inc., 619 F. Supp. 1167, 1170 (S.D.N.Y. 1985) (plaintiff who had alleged copyright infringement of its fictitious character, CONAN THE BARBARIAN, had adequately met "pattern of racketeering activity" pleading requirement by alleging two related and sufficiently particularized predicate acts arising out of the same scheme); see also R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350, 1355 (5th Cir. 1985) (while district court had not considered "pattern" issue, court of appeals noted that Sedima merely indicated that the two predicate acts needed to be related, and in this case, where defendants allegedly attempted to defraud company by twice mailing it false invoices regarding ownership and repair of certain equipment, the alleged acts of mail fraud were related);
Alexander T. Grant & Co. v. Tiffany Industries, Inc., 770 F.2d 717, 718 n.1 (8th Cir. 1985), cert. denied, 474 U.S. 1058, 106 S. Ct. 799, 88 L. Ed. 2d 776 (1986); Systems Research, Inc. v. Random, Inc., 614 F. Supp. 494, 497 (N.D.Ill. 1985).
However, none of these cases discuss the points raised in Inryco, supra, nor provide elaborate reasoning to support the conclusions reached regarding their interpretations of Sedima.
Nonetheless, plaintiffs claim these decisions support their contention that "the Supreme Court merely intended in Sedima to reassert what it already had made clear in [United States v.] Turkette [452 U.S. 576, 101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981)] and what has been the well-settled law in th[e] [Second] Circuit for several years, that is, that 'two isolated acts of racketeering activity do not constitute a pattern.'" Plaintiffs' Memo. of Law in Opp. to Joint Motion at 18 (quoting Sedima, supra, 105 S. Ct. at 3285 n.14); see also United States v. Chovanec, 467 F. Supp. 41 (S.D.N.Y. 1979); United States v. Stofsky, 409 F. Supp. 609 (S.D.N.Y.), aff'd on other grounds, 527 F.2d 237 (2d Cir. 1975), cert. denied, 429 U.S. 819, 97 S. Ct. 65, 66, 50 L. Ed. 2d 80 (1976). However, as pointed out by the Inryco court, this line of cases was only partly correct: "True, enough, 'pattern connotes similarity, hence the[se] cases' proper emphasis on relatedness of the constituent acts. But 'pattern' also connotes a multiplicity of events[.]" Inryco, supra, 615 F. Supp. at 831; see also text at 11 supra.
The Inryco decision, considered to be "the most thorough post-Sedima decision of the 'pattern' issue," Graham v. Slaughter, 624 F. Supp. 222, No. 84-7881 (N.D.Ill. 1985) (available on Lexis, Genfed Library, Dist. file), has been criticized to the extent that it suggests that in order to find a pattern of racketeering activity, a pattern of fraudulent schemes must be pled. See, e.g., Trak Microcomputer Corp. v. Wearne Brothers, 628 F. Supp. 1089, No. 84-7970 (N.D.Ill. 1985) (available on Lexis, Genfed Library, Dist. file).
This portion of the decision, however, which is mere dictum, has been clarified by subsequent cases -- to be "continuous" requires more than a single transaction, not necessarily more than a single scheme. Graham v. Slaughter, supra, 624 F. Supp. 222
In other words, "while a RICO claim must involve different criminal episodes, i.e., transactions 'somewhat separated in time and place,' ... an open-ended scheme may include a sufficient number of independent episodes to satisfy the 'continuity' factor of Sedima." Id. at (citation omitted). In contrast, an isolated criminal episode, even if it is accomplished through a number of fraudulent acts, neither evidences a threat of continuing criminal activity nor the involvement of an organized criminal enterprise. Fleet Management Systems Inc., supra, slip op. at .
As applied in Graham v. Slaughter, supra, this clarified definition of the "pattern" requirement led the district court to deny plaintiff's motion to dismiss defendant's RICO counterclaim. Defendant had based his counterclaim on plaintiff's embezzlement of funds from two corporations. The primary mechanism by which plaintiff embezzled the funds was through a series of wire transfers and checks drawn on the accounts, made payable to the plaintiff or the company he controlled. Id. at . As noted by the court:
"The present complaint alleges over twenty predicate acts stretched out over a two year period. Each of the acts involved the same or similar purpose, thus meeting the 'relatedness' requirement. The fraud was clearly ongoing, and it involved at least three different third parties: the two corporations controlled by [plaintiff] and an advertising agency whose invoices were fraudulently redirected to [one of the corporations]. Unlike the case in Inryco, the predicate acts alleged are not ministerial acts performed in the execution of a single fraudulent scheme, but appear to be independently motivated crimes."
Id. at .
This Court is of the opinion that the correct interpretation of the "pattern" requirement as articulated by Sedima and its progeny requires more than two related acts.
The acts alleged by plaintiff as predicate acts do not meet these requirements of a "pattern" -- as in Inryco, they are merely "ministerial acts performed in the execution of a single [allegedly] fraudulent scheme" (Graham, supra, slip op. at ) to deprive plaintiffs of their promised commission. As such, plaintiffs have failed to establish "'some sort of continuity between the acts or a threat of continuing criminal activity,'" Fleet, supra, slip op. at (quoting ABA Report, supra note 14, at 193-208), and their amended complaint must be dismissed.
Because this Court grants defendants' joint motion to dismiss plaintiffs' amended complaint on the above grounds, it need not address the Alirezas' motion for an order dismissing the complaint against them for lack of personal jurisdiction.