The opinion of the court was delivered by: Platt, Chief Judge.
Plaintiff commenced this suit on January 10, 1990 seeking
treble damages, costs and attorneys fees for defendants'
alleged violation of the Racketeer Influenced and Corrupt
Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. Defendants
move to dismiss plaintiff's complaint pursuant to Rule 12(b)(1)
of the Federal Rules of Civil Procedure for lack of subject
matter jurisdiction, Rule 12(b)(6) for failure to state a claim
on which relief may be granted, and Rule 9(b) for failure to
allege fraud with sufficient particularity. Defendants also
move for sanctions pursuant to Rule 11. For the reasons stated
below defendants' motion to dismiss is granted and defendants'
motion for Rule 11 sanctions is denied.
On October 14, 1986 plaintiff sold 83 acres of property in
Ulster County, New York to defendant Charrim Development
Corporation ("Charrim")*fn1. Charrim paid plaintiff $180,000
in cash and gave plaintiff a purchase money mortgage for the
remaining $639,000. Among other conditions of the sale
plaintiff contracted to develop the property. In addition,
defendants represented that they would obtain financing for
said development. In the event that defendants could obtain
financing (i.e. a construction loan) plaintiff agreed that he
would authorize the subordination of his $639,000 purchase
money mortgage to the
lender. Upon receipt of the first payment of monies from the
lender, defendants were to pay plaintiff $202,800 for work
"Certain difficulties arose" (¶ 15 of complaint) and
plaintiff filed a breach of contract action against corporate
defendant Charrim in the Supreme Court of Nassau County
("Nassau Contract Case"). Charrim defaulted.
On or about April 12, 1988, subsequent to Charrim's default
in the Nassau Contract Case, defendant Charles Dinolfo mailed
a letter to plaintiff alleging that they had received a
"commitment" for financing from Morsemere Federal Savings &
Loan Association ("Morsemere")*fn2. (¶ 28). Thereafter,
defendants sent plaintiff, by mail, additional communications
which contained additional alleged fraudulent representations
concerning defendants'"commitment" from Morsemere.
Thereafter, defendants' counsel sent plaintiff's counsel a
letter dated May 6, 1988. The letter stated that failure to
authorize subordination of the $639,000 purchase money mortgage
would result in defendants' failure to obtain financing.(¶ 29)
On May 16, 1988 corporate defendant Charrim filed an action
in Ulster County Supreme Court to direct plaintiff to authorize
subordination ("Ulster County Case"). Under the cover of a
letter dated May 19, 1988, defendant's counsel forwarded copies
of their pleadings in the Ulster County Case to plaintiff's
counsel. Charrim's pleadings included several representations
that defendants had received a loan "commitment" from
Morsemere.(¶ 30-¶ 35).
Subsequent to further communications between the parties they
came to an agreement. On or about July 1, 1988, defendants'
counsel sent to plaintiff's counsel copies of a proposed Order
with Notice of Settlement and a copy of an undertaking from
Aetna Casualty & Surety*fn3 in the Ulster County Case. The
proposed order directed the authorization of subordination of
the purchase money mortgage "as may be required by Morsemere .
. . in connection with the construction loan financing." (¶
Under the cover of a letter dated July 15, 1988, defendants'
counsel sent to plaintiff's counsel additional copies of
subordination documents for plaintiff's signature. The letter
also stated that plaintiff's "refusal to sign these documents
has, and continues to, impede [defendants'] ability to process
the financing necessary to the success of this project."(¶ 36-¶
On July 18, 1988 Ulster County Supreme Court Judge Joseph
Torraca directed plaintiff to authorize the subordination to
On or about August 31, 1988 defendants' counsel mailed a copy
of an Order to Show Cause filed in Ulster County which sought
to discharge the bond of Aetna Casualty and Surety Co.*fn5
On or about December 22, 1988 defendants' counsel mailed a
letter to the Ulster County Court which stated that
"construction financing was not granted." Said letter further
stated that defendants had, however, been loaned $300,000 which
did not require the subordination of plaintiff's purchase money
mortgage.(¶ 48-¶ 49). In an order dated January 27, 1989, the
Court ordered that the bond be discharged.(¶ 50).