the authorization of subordination, 4) defendants have
fraudulently obtained the discharge of the Aetna bond which was
originally contemplated as security for the authorization of
subordination and 5) that defendants' mailings constitute a
pattern of racketeering which includes at least two or more
acts of mail fraud under 18 U.S.C. § 1341.
Defendants move to dismiss plaintiff's complaint pursuant to
Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil
Procedure. Defendants claim, inter alia, that plaintiff has
failed to establish a RICO claim and without that claim, this
Court is without subject-matter jurisdiction.
A complaint may be dismissed pursuant to Rule 12(b)(6) for
failure to state a claim, only if, taking the allegations of
the complaint in the light most favorable to the plaintiff, the
Court nonetheless concludes that "no relief could be granted
under any set of facts that could be proved consistent with the
allegations." H.J. Inc. v. Northwestern Bell Telephone Co., ___
U.S. ___, 109 S.Ct. 2893, 2906, 106 L.Ed.2d 195 (1989) (quoting
Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229,
2232, 81 L.Ed.2d 59 (1984)). As the Third Circuit recently
emphasized, "this standard of review does not distinguish
between RICO and non-RICO claims." Rose v. Bartle,
871 F.2d 331, 355 (3rd Cir. 1989).
The RICO statute renders civilly liable persons (i) who use
or invest income derived from a pattern of racketeering
activity to acquire an interest in or to operate an enterprise
engaged in interstate commerce, § 1962(a); (ii) who acquire or
maintain an interest in or control of such an enterprise
through a pattern of racketeering activity, § 1962(b); (iii)
who, being employed by or associated with such an enterprise,
conduct or participate in the conduct of that enterprise's
affairs through a pattern of racketeering activity, § 1962(c).
Defendants claim, inter alia, that plaintiff has failed to
adequately allege a "pattern of racketeering activity."*fn6 At
a minimum a "pattern of racketeering activity requires at least
two acts of racketeering activity." 18 U.S.C. § 1961(5).*fn7
The broad nature of this standard resulted in the Supreme
Court's attempt at clarification in H.J. Inc. v. Northwestern
Bell Telephone Co., ___ U.S. ___, 109 S.Ct. 2893, 106 L.Ed.2d
195 (1989). The Court held in H.J. Inc. that a pattern of
racketeering involves a "more stringent requirement than proof
simply of two predicates." Id. 109 S.Ct. at 2899.
The Court, relying on the text of the statute and legislative
history, held that to prove a pattern of racketeering activity
a plaintiff "must show that the racketeering predicates are
related, and that they amount to or pose a threat of continued
criminal activity." Id. at 2900. Although the proof of
relatedness and continuity will often overlap, the Court
counseled that they must be stated separately. Id.
The predicate racketeering acts are related if they "have the
same or similar purposes, results, participants, victims, or
methods of commission, or otherwise are interrelated by
distinguishing characteristics and are not isolated events."
Id. at 2901. Defendants' mailings apparently all had the same
purpose, result, participants and victim — to wit, to
represent that defendants had received a loan "commitment" from
Morsemere and thereby to convince the plaintiff voluntarily to
authorize subordination of its purchase money mortgage or to
persuade the Ulster County Supreme
Court Judge to "so order" such authorization. Defendants'
alleged racketeering acts were, therefore, sufficiently
To establish adequately a "pattern of racketeering activity"
plaintiff must also show "that the predicates themselves amount
to, or that they otherwise constitute a threat of
continuing racketeering activity." Id. While the Court in H.J.,
Inc. recognized that to formulate a general test for continuity
is difficult it did provide us with some guidance;
"Continuity is both a closed- and open-ended
concept, referring either to a closed period of
repeated conduct, or to past conduct that by its
nature projects into the future with a threat of
Id. 109 S.Ct. at 2902.
In this case plaintiff has alleged no more than a single
scheme*fn8 which took place over a finite period of eight
months — from defendant Dinolfo's April 12, 1988 letter until
the December 22, 1988 letter to the Ulster County Court seeking
discharge of the Aetna bond.
Unlike the plaintiff's allegations in our recent decisions in
Morrow v. Black, 742 F. Supp. 1199, (1990) and Norstar v.
Pepitone, 742 F. Supp. 1209, (1990) there are no allegations
that constitute a basis from which one may find or infer a
threat of future or continuing criminal conduct.*fn9 See also
Continental Realty Corp. v. J.C. Penny, 729 F. Supp. 1452
(S.D.N.Y. 1990) where the Court held that where the complaint
alleged acts of fraud in one real estate transaction and did
not refer to other unrelated previous acts of similar fraud nor
alleged facts indicating that defendants would engage in
similar conduct in the future, it alleged a closed-ended RICO
Moreover, it is not sufficient to claim that allegations of
concealment on the part of the wrongdoer constitute a basis for
establishing an open-ended scheme or threat of repetition to
satisfy the continuity requirement. Otherwise every past act of
wrongdoing which a wrongdoer attempts to conceal might be the
basis for finding continuity.*fn10 Therefore, there is no
basis on which to establish an open-ended scheme as there was
in the Morrow and Norstar cases.
The H.J. Inc. Court held that a party alleging a RICO
violation may demonstrate continuity over a closed period by
proving a series of related predicates extending over a
"substantial period of time." Thus the only remaining question
is whether the eight month period in the case at bar is a
"substantial period of time" within the meaning of this portion
of the H.J. Inc. decision. Under the circumstances presented
here, this Court is of the opinion that the eight month period,
over which the alleged mail fraud activity took place in this
case, is not in and of itself a sufficient period on which to
base a finding of long term criminal conduct. See e.g. USA
Network v. Jones Intercable, 729 F. Supp. 304 (S.D.N.Y. 1990);
Continental Realty Corp v. J.C. Penny, 729 F. Supp. 1452
Plaintiff's RICO claims are dismissed pursuant to Rule
12(b)(6) for failure to state a claim because defendant has not
adequately alleged that defendants have engaged in a pattern of
racketeering activity. Without this federal claim, plaintiff's
complaint is dismissed for lack of subject matter jurisdiction.
Defendants' motion for Rule 11 sanctions is denied.
The Clerk of the Court is directed to enter a judgement for
the defendants and against the plaintiff dismissing plaintiff's