United States District Court, Southern District of New York
June 19, 1991
EXECUTIVE PHOTO, INC., PLAINTIFF,
RENE NORRELL, DEFENDANT. RENE NORRELL, THIRD-PARTY PLAINTIFF, V. SOLOMON BORNFREUND, THIRD-PARTY DEFENDANT.
The opinion of the court was delivered by: Leisure, District Judge:
This is an action for conversion of property, and for
violation of the Racketeer Influenced and Corrupt Organizations
Act ("RICO"), 18 U.S.C. § 1961 et seq. Defendant Rene Norrell
("defendant") has now moved to dismiss the amended complaint in
this action, pursuant to Federal Rules of Civil Procedure
12(b)(6). For the reasons set forth below, defendant's motion
Plaintiff filed this action on January 22, 1990. Defendant
filed an answer and thereafter moved, pursuant to Federal Rules
of Civil Procedure 9(b), 12(b)(1), 12(b)(6) and 12(c), to
dismiss the complaint. By an order and opinion dated February
1991, 756 F. Supp. 798 (the "February 7 Order"), this Court
granted defendant's motion in part and denied it in part.*fn1
Specifically, the Court granted defendant's motion to dismiss
plaintiff's RICO claim on the ground that plaintiff had failed
to allege "continuity" adequately, and thus had failed to
allege a RICO "pattern" of racketeering. The Court denied
defendant's motion to dismiss plaintiff's conversion claim.
Leave to replead was granted. Plaintiff has filed an amended
complaint, and defendant now moves to dismiss the amended
complaint on the ground that plaintiff has again failed to
plead "continuity" sufficiently.
"The court's function on a Rule 12(b)(6) motion is not to
weigh the evidence that might be presented at a trial but
merely to determine whether the complaint itself is legally
sufficient." Festa v. Local 3 International Brotherhood of
Electrical Workers, 905 F.2d 35, 37 (2d Cir. 1990); see also
Ryder Energy Distribution Corp. v. Merrill Lynch Commodities,
Inc., 748 F.2d 774, 779 (2d Cir. 1984) ("The function of a
motion to dismiss `is merely to assess the legal feasibility of
the complaint, not to assay the weight of the evidence which
might be offered in support thereof.'" (quoting Geisler v.
Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980))).
Thus, a motion to dismiss must be denied "unless it appears
beyond a doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief."
Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40
L.Ed.2d 90 (1974) (citing Conley v. Gibson, 355 U.S. 41, 45-46,
78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)); see also Morales v.
New York State Dep't of Corrections, 842 F.2d 27, 30 (2d Cir.
1988). In deciding a motion to dismiss, the Court must limit
its analysis to the four corners of the complaint, see Kopec v.
Coughlin, 922 F.2d 152, 154-55 (2d Cir. 1991), and must accept
the plaintiff's allegations of fact as true, together with such
reasonable inferences as may be drawn in his favor. Papasan v.
Allain, 478 U.S. 265, 283, 106 S.Ct. 2932, 2943, 92 L.Ed.2d 209
(1986); Murray v. Milford, 380 F.2d 468, 470 (2d Cir. 1967);
Hill v. Sullivan, 125 F.R.D. 86, 90 (S.D.N.Y. 1989) ("all
allegations in plaintiffs' amended complaint must be accepted
as true and liberally construed."); see also Scheuer, supra,
416 U.S. at 236, 94 S.Ct. at 1686. Federal Rule of Civil
Procedure 8(a) requires only a "`short and plain statement of
the claim' that will give the defendant fair notice of what
plaintiff's claim is and the ground upon which it rests."
Conley, supra, 355 U.S. at 47, 78 S.Ct. at 103 (quoting
In its February 7 Order, the Court noted that a plaintiff
bringing a RICO action must allege, inter alia, "continuity"
with respect to the defendant's predicate activity, and that,
as stated by the Supreme Court:
"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
repetition. . . . 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.
Predicate acts extending over a few weeks or
months and threatening no future criminal conduct
do not satisfy this requirement. . . .
H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229
241-42, 109 S.Ct. 2893, 2902, 106 L.Ed.2d 195 (1989); see also
Azurite Corp. Ltd. v. Amster & Co., 730 F. Supp. 571
(S.D.N.Y. 1990) (predicate acts occurring over seven months do
not establish continuity).
Relying on the Supreme Court's guidance in H.J. Inc., this
Court found that plaintiff's complaint, containing no
allegations whatsoever as to the period of time over which the
predicate acts allegedly occurred,
failed sufficiently to allege "continuity" over a closed
period. 756 F. Supp. at 804-05.*fn2 Plaintiff's amended
complaint rectifies this deficiency with the following
Commencing at a time unknown to plaintiff,
Bornfreund and defendant entered into a common
plan, scheme, design and business pursuant to
which, over a period of at least two and one-half
years, Bornfreund stole merchandise from
plaintiff's storeroom, removed it from plaintiff's
premises, and sold it to defendant for cash. Upon
information and belief, over the same period,
defendant, knowing the merchandise had been stolen
from plaintiff, resold the merchandise at a profit.
Amended Complaint ¶ 6 (emphasis added).
Bornfreund and defendant engaged in a pattern of
racketeering activity . . . which consisted of,
inter alia, at least two racketeering acts,
including, over a continuous period of at least two
and one-half years, repeated and numerous acts of
receipt, sale, transportation, transfer and
transmittal of stolen goods having a value of
$5,000 or more in interstate commerce, knowing the
goods to have been stolen, in violation of
18 U.S.C. § 2314.
Amended Complaint ¶ 15 (emphasis added). These allegations of
"repeated and numerous" predicate acts taking place over a
substantial period of time are sufficient to establish the
requisite closed-ended continuity under the case law of the
Supreme Court and Second Circuit. See Proctor & Gamble Co. v.
Big Apple Industrial Buildings, Inc., 879 F.2d 10
, 18 (2d Cir.
1989) (predicate acts occurring over a period of nearly two
years establish continuity), cert. denied, ___ U.S. ___, 110
S.Ct. 723, 107 L.Ed.2d 743 (1990); Polycast Technology Corp. v.
Uniroyal, Inc., 728 F. Supp. 926, 948 (S.D.N.Y. 1989) (multiple
acts over eight and one-half month period establish
Defendant argues that plaintiff's failure to allege a
specific date on which the predicate activity began precludes
a finding of "continuity," despite the above-quoted
allegations. This argument, relying on a case involving
predicate acts of fraud, West Mountain Sales, Inc. v. Logan
Manufacturing Co., 718 F. Supp. 1084, 1086 (N.D.N.Y. 1989),
confuses the different pleading requirements of Federal Rules
of Civil Procedure 9(b) and 12(b)(6). The former rule,
requiring the pleading of fraud with particularity, may well
mandate the averment of specific predicate acts occurring on
specific dates. However, the latter rule, applicable here,*fn3
does not. As the Supreme Court has observed, "Congress was
concerned in RICO with long-term criminal conduct." H.J. Inc.,
supra, 492 U.S. at 242, 109 S.Ct. at 2902. Plaintiff's
allegations of a scheme extending over more than two and
one-half years, involving numerous illegal acts, clearly fall
within the scope of that concern, regardless of the precise
date on which that scheme began.*fn4 Accordingly, defendant's
motion to dismiss for failure to state a claim is denied.*fn5
For the reasons set forth above, defendant Rene Norrell's
motion to dismiss the
amended complaint in this action, pursuant to Fed.R.Civ.P.
12(b)(6), for failure to state a claim upon which relief may be
granted, is denied.