The opinion of the court was delivered by: Spatt, District Judge.
The defendants' motion to dismiss the amended complaint in this
case raises the issue of whether the defendants' alleged
fraudulent activity as trial counsel for the plaintiff's
attorney-decedent in tort litigation is sufficient to state a
claim for relief under the Racketeer Influenced and Corrupt
Organizations Act ("RICO"), 18 U.S.C. § 1961-1968. Taking the
allegations of the amended complaint as true for the purposes
of these motions, and for the reasons discussed below, the
Court finds that the plaintiff has sufficiently pled two
predicate acts of "mail fraud" racketeering activity as well as
two acts of bank fraud with the requisite particularity so as
to state a claim for relief under RICO. Therefore, the
defendants' motions to dismiss the amended complaint are
A description of the factual background of this action is set
forth in detail in this Court's memorandum decision, which
ruled on the parties' earlier motions to dismiss the complaint
(see Wiener v. Napoli, 760 F. Supp. 2 [E.D.N.Y. 1991]). At
that time, the defendants moved to dismiss on the grounds,
inter alia, that the plaintiff had failed to plead fraud with
the requisite particularity and that the alleged RICO violation
failed to state a claim upon which relief could be granted. The
defendants, Joseph P. Napoli, Esq. and Morris J. Eisen & Joseph
P. Napoli also moved to dismiss the complaint, pursuant to
Rules 9(b), 12(b)(1), 12(b)(6) and 12(b)(7) of the Federal
Rules of Civil Procedure on the grounds that the alleged state
law claims could not be sustained by pendent jurisdiction. The
Court agreed with the defendants and dismissed the complaint,
without prejudice to the plaintiff filing an amended complaint
within thirty (30) days. The plaintiff's amended complaint is
now before the Court.
Although set forth at length at 760 F. Supp. 278, the Court
briefly reiterates only those facts relevant to the instant
motions to dismiss.
This action stems from financial arrangements between Samuel
Wiener, an attorney at law, and the defendants-attorneys,
whereby the defendants acted as trial counsel for Wiener. By
letter agreement, Wiener retained defendant Napoli as trial
counsel in a number of civil actions and made specific
arrangements for fees and disbursements. The amended complaint
alleges that Napoli practiced individually and also in
association and partnership with defendants Eisen and Eisen &
After Wiener's death on August 20, 1982, Florence Wiener, as
the Executrix of Samuel Wiener's estate, retained Napoli and
the other defendants as attorneys in a substantial number of
additional cases. The plaintiff alleges that the defendants
took advantage of a personal and confidential relationship with
her as Executrix of her husband's estate, and that such a
violation constituted a breach of fiduciary duty as well as a
fraudulent scheme to cheat and defraud the plaintiff of monies
belonging to the Estate of Samuel Wiener. According to the
plaintiff, this scheme was effectuated through racketeering
activities prohibited by 18 U.S.C. § 1961-1968 which included
acts of mail fraud (18 U.S.C. § 1341) and bank fraud (18 U.S.C. § 1344).
The object of this racketeering activity was to obtain
by fraudulent means certain fees and disbursements due to the
estate from the settlement of cases for which the defendants
provided legal representation after Samuel Wiener's death.
The amended complaint provides, in part, as follows:
"¶ 29. After the transfer of the files, and pursuant to the
fraudulent scheme and racketeering activities set forth herein,
defendants committed the following acts, concealments and
breaches, without limitation:
(a) A continuing failure to advise of settlements or
recoveries and resulting failure to remit fees and
disbursements due or to remit fees in proper amounts.
Defendants had a duty to so advise and remit fees both under
the confidential relationship between the parties and by
reason of the covenant of good faith implied into the fee
arrangements. This act was committed by all of the
defendants. For example, no status has been provided on the
following matters since transfer: . . . (list of affected
clients follows) . . .
(c) By advising prospective settlement defendants that
settlement drafts should be made out only to EISEN, P.C. and
that hold harmless agreements would be provided as to any
claim that the WIENER Estate may have against the settlement
proceeds. One known specific instance pertains to the matter
entitled `Haber v. Carlma Associates' where Eisen, P.C.
agreed to hold harmless Crum & Forster Commercial Insurance
from any attorney lien which may be asserted by the estate
from the settlement of said case. Said agreement is confirmed
by Crum & Forster to defendants pursuant to Crum & Forster's
letter of September 11, 1990 to Mr. Chris Caputo, `Morris J.
Eisen, Attorneys' . . .
(e) By preparing, mailing and filing closing statements of
cases which understated the fees due to the estate. This act
was performed by EISEN, P.C. under the direction of NAPOLI
and EISEN. Examples of this practice are contained in closing
statements obtained from Eisen, P.C. concerning the `Quinones
v. Pepsico' matter, the `Patricia Crispino' matter, the
`Philip Schultz v. Daniels' matter, the `Ancona v. Cohen'
matter and many other matters.
(f) By failing to file closing statements with the New York
State Office of Court Administration in an effort to conceal
the terms of settlements and fees due the WIENER Estate. This
act was performed by EISEN, P.C., the law offices of EISEN &
NAPOLI, and EISEN and NAPOLI as partners, individually,
depending on what entity handled a particular matter.
Examples of this are the `Virginia Faro v. DiBenedetto'
matter, the `Faustein v. Dendy' matter, the `Lescaille v. 360
Bedford Market, Inc.' matter, and others unknown at this time
. . . ."
The amended complaint sets forth five claims for relief: (1)
RICO, 18 U.S.C. § 1962(c) [including mail fraud and bank
fraud]; (2) common law fraud; (3) accounting and constructive
trust; (4) monies had and received; and (5) breach of contract.
In contrast to the original complaint, the plaintiff has set
forth specific factual allegations in support of these claims,
an example of which is cited below.
"¶ 35. On or about the dates set forth below, the defendants
unlawfully, willfully and knowingly, and for the purpose of
furthering and executing their fraudulent scheme, did place and
cause to be placed in the United States Post Offices and
authorized depositories for mail matter, and did cause to be
delivered by mail, according to the directions thereon, certain
mail matter to be sent and delivered by the United States
Postal Service, all in violation of 18 U.S.C. § 1341, as
(A) Melvina Smith, Administratrix of the Estate of Valeane
Jones v. The City of New York
(a) Pursuant to agreement in August 1982, defendant NAPOLI
agreed to share with SAMUEL WIENER the fees on the
above-noted matter on a 50-50 basis. Said agreement was on
behalf of himself and all of the defendants.
(b) In furtherance of the agreement, the matter was handled
by MORRIS J. EISEN & JOSEPH P. NAPOLI.
(c) Upon resolution of the matter, the Honorable Marie M.
Lambert, Surrogate, New York County, issued a `Decree
Authorizing Compromise and Settling Account,' dated October
26, 1984, which specifically ordered that the defendant City
of New York pay to `Morris J. Eisen, P.C.' and `Samuel
Wiener,' attorneys for plaintiffs, the sums of $1,894.13 in
disbursements and $12,701.96 in fees.
(d) Pursuant to said decree, the City of New York issued its
payment draft nos. 758453 and 758462 to `M.J. Eisen & S.
Wiener' about July 10, 1987.
(e) As set forth more fully in paragraph 29(b) supra, and
paragraphs 43-49, infra, said drafts were never presented
for endorsement to the Estate and no payment made to the
Estate for fees due.
(f) As set forth more fully in the complaint at ¶¶ 29(b) and
43-49, said endorsement of `S. Wiener' was forged by
(g) Upon information and belief, in furtherance of said
fraud, defendant NAPOLI mailed or caused to be mailed a
closing statement to both the client, Melvina Smith, and to
the Office of Court Administration which falsely stated that
a fee in the amount of $4,233.99 was paid to the Estate. Said
mailing and fraudulent statement was intended as a cover-up
of the nonpayment to the Estate in order to falsely represent
compliance with the order of Surrogate Lambert and a settling
of account to the client.
(h) The information upon which said belief is based as to
NAPOLI's mailing of the fraudulent matter is a series of
documents obtained from defendants' offices which include a
closing statement prepared on behalf of `Morris J.
Eisen/Joseph P. Napoli, Esqs.' which states a copy was
forwarded to the client on August 31, 1987, and an affidavit
dated August 31, 1987 for Joseph P. Napoli's signature for
submission to the Office of Court Administration in
connection with the late filing of a retainer statement."
In all, plaintiff cites seventeen instances of similar alleged
acts of mail fraud. Thereafter, the amended complaint alleges
"42. Those uses of the mail constituted a pattern of
racketeering activity by the repeated presentation of checks
to plaintiffs representing underpayment, misrepresentations
that the underpayments were the Estate's actual share of
fees, requests by defendants for and receipt of settlement
drafts and funds from insurance companies, which failed to
account for the Estate's interest in the settlement proceeds,
defendants' use of the mails to forward closing statements
which misrepresented that payments were made when they in
fact were not, and defendants' causing the use of mails
setting forth the terms of and, ...