The opinion of the court was delivered by: ROBERT W. SWEEET
Mintz, Fraade, and Zeigler, P.C. ("the Mintz, Fraade Defendants" or "the law firm") have moved for the dismissal of the Plaintiffs' RICO claims in light of the recent decision of the Supreme Court in Reves v. Ernst & Young, U.S. , 113 S. Ct. 1163, 122 L. Ed. 2d 525 (1993). For the reasons given below, this motion is granted. Counsel for another group of defendants named only in the Alberti action, the real estate appraisers Jackson-Cross Company, Russell Snyder and George Hoez (the "Jackson-Cross Defendants"), originally joined in this motion by letter to the court dated May 12, 1993, but have since settled with the Plaintiffs, rendering their motion moot.
The Alberti Plaintiffs are investors in a New York limited partnership known as the Sacramento Office Park Associates ("Sacramento Associates"), organized to own, operate and lease a two-building office park complex in Sacramento, California referred to as the Butano Buildings (the "Butano Property"). The Morin plaintiffs are investors in other real estate limited partnerships, referred to as the 118, 119, 119M, 130 and 218 syndications, formed to divide up and offer to the public interests in three office buildings located in Sarasota, Florida, Grand Rapids, Michigan, Dallas, Texas, and in warehouses in Indianapolis, Indiana. Apart from the manner in which interlocking interests in the four properties were distributed among the different limited partnerships, the Morin plaintiffs alleged that the syndications were structured in precisely the same way as the Sacramento offering in Alberti.
Familiarity with the underlying disputes and principal parties in these actions is assumed. See, e.g., Morin v. Trupin, 711 F. Supp. 97 (S.D.N.Y. 1989) (filed April 13, 1989); Morin v. Trupin, 728 F. Supp. 952 (S.D.N.Y. 1989) (filed December 13, 1989); Morin v. Trupin, 738 F. Supp. 98 (S.D.N.Y. 1990) (filed May 4, 1990); Morin v. Trupin, 747 F. Supp. 1051 (S.D.N.Y. 1990) (filed September 29, 1990); Morin v. Trupin, 778 F. Supp. 711 (S.D.N.Y. 1991) (filed November 18, 1991); and Morin v. Trupin, 799 F. Supp. 342 (S.D.N.Y. 1992) (filed July 28, 1992). See also Ahmed v. Trupin, 781 F. Supp. 1017 (S.D.N.Y. 1992); Ahmed v. Trupin, 809 F. Supp. 1100 (S.D.N.Y. 1993)
In brief, in both actions the Plaintiffs have alleged that Trupin organized, ran, and syndicated limited partnerships in the businesses of real estate and equipment leasing in order to generate profits and tax losses for limited partners. The Alberti action involves the syndication of limited partnership shares in one commercial property located in Sacramento, California. The Morin action involves the syndication of limited partnership shares in four commercial real estate properties and shares in certain equipment leasing trusts. Certain of the tax benefits alleged promises to investors in the equipment leasing trusts have apparently been disallowed by the I.R.S. All of the commercial properties have been foreclosed upon. The Plaintiffs in Alberti and Morin have filed suit alleging violations of Section 10(b) of the 1934 Securities Exchange Act (the "10(b) action"), 15 U.S.C. § 78j(b) and Rule 10(b)-5, 17 C.F.R. § 240.10(b)-5, violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) 18 U.S.C. § 1962(1)-(d), and common law claims including misrepresentations and commonlaw fraud.
I. Standards for Dismissal Under Rule 12(b)(6)
On a Rule 12(b)(6) motion to dismiss, the factual allegations of the complaint are presumed to be true and all factual inferences must be drawn in the plaintiff's favor and against the defendants. See Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989); Dwyer v. Regan, 777 F.2d 825, 828-29 (2d Cir. 1985). Accordingly, the factual allegations considered here and set forth below are taken from the Plaintiffs' Complaints and do not constitute findings of fact by the Court. They are presumed to be true only for the purpose of deciding the present motions.
A court may not dismiss a complaint unless the movant demonstrates "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitled him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). Accord Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984) (quoted in H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50, 106 L. Ed. 2d 195, 109 S. Ct. 2893 (1989).
The substantive provisions of the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1962(a)-(d), outlaw four types of racketeering-related activities in the sections which the Plaintiffs allege have been violated. The Court of Appeals for the ...