however, collaterally estop the Plaintiffs from pursuing their breach of contract claim; (3) the guilty pleas of the insureds' principals to attempted grand larceny in the Fourth Degree does not bar civil litigation; (4) the Plaintiffs failed to state federal RICO and civil rights claims; and (6) as a result, the remaining state based claims were dismissed for lack of jurisdiction. Accordingly, the Complaint was dismissed with leave to replead.
On March 7, 1994, the Clerk of the Court entered a judgment of dismissal and closed this case. On March 17, the Plaintiffs moved to vacate the judgment and filed their Amended Complaint
on April 11, 1994. Three days later, the Plaintiffs' motion to vacate the judgment of dismissal was granted, over opposition, and this action was reinstated.
The Defendants initiated the filing of their motions to dismiss the Amended Complaint on June 1, 1994 and for Rule 11 sanctions on June 30, 1994. Oral argument on the motions were consolidated and heard by the Court on July 20, 1994. Supplemental affidavits and submissions were received by the Court through August 1, 1994, at which time the motions were considered fully submitted.
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 their 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 are taken from the Plaintiffs' Amended Complaint 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.
Rule 12(b)(6) also imposes a substantial burden of proof upon the moving party. 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, 250, 106 L. Ed. 2d 195, 109 S. Ct. 2893 (1989)).
As set forth in detail in Scheiner I, to sustain a RICO claim, a plaintiff must allege that the defendants committed two or more predicate acts which constitute a "pattern" of "racketeering activities" that directly or indirectly invests, maintains or participates in an enterprise affecting interstate commerce. Scheiner I, 832 F. Supp. at 699 (citations omitted).
In Scheiner I, the Court dismissed the Plaintiffs' initial RICO allegations that "at best . . . center around a business dispute involving a breach of contract." Scheiner I, 832 F. Supp. at 702. Specifically, the Court held that the Plaintiffs inadequately pleaded predicate acts with any "taint of illegality," that Plaintiffs' mail and wire fraud claims failed to "articulate a single fraudulent statement that was allegedly transmitted or received," and that the Defendants' acts did not constitute a pattern of racketeering activity entailing the requisite "indictable criminal conduct." Id. at 699-702.
Plaintiffs' Amended Complaint fails to cure the pleading deficiencies identified in Scheiner I. The Amended Complaint alleges that the "association-in-fact" between the Defendants constitutes a RICO enterprise within the meaning of 18 U.S.C. § 1961(4) which allegedly made a series of payments to WFFW, Homes, Miller, Coyne, Alizade, City Safe and McNicholas. (Am. Compl. P 98.) As no facts are alleged demonstrating that such payments are illegal they are accordingly presumed not to be alleged by the Plaintiffs as predicate acts within the meaning of the RICO statute.
As the basis for their RICO allegations, the Plaintiffs appear to only allege that the Defendants engaged in "two or more predicate acts of mail and/or wire fraud" in violation of 18 U.S.C. §§ 1341, 1343 (Am. Compl. P 100, 108). n3 The interstate communications listed are letters and telephone calls between Wade and Wallis (presumably Derek Wallace) and Wade and City Safe or Alizade, presumably compiled from WFFW's billing records:
9/1/89 Letter from Dennis Wade to Mr. Wallis.
10/25/89 Telephone conference between Dennis Wade and
Mr. Derek Wallis.
11/1/89 Receipt and review of proof of loss.
11/2/89 Telephone conference between Dennis Wade and
Mr. Derek Wallis (decision not to pay claim?).
11/30/89 Telephone conference between Dennis Wade and
Mr. Derek Wallis.
4/10/90 Telephone conference between Dennis Wade and
6/12/90 Receipt and review by Dennis Wade of Alizade
3/25/91 Telephone conference between Dennis Wade and
4/3/91 Receipt and review of fax of Karl Alizade's
report by CLM.
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