Plaintiffs totaling $ 195,000 are void and unenforceable; 7) treble damages and attorneys' fees under RICO, pleading that the various false statements made by the Defendants to the Plaintiffs were made through the mails and the international telephone and constituted mail fraud and wire fraud; and 8) damages from Defendant Rogers measured by lost opportunity due to Rogers' fraudulently inducing Plaintiffs into the venture at their command without intending to compensate them for doing so as promised in the joint venture agreement.
Federal jurisdiction is premised on Claim Seven, the federal RICO claim.
Oral argument was heard on Defendants' motions on March 1, 1995, and the motions were considered fully submitted at that time.
The State Claims at Law are Dismissed at This Time
In New York, joint ventures and the relationship between joint venturers are reviewed and tested by the rules governing partnerships and partners. See Ebker v. Tan Jay International, Ltd., 741 F. Supp. 448, 468 (S.D.N.Y. 1990), aff'd, 930 F.2d 909 (2d Cir.), cert. denied, 502 U.S. 853, 116 L. Ed. 2d 126, 112 S. Ct. 161 (1991); Pedersen v. Manitowoc Co., 25 N.Y.2d 412, 419, 306 N.Y.S.2d 903, 255 N.E.2d 146 (1969).
As a general New York rule, one partner may not sue another at law for damages relating to partnership affairs unless there has been a full accounting, prior settlement or adjustment of the partnership affairs. Ebker v. Tan Jay International, Ltd., 741 F. Supp. 448, 470 (S.D.N.Y. 1990), aff'd, 930 F.2d 909 (2d Cir.), cert. denied, 502 U.S. 853, 116 L. Ed. 2d 126, 112 S. Ct. 161 (1991); Pace v. Perk, 81 A.D.2d 444, 440 N.Y.S.2d 710, 715 (2d Dept. 1981); Consolidated Machinery and Wrecking Co. v. Harper Machinery Co., 190 A.D. 283, 180 N.Y.S. 135, 136 (1st Dept. 1920). Cases or counts are dismissed which plead legal causes of actions between partners prior to an accounting. See Giblin v. Anesthesiology Associates, 171 A.D.2d 839, 567 N.Y.S.2d 775, 776 (2d Dept. 1991) (breach of contract claim dismissed); Miske v. Berdon, 189 A.D.2d 594, 592 N.Y.S.2d 303, 304 (1st Dept. 1993) (leave to amend to add RICO claim was not granted until accounting was completed); Silverman v. Caplin, 150 A.D.2d 673, 541 N.Y.S.2d 546, 547 (2d Dept. 1989) (dismissing legal claims for breach of contract and fraud concerning failure to make payments to partnership); Sasson v. Lichtman, 276 A.D. 932, 94 N.Y.S.2d 578, 578-79 (2d Dept 1950) (dismissing claim for fraudulent withdraw of funds).
New York courts have permitted partners to seek injunctive relief prior to an accounting, however Plaintiff's second (breach of contract), fourth (damages for breach of fiduciary duty), fifth (damages for participation in breach of fiduciary duty) and eighth (damages for fraud in the inducement) claims do not seek equitable relief.
While there are exceptions to the rule that one partner may not sue another at law until there has been an accounting, Ebker v. Tan Jay Int'l Ltd., 741 F. Supp. 448 (S.D.N.Y. 1990), aff'd, 930 F.2d 909 (2d Cir.), cert. denied, 502 U.S. 853, 116 L. Ed. 2d 126, 112 S. Ct. 161 (1991) ("Ebker"), the facts of this case do not present a situation where the exception applies. Ebker contains a succinct discussion of the exception to the exclusivity of the accounting rule, known as the Crownshield/LaFleur exception. In Ebker, the court concluded that "the sole remedy available" to the plaintiff joint venturer in Ebker was an accounting, 741 F. Supp. at 468, and described the inapplicable exceptions:
The Crownshield and LaFleur cases cited by our Circuit Court are similarly inapplicable to the matter before us. Crownshield held that where a partner commences to dissolve a partnership before the end of the term agreed upon, or where prior to the commencement of the partnership or joint venture he disaffirms the underlying partnership contract, he is liable in an action at law for damages. [citing Crownshield] Since the partnership between Ebker and Nygard was expressly held by the Court of Appeals to be terminable at will, the Crownshield case, which concerned a partnership which was for a fixed term, is not applicable to the matter before us.