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CURATOLA v. RUVOLO

January 3, 1997

ANTHONY CURATOLA, LINDA CURATOLA in their own right and as shareholders of 18 EAST 17th STREET OWNERS, INC., Plaintiffs, against GUY RUVOLO, KATHRYN PHILIPPE, LAURA PARKINS and 18 EAST 17th STREET OWNERS, INC., Defendants.


The opinion of the court was delivered by: MCKENNA

 CLOSES CASE (REMAND TO N.Y.CO. SUPREME COURT)

 McKENNA, D.J.

 Plaintiffs Anthony and Linda Curatola brought this action against defendants, 18 East 17th Street Owners, Inc. and members of its board of directors for breach of fiduciary duty. Plaintiffs now move to toll the period within which plaintiffs would otherwise be required to cure their lease default, for leave to amend and supplement their complaint, and to disqualify defendants' counsel.

 I. Factual and Procedural Background

 Plaintiffs Anthony and Linda Curatola (the "Curatolas") are owners of 100 of the 850 shares of the defendant corporation, 18 East 17th Street Owners, Inc., and have possession of the fifth floor of the commercial cooperative building located at that address (the "building"). Defendant, 18 East 17th Street Owners, Inc. (the "Cooperative Corporation"), is a corporation organized under the laws of New York which owns and operates the building. Laura Parkins and the other individual defendants are or were at one time members of the Board of Directors of the Cooperative Corporation.

 The present case arises out of a continuing dispute between the Curatolas and the Cooperative Corporation. Plaintiffs have been served with a notice of default due to their failure to pay assessments and to reimburse the Cooperative Corporation for legal fees. Plaintiffs have alleged that this failure to make payment is due to defendants' fraudulent conduct which amount to numerous breaches of fiduciary duty by the Cooperative Corporation and the individual defendants. *fn1"

 This case was removed by the defendants pursuant to 28 U.S.C. § 1441(b) due to the newly asserted claim contained in the proposed amended complaint alleging a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq. ("RICO"). This proposed claim is the only basis under which this Court would have subject matter jurisdiction.

 For the reasons stated below, this Court has determined that the motion to amend the complaint with respect to the addition of a RICO claim must be denied for failure to state a claim upon which relief can be granted. See Prudential Ins. Co. of America v. BMC Indus., Inc., 655 F. Supp. 710, 711 (S.D.N.Y. 1987). Therefore, as no federal claim has been properly pled, this Court does not have jurisdiction to determine the remaining motions.

 In their proposed amended complaint, the Curatolas allege that defendant Parkins, aided and abetted by proposed additional defendant Camhy, Karlinsky & Stein LLP ("CK&S"), "repeatedly used the facilities of the United States Postal service to transmit letters and other items of correspondence in furtherance of a scheme or artifice to defraud..." (Proposed Amended Complaint P121), through which Parkins acquired or maintained an interest or control in an enterprise, namely the Cooperative Corporation, in violation of RICO, 18 U.S.C. § 1962(b) (Proposed Amended Complaint P128). In order to state a claim under RICO, the plaintiff must allege:

 
(1) that the defendants (2) through the commission of two or more acts (3) constituting a "pattern" (4) of "racketeering activity" (5) directly or indirectly invests in, or maintains an interest in, or participates in (6) an "enterprise" (7) the activities of which affect interstate commerce.

 Moss v. Morgan Stanley, Inc., 719 F.2d 5, 17 (2d Cir. 1983), cert. denied, 465 U.S. 1025, 104 S. Ct. 1280, 79 L. Ed. 2d 684 (1984). The Curatolas claim that Parkins and CK&S have engaged in mail fraud in violation of 18 U.S.C. § 1341 constituting the pattern of racketeering activity. However, the Curatolas fail to allege facts sufficient to state a claim under RICO predicated by acts of mail fraud. *fn2"

 The Curatolas claim that defendant Parkins, aided and abetted by CK&S, has committed mail fraud by (a) the mailing of a notice of default on or about September 19, 1995, based in part on a July 1995 CK&S bill and August 1995 legal fee assessment, (b) the mailing of a notice of termination on October 2, 1995, and (c) the mailing of a phony, ...


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