in a single injury" over a mere five month span, closed-ended continuity has not been alleged. D'Orange v. Feely, 877 F. Supp. 152, 157-58 (S.D.N.Y. 1995). On the other hand, if a number of limited partnerships over a ten to fifteen month period sell interests in their partnerships by committing mail and wire fraud, insurance fraud, and securities fraud, then closed-ended continuity is established. Pahmer v. Greenberg, 926 F. Supp. 287, 301 (E.D.N.Y. 1996).
It is difficult to argue that the allegations in this case support a finding of closed-ended continuity. The predicate acts alleged occurred over a three month period. Moreover, they involved a single perpetrator, defendant Menasche, a single victim, plaintiff, and a single, discrete scheme to induce plaintiff to guarantee a performance bond by fraudulently indicating that the company for which the bond was executed was in a financially sound condition. In fact, plaintiff does not even appear to seriously contest that closed-ended continuity cannot be established on the facts as they are alleged, but rather focusses his effort on demonstrating the existence of open-ended continuity, to which the court now directs its attention.
2. Open-Ended Continuity
In order to determine whether open-ended continuity exists, Second Circuit cases look either to the nature of the predicate acts alleged or to the nature of the enterprise at whose behest the predicate acts were performed. GICC, 67 F.3d at 466; United States v. Aulicino, 44 F.3d 1102, 1111 (2d Cir. 1995); United States v. Kaplan, 886 F.2d 536, 542 (2d Cir. 1989), cert. denied 493 U.S. 1076, 110 S. Ct. 1127, 107 L. Ed. 2d 1033 (1990); Beauford v. Helmsley, 865 F.2d 1386, 1391 (2d Cir.) (en banc), vacated and remanded, 492 U.S. 914, 109 S. Ct. 3236, 106 L. Ed. 2d 584, adhered to on remand, 893 F.2d 1433, cert. denied 493 U.S. 992, 110 S. Ct. 539, 107 L. Ed. 2d 537 (1989). Thus, "in cases where the act of the defendant or the enterprise were inherently unlawful, such as murder or obstruction of justice, and were in pursuit of inherently unlawful goals, such as narcotics trafficking or embezzlement, the courts generally have concluded that the requisite threat of continuity was adequately established by the nature of the activity . . . ." Aulicino, 44 F.3d at 1111.
However, when the nature of the conduct or enterprise are not inherently unlawful, courts must look to other external factors that would show the requisite threat of continuity. Kaplan, 886 F.2d at 542-43; GICC, 67 F.3d at 466. For example, open-ended continuity can be established for defendants who are engaged in a one-time mailing of 8,000 copies of fraudulent documents in connection with a condominium conversion plan when there is an indication that a similar mailing might occur in the future. Beauford, 865 F.2d at 1392. Similarly, a series of fraudulent sales of securities over at least one year, coupled with an apparent attempt to continue to sell securities in the future, establishes a threat of continuity. Azrielli v. Cohen Law Offices, 21 F.3d 512, 521 (2d Cir. 1994).
It is clear that banking is not an inherently unlawful enterprise, nor is issuing a letter of credit an activity which is by its very nature unlawful. Plaintiff claims, however, that there are external factors which establish the existence of a threat of future continuity which, when taken into account, are sufficient to establish open-ended continuity. According to plaintiff, because a bank is an institution upon which investors rely heavily, it should be liable under RICO whenever it issues fraudulent letters of credit. Thus, according to plaintiff, the mere fact that defendant is a bank is enough of an external factor to establish a threat of continuity. Plaintiff further argues that he may be able to establish more factors which demonstrate a threat of continuity if he were given an opportunity to conduct discovery.
Plaintiff's argument is without merit. The external facts which establish a threat of continuity are those which belie a characterization of the defendant's acts as isolated or sporadic. United States v. Indelicato, 865 F.2d 1370, 1382 (2d. Cir. 1989) (en banc); Kaplan, 886 F.2d at 543. The fact that a bank is generally considered a trustworthy institution and that investors tend to rely upon banks by no means indicates that the act which is alleged in the complaint is anything but an isolated garden variety fraud which the "pattern" requirement was designed to exclude from RICO. Indelicato, 865 F.2d at 1383; In re Integrated Resources Real Estate, 850 F. Supp. 1105, 1146 (S.D.N.Y. 1990). See also Cucina Classica v. Banca Nazionale Del Lavoro, 1997 U.S. Dist. LEXIS 3, *17, 1997 WL 2516, *5 (S.D.N.Y.)(dismissing RICO claim against a bank on the grounds that the predicate acts occurred over only two months and that there were no external factors which established a threat of future continuity).
Plaintiff's argument that he should be entitled to further discovery in order to establish the threat of continuity is bizarre. If plaintiff's argument were to succeed, every case in which an isolated or sporadic fraud was alleged would have to proceed to discovery under RICO, since it is always possible that further discovery will show that there is a threat that alleged racketeering activity will continue in the future. The mere fact that such cases are dismissed routinely demonstrates that plaintiff's argument that he is entitled to conduct a "fishing expedition" in the absence of any evidence that there has been a pattern of racketeering activity is unfounded in the law. See GICC, 67 F.3d at 464-69 (affirming district court's dismissal of a RICO action because the allegations were not sufficient to establish continuity); Cucina Classica, 1997 U.S. Dist. LEXIS 3, *24, 1997 WL at 2516 *4-7 (dismissing RICO claim on pleadings alone); D'Orange, 877 F. Supp. at 156-60 (same).
III. Pendent State Law Claims
In the absence of a federal claim, this court may decline to exercise jurisdiction over the pendent state law claims and dismiss the case. 28 U.S.C. § 1367(c) (West 1997). However, plaintiff urges this court not to dismiss these claims because of the existence of diversity jurisdiction pursuant to 28 U.S.C. § 1332 (West 1997). Unfortunately, the complaint does not make it clear that diversity jurisdiction is applicable since the allegations are that plaintiff is a "resident" of Greece but does not indicate that he is a Greek citizen, as would be required in order for § 1332 to apply. Moreover, defendant Menasche's citizenship is unclear from the complaint. Rather than dismiss the pendent claims, however, which may only result in a refiling of the case on the grounds of diversity, the court directs plaintiff within ten days of the date of the filing of this opinion to amend his complaint so as to plead properly a diversity case. Defendant will then be given ten days to answer or otherwise move with respect to the amended complaint.
For the reasons stated above, plaintiff's claim under RICO is dismissed and plaintiff is given ten days to amend his complaint so as to properly invoke diversity jurisdiction. Defendant is given ten days to answer or otherwise move with respect to the amended complaint.
Dated: June 4, 1997
New York, New York
Constance Baker Motley
United States District Judge
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