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SMITH v. WEINBERGER

March 9, 1998

OSCAR SMITH, Plaintiff, against WAYNE WEINBERGER, P.C., WAYNE WEINBERGER, RALPH EMPROTO, SALVATORE SAFONTE, and ANTONIO SAFONTE a/k/a SALVATORE SAFONTE, Defendants.


The opinion of the court was delivered by: SPATT

 SPATT, District Judge :

 This lawsuit arises from the parties' dispute regarding the management and/or ownership of several parcels of real estate. The pro se plaintiff, Oscar Smith ("Smith" or the "plaintiff"), is the owner of seven residential properties in the Arverne area of Queens, New York. Smith hired the defendant, Ralph Emproto ("Emproto") to manage and sell the properties. According to the Amended Complaint, Emproto, with the aid of the defendants Wayne Weinberger ("Weinberger"), Salvatore Safonte ("Salvatore") and Antonio Safonte ("Antonio"), defrauded him of several hundred thousand dollars through the use of "straw buyers" and other fraudulent acts. Smith's original and amended complaint alleged violations of the Racketeer Influenced Corrupt Organizations Act ("RICO") 18 U.S.C. §§ 1961 et seq., and related state law claims for common-law fraud and conversion. In addition, the complaint asserted a single "fraudulent conveyance" claim against Salvatore individually.

 This matter is now before the Court on the defendant Salvatore's third dispositive motion, this time an application for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Familiarity with the Court's earlier decisions is presumed, and the Court will not reiterate the extensive factual and procedural background of this case, which is set forth in detail in the prior decisions.

 I. BACKGROUND

 A. The Dispute Between the Parties

 The following facts are taken from the Amended Complaint. The plaintiff, Oscar Smith, is a North Carolina resident in the real estate business. In August 1989 Smith employed Emproto, a Queens County resident, to manage and sell seven parcels of real property, located at 69-43, 69-44, 69-49, 69-51, 69-52, 69-56, and 69-60 Hillmeyer Avenue, in Arverne, New York (the "Properties"). Emproto's compensation was a $ 20,000 credit to be applied to his purchase of the premises located at 69-51 Hillmeyer Avenue. Although at the time of this initial transaction Emproto was a licensed real estate broker, in May 1990 Emproto lost his license, a fact which was never stated to Smith.

 To assist him in selling the Properties, Emproto retained the services of the defendant Weinberger, a New York resident and attorney practicing law in Nassau County. Between January 31, 1990 and December 17, 1991, with Weinberger's assistance, Emproto sold the parcels located at 69-43, 69-44, 69-51, 69-52, 69-56 and 69-60 Hillmeyer Avenue. Apparently all of the properties were sold with exception of 69-49. All of the sales were brokered by Emproto, and except for the sale of 69-51, Weinberger represented the buyers in each transaction.

 As an incentive for purchasing these properties, each buyer was given a "credit for repairs." Smith alleges however, that this credit was "in total disregard of appraisals made independently" by at least two inspection agencies, and that these credits cost him over $ 150,000. Furthermore, the buyers for properties located at 69-51, 69-52 and 69-56 were granted purchase money mortgages of $ 10,000, $ 15,000, and $ 15,000 respectively. At the time this lawsuit was filed, no payments had been made on the notes for the 69-52 and 69-56 properties. With respect to the mortgage on 69-51, Smith claims that on April 29, 1991, he was forced to accept repayment of the mortgage under duress at a reduced rate. Further, although Smith fails to explain the surrounding circumstances, on April 29, 1991, he also delivered four signed satisfactions of mortgage in blank to Weinberger to be held in escrow.

 Prior to these events, on December 22, 1988, at the request of Weinberger and Emproto, the defendant Salvatore Safonte gave Smith a "line of credit mortgage" in the amount of $ 100,000 with a wraparound mortgage for the purpose of renovating 69-51. As part of this transaction, a $ 10,000 check written to the order of Oscar Smith was signed and given back to Antonio Safonte, apparently representing ten points "as consideration for getting the loan." The total disbursement under this line of credit was $ 45,000. This debt was repaid in full on January 31, 1990 at the closing on 69-51, which was eventually sold to one Paul Yenco who is not a party to this action.

 Similarly, on December 2, 1988 Salvatore, as the mortgagee for the property at 69-52, transferred $ 50,000 to the borrowers with the sum of $ 5,000, representing ten points, again being conveyed to Antonio. This loan was repaid on June 30, 1990. Although the allegations based on these transactions are difficult to decipher, the plaintiff apparently alleged that Antonio fraudulently facilitated these loans in order to obtain his fees. However, the nature of the fraud is unclear. In a single allegation, Smith contended that the underlying loans did not exist, and then contradicted himself by identifying the date the two loans for $ 45,000 and $ 50,000 were made, when they were repaid, and the amount of interest that accrued. Nevertheless, in a subsequent allegation, Smith apparently maintained that Salvatore on several occasions intentionally misrepresented the amount due on the loans in order to unlawfully obtain a higher return. In support of these allegations, Smith cited to two letters dated October 2, 1989, and November 25, 1991, which allegedly fraudulently overstated the outstanding balances.

 Further, in April 1992 or April 1993--the plaintiff gives both dates--Salvatore foreclosed on a mortgage on the property located at 69-49. According to the Amended Complaint, the foreclosure was the "result of usury and fraud." However, the facts supporting these allegations were not set forth in the Amended Complaint, except to say that the Queens County District Attorney was investigating the matter. Smith further alleged that on December 17, 1991, he was billed for legal fees in the amount of $ 3,950 associated with a foreclosure in addition to receiving an affidavit of Arthur Terranova, Esq., Referee of the Supreme Court, Queens County, stating that Smith owed $ 71,441.63 plus interest, apparently based on a failure to repay an underlying loan. In addition, the plaintiff alleged that the $ 3950 in legal fees was paid "under duress" at the closing on the 69-60 property.

 Finally, Smith alleged that Salvatore, "conspired to defraud" him with respect to the closing on 69-60 Hillmeyer Avenue "as a result of some under-the-table dealings" with an unrelated company. The details of these fraudulent activities were not identified.

 B. The Court's Prior Decisions

 By a Decision and Order dated September 21, 1995, this Court dismissed the plaintiff's claims against Salvatore, as contained in the original Complaint, pursuant to Fed. R. Civ. P. 12(b)(6), without prejudice and with leave to replead. Thereafter, Smith filed an Amended Complaint alleging the following ten counts: (1) violations of RICO pursuant to 18 U.S.C. § 1962(c); (2) conspiracy violations of RICO pursuant to 18 U.S.C. § 1962(d); (3) breach of fiduciary duty pursuant to 18 U.S.C. § 1962; (4) common law fraud; (5) conversion; (6) participation in conversion; (7) and (8) fraudulent conveyances; (9) participation in conspiracy; and (10) perjury.

 In a Decision and Order dated July 23, 1996, this Court: (1) granted Salvatore's Rule 12(b)(6) motion to dismiss, with prejudice, the eighth and tenth counts contained in the Amended Complaint for fraudulent conveyance and perjury; (2) denied Salvatore's motion to dismiss the plaintiff's "conversion" claims, the fifth and sixth counts; and (3) granted Salvatore's motion to dismiss the remaining claims pursuant to Fed. R. Civ. P. 12(b)(6) for failure state a claim without prejudice and with leave to file a Second Amended Complaint within thirty days from ...


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