The opinion of the court was delivered by: SEYBERT
Presently before the Court are fourteen pending motions. To ensure completeness and clarity, and for administrative purposes, it is necessary to identify in summary fashion each pending motion.
Plaintiff commenced the instant action on December 9, 1997, alleging the following claims:
1. Against Defendant Dean Witter Reynolds, Inc., ("Dean Witter"), for interstate fraud, conspiracy, violations of a fiduciary duty, criminal enterprise, money laundering, racketeering, mail fraud, and embezzlement, stemming from Dean Witter's alleged failure to obey a state court injunction and its subsequent release via embezzlement in May, 1990, of plaintiff's commingled marital assets in account number 201-3884, valued in excess of $ 170,000.00. As against Defendant Dean Witter, Vasile prays to recover $ 1,000,000.00 in compensatory damages and $ 1,000,000.00 in punitive damages;
2. Against Defendant Norman P. Weiss, Esq., for interstate fraud, criminal enterprise, malicious abuse of legal process, slander, money laundering, and the intentional infliction of emotional distress, for his role in wrongly accusing plaintiff of embezzling the assets of Robyn Enright, before they were embezzled by others. As against Defendant Weiss, Vasile prays to recover $ 6,000,000.00 in compensatory damages and $ 6,000,000.00 in punitive damages;
3. Against Defendant Justice Alan D. Oshrin, for breaching a ministerial duty, civil rights violations, due process violations, conspiracy, obstruction, malicious abuse of legal process, and subornation. As against Defendant Justice Oshrin Vasile prays to recover $ 1,000,000.00 in compensatory damages and $ 1,000,000.00 in punitive damages;
4. Against Defendant Justice William L. Underwood, for breaching a ministerial duty, civil rights violations, due process violations, conspiracy, and subornation. As against Defendant Justice Oshrin Vasile prays to recover $ 1,000,000.00 in compensatory damages and $ 1,000,000.00 in punitive damages.
I. Standards Governing a 12(b)(6) Motion to Dismiss
A district court should grant a motion to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim only if "'it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50, 109 S. Ct. 2893, 2906, 106 L. Ed. 2d 195 (1989) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 2232, 81 L. Ed. 2d 59 (1984)); Annis v. County of Westchester, N.Y., 36 F.3d 251, 253 (2d Cir. 1994).
In applying this standard, a district court must "read the facts alleged in the complaint in the light most favorable" to the plaintiff, and accept these allegations as true. H.J. Inc. at 249, 109 S. Ct. at 2906; Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 1686, 40 L. Ed. 2d 90 (1974); Christ Gatzonis Elec. Contractor, Inc. v. New York City Sch. Constr. Auth., 23 F.3d 636, 639 (2d Cir. 1994); see also Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 165, 113 S. Ct. 1160, 1163, 122 L. Ed. 2d 517 (1993) (citing Fed. R. Civ. P. 8(a)(2) to demonstrate liberal system of 'notice pleading' employed by the Federal Rules of Civil Procedure).
The court's duty merely is "to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof." Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980); accord Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). The appropriate inquiry, therefore, is not "whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer, 416 U.S. at 236, 94 S. Ct. at 1686; Ricciuti v. New York City Transit Auth., 941 F.2d 119, 124 (2d Cir. 1991) (plaintiff is not compelled to prove his case at the pleading stage).
Additionally, it is not required that a claimant set out in detail the facts upon which he or she bases a claim, but only a statement of his or her claim that will give defendant "fair notice of what [the] claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 103, 2 L. Ed. 2d 80 (1957). Therefore, where a complaint is filed that charges each element necessary to recover, dismissal of the case for failure to set out evidential facts can seldom be warranted. United States v. Employing Plasterers Ass'n of Chicago, 347 U.S. 186, 188-89, 74 S. Ct. 452, 98 L. Ed. 618 (1954). Individual allegations, however, that are so baldly conclusory that they fail to give notice of the basic events and circumstances of which the plaintiff complains are meaningless as a practical matter and, as a matter of law, insufficient to state a claim. Barr v. Abrams, 810 F.2d 358, 363 (2d Cir. 1987).
When deciding a Rule 12(b)(6) motion, courts are directed to treat the motion as one for summary judgment if matters outside the pleading are presented to and not excluded by the court. Sua sponte conversion of a motion to dismiss into a motion for summary judgment is appropriate where "the losing party is not taken by surprise by the court's action." Blassingame v. Secretary of Navy, 811 F.2d 65, 74 (2d Cir. 1987). In the instant action, the Plaintiff Carmine Vasile has moved for summary judgment presenting an abundance of extrinsic evidence, therefore, the Court will consider all the pending motions to dismiss as motions for summary judgment.
II. Standards Governing a Motion For Summary Judgment
Pursuant to Federal Rule of Civil Procedure 56(c), courts may not grant a motion for summary judgment unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The burden of proof is on the moving party to show that there is no genuine issue of material fact, Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223 (2d Cir. 1994) (citing Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir. 1975)), and "all ambiguities must be resolved and all inferences drawn in favor of the party against whom summary judgment is sought." Id. (citing Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir. 1985), cert. denied, 484 U.S. 918, 108 S. Ct. 269, 98 L. Ed. 2d 226 (1987)). "Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986) (citing 10A C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure § 2725, at 93-95 (1983)).
A party opposing a motion for summary judgment "'may not rest upon the mere allegations or denials of his pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial.'" Id. at 248, 106 S. Ct. at 2510 (quoting First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 288-89, 88 S. Ct. 1575, 1592, 20 L. Ed. 2d 569 (1968). Under the law of the Second Circuit, "when no rational jury could find in favor of the nonmoving party because the evidence to support its case is so slight, there is no genuine issue of material fact and a grant of summary judgment is proper." Gallo, 22 F.3d at 1224 (citing Dister v. Continental Group, Inc., 859 F.2d 1108, 1114 (2d Cir. 1988)). It is within this framework that the Court addresses the instant motions.
III. Criminal Allegations
As an initial matter, many of Vasile's claims involve allegations of criminal activity. It is an elementary concept inherent in this nation's governmental structure and rooted in separation of powers principles that the investigation and prosecution of criminal laws is delegated to the executive branch and the appropriate law enforcement agency; agency determination depends upon the jurisdiction and the crime involved. In reviewing the numerous submissions of Carmine Vasile over the past year, it is clear that he has presented his claims to practically every federal and state law enforcement agency for review and consideration. It is not the Court's role to sit in judgment of those agencies' decisions.
It is also a general precept of criminal law that unless the statute specifically authorizes a private right of action, none exists. See Thompson v. Thompson, 484 U.S. 174, 179, 108 S. Ct. 513, 516, 98 L. Ed. 2d 512 (1988); Cort v. Ash, 422 U.S. 66, 79, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975) (no private right of action exists under criminal statutes unless there is a clear statutory basis for such an inference); Nashville Milk Co. v. Carnation Co., 355 U.S. 373, 78 S. Ct. 352, 2 L. Ed. 2d 340 (1958). One of the difficulties the Court faces, as is common in many pro se cases, is understanding the claims alleged, and associating the allegations, if possible, with viable claims. For example, Vasile accuses Defendant Dean Witter of, inter alia, interstate fraud, conspiracy to embezzle, obstruction of justice, mail fraud, violation of an injunction, and delaying discovery, while accusing Defendant Weiss of fraud, criminal enterprise, malicious abuse of legal process, and lying to a United States Department of Defense Investigator. The Justices are accused of breaching ministerial duties, and conspiracy to violate plaintiff's civil and property rights and malicious abuse of legal process.
Justice Underwood broke the law, Vasile maintains, by entering an Order preventing Vasile from commencing any action or proceeding in his court against Sheila Enright,
without prior approval of the court to ensure that the claim is made in good faith. Justice Oshrin purportedly broke the law by failing to protect Vasile from Justice Underwood's abuse of legal process, by rejecting Vasile's pleas for judicial intervention and by failing to enjoin Justice Underwood. As discussed infra, these judicial acts by Justices Underwood and Oshrin are actions taken pursuant to their jurisdiction and their inherent power "to manage their own proceedings . . . to control the conduct of those who appear before them . . . [and] to punish conduct which abuses the judicial process." Chambers v. NASCO, Inc., 501 U.S. 32, 33, 111 S. Ct. 2123, 2126, 115 L. Ed. 2d 27 (1991). Just as I have placed limitations on Vasile's right to file additional material and bring new proceedings without obtaining prior approval of this Court, Justice Underwood was equally empowered.
Even though the Court construes the claims in the light most favorable to Plaintiff, there is no private right of action for the vast majority of criminal allegations alleged. For example, Vasile has alleged a criminal conspiracy to deprive Plaintiff of his constitutional rights, allegedly involving all the defendants, either jointly or as between the individual defendants and other actors. The federal criminal conspiracy statute, 18 U.S.C. § 241, does not provide for a private right of action. See Powers v. Karen, 768 F. Supp. 46, 51 (E.D.N.Y. 1991), aff'd, 963 F.2d 1522 (2d Cir. 1992); John's Insulation, Inc. v. Siska Construction Co., Inc., 774 F. Supp. 156, 163 (S.D.N.Y. 1991); United States v. Kaufman, 750 F. Supp. 106, 108 (S.D.N.Y. 1990); Dugar v. Coughlin, 613 F. Supp. 849 (S.D.N.Y. 1985). Nor may Vasile bring an action alleging wire or mail fraud, because the respective statutes do not create a private right of action. See Official Publications, Inc. v. Kable News Co., 884 F.2d 664, 667 (2d Cir. 1989); Pappas v. Arfaras, 1991 U.S. Dist. LEXIS 14840, No. B-90-326, 1991 WL 218072, at *2 (D. Conn. Aug. 27, 1991) (no legislative history or case law indicates that either 18 U.S.C. § 1341 (mail fraud) or 18 U.S.C. § 1343 (wire fraud) offers basis for private cause of action); Raffaele v. Designers Break, Inc., 750 F. Supp. 611, 612-13 (S.D.N.Y. 1990).
With respect to Defendant Weiss' alleged false statements to a Department of Defense Investigator, although a criminal prosecution might be brought under the general statute covering false statements to an agency, 18 U.S.C. § 1001, there is no private right of action under this federal criminal statute. See Federal Savings and Loan Ins. Corp. v. Reeves, 816 F.2d 130, 137-39 (4th Cir. 1987); United States v. Richard Dattner Architects, 972 F. Supp. 738, 744 (S.D.N.Y. 1997); Shah v. New York State Dep't of Civil Serv., 1996 U.S. Dist. LEXIS 392, No. 94 Civ 9193, 1996 WL 19021, at *7, (S.D.N.Y. Jan. 17, 1996); Williams v. McCausland, 791 F. Supp. 992, 1001 (S.D.N.Y. 1992). Nor has plaintiff cited any authority which would support implying a private right of action for violation of these alleged crimes. If the allegations are purported to raise a claim pursuant to the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., Congress specifically provided for a private right of action. See 18 U.S.C. § 1964(c) ("Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court").
Accordingly, as the criminal claims raised, save the RICO allegations, do not provide for a private right of action, Vasile cannot seek civil redress for these allegations. However, as discussed infra, Vasile's allegations do not meet the minimal requisites of RICO.
IV. Defendant Dean Witter
Defendant Dean Witter moves to dismiss this action on numerous independent grounds. The gravamen of Vasile's claim against Dean Witter stems from an alleged series of transfers in or about May 1990, of approximately $ 176,000 in commingled matrimonial and Uniform Gift for Minors Act ["UGMA"] assets, held in Dean Witter accounts, specifically account number 201-013884, and that the UGMA assets were illegally transferred into margin accounts, in contravention of a court ordered injunction. In response, Dean Witter asserts that: (1) the injunction had been dissolved prior to the challenged account activity; (2) the injunction had no legal application to Dean Witter; (3) the accounts in question were registered to Sheila Enright and Robyn Enright, and therefore Dean Witter owed Carmine Vasile no fiduciary duty; (4) Vasile has failed to allege fraud; (5) Vasile has failed to allege a RICO claim; (6) Dean Witter is exempt from liability under UGMA; (7) Dean Witter cannot be held vicariously liable; and (8) Vasile's claims are time barred.
Although each of the grounds raised for dismissal may constitute a separate and independent basis to dismiss Plaintiff's suit, the Court need not determine the propriety of each proffered ground. Because of Vasile's undeterred persistence, however, an attempt will be made to analyze each enumerated defense.
As an initial matter, Dean Witter claims that the injunction was not in force at the time the transfer was made. The accounts held by Dean Witter included separate accounts in the name of Carmine Vasile, Sheila Vasile, and Sheila Vasile CDN (custodian) for Robyn Enright CA/UGMA.
A review of the activity during May, 1990, in account number 201-013884, held in the name of Mrs Sheila Vasile at a California Dean Witter branch, which eventually was transferred on May 21 to a Dean Witter branch in Melville, Long Island, where it was assigned account number 539-045735, based upon the records Plaintiff submitted, include the following: (1) On April 30, the account had a negative cash balance of $ 2998.20, (2) on May 15, $ 57,015.44 was transferred to an account at Manufacturer's Hanover; (3) on May 16, a check written on the account cleared and was covered by a check deposited the day before, also in the amount of $ 60,000.00; (4) on May 21, a negative cash balance of $ 59,295.64 was transferred to the Melville branch, along with the securities portfolio; (5) sufficient securities were sold from the account to cover the shortfall; and (6) as of May 31, 1990, the Dean Witter account had a positive cash balance of $ 1967.14.
In account number 201-019096, Sheila Vasile for Robyn Enright, which became account number 539-046171 as of August 13, 1990, when it was transferred to the Melville office, the account statements provided by the Plaintiff reveal a total account valuation of $ 4727.72 as of March 31, 1990, $ 4727.20 as of May 30, 1990, and $ 3556.68 as of August 31, 1990. The reduction in account valuation was related solely to a decrease in the value of the portfolio, as there was no activity in the account. Although Vasile alleges that $ 176,567.14 was removed from marital assets, the records do not support such contention. Only the May 15, 1990 transfer of $ 57,015.44 to an account at Manufacturer's Hanover represents assets removed from the account. The $ 60,000.00 appears to be a pass-through transaction where monies entered and left the account in conjunction, with no net effect. And, as indicated, there was no activity in the Robyn Enright account during the period reviewed.
The Honorable Saverio J. Fierro, Suffolk County Supreme Court, presiding over an order to show cause and cross motions in the underlying divorce action, by Order, dated April 17, 1989, held, in relevant part:
Defendant [Carmine Vasile] is directed to pay all of the carrying charges on the marital residence, including, but not limited to, mortgage principal and interest for both the first and second mortgages, real estate taxes, water, utilities and fuel, but not telephone service, cable television, or lawn or horticultural care.
Both parties are restrained and enjoined from selling, transferring, hypothecating or otherwise disposing of or encumbering any marital asset or any interest therein, including, but not limited to, the Dean Witter account no. 174534-08, Washington Public Power System Supply Systems bonds and shares of Instrument Systems maintained in Dean Witter accounts, except in the ordinary course of business or personal affairs and for full value. Leibowits v. Leibowits, 93 A.D.2d 535, 462 N.Y.S.2d 469 (2d Dep't 1983).
Mr. Vasile has provided a letter indicating that he notified Dean Witter of the court order restricting account activity. However, as the account activity in question, specifically the May 15, 1990 transfer to Manufacturer's Hanover, arose after the May 9, 1990 Order, Index # 12305/88, entered by the same Honorable Saverio J. Fierro, Suffolk County Supreme Court, lifting the injunction, the transfer was lawful. Sheila Enright was no longer restrained from engaging in activity in her Dean Witter account. Specifically, the May 9, 1990 Order provides, in relevant part:
The parties and their respective attorneys having appeared before me on May 8, 1990, and having entered into a stipulation of settlement in open court, and the parties having agreed, inter alia, . . . and the parties having further agreed that the restraining order issued by this court on April 17, 1989 which restrained and enjoined the parties from selling, transferring, hypothecating or otherwise disposing of or encumbering any marital asset or any interest therein, including but not limited to, the Dean Witter accounts be terminated and of no further force and effect ; and the court having had due deliberation thereon
Now, on motion of Philip F. Alba, P.C., attorney for the defendant, it is . . . ORDERED that the restraining order issued by this court on April 17, 1989 restraining and enjoining the parties from selling, transferring, hypothecating or otherwise disposing of or encumbering any marital asset or any interest therein, including but not limited to, the Dean Witter accounts held in the name of Sheila Vasile, Robyn Alise Enright and Carmine Vasile, be and the same is hereby terminated and of no further force and effect. [Emphasis added].
Therefore, it is clear that the Court which entered the injunction in the first instance, removed the injunction by Order dated May 9, 1990, pursuant to the stipulation of settlement of the parties, occurring in open court, and entered on the motion of Mr. Vasile's attorney. Accordingly, Vasile's claim against Dean Witter for transferring funds in derogation of the injunction is not factually accurate.
As a separate basis for dismissal of the claims, Dean Witter asserts that the injunction at issue had no legal effect against Dean Witter because it was only addressed to the parties in the action. Moreover, Dean Witter asserts that the injunction was technically a "property restraint" issued pursuant to New York Domestic Relations Law ("DRL") § 234, and not a "preliminary injunction" issued pursuant to CPLR Article 63.
This is a correct statement of law. Justice Fierro's Order of April 17, 1989, cited to Leibowits v. Leibowits, 93 A.D.2d 535, 462 N.Y.S.2d 469 (2d Dep't 1983) as controlling authority for imposing the restraint on the parties. In Leibowits, the court established in its opening paragraph that "Section 234 of the Domestic Relations Law provides the authority for the issuance of an order restraining disposition of marital assets during the pendency of a divorce action. Therefore, compliance with the formalities and jurisprudential requirements of article 63 of the CPLR relative to preliminary injunctions is not a prerequisite to an order of restraint." Id. Because a preliminary injunction would require a showing of probability of success on the merits, irreparable injury, and a favorable balancing of the equities, and would require the movant spouse to post an undertaking, the court went on to describe Section 234's power of restraint as "vital to meaningful enforcement of the equitable distribution statute." Id. at 536, 462 N.Y.S.2d at 471. In his concurring opinion, Justice O'Connor thoroughly explicates the legislative history of Section 234 and its scope and powers, and describes the interplay with third parties thusly:
Accordingly, since section 234 is limited in its reach to the rights of the spouses as between themselves, a spouse seeking to preclude dissipation of marital property in which a third party has an interest that would be prejudiced by a change of possession must be relegated to the court's inherent power to issue preliminary injunctions as regulated by article 63 of the CPLR.
Id. at 557, 462 N.Y.S.2d at 482. Although Dean Witter is not a third party in interest, the breadth of Section 234 is clearly delimited to the immediate parties to the Order. This is buttressed by the McKinney's Practice Commentaries to DRL § 234, C:234:5 at 98, (McKinney's (1986)), which provides, "where a restraint is sought to be made effective as against third persons, DRL 234 has no role and remedies must be sought elsewhere, as in CPLR Article 63 on injunctions. . . . Accordingly, where a matrimonial litigant seeks to restrain an asset transfer to third parties, or to direct those third parties to place the consideration for the asset transfer in escrow, the appropriate procedure, to obtain relief against the third parties is by resort to an application for a preliminary injunction." As referenced by Dean Witter, and directly on point is Bell v. Roosevelt Savings Bank, 160 Misc. 2d 728, 611 N.Y.S.2d 87 (Sup. Ct. Kings Cty. 1994), which framed the issue before the court as "how a financial institution should act when it is served with an order restraining an individual from withdrawing funds from an account but the order is silent as to a restraint on the financial institution itself." (emphasis in original). The court concluded that the result is straight-forward, "the individual, who is before the court, is restrained from removing funds while the financial institution, which is not before the court, is not called upon to do anything other than honor its institutional rules concerning access to accounts," even when notified of the restraint order. Id. at 729, 611 N.Y.S.2d at 88. By honoring its own rules pertaining to withdrawals and account activity, Dean Witter duly carried out its institutional responsibility, and accordingly is not liable to the plaintiff.
Dean Witter next avers that it owes Vasile no duty, fiduciary or otherwise, with respect to the two accounts at issue, registered in the names of Mrs. Sheila Vasile and Robyn Enright. As a general matter, under New York law, a fiduciary relationship exists "when one [person] is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation." Flickinger v. Harold C. Brown & Co. Inc., 947 F.2d 595, 599 (2d Cir. 1991)(citations omitted). A relationship between a stock broker and his customer may rise to this level, but not necessarily so. See Bissell v. Merrill Lynch & Co., 937 F. Supp. 237, 246 (S.D.N.Y. 1996) ("the mere existence of a broker-customer relationship is not proof of its fiduciary character."). Rather, it is only in those instances in which the broker exercises trading discretion over the account, as delegated by the customer, that the relationship establishes a fiduciary duty. Id. In the instant action, there is nothing in the record indicating that Dean Witter had trading discretion over the account, and of greater consequence, neither account was in the name of Carmine Vasile. Mr. Vasile had no interest in either account, save at most an expectancy interest contingent upon a favorable equitable distribution of the marital assets. This is supported by Mr. Vasile's letter of October 7, 1989, in which he notified Dean Witter's Vice-President of Investments, Mr. D. Warner Johnson, of Justice Fierro's court order. In the letter Vasile states "you of all people know how careful I was over the years to keep our accounts separate." As the Vasiles kept completely separate accounts, Carmine Vasile has no legal interest in the two accounts in question and cannot establish the existence of Dean Witter's purported fiduciary duty.
3. Conspiracy and Fraud Allegations
Dean Witter asserts in defense that Vasile has not satisfied the requisite elements of fraud and that New York does not recognize a conspiracy cause of action. As an initial matter, Rule 9(b) of the Federal Rules of Civil Procedure requires that the circumstances constituting fraud be stated with particularity.
As mentioned supra, there is no private right of action for criminal conspiracy. If the conspiracy allegations are construed as alleging civil conspiracy, New York law does not recognize a tort action for civil conspiracy. See Wall St. Transcript Corp. v. Ziff Communications Co., 225 A.D.2d 322, 638 N.Y.S.2d 640, 641 (1st Dep't 1996); see also Durante Bros. and Sons, Inc. v. Flushing Nat'l Bank, 755 F.2d 239, 251 (2d Cir.), cert. denied, 473 U.S. 906, 105 S. Ct. 3530, 87 L. Ed. 2d 654 (1985); Greystone Partnerships Group, Inc. v. Koninklijke Luchtvaaart Maatschappij N.V., 815 F. Supp. 745, 759 (S.D.N.Y. 1993). However, while New York does not recognize conspiracy as an independent cause of action in tort, a cause of action for conspiracy to do something unlawful is valid to the extent that the underlying conduct alleged states a cause of action. Local 144, Hotel, Hosp. v. C.N.H. Mgt. Assocs., 741 F. Supp. 415, 421 (S.D.N.Y. 1990). To the extent the Plaintiff's claims can be read to allege conspiracy to commit fraud, under New York law, "civil conspiracy to commit fraud, standing alone, is not actionable . . . if the underlying independent tort has not been adequately pleaded . . ." Epstein v. Haas Sec. Corp., 731 F. Supp. 1166, 1187 (S.D.N.Y. 1990) (citing Demalco Ltd. v. Feltner, 588 F. Supp. 1277, 1278 (S.D.N.Y. 1984), though "a claim of conspiracy can rest upon an independent underlying claim of fraud." Boucher v. Sears, 1997 U.S. Dist. LEXIS 19134, *32, No. 89- CV-1353, 1997 WL 736532, at *12 (N.D.N.Y. Nov. 21, 1997)(internal quotations omitted).
Under New York law, a plaintiff must establish five elements by clear and convincing evidence to prevail on a claim of fraud: (1) a material misrepresentation or omission of fact; (2) made with knowledge of its falsity, (3) with an intent to defraud; (4) reasonable reliance on the part of the plaintiff; and (5) such reliance causes damage to the plaintiff. Schlaifer Nance & Co. v. Estate of Andy Warhol, 119 F.3d 91, 98 (2d Cir. 1997)(citations omitted). Once fraud is established, the conspiracy must be proven, requiring "(i) an agreement between the conspirator and the wrongdoer and (ii) a wrongful act committed in furtherance of the conspiracy." Richardson v. Artrageous, Inc., 1994 U.S. Dist. LEXIS 3234, *11, No. 93 Civ. 5221, 1994 WL 97222 at *3 (S.D.N.Y., March 18, 1994).
As Dean Witter correctly asserts, Vasile does not allege a material misrepresentation. Vasile's contention lies on the premise that Dean Witter wrongly allowed Sheila Enright to transact business in her account and in her daughter's account in derogation of a court order. As discussed above, Dean Witter did not violate the court order and Carmine Vasile was neither a signatory to, nor had a legal interest in, the two accounts in question. Moreover, although Vasile purportedly notified Dean Witter of the restraining order, there is no allegation that they responded or made representations of an intent to comply. They had no duty to comply, and they owed Vasile nothing with respect to these accounts. Finally, there was no omission of facts. Dean Witter was not required, and may not have been at liberty to provide copies of account statements upon request, absent a subpoena or discovery procedures arising from the matrimonial or other state court proceedings. Accordingly, as Vasile has failed to plead the initial element of fraud, a material misrepresentation or omission of fact, and the facts as alleged do not support such a showing, the claim of fraud is hereby dismissed. Having failed to make a prima facie showing of fraud, Vasile's conspiracy claim must also be summarily dismissed.
Vasile also raises allegations of a RICO violation in his complaint and supporting documents, suggesting that Dean Witter's brokers engaged in a criminal enterprise, money laundering, racketeering, mail fraud, and embezzlement and other crimes. As discussed supra, there is no private right of action for the alleged crimes, however, a civil RICO claim can arise from criminal behavior.
The Supreme Court has explained that "RICO renders criminally and civilly liable 'any person' who uses or invests income derived 'from a pattern of racketeering activity' to acquire an interest in or to operate an enterprise engaged in interstate commerce, [18 U.S.C.] § 1962(a); who acquires or maintains an interest in or control of such an enterprise 'through a pattern of racketeering activity,' [18 U.S.C.] § 1962(b); who, being employed by or associated with such an enterprise, conducts or participates in the conduct of its affairs 'through a pattern of racketeering activity,' [18 U.S.C.] § 1962(c); or, finally, who conspires to violate the first three subsections of [18 U.S.C.] § 1962, § 1962(d)." H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 232-33, 109 S. Ct. 2893, 2897, 106 L. Ed. 2d 195 (1989); see Azrielli v. Cohen Law Offices, 21 F.3d 512, 520 (2d Cir. 1994). Additionally, "RICO provides for drastic remedies: conviction for a violation of RICO carries severe criminal penalties and forfeiture of illegal proceeds, 18 U.S.C. § 1963 . . . and a person found in a private civil action to have violated RICO is liable for treble damages, costs, and attorney's fees, 18 U.S.C. § 1964(c)." H.J. Inc., 492 U.S. at 233, 109 S. Ct. at 2897.
To state a claim for RICO damages, a plaintiff has two pleading burdens. First, a plaintiff has to allege the existence of seven constituent elements: "(1) that the defendant (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 or foreign commerce." Moss v. 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); see Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496-497, 105 S. Ct. 3275, 3285, 87 L. Ed. 2d 346 (1985); United States v. Private Sanitation Indus. Ass'n, 793 F. Supp. 1114, 1125-26 (E.D.N.Y. 1992). Second, a plaintiff has to allege that he was "injured in his business or property by reason of a violation of section 1962." Moss v. Stanley, Inc., 719 F.2d at 17; see Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. at 496-497, 105 S. Ct. at 3285 (proclaiming that a plaintiff must prove that "he has been injured in his business or property by the conduct constituting the violation").
In the instant action, Dean Witter contends that the Plaintiff has failed to satisfy their burden regarding any of the elements of a RICO claim, and specifically addresses the failure to allege a pattern of racketeering activity consisting of the commission of at least two predicate acts. The Court will address each of these arguments.
To constitute a pattern, the RICO predicate acts (1) must be related, and (2) reveal (a) continued, or (b) the threat of continued, unlawful conduct. See Azrielli, 21 F.3d at 520. As the Supreme Court has explained:
A pattern is not formed by sporadic activity, . . . and a person cannot be subjected to the sanctions of [RICO] simply for committing two widely separated and isolated criminal offenses . . . . Instead, the term "pattern" itself requires the showing of a relationship between the predicates, . . . and of the threat of continuing activity . . . . It is this factor of continuity plus relationship which combines to produce a pattern.
H.J. Inc., 492 U.S. at 239, 109 S. Ct. at 2900 (emphasis in original) (internal quotes omitted); Azrielli, 21 F.3d at 520 (quoting H.J. Inc., 492 U.S. at 239, 109 S. Ct. at 2900).
Similarly, the Second Circuit has explained that "the purpose of the relationship and continuity requirements is to 'prevent the application of RICO to the perpetrators of "isolated" or "sporadic" criminal acts.'" Azrielli, 21 F.3d at 520 (quoting United States v. Indelicato, 865 F.2d 1370, 1383 (2d Cir.)(en banc), cert. denied, 493 U.S. 811, 110 S. Ct. 56, 107 L. Ed. 2d 24 (1989)). Multiple schemes, however, are not required for a pattern to be found, and further, there is no requirement that the predicate acts be discernable as separable episodes or transactions. See Com-Tech Assocs. v. Computer Assocs. Int'l, 753 F. Supp. 1078, 1091 (E.D.N.Y. 1990), aff'd, 938 F.2d 1574 (2d Cir. 1991).
Predicate acts are "related" for RICO purposes when they "have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." Schlaifer Nance & Co., 119 F.3d at 97 (quoting H.J. Inc., 492 U.S. at 240, 109 S. Ct. at 2901). The Second Circuit has noted that
an interrelationship between acts, suggesting the existence of a pattern, may be established in a number of ways. These include proof of their temporal proximity, or common goals, or similarity of methods, or repetitions. The degree to which these factors establish a pattern may depend on the degree of proximity, or any similarities in goals or methodology, or the number of repetitions.
Azrielli, 21 F.3d at 520 (quoting Indelicato, 865 F.2d at 1382). Further, for the relatedness element to be satisfied, the predicate acts must be related, directly or indirectly, to each other as well as to the enterprise. See United States v. Locascio, 6 F.3d 924, 943 (2d Cir. 1993), cert. denied, 511 U.S. 1070, 114 S. Ct. 1646 (1994) (proclaiming that relatedness requirement is satisfied even if the predicate acts are not directly related to each other so long as both are related to the RICO enterprise in such a way that they become indirectly connected to each other); United States v. Long, 917 F.2d 691, 697 (2d Cir. 1990).
Continuity -- the second element that must be shown for a pattern of racketeering activity to be established -- requires allegations of "either an 'open-ended' pattern of racketeering activity, (i.e., past criminal conduct coupled with a threat of future criminal conduct) or a 'closed-ended' pattern of racketeering activity (i.e., past criminal conduct 'extending over a substantial period of time')." Schlaifer Nance & Co., 119 F.3d at 97 (quoting GICC Capital Corp. v. Technology Finance Group, Inc., 67 F.3d 463, 466, (2d Cir. 1995), cert. denied, 518 U.S. 1017, 116 S. Ct. 2547, 135 L. Ed. 2d 1067 (1996). The Second Circuit went on to describe how to determine whether a threat of "open-ended" continuity exists. Id. "[A] court must examine the nature of either: (1) the predicate acts alleged, or (2) the enterprise at whose behest the predicate acts were performed." Id. (citations omitted). For "close-ended" continuity, activity continuing for a matter of years is sufficient to satisfy "a substantial period of time." Id. (citing Jacobson v. Cooper, 882 F.2d 717, 720 (2d Cir. 1989).
Applying these standards to the case at bar, Vasile's claims amount to the following: (1) Dean Witter had knowledge of the injunction restraining transfer of the account assets; (2) Dean Witter's failure to comply with the restraining order prevented Vasile's assets from being protected from embezzlement; (3) Dean Witter's brokers conspired with Sheila Enright to embezzle funds belonging to Vasile and Robyn Enright, and in so doing engaged in mail fraud and wire fraud.
As previously discussed, Dean Witter had no legal obligation to comply with the April 17, 1989 property restraint issued pursuant to DRL § 234. Mr. Vasile's attorney had the opportunity to make application for a preliminary injunction enjoining Dean Witter from transacting any activity in the accounts in question. Further, because there is no evidence that the transactions were unauthorized, all claims of wire fraud and/or mail fraud must fail. "The essential elements of a mail [or wire] fraud violation are (1) a scheme to defraud, (2) money or property [as the object of the scheme], and (3) use of the mails [or wires] to further the scheme." United States v. Dinome, 86 F.3d 277, 283 (2d Cir. 1996) (internal quotations omitted); 18 U.S.C. §§ 1341, 1343. In addition, there has been no showing of a scheme to defraud, or any conspiracy entered into by Dean Witter's brokers in conjunction with Sheila Enright. This would require a showing that the brokers and Enright entered into an agreement and committed a wrongful act in furtherance of the agreement. All Vasile can point to is that the brokers executed transactions on behalf of Sheila Enright and transferred her account from a California branch to a New York branch. In executing the transactions they were acting pursuant to instructions of the account holder. Repeatedly calling people embezzlers, conspirators or criminals, does not make it so. Embezzlement is the fraudulent appropriation of money by a person to whom such money had been entrusted or into whose hands it has lawfully come and that the person misappropriated the funds for his own purpose and that he did so with wrongful intent or deceit. There has been no allegation that Dean Witter benefitted by the transactions, or any showing of the specific criminal intent required. Because Vasile can prove no criminal activity was committed by Dean Witter, or establish the existence of a predicate act as set forth in 18 U.S.C. Section 1961(a), the RICO claim must fail.
The specific acts in question, based upon Vasile's contentions, occurred within the span of a few months in 1990. The acts did not constitute a RICO pattern and although they were related to the extent that they were transactions involving Enright's accounts, they had no continuity as they did not extend over a substantial period of time, nor pose a threat of future criminal conduct. After construing the evidence in the light most favorable to the Plaintiff, the Court concludes that Vasile has failed to establish a single predicate act or the existence of a pattern of racketeering activity. Accordingly, the Court finds that a reasonable juror could not find a "pattern" of racketeering activity, and thus summary judgment is warranted on this ground.
As an additional and separate basis to dismiss Vasile's complaint, Dean Witter raises the statutory exemption absolving brokers and financial institutions from liability for acting on instructions from the custodian. The Uniform Gifts to Minors Act governs transfers made before the end of 1996. Custodial transfers made thereafter are governed by the Uniform Transfers to Minors Act. EPTL 7-6.1 et seq.. The statutory exemption raised by Dean Witter is Section 7-4.6 of the Estates, Powers and Trust Law ("EPTL"), entitled "Exemption of third persons from liability."
Although courts have held that "the policy of this section protects a broker in the broker's reliance on instructions received from a custodian," Feinberg v. Bache Halsey Stuart Inc., 61 A.D.2d 135, 402 N.Y.S.2d 187, 189 (1st Dep't 1978), the wisdom of the Second Circuit informs a cautionary reluctance, in part because the "meaning of section 7-4.6 is far from clear because that provision has rarely been interpreted by New York courts. Were a federal court deciding whether to assert pendent jurisdiction over a claim requiring interpretation of such a statute, its obscurity and the paucity of pertinent state judicial precedent would argue in favor of deferring in favor of the state courts." Scott v. Long Island Sav. Bank, 937 F.2d 738, 742 (2d Cir. 1991). Accordingly, and because it is unnecessary to decide, the Court will not determine whether EPTL § 7-4.6 absolves Dean Witter of liability in the instant matter.
6. Statute of Limitations
Lastly, as a separate and independent basis to dismiss this action, Dean Witter asserts that Vasile's claims are time-barred. A four-year statute of limitations applies to civil RICO actions. See Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 152, 107 S. Ct. 2759, 97 L. Ed. 2d 121 (1987). A cause of action accrues under RICO at the time that the plaintiff "discovered or should have discovered the injury." Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1102 (2d Cir. 1988), cert. denied, 490 U.S. 1007, 109 S. Ct. 1642, 104 L. Ed. 2d 158 (1989). The New York statute of limitations for fraud is six years from the date of commission, see CPLR 213(8) (McKinney 1990), or two years from the date the plaintiff discovered, or should have discovered, the fraud, whichever is longer. CPLR 203(f), 213(8); see also Long Island Lighting Co. v. Imo Indus. Inc., 6 F.3d 876, 887 (2d Cir. 1993). A claim for breach of fiduciary duty is governed by the underlying concomitant claim, thus, where it is a claim for an action to recover damages for any "injury to property," pursuant to CPLR § 214(4), a three year statute of limitations applies. Under New York law, a six year limitations applies to a claim for breach of fiduciary duty only where the alleged breach "had its genesis in the contractual relationship of the parties." Sears Roebuck & Co. v. Enco Assocs. Inc., 43 N.Y.2d 389, 396, 401 N.Y.S.2d 767, 771, 372 N.E.2d 555 (1977). The statute of limitations can be specified in the statute. For example, under ERISA, inapplicable to the case at bar, "a breach of fiduciary duty involving fraud or concealment, the three-year exception for actual knowledge does not apply, and a party has six years from the time it discovers the breach to bring an action. For all other breaches of fiduciary duty, a party can commence an action within six years of the time the breach occurred, unless the party has actual knowledge of the breach, in which case it must bring the action within three years of the time it learned of the breach." Diduck v. Kaszycki & Sons Contractors, Inc., 874 F.2d 912, 919 (2d Cir. 1989). When negligence is the basis upon which the breach is alleged, a three years statute of limitations applies. See Aaron Ferer & Sons Ltd., v. Chase Manhattan Bank, Nat'l Ass'n, 731 F.2d 112, 120 (2d Cir. 1984).
Here, the actions which Vasile maintains provides the basis for his claims, arose in the summer of 1990. Plaintiff initiated this suit on December 9, 1997, more than seven years later. Vasile contends that he first became aware of the true character and scope of the conspiracy, and therefore the RICO claim, on September 18, 1997, based upon documents provided by NYSE counsel, Regina Dunne, which included the Dean Witter account statements.
This claim is discredited by the testimony at a hearing before the Honorable Alan Oshrin, dated September 9, 1992, in which Vasile, represented by Anthony N. Del Rosso, Esq., brought an order to show cause based on newly discovered evidence that Sheila Enright committed fraud and was guilty of misrepresentation. The following exchange took place:
Del Rosso: We found out about the fraud, I did, on August 13, 1992. My client was informed on August 17th, five days after I
Court: But that was fraud that you could have ascertained prior to the
Del Rosso: Who said so, Judge?
Court: You claim in your papers that there was non-compliance by Mrs Vasile or Mrs. Enright with respect to a prior Order of Justice Fierro.
Then later on, the following discussion occurred:
Court: Was your client represented by a lawyer?
Del Rosso: I believe he was.
Court: Okay. Did discovery ...