The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM OF DECISION AND ORDER
The plaintiffs Arizona Premium Finance, Inc. ("Arizona") and
Westchester Premium Acceptance Corp. ("Westchester"), finance the
payments of insurance premiums for various businesses. The two
individually named defendants, Anthony Bielli and Arthur Bielli,
are both licensed insurance brokers. The four corporate
defendants, including Arthur M. Bielli & Company of New York,
Inc., Tony Bielli & Co. of New York, Invc., TBI International
Insurance Brokers Ltd., and Global Insurance Brokerage Inc. are
insurance brokerage agencies.
The plaintiffs claim that the defendants forwarded to them
fraudulent premium finance agreements. The finance agreements are
alleged to have contained false statements including non-existent
insurance policies, fictitious insureds, forged signatures,
incorrect policy information and incorrect inception dates of the
policies. Based upon these alleged fraudulent premium finance
agreements, the plaintiffs contend that they paid in excess of $1
million to the defendants which money was intended to be used
solely for the purpose of financing the insurance policies as set
forth in the agreements. The plaintiffs contend that instead of
financing insurance, the plaintiffs contend that the defendants
converted the funds for their own use and proceeded to secrete
the assets which they fraudulently obtained.
Presently before the Court is defendant Anthony Bielli's motion
to dismiss the complaint pursuant to Rule 12(b)(6) and 9(b) of
the Federal Rules of Civil Procedure ("Fed.R.Civ.P."). In
addition, defendants Arthur M. Bielli, Arthur M. Bielli & Co. of
New York, Inc., Tony Bielli & Co. of New York, Invc., and TBI
International Insurance Brokers Ltd. join in Anthony Bielli's
motion to dismiss. Global Insurance Brokerage Inc. has not
The following facts are taken from the plaintiffs' complaint,
filed on September 13, 1999. In 1998, the defendants began
transacting business with the plaintiff Arizona. At that time,
the defendants forwarded to Arizona what they represented to be
premium finance agreements seeking financing for insurance that
they were placing on behalf of their clients. In 1999, the
defendants began transacting business with Westchester, and
similarly forwarded it premium finance agreements seeking
financing for their insurance clients.
The plaintiffs assert that the premium finance agreements
contained false and fraudulent information including non existent
insurance policies, inflated premiums, incorrect insurance
carriers, false and ficticious names of insureds, forged
signatures of insureds, incorrect policy information, incorrect
inception dates of insurance policies and miscellaneous incorrect
premium and policy information. Based upon the fraudulent
information, the plaintiffs, who were licensed lending
institutions pursuant to the New York Banking Law, advanced large
sums of money to the defendants for what they believed were
financed insurance premiums. The plaintiffs contend that they
forwarded sums in excess of $1
million to the defendants for the purpose of financing insurance
policies, but unknown to them, the funds were instead diverted
for their own personal use.
The plaintiffs' complaint, consisting of 41 pages and 376
paragraphs refers to approximately 45 separate fraudulent premium
finance agreements. By way of example, the plaintiffs allege that
on separate occasions the defendants forwarded them premium
finance agreements listing the entity "TAB Enterprises" as the
insured. The complaint states that TAB Enterprises was formed in
1986 and dissolved in 1991, at which time the defendant Arthur M.
Bielli was the president of the corporation. The complaint
further claims that at the time of the submission of the premium
finance agreement, Arthur Bielli knew that the corporation did
not exist, had no assets and thus had no need to acquire
insurance. Based upon the representations in the premium finance
agreement, the plaintiffs forwarded the defendants approximately
$110,000. Instead of this money going to Lloyds of London, as
represented by the defendants, it was diverted for the personal
use of the defendants. In similar detail, the complaint goes on
to describe numerous other transactions where the defendants
forwarded fraudulent premium finance agreements and received
large sums of money that were not used to finance insurance
policies, but were diverted for the personal use of the
As a result of this conduct, the plaintiffs filed an eight
count complaint alleging violations of the civil RICO statute,
conversion and breach of contract.
On a motion to dismiss for failure to state a claim, the Court
should dismiss the complaint pursuant to Rule 12(b)(6) if it
appears "beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to relief."
Northrop v. Hoffman of Simsbury, Inc., 134 F.3d 41, 44 (2d Cir.
1997) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct.
99, 101-02, 2 L.Ed.2d 80 (1957)); see also IUE AFL — CIO Pension
Fund v. Herrmann, 9 F.3d 1049, 1052 (2d Cir. 1993), cert.
denied, 513 U.S. 822, 115 S.Ct. 86, 130 L.Ed.2d 38 (1994). The
Second Circuit stated that in deciding a Rule 12(b)(6) motion, "a
district court must limit itself to facts stated in the complaint
or in documents attached to the complaint as exhibits, or
incorporated in the complaint by reference." Newman & Schwartz
v. Asplundh Tree Expert Co., Inc., 102 F.3d 660, 662 (2d Cir.
1996) (quoting Kramer v. Time Warner, Inc., 937 F.2d 767, 773
(2d Cir. 1991)); see also International Audio-text Network, Inc.
v. AT & T Co., 62 F.3d 69, 72 (2d Cir. 1995); Paulemon v.
Tobin, 30 F.3d 307, 308-09 (2d Cir. 1994).
It is not the Court's function to weigh the evidence that might
be presented at a trial; the Court must merely determine whether
the complaint itself is legally sufficient, see Goldman v.
Belden, 754 F.2d 1059, 1067 (2d Cir. 1985), and in doing so, it
is well settled that the Court must accept the factual
allegations of the complaint as true, see Strom v. Goldman,
Sachs & Co., 202 F.3d 138, 140 (2d Cir. 1999); LaBounty v.
Adler, 933 F.2d 121, 123 (2d Cir. 1991); Procter & Gamble Co.
v. Big Apple Indus. Bldgs., Inc., 879 F.2d 10, 14 (2d Cir.
1989), cert. denied, 493 U.S. 1022, 110 S.Ct. 723, 107 L.Ed.2d
743 (1990), and construe all reasonable inferences in favor of
the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94
S.Ct. 1683, 40 L.Ed.2d 90 (1974); Leeds v. Meltz, 85 F.3d 51,
53 (2d Cir. 1996); LaBounty, 933 F.2d at 123; Bankers Trust
Co. v. Rhoades, 859 F.2d 1096, 1098 (2d Cir. 1988), cert.
denied, 490 U.S. 1007, 109 S.Ct. 1642, 104 L.Ed.2d 158 (1989).
The Court is mindful that under the modern rules of pleading, a
plaintiff need only provide "a short and plain statement of the
claim showing that the pleader is entitled to relief,"
Fed.R.Civ.P. 8(a)(2), and that "[a]ll pleadings shall be so
as to do substantial justice," Fed.R.Civ.P. 8(f).
The issue before the Court on a Rule 12(b)(6) motion "is not
whether a plaintiff will ultimately prevail but whether the
claimant is entitled to offer evidence to support the claims."
Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d
Cir. 1995), cert. denied, 519 U.S. 808, 117 S.Ct. 50, 136
L.Ed.2d 14 (1996) (quoting Scheuer, 416 U.S. at 236, 94 S.Ct.
1683). Recovery may appear remote and unlikely on the face of the
pleading, but that is not the test for dismissal under Rule
12(b)(6). Gant v. ...