¶¶ 85-89; JC ¶ 149. And, "Plaintiffs have made no allegation of
wrongdoing against Diamond," who is named as a defendant "solely
in her capacity as a trustee of the Jacques and Natasha Gelman
Trust dated November 18, 1997. . . ." Pl. Opp. at 1, n. 1.
Defendants also argue that Plaintiffs have failed to plead a
"pattern" of racketeering. Def. Mem. at 19. Plaintiffs respond
that "[a]llegations that a fiduciary engaged in numerous
transactions of diversion of funds, all related to the overall
purpose of stealing and diverting the funds, satisfy the
requirement of a `pattern of racketeering activity.'" Pl. Opp.
To establish "pattern," a plaintiff must allege facts tending
to show that "the racketeering predicates are related, and that
they amount to or pose a threat of continued criminal activity."
H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239,
109 S.Ct. 2893, 106 L.Ed.2d 195 (1989). "The continuity
necessary to prove a pattern can be either `closed-ended
continuity,' or `open-ended continuity.'" Cofacredit, S.A. v.
Windsor Plumbing Supply Co., Inc., 187 F.3d 229, 242 (2d Cir.
The Complaints fail to plead that Neschis' alleged predicate
acts constitute either a closed-ended or an open-ended pattern.
"Closed-ended continuity is demonstrated by predicate acts that
amount to continued criminal activity by a particular
defendant." Id. Several factors may be considered, including,
inter alia: "the length of time over which the alleged
predicate acts took place, the number and variety of acts, the
number of participants, the number of victims, and the presence
of separate schemes." GICC Capital Corp. v. Technology Fin.
Group, Inc., 67 F.3d 463, 467 (2d Cir. 1995) (citations
omitted). To show closed-ended continuity, a plaintiff must
allege "a series of related predicates extending over a
substantial period of time." H.J., Inc., 492 U.S. at 242, 109
S.Ct. 2893. The Second Circuit "has never held a period of less
than two years to constitute a `substantial period of time.'"
Cofacredit, 187 F.3d at 242.
Defendants argue that Neschis' alleged predicate acts after
1992 may not be considered "[b]ecause replacing Plaintiffs as
second[ary] beneficiaries was `effectively accomplished' when
the 1992 By-[L]aws replaced the 1991 By-[L]aws. . . ." Def. Mem.
at 19. Plaintiffs state that the "goal of the purported scheme —
control over Mrs. Gelman's wealth — will not be accomplished
until the New York Trust, Littman and Diamond receive their
distributions of Anturia funds," Pl. Opp. at 22, i.e., the
scheme "began in 1992 and continued at least through the
completion of the Liechtenstein arbitration and the receipt of
the proceeds of the fraud by the New York Trust." Id. at
22-23. Assuming arguendo that each of Neschis' four (alleged)
acts of mail fraud, beginning on April 30, 1992 and ending on
July 16, 1999, is relevant to assessing continuity, Neschis'
actions lasted approximately seven years.
At the same time, "a scheme's duration alone is not
dispositive." Pier Connection, 907 F. Supp. at 78; see also
Schnell v. Conseco, Inc., 43 F. Supp.2d 438, 446 (S.D.N.Y. 1999)
("While, when taken in isolation, the time period of the alleged
racketeering conduct may support a finding of closed-ended
continuity, such a finding is not automatic in light of the
other factors to be considered."). In Feirstein v. Nanbar
Realty Corp., 963 F. Supp. 254, 260 (S.D.N.Y. 1997), the Court
held that plaintiffs' allegations of four predicate acts
committed over a three-year period were insufficient to
establish closed-ended continuity because "an average of one act
year is a sporadic event" and plaintiffs alleged "nothing more
than a single alleged scheme with a single, wrongful, narrow
goal. . . ." Id. at 260. As in Feirstein, none of the
(other) indicia of closed-ended continuity — i.e. a large number
and variety of predicate acts, a large number of either
participants or victims, and the presence of separate schemes —
is present in this case. The Complaints plead four predicate
acts of mail fraud, committed by one participant (Neschis)
against a limited number of victims (Weizmann and the Jungs) in
furtherance of a single fraudulent scheme (to gain control of
Mrs. Gelman's assets). "Such a discrete and limited scheme is
insufficient to support closed-ended continuity." Lopresti v.
Merson, 00 Civ. 4255(JGK), 2001 WL 1132051, at *13 (S.D.N.Y.
Sept. 21, 2001). And, Plaintiffs' allegations that Neschis
committed larceny do not help Plaintiffs' cause. "RICO
continuity is measured by RICO predicate acts, not by actions
that, while wrongful, are not statutory predicates for a RICO
violation." Vicon Fiber Optics Corp. v. Scrivo, 201 F. Supp.2d 216,
221 (S.D.N.Y. 2002).*fn30
J. RICO Conspiracy — 18 U.S.C. § 1962(d)
Defendants argue (correctly) that "[b]ecause Plaintiffs'
substantive RICO claim fails, Plaintiffs' claim of conspiracy to
commit a violation of 18 U.S.C. § 1962(c), pursuant to §
1962(d), must also fail." Def. Mem. at 22. See Vicon,
201 F. Supp.2d at 221 (dismissing RICO conspiracy claim "because the
underlying substantive RICO cause of action has been
dismissed."); Katzman v. Victoria's Secret Catalogue,
167 F.R.D. 649, 658 (S.D.N.Y. 1996) (holding that plaintiffs
"failure to adequately plead facts that would satisfy the
pleading requirements of §§ 1962(a), 1962(b) or 1962(c)
necessarily dooms any claim she might assert arising under §
K. Constructive Trust
The Jungs allege that they are entitled to a constructive
trust on Defendants assets because Defendants "took advantage of
or otherwise abused" the confidential fiduciary relationship as
trustees of the Inter Vivos Trust and the Testamentary
Trust.*fn31 (JC ¶¶ 178-79). Defendants contend, inter alia,
that the Jungs fail to "allege that Defendants made them a
promise or their reliance on said promise." Def. Reply at 8.
A constructive trust is an equitable remedy designed to
"prevent unjust enrichment, although unjust enrichment does not
necessarily implicate the performance of a wrongful act."
Counihan v. Allstate Ins. Co., 194 F.3d 357, 361 (2d Cir.
1999). "New York law generally requires that a party establish
four elements before a constructive trust may be imposed: (1) a
confidential or fiduciary
relationship; (2) an express or implied promise; (3) a transfer
made in reliance on that promise; and (4) unjust enrichment."
ESI, Inc. v. Coastal Power Production Co., 995 F. Supp. 419,
436 (S.D.N.Y. 1998). While these elements serve as important
guideposts, the constructive trust doctrine is equitable in
nature and should not be rigidly limited. See Pagliai v. Del
Re, 99 Civ. 9030, 2001 WL 220013, at *6 (S.D.N.Y. Mar. 7,
"However, even given the Court's flexibility, plaintiffs must
at least show a promise and a transfer of property in reliance
thereof." Weber v. Multimedia Entertainment, Inc., 97 Civ.
0682(PKL), 1998 WL 2550, at *5 (S.D.N.Y. Jan. 5, 1998). Here,
the Jungs have failed to allege either a promise or a transfer
of any property in reliance on a promise. See id, see also Van
Brunt v. Rauschenberg, 799 F. Supp. 1467, 1474 (S.D.N.Y. 1992)
("Without transfer of property in reliance of a promise or
agreement, there cannot be a constructive trust."); Caballero
v. Anselmo, 759 F. Supp. 144, 147 (S.D.N.Y. 1991) (". . .
plaintiff must at least show a promise and a transfer of
L. Injunctive Relief
The Jungs' assert that they are "entitled to a preliminary and
permanent injunction against all of the Defendants enjoining and
restraining the Defendants from exercising any dominion or
control . . . over any of the assets of the . . . Foundation
and/or the estate of Natasha Gelman."*fn32 (JC ¶ 171). The
Jungs seek a permanent injunction "enjoining all [D]efendants
from using or transferring any part of the assets received from
the . . . Foundation directly to any person or entity, other
than to [the Jungs], until [the Jungs] ha[ve] received their
proportionate share of the assets in the . . . Foundation at the
time of the death of Mri. Gelman." (Id. at 36). Plaintiffs
contend that "[t]he Jungs' claim for injunctive relief is
necessary to insure that [D]efendants' elaborate scheme to
defraud the Gelmans' rightful beneficiaries does not continue."
Pl. Opp. at 24.
Defendants argue, among other things, that the Jungs' claim
for injunctive relief should be dismissed "because the Jungs
fail to demonstrate that irreparable harm exists or that money
damages would be insufficient." Def. Mem. at 23.
To obtain a preliminary injunction, a party must establish:
"(1) irreparable harm in the absence of the injunction and (2)
either (a) a likelihood of success on the merits or (b)
sufficiently serious questions going to the merits to make them
a fair ground for litigation and a balance of hardships tipping
decidedly in the movant's favor." Random House, Inc. v. Rosetta
Books LLC, 283 F.3d 490, 491 (2d Cir. 2002). "The standard for
obtaining a permanent injunction is essentially the same as for
a preliminary injunction with the exception that the plaintiff
must actually succeed on the merits of the case, rather than
merely demonstrate that success is likely in a future
proceeding." Old Republic Ins. Co. v. Hansa World Cargo Serv.,
170 F.R.D. 361, 385 (S.D.N.Y. 1997) (citations and internal
quotation marks omitted). To satisfy the first prong of this
test, the "potential injury . . . justify[ing] the granting of
injunctive relief . . . must be irreparable; that is, it must be
the kind of injury for which an award of money cannot
compensate." Sperry Int'l Trade, Inc. v. Government of Israel,
670 F.2d 8, 12 (2d Cir. 1982).
The Jungs seek monetary relief. See Pl. Opp. at 24 ("Absent
injunctive relief, [D]efendants will continue to exercise
dominion and control over the [Foundation's] assets."). The
Jungs' claimed injury "is precisely the type of harm which
injunctive relief is not designed to remedy." Old Republic,
170 F.R.D. at 385. "There is absolutely no basis in law for an
injunction to issue to remedy [their] alleged monetary damages
[and] repleading this claim would be futile." Id. at
V. Conclusion and Order
For the foregoing reasons, Defendants' motion to dismiss
[14-1] is granted in part and denied in part and Plaintiffs'
motion for a preliminary injunction [23-1] is denied.
Plaintiffs' application for leave to amend (see Pl. Opp. at 5,
n. 4) is granted provided the (alleged) facts so warrant.
Plaintiffs shall serve and file their claims, amended in
accordance with this Order, by October 25, 2002.
Counsel are directed forthwith to appear at a
settlement/scheduling conference with the Court on November 15,
2002, at 2:30 p.m., in Courtroom 706 of the U.S. Courthouse, 40
Centre Street, New York, New York. The parties are directed to
engage in good faith settlement negotiations prior to the
conference with the Court.