Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

WEIZMANN INSTITUTE OF SCIENCE v. NESCHIS

October 3, 2002

WEIZMANN INSTITUTE OF SCIENCE, PLAINTIFF,
V.
JANET C. NESCHIS, INDIVIDUALLY AND IN HER CAPACITIES AS TRUSTEE OF THE JACQUES AND NATASHA GELMAN TRUST DATED NOVEMBER 18, 1997, AND AS TRUSTEE OF THE TRUST CREATED UNDER THE LAST WILL AND TESTAMENT OF NATASHA GELMAN DATED APRIL 23, 1993, ROBERT R. LITTMAN, INDIVIDUALLY AND IN HIS CAPACITY AS SUCCESSOR TRUSTEE OF THE TRUST CREATED UNDER THE LAST WILL AND TESTAMENT OF NATASHA GELMAN DATED APRIL 23, 1993, AND MARILYN G. DIAMOND, IN HER CAPACITY AS TRUSTEE OF THE JACQUES AND NATASHA GELMAN TRUST DATED NOVEMBER 18, 1997, AND AS TRUSTEE OF THE TRUST CREATED UNDER THE LAST WILL AND TESTAMENT OF NATASHA GELMAN DATED APRIL 23, 1993, DEFENDANTS. ALICE ANN JUNG ON HER OWN BEHALF, AS EXECUTRIX OF THE ESTATE OF MIROSLAV JUNG, DECEASED, JOSEF JUNG, MICHELLE JUNG, AND JAROSLAV JUNG A/K/A JERRY JUNG, PLAINTIFFS, V. JANET C. NESCHIS, INDIVIDUALLY AND IN HER CAPACITIES AS TRUSTEE OF THE JACQUES AND NATASHA GELMAN TRUST DATED NOVEMBER 18, 1997, AND AS TRUSTEE OF THE TRUST CREATED UNDER THE LAST WILL AND TESTAMENT OF NATASHA GELMAN DATED APRIL 23, 1993, ROBERT R. LITTMAN, INDIVIDUALLY AND IN HIS CAPACITY AS SUCCESSOR TRUSTEE OF THE TRUST CREATED UNDER THE LAST WILL AND TESTAMENT OF NATASHA GELMAN DATED APRIL 23, 1993, AND MARILYN G. DIAMOND, IN HER CAPACITY AS TRUSTEE OF THE JACQUES AND NATASHA GELMAN TRUST DATED NOVEMBER 18, 1997, AND AS TRUSTEE OF THE TRUST CREATED UNDER THE LAST WILL AND TESTAMENT OF NATASHA GELMAN DATED APRIL 23, 1993, DEFENDANTS.



The opinion of the court was delivered by: Berman, District Judge.

        I. Introduction

Plaintiff Weizmann Institute of Science ("Weizmann") commenced an action against defendants Janet C. Neschis ("Neschis"), Robert R. Littman ("Littman"), and Marilyn G. Diamond ("Diamond") (collectively, "Defendants") on or about October 16, 2000. Weizmann's complaint ("Weizmann Complaint") alleges six causes of action: (i) declaratory judgment that Weizmann is entitled to 37% of the assets of the Anturia Foundation, a nonparty; (ii) conversion; (iii) tortious interference with contractual relations; (iv) tortious interference with expectancy of inheritance; (v) violation of 18 U.S.C. § 1962(c); and (vi) violation of 18 U.S.C. § 1962(d).*fn1 Weizmann alleges that the Court has jurisdiction over its claims pursuant to 18 U.S.C. § 1965(a) (RICO), 28 U.S.C. § 1331 (federal question), 28 U.S.C. § 1332(a)(2) (diversity), and 28 U.S.C. § 1367 (supplemental jurisdiction). (Weizmann Complaint ("WC") ¶ 4).

Plaintiffs Alice Ann Jung, Josef Jung, Michelle Jung, and Jaroslav Jung, a/k/a Jerry Jung (collectively, "Jungs") commenced an action against Defendants on or about July 30, 2001.*fn2 The Jungs' complaint ("Jung Complaint") alleges nine causes of action: (i) declaratory judgment that the Jungs are entitled to 20% of the assets of the Anturia Foundation, a nonparty; (ii) conversion; (iii) tortious interference with contractual relations; (iv) tortious interference with expectancy of inheritance; (v) violation of 18 U.S.C. § 1962(c); (vi) violation of 18 U.S.C. § 1962(d); (vii) injunctive relief; and (viii) two counts seeking a constructive trust. The Jungs allege that the Court has jurisdiction over their claims pursuant to 18 U.S.C. § 1965(a) (RICO), 28 U.S.C. § 1331 (federal question), and 28 U.S.C. § 1367 (supplemental jurisdiction); they appear not to have plead diversity jurisdiction. (Jung Complaint ("JC") ¶ 13).

On September 26, 2001, the Court consolidated these two cases for pre-trial purposes, including motion practice. On or about October 19, 2001, Defendants moved jointly, pursuant to Federal Rules of Civil Procedure ("Fed.R. Civ.P.") 12(b)(6) and 12(b)(7), to dismiss Plaintiffs' claims for, inter alia, failure to state a claim upon which relief can be granted and failure to join a necessary party, i.e., the Anturia Foundation. See Defendants' Joint Memorandum of Law in Support of Their Motion to Dismiss the Complaints, dated October 19, 2001 ("Def.Mem."). On November 15, 2001, Plaintiffs filed their Joint Brief in Opposition to Motion to Dismiss ("Pl. Opp." or "Opposition Brief"). Defendants filed a reply brief, dated November 20, 2001 ("Def.Reply"). On December 17, 2001, Plaintiffs moved jointly for a preliminary injunction "pending the Court's decision on [D]efendants' currently pending motions to dismiss. . . ." Notice of Motion for a Preliminary Injunction, dated December 17, 2001, at 2.

For the reasons set forth below, Defendants' motion to dismiss is granted in part and denied in part and Plaintiffs' motion for a preliminary injunction is denied.*fn3

II. Background

The following allegations from the Weizmann Complaint and the Jung Complaint are taken as true for the purposes of this motion. Jacques and Natasha Gelman, a married couple with no children, amassed a great personal fortune as a result of Mr. Gelman's successful career as an entertainment agent and film producer. (WC ¶ 10; JC ¶¶ 29-30). In 1985, the Gelmans deposited a substantial portion of their assets into a Liechtenstein "stiftung" called the Anturia Foundation ("Anturia" or "Foundation").*fn4 (WC ¶ 11; JC ¶ 31). The Foundation's Board of Trustees ("Board") enacted various sets of by-laws over time, all of which provide for the distribution of the Foundation's assets upon the death of the surviving Gelman spouse.*fn5 (WC ¶ 13; JC ¶ 34).

After Mr. Gelman's death on July 23, 1986, Mrs. Gelman instructed the Board to make two sets of changes to the Foundation's by-laws.*fn6 (WC ¶¶ 15, 20; JC ¶¶ 37-38). Pursuant to her instructions, the Board adopted by-laws, dated August 10, 1989 ("August 10, 1989 By-Laws") which provided that, in the event of Mrs. Gelman's death, the Foundation's assets would be divided as follows: (1) 20% to Weizmann; (2) 34% (collectively) to the Jungs; and (3) 46% (collectively) to other named charities and beneficiaries.*fn7 In 1991, pursuant to Mrs. Gelman's instructions, the Board adopted by-laws dated August 13, 1991 ("August 13, 1991 By-Laws"). The August 13, 1991 By-Laws provided for the following distribution of the Foundation's assets upon Mrs. Gelman's death: (1) 20% to Weizmann; (2) 37% (collectively) to the Jungs; (3) 1% to Littman; and (4) 42% (collectively) to other named charities and beneficiaries. (WC ¶ 18; JC ¶ 41).

Plaintiffs allege that Mrs. Gelman developed Alzheimer's disease in late 1991 and that either the August 10, 1989 By-Laws or the August 13, 1991 By-Laws (or both documents together) "were the last bylaws executed in accordance with Mrs. Gelman's instructions while Mrs. Gelman remained of sound mind and free of duress and undue influence." (WC ¶ 19-20; JC ¶ 43-44).*fn8

Mrs. Gelman possessed other assets which were not part of the Foundation and which were to be disposed of by will to be probated in New York ("New York assets"). (WC ¶ 17; JC ¶ 40). Until 1989, Sidney Cohn, Esq. ("Cohn") prepared the Gelmans' wills and codicils. (WC ¶ 22; JC ¶ 49). Thereafter, Mrs. Gelman was represented by Diamond until Diamond became a Justice of the New York State Supreme Court, New York County, in 1991. (WC ¶¶ 9, 22; JC ¶¶ 26, 50). Neschis, Cohn's daughter and Diamond's former partner, became Mrs. Gelman's attorney in 1991. Id. Plaintiffs allege that beginning in late 1991, after Neschis became Mrs. Gelman's legal representative and continuing until Mrs. Gelman's death on May 2, 1998, Neschis and Littman took (unfair) advantage of Mrs. Gelman's mental condition by, among other things, "cementing themselves as the sole custodians of her substantial estate and charitable trust, unlawfully taking millions of dollars from Anturia Foundation and Mrs. Gelman's personal assets, and increasing the bequests, commissions and/or fees to be received by these defendants." (WC ¶ 23; JC ¶ 51).

Plaintiffs allege that Neschis and Littman "fraudulently assum[ed] fiscal authority over Mrs. Gelman's assets," by, among other things, securing the following documents after Mrs. Gelman no longer possessed mental or testamentary capacity: (1) general powers of attorney in favor of Neschis and Littman and (several) powers of attorney which gave Neschis the authority to conduct transactions at Mrs. Gelman's New York banks; (2) a last will and testament, executed on April 23, 1993 ("1993 Will"), appointing Neschis as executor and appointing Diamond and Littman as alternate executors; and (3) an affidavit by Mrs. Gelman, signed on October 28, 1994, stating that, at the time of the 1993 Will, she intended that Neschis receive a commission for her services as executor and that Neschis' law firm receive legal fees for administering her estate.*fn9 (WC ¶¶ 23-29; JC ¶¶ 51-53, 75-88).

Plaintiffs further allege that Neschis "fraudulently obtained" an amendment to the Foundation's by-laws which eliminated Weizmann as a beneficiary and drastically reduced the amount of the bequests to the Jungs. (WC ¶ 33; JC ¶ 60). "In or about April 1992, Neschis traveled to Zurich with Mrs. Gelman to meet with representatives of Credit Suisse and/or Fides, the asset management company responsible for administering the . . . Foundation." (WC ¶ 30; JC ¶ 54). During this trip, Dr. Madeline-Claire Levis ("Levis"), a Fides employee, came to believe that Mrs. Gelman was not of sound mind. (WC ¶ 30; JC ¶ 55). Plaintiffs allege that Neschis fraudulently obtained Mrs. Gelman's signature on a letter dated June 5, 1992 to the Board ("June 5, 1992 Letter"), instructing that certain changes be made to the bylaws, and transmitted the letter to Levis.*fn10 (WC 133; JC ¶¶ 60-62). Although Levis initially "refused to make the requested changes without a satisfactory explanation of the unusual circumstances," she was allegedly compelled to do so after Neschis threatened to withdraw the Foundation's assets from Credit Suisse Bank and persuaded one of the Board members to intervene. (WC ¶¶ 34-35; JC ¶¶ 64-66).

In or about October 1992, Neschis presented a letter to the Board from Mrs. Gelman and dated September 29, 1992 ("September 29, 1992 Letter") purporting to contain Mrs. Gelman's instructions for amending the Foundation's by-laws. (WC ¶ 37; JC ¶ 68). In accordance with the September 29, 1992 Letter, the Board adopted new by-laws on or about October 19, 1992 ("October 19, 1992 By-Laws") which, inter alia, eliminated Weizmann as a beneficiary, reduced the Jungs' allocation to 5% of the Foundation's assets, increased Littman's share from 1% to 31% of the assets, added Diamond as a beneficiary of 3% of the assets, and added the Testamentary Trust as a beneficiary of 57% of the assets.*fn11 (WC ¶¶ 37-38; JC ¶¶ 69-70).

Plaintiffs further allege that "[i]n April 1992 and continuing through 1998, Neschis caused substantial distributions to be made from the assets of the . . . Foundation to herself or for her personal benefit." (WC ¶ 41; JC ¶ 89). Neschis presented a handwritten note, dated April 30, 1992 and purportedly signed by Mrs. Gelman, directing Credit Suisse to "`arrange for the immediate transfer to my Credit Suisse, New York account of $150,000 (U.S.)' from the accounts of the . . . Foundation and/or from accounts held for the Gelmans." (WC ¶ 42; JC ¶ 91). In addition, the April 1992 note instructed the bank to send all future interest payments directly to the same New York account. (WC ¶ 42; JC ¶ 92). Credit Suisse complied with these instructions and transferred approximately $2.5 million from the Credit Suisse Zurich account to the Credit Suisse New York account between November 30, 1992 and February 28, 1995. (WC ¶ 43; JC ¶ 94). Plaintiffs also allege that Credit Suisse Zurich periodically sent other distributions to the Credit Suisse New York account "in excess of $10 million." (WC 43; JC ¶ 95).

Plaintiffs allege that on or about November 18, 1997, Neschis fraudulently induced Mrs. Gelman to execute an instrument creating a second trust, also named the Jacques and Natasha Gelman Trust ("Inter Vivos Trust"), which designated Neschis and Diamond as its co-trustees.*fn12 (WC ¶ 46; JC ¶¶ 98-99). The Inter Vivos Trust instrument provides that: (i) "[i]n addition to commissions, the [t]rustees are authorized to perform professional services for the Inter Vivos Trust at their regular rates;" (ii) "[t]he [t]rustees are also expressly authorized to arbitrate and settle claims on behalf of the Inter Vivos Trust;" and (iii) "[t]he trustees are expressly excused from filing inventories and periodic accountings in any court."*fn13 (WC ¶ 46; JC ¶ 99). That same day, Mrs. Gelman allegedly signed a letter to the Foundation requesting, inter alia, that the Inter Vivos Trust be substituted for the Testamentary Trust as the beneficiary of 58% of the Foundation's assets. (WC ¶ 49; JC ¶¶ 106-07). The Foundation's by-laws were amended again on January 27, 1998 ("January 27, 1998 By-Laws") to reflect this change in beneficiaries. (WC ¶ 49; JC ¶ 107).

Mrs. Gelman died on May 2, 1998. (WC ¶ 53; JC ¶ 110). On or about September 21, 1999, the Court of Arbitration in Liechtenstein began arbitration proceedings ("Liechtenstein Arbitration") between Neschis and Diamond, as trustees for the Jacques and Natasha Gelman Trust, and the Foundation.*fn14 See Decision of the Court of Arbitration ("Arbitration Order"), dated September 21, 1999, at 1. The Arbitration Order, among other things, lists the names of the arbitrators ("Arbitration Panel"), states that "the Court of Arbitration is duly formed pursuant to Article 13 of the bylaws of the Anturia Foundation, dated May 29, 1985," and outlines the procedures governing the Liechtenstein Arbitration. See id. at 1-4. On or about January 12, 2000, the Foundation filed its arbitration Answer to the Complaint/Interlocutory Motion for a Determination ("Answer"). On or about March 20, 2000, Weizmann filed its arbitration Joinder as Intervener/Answer to the Complaint/Preliminary Pleading ("Joinder"). The Joinder states, in pertinent part: "we have a legal interest in seeing the [Foundation] prevail, and we therefore join [the Foundation] as an intervening third party." Joinder at 1. On or about June 8, 2001, the Arbitration Panel issued its Award in Arbitration ("Arbitration Award"), finding, among other things, "that the 1992 and 1998 [foundation] by-laws are legally valid." Arbitration Award at 51. Pursuant to the January 27, 1998 By-Laws, 57% of the Foundation's assets will be distributed to the Inter Vivos Trust. (WC ¶ 49; JC ¶ 107).

After Mrs. Gelman's death, Neschis offered the 1993 Will for probate in the Surrogate's Court, New York County ("Surrogate's Proceeding"). (WC ¶ 54; JC ¶ 111). On May 4, 1999, Alice Jung and Jaroslav Jung filed their Amended Objections to Probate and Jury Demand ("Am. Obj.") stating, among other things that the 1993 Will "was not freely or voluntarily made by [Mrs.] Gelman . . . but that the said paper writing purporting to be her Last Will and Testament . . . was procured by duress and undue influence . . . Janet Neschis and Robert Littman. . . ."*fn15 Am. Obj. ¶ 4. By stipulation dated as recently as April 26, 2001 ("4/26/01 Stip."), the Jungs agreed to withdraw their objections to probate of the 1993 Will if the Liechtenstein Arbitration "determine[d], for any reason, that the 1992 By-Laws are valid." 4/26/01 Stip. at 1. On June 19, 2001 — after the decision was rendered in the Liechtenstein Arbitration — Alice Jung and Jaroslav Jung (each) withdrew their objections to probate. See Withdrawal of All Objections of Alice Jung, ("Alice Jung . . . hereby withdraws her Objections to Probate . . ."); Withdrawal of All Objections of Jaroslav Jung, ("Jaroslav Jung hereby withdraws his Objections to Probate . . ."). On October 16, 2001, the Surrogate admitted the 1993 Will to probate. See Decree Granting Probate ("Probate Decree"). The Probate Decree states, in pertinent part, that (1) "the [1993] Will was duly executed;" (2) "the Testatrix, at the time of executing it, was in all respects competent to make a Will, and not under restraint;" and (3) "the Court [is] satisfied of the genuineness of the [1993] Will and the validity of its execution." Probate Decree at 2.

III. Standard of Review

In resolving a Fed.R.Civ.P. 12(b)(6) motion to dismiss, the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the plaintiff. See Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996). A complaint should not be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). This standard applies equally to RICO claims. See NOW v. Scheidler, 510 U.S. 249, 256, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994).

At the same time, while "the well-pleaded material allegations of the complaint are taken as admitted . . . conclusions of law or unwarranted deductions of fact are not admitted." First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 771 (2d Cir. 1994) (citation omitted). Where, as here, a complaint alleges fraud, the pleading requirements of Fed.R.Civ.P. 9(b) apply. Id. Because the mere assertion of a civil RICO claim "has an almost inevitable stigmatizing effect on those named as defendants . . . courts should strive to flush out frivolous RICO allegations at an early stage of the litigation." Figueroa Ruiz v. Alegria, 896 F.2d 645, 650 (1st Cir. 1990).*fn16

IV. Analysis

A. Materials and Matters Outside the Pleadings

In resolving a motion to dismiss, "a court may consider `documents attached to the complaint as an exhibit or incorporated in it by reference, . . . matters of which judicial notice may be taken, or . . . documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit.'" Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (quoting Brass v. American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir. 1993)).*fn17

"Despite the submission of extra-pleading documents, [the Court does] not convert this motion into a motion for summary judgment under Rule 56(c)."*fn18 Scherer v. Equitable Life Assurance Soc'y, 190 F. Supp.2d 629, 636 n. 2 (S.D.N.Y. 2002). Both Plaintiffs and Defendants have submitted extra-pleading documents in connection with the instant motion, only some of which, as herein noted, have been considered by the Court.

"A court may consider documents attached to the complaint as exhibits, or incorporated by reference, as well as any documents that are integral to, or explicitly referenced in, the pleading."*fn19 Preston v. State of New York, 223 F. Supp.2d 452, 461-62 (S.D.N.Y. 2002). "[C]ourts routinely take judicial notice of documents filed in other courts . . . not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings."*fn20 Kramer, 937 F.2d at 774. "However, [some of] the evidence [the parties have] offered goes beyond these limited parameters and will not be considered."*fn21 Jordan (Bermuda) Investment Co., Ltd., 154 F. Supp.2d at 689.

B. Collateral Estoppel

Collateral estoppel bars a party from relitigating "an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point." Khandhar v. Elfenbein, 943 F.2d 244, 247 (2d Cir. 1991); see also Conte v. Justice, 996 F.2d 1398, 1400 (2d Cir. 1993) (citations and internal quotation marks omitted). Collateral estoppel, also referred to as "issue preclusion," applies "when an issue was necessarily and conclusively determined in a prior proceeding and the party to be bound had a full and fair opportunity to litigate the issue." Sassower v. Abrams, 833 F. Supp. 253, 264-65 (S.D.N.Y. 1993). It is well-settled that "collateral ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.