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DUBAI ISLAMIC BANK v. CITIBANK

March 18, 2003

DUBAI ISLAMIC BANK, PLAINTIFF,
v.
CITIBANK, N.A., DEFENDANT.



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

ORDER

I. Background

In this action, filed in March 1999, Plaintiff Dubai Islamic Bank ("DIB") alleges generally that between 1995 and 1998, Defendant Citibank, N.A. ("Citibank"), principally but not exclusively through the actions of three employees Mona Searles, Pia Hurst and Brigitte Christensen, assisted in the alleged money-laundering activities of a man named Foutanga Dit Babani Sissoko, who became a customer of Citibank by walking in "off the street." Because the Court assumes familiarity with the facts, this Order will not recite them. See the Court's Dec. 29, 2000 Order, reported at 126 F. Supp.2d 659.

In the Dec. 29, 2000 Order, the Court dismissed DIB's claims for negligence per se, strict liability for facilitating financial terrorism and RICO under 18 U.S.C. § 1962(b) and (c). On Mar. 8, 2002, the Court denied without prejudice DIB's first motion to amend the complaint to add (1) a cause of action for participating in breach of fiduciary duty because "the amended pleading was not helpful or adequate to apprise/notify Defendant of Plaintiffs claims," (Mar. 8, 2002 Order, at 4) and (2) a demand for punitive damages because a plaintiff must do a "clearer, less conclusory, job of pleading, given the seriousness of [the] allegations." (Id. at 8.)

Before the Court now is DIB's second motion to amend the complaint, filed on Apr. 8, 2002. In its Proposed Amended Complaint ("PAC"), DIB seeks to add two new claims for RICO under §§ 1962(c) and (d) (PAC claims 10 and 11) and claims for participation in breach of fiduciary duty (PAC claim 12), fraudulent concealment (PAC claim 13), aiding and abetting fraud (PAC claim 14), negligent misrepresentation (PAC claim 15), commercial bad faith (PAC claim 16) and restitution (PAC claim 17). DIB also seeks, again, punitive damages for the claims for participation in breach of fiduciary duty, fraudulent concealment, aiding and abetting fraud and commercial bad faith.

In its brief in support of the motion to amend ("Br. in Supp."), DIB argues that the Court should grant the motion because, among other reasons, "DIB should be afforded an opportunity to test the claims on the merits." (Br. in Supp. at 1), and the "proposed amendments add new legal theories for recovery and clarify the relief sought by DIB." (Id. at 6.) Citibank counters that none of the new claims should be permitted because they are all "futile." For the reasons stated below, Plaintiff's motion is granted in part and denied in part.*fn1

II. Standard of Review

Federal Rule of Civil Procedure 15(a) provides that a party may amend a pleading "only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." Leave to amend "should not be denied unless there is evidence of undue delay, bad faith, undue prejudice to the non-movant, or futility." Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001)(citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)). A court measures futility under the same standard as a motion to dismiss under Fed.R.Civ.P. 12(b)(6). Nettis v. Levitt, 241 F.3d 186, 194 & n. 4 (2d Cir. 2001). A Rule 12(b)(6) motion may be granted only if it appears that the plaintiff can prove no set of facts that would entitle him to relief, while making all reasonable inferences in plaintiffs favor and taking the allegations plead in the complaint as true. Id. Nevertheless. "`[a] complaint which consists of conclusory allegations unsupported by factual assertions fails even the liberal standard of Rule 12(b)(6).'" DeJesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir. 1996) (citation omitted).

Under Rule 9(b), certain claims must (also) be plead with particularity, e.g., a plaintiff must (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made and (4) explain why the statements were fraudulent. Ryan v. Hunton & Williams, 99-CV-5938, 2000 WL 1375265, at *7 (E.D.N.Y. Sept. 20, 2000).

III. Analysis

The Court has reviewed DIB's Memorandum of Law in Support of Motion for Leave to File Amended Complaint, dated Apr. 8, 2002 and the PAC; Citibank's Memorandum of Law in Opposition to Plaintiff's Apr. 8, 2002 Motion for Leave to File Amended Complaint, dated May 22, 2002; and DIB's Reply Memorandum of Law in Support of Motion for Leave to File an Amended Complaint, dated June 6, 2002. The Court heard helpful oral argument from both parties on March 17, 2002.

Among other things, the PAC adds references to employees at Citibank other than Mona Searles, Pia Hurst and Brigitte Christensen. For example, DIB alleges that

"Citibank officers, including Greg Duswalt and Ken Strutin, willfully ignored and failed to respond to repeated requests by compliance officer Donna Barnes for know your customer information justifying the Sissoko transactions." (PAC ¶ 65);
"In August 1997, officer Grace Bornus documented Citibank's knowledge about the illicit activity in another (the fourth) SAR filed about the illicit Sissoko activity." (PAC ¶ 71).

Although some of these allegations (and others in the PAC) may help to bolster DIB's negligence and/or breach of contract claims, other allegations concerning allegedly culpable individuals fall short of specifically alleging participation in the underlying alleged racketeering scheme, which several of the claims DIB seeks to add back here require. Some of the allegations simply make conclusions without more. The Court is not required to accept "conclusions of law ...


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