United States District Court, S.D. New York
March 30, 2004.
DONALD RAMPERSAD, Plaintiff, -against- DEUTSCHE BANK SECURITIES, Inc., f/k/a DEUTSCHE BANC ALEX.BROWN, Inc., LANGTRY TRUST GROUP, RICHARD DeBOE, and PETER BRANT. Defendant(s)
The opinion of the court was delivered by: LAURA TAYLOR SWAIN, District Judge
MEMORANDUM OPINION AND ORDER
In this action arising out of the management of an offshore brokerage
account, Plaintiff Donald Rampersad ("Rampersad") asserts claims for
securities fraud under section 10(b) of the Securities and Exchange Act
of 1934 ("Section 10(b)") and Rule 10b-5 promulgated thereunder, and for
violation of the Racketeer Influenced Corrupt Organization Act ("RICO").
Plaintiff also asserts common law fraud, conversion, and breach of
fiduciary duty claims. Plaintiff amended his original complaint following
initial dispositive motion practice. Defendants Deutsche Bank Securities.
Inc., formerly known as Deutsche Bank Alex.Brown Inc. ("Alex.Brown"),
Richard DeBoe ("DeBoe"), and Langtry Trust Group ("Langtry") move for
dismissal of the Amended Complaint pursuant to Federal Rules of Civil
Procedure 9(b) and 12(b)(6). Alex.Brown and DeBoe also seek, pursuant to
Federal Rule of Civil Procedure 12(f), an order striking certain
allegations in the Amended Complaint.
The Court has jurisdiction of Plaintiff's Section 10(b) and RICO claims
pursuant to 2S U.S.C. § 1331. The Court has considered thoroughly
all submissions in connection with
the instant motions. For the following reasons, Defendants' motions
The following facts, which are alleged in the Amended Complaint (the
"Complaint"), are taken as true for purposes of the motions to dismiss.
In October or early November 1998, Rampersad, a citizen of Trinidad and
Tobago, telephoned Robert Parry ("Parry"), his cousin residing in the
United States, about the possibility of investing approximately $500,000
(U.S. dollars) in the U.S. stock market. (Compl. ¶¶ 1, 10.) Parry
contacted Steven Harrison ("Harrison"), an individual previously
introduced to Rampersad by Parry, to discuss investment options for
Rampersad. (Id. ¶¶ 8, 12.) Harrison suggested Rampersad
contact Peter Brant ("Brant"), a convicted felon who managed Harrison's
personal investments at Alex.Brown with DeBoe as broker. (Id.
¶¶ 12, 13.)
On November 8, 1998, Brant recommended that Rampersad invest his money
offshore. (Id. ¶ 15.) Once in the offshore account, the
money would be transferred to an account at Alex.Brown that would be
managed and traded by Brant with DeBoe as broker. (Id. ¶
16.) So as to avoid U.S. tax liability, Rampersad agreed to the structure
of the transaction. (Id.) Rampersad and Brant also agreed that
Brant would receive a management fee equal to 20% of any gains realized
by the account under his management. (Id. ¶ 17.) In
connection with this arrangement, Rampersad urged Brant to "mind the
money safely," to which Brant replied that he would invest the funds only
in "renowned" stocks. (Id. ¶ 18.)
On December 7, 1998, Rampersad received from Langtry, the offshore
entity, a letter containing wiring instructions. (Id. ¶
19.) Upon Brant's confirmation that the wiring instructions were
legitimate, Rampersad wired $300,000 to Langtry, on December 16, 1998.
(Id. ¶ 22.) The funds transfer report states that Rampersad
was the "customer" with respect to the funds located in
the account established with Langtry. (Id. ¶ 23.) In
late December 1998 or early January 1999,* Langtry directed Lloyd's Bank
to send the sum of approximately $300,000 to an account at Alex.Brown.
(Id. ¶ 27.) This account was opened in Langtry's name;
Brant was authorized to trade in this account. (Id. ¶ 26.)
In late December 1998 or early January 1999, Rampersad telephoned DeBoe
requesting, among other things, confirmation that his account with
Alex.Brown had been "performing well." (Id. ¶ 26.) DeBoe
told him that the $300,000 had been received into an account at
Alex.Brown and that the account would be established under the name
"Langtry", though Rampersad would be the "owner." (Id.)
Furthermore, DeBoe told Rampersad that Brant was going to trade the
Langtry account, that Rampersad's account information was being sent to
Brant and not Rampersad, that DeBoe would make him a copy of the account
information, and that Brant was a "good client" of Alex.Brown.
(Id.) Finally, Rampersad alleges that, based on this
conversation with DeBoe, he wired the remaining $200,000 to Langtry.
(Id. ¶ 29.)
Langtry, on January 15, 1999, transferred the $200,000 to the same
Alex.Brown account, held in its name, that contained the original
deposit. (Id. ¶¶ 32-33.) Rampersad did not wire money
directly to Alex.Brown but rather sent money directly to Langtry, which
then forwarded the funds to the Alex.Brown account in Langtry's name.
((Id., ¶¶ 26, 29, 32.)
In mid-January 1999, Rampersad alleges, he once again spoke to DeBoe,
who continued receipt of the second set of funds. (Id. ¶
34.) During this conversation, Rampersad further alleges, he asked DeBoe
for certain forms in connection with avoiding U.S. tax liability and for
copies of the monthly account statements. (Id.) DeBoe directed
Rampersad to ask Brant for the paperwork. (Id.)
Over the next year, the value of the Alex.Brown account began to drop
precipitously.*fn1 Account statements reveal that the account was on
margin as early as May 1999. (Id. ¶ 37.) Also, as of July
1999, the account only held Global Telesystems Group stock.
(Id. ¶ 39.) If Rampersad had known that his portfolio was
being managed in this way, he would have objected. (Id.) Funds
from the Alex.Brown account were transferred to Lloyds Bank at the
instruction of Langtry, to an account not belonging to Rampersad.*fn2
(Id. ¶¶ 35-38.) Rampersad alleges that DeBoe was aware that
the wire transfers were without Rampersad's knowledge or consent.
(Id. ¶¶ 35-38.)
Rampersad asserts that DeBoe called him at least two times during 1999
seeking business from Rampersad's friends and/or family. (Id.
¶ 42.) During one of these conversations, Rampersad and DeBoe
discussed the Alex.Brown account; the discussion, however, was limited to
a request for the account statements and there was no discussion
concerning the account's performance. (Id. ¶ 43.) Rampersad
further alleges that he and Brant spoke occasionally throughout 1999, and
Brant "continually informed" Rampersad that his investments were "doing
well." (Id. 11 45.) Towards the end of 1999 Brant, suddenly and
without warning, told Rampersad that the Alex.Brown account was negative
by several hundred thousand dollars. (Id. 148.)
On August 14, 2000, Rampersad submitted his claims against Alex.Brown,
DeBoe and Matthew Kolb (Alex.Brown's New York City branch manager)
arising out of the account to arbitration before the New York Stock
Exchange, Inc. ("NYSE"). (Id. 1| 52; Uniform Submission
Agreement, Ex. A to DeBoe Not. of Mot.) Langtry was not a party to
these proceedings. On March 7, 2002, the arbitration panel dismissed
Rampersad's claim without prejudice. (Compl. ¶ 52.) On September 4,
2002, Rampersad commenced this action in New York Supreme Court, New York
County. Alex.Brown and DeBoe removed the action to this Court and
Defendants moved to dismiss the original complaint. Rampersad amended his
complaint with Defendants' consent on January 23, 2003.
Motion to Strike
Defendants Alex.Brown and DeBoe seek to have Plaintiff's allegations
concerning conversations between Plaintiff and DeBoe stricken pursuant to
Federal Rule of Civil Procedure 12(0 on the ground that they are a sham
and false. DeBoe also asserts that Plaintiff should be found judicially
estopped from alleging that he had any conversations with DeBoe. DeBoe
and Alex.Brown contend that such allegations contradict Plaintiff's
pleadings in the NYSE arbitration proceeding. Neither Defendant proffers
the NYSE pleadings, on the ground that NYSE arbitration pleadings arc
"generally considered confidential." Instead, Defendants quote Plaintiff
as having alleged in his Statement of Claim and Amended Statement of
Claim that "`[Plaintiff] has never met or spoken with DeBoe'" and
"`nobody from Alex.Brown ever met or even talked to [Plaintiff].'" (DeBoe
Mem. in Supp. at 5; Alex.Brown Mem. in Supp. at 6-8.) Plaintiff does not
dispute the accuracy of Defendants' citations, although he notes that he
never swore to the accuracy of the facts in his arbitration demand.
(Pl.'s Mem. in Opp. to DeBoe at 11 n.6).
Rule 12(f) provides in pertinent part that a court "may order stricken
from any pleading any insufficient defense or any redundant, immaterial,
impertinent, or scandalous matter." Rule 12(f) does not explicitly list
sham or falsity as grounds for strike. In the case cited by
Defendants in support of their motion to strike, however, the Federal
Circuit did affirm as not an abuse of discretion a district court's
striking of certain allegations in the plaintiff's second amended
complaint as sham when they were manifestly inconsistent with allegations
in the first amended complaint, notwithstanding the plaintiff's
explanation of "eventual recollection." Bradley v. Chiron
Corporation, 136 F.3d 1317, 1324-25 (Fed. Cir. 1998). Courts in this
district have also recognized a district court's authority to strike
allegations as false. See, for example, Weiss v. La
Suisse, 131 F. Supp.2d 446, 450 (S.D.N.Y. 2001); Salzmann v.
Prudential Securities, Inc., No. 91 Civ. 4253, 1994 WL 191855, *13
(S.D.N.Y. May 16, 1994). Nonetheless, "[a] pleading should be stricken
only when it appears beyond peradventure that it is sham and false and
that its allegations are devoid of factual basis." Murchinson v. Kirby,
27 F.R.D. 14, 19 (S.D.N.Y. 1961).
Defendants here have at best established that the Amended Complaint is
inconsistent with Plaintiff's arbitral pleadings. Accordingly, it does
not appear beyond doubt that Plaintiff's allegations concerning
conversations with DeBoe lack any factual basis. The motions of
Alex.Brown and DeBoe are therefore denied to the extent they seek to have
those allegations stricken under Rule 12(f).
DeBoe's judicial estoppel argument is likewise unavailing. A party
invoking judicial estoppel "must show that (1) the party against whom
estoppel is asserted took an inconsistent position in a prior proceeding
and (2) that position was adopted by the first tribunal in some manner,
such as by rendering a favorable judgment." Mitchell v.
Washingtonville Central School District, 190 F.3d 1, 6 (2d Cir.
1999) (internal citations omitted). DeBoe has not satisfied the second
element. Although Plaintiff's allegations in the Complaint regarding
conversations with DeBoe do appear inconsistent with the assertions in
his arbitral pleadings recited above, the decision dismissing Plaintiff's
claim does not articulate any reasons for the dismissal. DeBoe
contends that the arbitrator must have accepted Plaintiff's
allegation that he had never spoken with DeBoe or anyone else at
Alex.Brown in order to grant DeBoe's motion to dismiss. The grounds
proffered by DeBoe for dismissal-that Rampersad was not a customer of
Alex.Brown, that his claim did not arise in connection with Alex.Brown's
business, and that the dispute was not a proper for NYSE
arbitration however, did not require the arbitrator to accept Plaintiff's
allegation that he had never spoken with DeBoe in order to find any of
them a sufficient basis for dismissal, particularly the third ground.
Rather, the arbitrator could have found that whatever contacts occurred
did not give rise to the requisite legal relationship. In any event,
DeBoe has not shown that the arbitrator adopted the allegation in
question. Accordingly, DeBoe's motion is denied to the extent it seeks to
cstop Plaintiff's from alleging that he had conversations with DeBoe.
Plaintiff's Securities Fraud Claims are Time-Barred
Plaintiff asserts claims for securities fraud under Section 10(b)
premised on theories of unsuitability, churning and unauthorized trading.
Defendants seek dismissal of Plaintiff's Section 10(b) claims on the
grounds that they are time-barred.
In determining a motion to dismiss pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure, the Court is required to accept as true
the factual assertions in the complaint. Charles W. V. Maul,
214 F.3d 350, 356 (2d Cir. 2000). A district court should grant such a
motion to dismiss only where, viewing plaintiff's allegations in the
light most favorable to him, "it appears beyond doubt that plaintiff can
prove no set of facts in support of his claim which would entitle him to
relief." See Harris v. City of New York,
186 F.3d 243, 247 (2d Cir. 1990).
The parties agree that Plaintiff's Section 10(b) claims are subject to
the limitations period established by the Sarbanes-Oxley Act of 2002,
codified at 28 U.S.C.A. section 1658(b), which provides that a
securities fraud claim "may be brought no later than the earlier of (1) 2
after the discovery of the facts constituting the violation; or (2)
5 years after such violation." "A plaintiff in a federal securities case
will be deemed to have discovered fraud for purposes of triggering the
statute of limitations when a reasonable investor of ordinary
intelligence would have discovered the existence of the fraud."
Newman v. Warnaco. Group, Inc., 335 F.3d 187, 193 (2d Cir.
2003) (quoting Dodds v. Cigna Sec., Inc., 12 F.3d 346, 350
(2d Cir. 1993)). Furthermore, when "the facts needed for determination
of when a reasonable investor of ordinary intelligence would have been
aware of the existence of fraud can be gleaned from the complaint and
. . . forms that are integral to the complaint, resolution of the issue
on a motion to dismiss is appropriate." Dodds, 12 F.3d at 352
Plaintiff alleges that, in late 1999, Brant told him that his account
was negative by several hundred thousand dollars. Because Plaintiff's
fraud claims are premised on Defendants' having disregarded Plaintiff's
conservative investment objectives and traded on margin without
authorization, Plaintiff had actual notice of the alleged fraud when he
learned of the account's negative balance a condition that could not have
arisen in the absence of unauthorized margin trading. Moreover, even if
knowledge of the negative balance did not provide Plaintiff actual notice
of the fraud, Plaintiff certainly knew he had a cause of action when he
agreed to submit his fraud claims to arbitration. Cf. Friedman v.
Wheat First Sec. Inc., 64 F. Supp.2d 338, 344 (S.D.N.Y. 1999)
("Plaintiffs were clearly aware that they had a cause of action, as
evidenced by their decision to file an arbitration claim with the
NASD[.]"). It is undisputed that Plaintiff agreed to submit his fraud
claims to arbitration on August 14, 2000, more than two years prior to
the September 2002 commencement of this action. See Uniform
Submission Agreement, Ex. A to DeBoe Not. of Motion; Complaint
annexed to Notice of Removal. Accordingly, Plaintiff's Section 10(b)
fraud claims must be dismissed as time-barred.
Rampersad contends that because the action was originally filed in New
York state court he should receive the benefit of tolling under New York
law for the period during which the arbitration proceeding was pending.
Section 204(b) of New York's Civil Practice Law and Rules ("C.P.L.R.")
provides, in pertinent part, that:
Where it shall have been determined that a party
is not obligated to submit a claim to arbitration,
the time which elapsed between the demand for
arbitration and the final determination that there
is no obligation to arbitrate is not a part of the
time within which an action upon such claim must
N.Y.C.P.L.R. § 204(b) (McKinney 2003). Federal law, however,
not New York state law, governs the availability of tolling in a Section
10(b) action. Thus, Section 204(b) is irrelevant to the question of
whether tolling is available with respect to the Section 10(b)
See Friedman, 64 F. Supp.2d at 344. NYSE
which Rampersad also invokes, does not alter this
conclusion, because Rule 606(a) only applies "[w]here permitted by law,"
which, in the context of Section 10(b) claims, must mean permitted by
federal law. Friedman, 64 F. Supp.2d at 343-44. Rampersad has
not identified any federal tolling principle that would be applicable to
the instant action, nor is the Court aware of any. Accordingly,
Plaintiff's Section 10(b) claims are dismissed as time-barred.
With respect to Langtry, Rampersad's attempt to bring his securities
fraud claim within the limitation period by relying on his arbitration
claim against Alex.Brown and DeBoe is
unavailing for the further reason that Langtry was not a party to
the arbitration proceeding. Thus, any tolling in connection with the
arbitration proceedings, even if available, is inapplicable to Langtry.
Rampersad attempts to circumvent this obstacle by invoking the "relation
back" doctrine set forth in the Federal Rule of Civil Procedure
Rule 15(c), arguing that his claim against Langtry, first asserted in
Plaintiff's September 2002 complaint, should be deemed to have been
asserted in the arbitral submissions. It is not readily apparent how
Plaintiff's submissions in the arbitration proceeding, as opposed to his
original complaint, may be used as the basis for invoking Rule 15(c). In
fact, it is quite clear that Rule 15(c) applies only to an "amendment of
a pleading." Bank of India v. Trendi Sportswear, Inc., No. 89
Civ. 5996, 2002 WL 1836754, at *3 (S.D.N.Y. 2002).
Even assuming Rule 15(c) applies, Rampersad fails to allege, as he
must, that his decision not to name Langtry as a defendant in the
arbitration was due to mistaken identity. "If the reason for not naming a
new party is anything other than a mistake of identity, then the relation
back doctrine is unavailable." Nordco. A.S. v. Ledes, No. 95
Civ. 7753, 1999 WL 1243883, at *3 (S.D.N.Y. 1999). Accordingly, Rampersad
has failed to successfully invoke the "relation back" doctrine. Count III
of the Amended Complaint is dismissed as time-barred.*fn5
Plaintiff Fails to State a RICO Claim
Rampersad does not clearly identify which RICO provision serves as the
basis for his cause of action. However, it appears from his papers in
opposition to the instant motions that Rampersad is asserting his RICO
cause of action under 18 U.S.C. § 1962(c). To state a civil RICO
claim under section 1962(c), the plaintiff must allege injury resulting
from "defendants' (1)
conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity." Azrielli v. Cohen Law Offices,
21 F.3d 512, 520 (2d Cir. 1994) (internal quotation marks omitted).
The Amended Complaint fails to state a RICO claim because Plaintiff has
not alleged a pattern of racketeering activity. In order to establish a
pattern, a plaintiff must demonstrate that the predicate acts of
racketeering activity by a defendant 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 (1989). There are two
forms of continuity under RICO that may be shown in order to satisfy the
"continued criminal activity" element of the cause of action,
"closed-ended continuity" or "open-ended continuity." H.J.
Inc., 492 U.S. at 239, 241.
"Closed-ended continuity is demonstrated by predicate acts that `amount
to continued criminal activity' by a particular defendant." De Falco
v. Bernas, 244 F.3d 286, 321 (2d Cir. 2001) (quoting H.J.
Inc., 492 U.S. at 242). In order to establish closed-ended
continuity, a plaintiff must prove "a series of related predicates
extending over a substantial period of time. Predicate acts extending
over a few weeks or months . . . do not satisfy this requirement."
H.J. Inc., 492 U.S. at 242.
"Since the Supreme Court decided H.J. Inc., the Second
Circuit has never held a period of less than two years to constitute a
`substantial period of time'" for purposes of the closed-ended continuity
test. DeFalco. 244 F.3d at 321. See also Cofacredit S.A. v. Windsor
Plumbing Supply Co., 187 F.3d 229, 242 (finding allegations of
activity over a period of 11/2 years insufficient to establish
closed-ended continuity); GICC Capital Corp. v. Technology
Finance Group. 67 F.3d 463, 466 (2d Cir. 1995) (period of less than
one year insufficient to demonstrate closed-ended continuity).
Taken in the light most favorable to Rampersad, the predicate acts he
alleges in the Amended Complaint extend from November 1998 through late
1999, when Brant told Plaintiff that his account had a negative balance.
Plaintiff appears to concede that the Amended Complaint does not allege
closed-ended continuity, but contends that with discovery he could make
such allegations. (Pl's Mem. in Opp. to DeBoe Mot. at 24-25.) Plaintiff
offers no suggestion, however, as to what discovery would alter the fact
that he knew his account was depleted and negative by late 1999, and thus
that the actions in question took place within a period of less than two
years. In addition, Plaintiff alleges no other basis for concluding that
Defendants' actions could support a finding of closed-ended continuity:
as plead, only a handful of participants were involved in a single scheme
to defraud a single plaintiff. See GICC Capital Corp., 67 F.3d
at 467 (discussing non-dispositive factors to be weighed in determining
existence of closed-ended continuity). Accordingly, Plaintiff's
allegations are insufficient to meet the closed-ended continuity
Nor are the facts alleged in the Amended Complaint sufficient to
support a finding of open-ended continuity. In order to establish this
type of continuity, a plaintiff must show that there was a threat of
continuing criminal activity "extending indefinitely into the future."
H.J., Inc., 492 U.S. at 242. This threat of continuing criminal
activity must extend "beyond the period during which the predicate acts
were performed." De Falco, 244 F.3d at 323 (quoting
Cofacredit, 187 F.3d at 242). In considering whether a
complaint alleges open-ended continuity the court should consider the
nature of the enterprise and the predicate acts alleged. See
Cofacredit, 187 F.3d at 242.
A fraudulent scheme limited to one account is considered "inherently
terminable" and does not support an inference of a threat of continuing
criminal activity. See GICC Capital Corp., 67 F.3d at 466
(allegations of fraudulent scheme designed to deprive a single entity of
its assets insufficient to suggest threat of continuity as it "defies
logic to suggest that a threat of
continued looting activity exists when, as plaintiff admits, there
is nothing left to loot"); D.R.S. Trading Co. v.
Fisher, No. 01 Civ. 8028, 2002 WL 1482764, at *4 (S.D.N.Y. 2002)
("When the fraudulent conduct alleged involves such a limited number of
perpetrators, small number of victims, and limited goal, it cannot
support a claim of open-ended or closed-ended continuity."); Price
v. Gast, No. 98 Civ. 7769, 2000 WL 369381, at *9 (S.D.N.Y. April 11,
2000) ("`The Courts of this Circuit have repeatedly found
that . . . short-lived, inherently terminable schemes with a few criminal
acts and few victims do not show a threat of continuity sufficient to
plead a RICO pattern.'"). Here, the alleged fraudulent scheme set forth
in the Complaint is limited to one account. By Rampersad's own admission
this account was fully depleted of all funds by September 1999. The
alleged scheme therefore cannot give rise to an inference of a threat of
future criminal activity.
The facts alleged by Plaintiff are inconsistent with both closed-and
open-ended continuity, thus Plaintiff has not alleged a pattern of
racketeering activity and it is clear that he can prove no facts in
support of his RICO claim that would entitle him to relief. Accordingly,
the Amended Complaint fails to state a claim under section 1962(c); Count
V is dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6).
Dismissal with Prejudice
Plaintiff has had, taking into account his submissions in the NYSE
arbitration, four opportunities to plead his claims, and he filed his
Amended Complaint after briefing Defendants' motions to dismiss the
original complaint. In light of the foregoing analysis and Plaintiffs'
prior opportunity to address the legal insufficiencies of the federal
claims asserted in this action, granting further leave to replead
Plaintiffs' federal claims would be fufile. Accordingly, Counts III and V
of the Complaint are dismissed with prejudice pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure.
Plaintiffs Federal Claims against Defendant Peter Brant
Plaintiff also asserts his Section 10(b) and RICO claims against
Defendant Peter Brant, who has not appeared in this action. Count V is
dismissed with prejudice as against Brant for failure to state a claim
for the reasons explained above. As to Count III, from the face of the
Amended Complaint it appears that the Court's analysis of the timeliness
of Plaintiff's Section 10(b) claim would apply to Brant as well. See
Coakley v. Jaffe, 49 F. Supp.2d 615, 621 n.1 (S.D.N.Y. 1999)
(dismissing sua sponte claims against non-moving defendant who
was "similarly situated to the [moving] defendants with respect to the
claims dismissed"). See also Leonhard v. United States,
633 F.2d 599, 609 n.1 1 (2d Cir. 1980) ("The district court has the power to
dismiss a complaint sua sponte for failure to state a claim. There
appears to be no reason why the same rule should not apply to statute of
limitations grounds [where, as here] the facts supporting the statute of
limitations defense are set forth in the papers plaintiff himself
submitted."); Baker v. Cuomo, 58 F.3d 814, 819 (2d Cir. 1995),
cert. denied sub nom. Pataki v. Baker, 516 U.S. 980
(1995), vacated in part on other grounds, 85 F.3d 919 (2d Cir.
1996) (en banc) ("[Sua sponte dismissal] is . . . appropriate if it
appears from the face of the complaint that the action is barred, for
example by expiration of the statute of limitations."). However, in light
of Plaintiff's failure to seek a default judgment against Brant, Count
III will be dismissed as against Brant without prejudice, for failure to
Remand of Plaintiff's State Law Claims
Defendants removed this action on the basis of federal question
jurisdiction. Diversity of the citizenship of the parties in this action
is not asserted in any of the pleadings, in the Notice of Removal or in
the Amended Complaint. Indeed, it appears that removal on the basis of
diversity would not have been available to Defendants, because it is
likely that either Alex.Brown or DeBoe is a citizen of New York for the
purposes of diversity jurisdiction. See 28 U.S.C.A. §
1441(b) (West 1994).
Accordingly, in the interests of comity and the conservation of judicial
* resources the Court declines to exercise jurisdiction over
Plaintiff's remaining state law claims, and remands them to state court
pursuant to 28 U.S.C. § 1447(c). Cf Trask v. Kasenetz,
818 F. Supp. 39, 44-45 (E.D.N.Y. 1993) (remanding state claims after
dismissing federal claim which served as sole basis for removal even
though parties may have been diverse). See also Woolf v. Mary Kay.
Inc., 176 F. Supp.2d 654 (N.D. Tex. 2001); Maher v. Moore
College of Art and Design, No. 98 Civ. 2978, 1999 WL 88964 (E.D.
Pa. Feb. 19, 1999).
For the foregoing reasons, Defendants' motions are granted. Count V of
the Amended Complaint is dismissed with prejudice as against all
Defendants. Count III is dismissed with prejudice as against Alex.Brown,
DeBoe, and Langtry and without prejudice as against Peter Brant.
Plaintiff's remaining claims are remanded to the New York Supreme Court,
New York County. The Clerk of Court shall effectuate the remand and close
this matter on the records of this Court.