United States District Court, E.D. New York
March 31, 2004.
DONALD R. WOOD, JR., individually and on behalf of all other similarly situated, Plaintiff, -against- INCORPORATED VILLAGE OF PATCHOGUE OF NEW YORK, F. TALDONE, individually and in his capacity as constable, MARY PONTIERI, individually and in her capacity as former Village of Patchogue clerk, TODD C. JOHNSON individually and in his capacity as former Village of Patchogue treasurer, ROSE MARIE BERGER, individually and in her capacity as former Village of Patchogue clerk, DEIDRE O'BRIEN, individually and in her capacity as constable, STEPHEN KEEGAN, individually and in his capacity as former mayor of Patchogue, JEFFREY KRACHT, individually and in his capacity as former chief constable, NANCY AUER, individually and in her capacity as Village of Patchogue Justice Court clerk, LOUIS TOMEO, individually and in his capacity as chief constable, VINCENT YANNACONE, JR., individually andin his capacity as Judge of the Village of Patchogue Justice Court, GAIL REILLY, individually and in her capacity as Village of Patchogue Justice Court clerk, RICHARD COLLOCOLA, individually and in his capacity as Village of Patchogue clerk, PATRICK O'CONNELL, individually and in his capacity as Justice of the Village of Patchogue Court, DEBORAH GUSTAM, individually and in her capacity as Clerk of the Village of Patchogue Justice Page 2 Court, EDWARD IHNE, individually and in his capacity as Mayor of Patchogue and in his capacity as former village trustee, JERRY AVELLINO, individually and in his capacity as constable, SALVATORE BARBARA, individually and inhis capacity as constable, NICHOLAS CHIRILLO, individually and in his capacity as constable, ALEXANDER COSTELLO, individually and in his capacity as constable, FRANCES CUOZZO, individually and in his capacity as constable, RICHARD DEBETTA, individually and in his capacity as constable, BARRY DONADIO, individually and in his capacity as constable, MICHAEL DONOVICH, individually and in his capacity as constable, DANIEL DURINICK, individually and in his capacity as constable, SCOTT ECKERT, individually and in his capacity as constable, ERICK EVRLY, individually and in his capacity as constable, RICHARD FIORUCCI, individually and in his capacity as constable, CASTO GONZALEZ, individually and in his capacity as constable, WILLIAM B. HART, individually and in his capacity as constable, DONALD HENDERSON, individually and in his capacity as constable, RANALD HOLCOMBE, individually and in his capacity as constable, GERALD LENOX, individually and in his capacity as constable, WILLIAM LOGAN, individually and in his capacity as constable, KARL MAKINEN, individually and in his capacity as constable, PETER MARKS, individually and in his capacity as constable, ERICK McFARLAN, individually and in his capacity as constable, JAMES NUDO, individually and in his capacity as constable, BRIAN PANUCCIO, individually and in his capacity as constable, KEVIN PETTERSON, individually and in his capacity as constable, SUSAN RALPH, individually and in his capacity as constable, STEPHEN E. RAMSLAND, individually and in his capacity as constable, FERDINANDO SABELLICHI, individually and in his capacity as constable, COSMO STOIA, individually and in his capacity as constable, LUIS VELEZ, individually and in his capacity as constable, BASIL WATTLEY, individually and in his capacity as constable, JOSEPH WOOD, individually and in his capacity as constable, NICHOLAS ZAMBELLI, individually and in his capacity as constable, Defendants
The opinion of the court was delivered by: ARTHUR SPATT, District Judge Page 3
MEMORANDUM OF DECISION AND ORDER
This case arises out of claims by the plaintiff Donald R. Wood, Jr.
("Wood" or the "plaintiff"), on behalf of himself and a class of
similarly situated persons, that the defendants the Village of Patchogue
("Patchogue" or the "Village") and forty eight of its present and former
officials and employees (collectively, the "defendants") created a scheme
under which they, under color of law, purported to enforce traffic and
other laws and collect
purported fines for alleged violations of those laws through a distinct
enterprise in violation of, among other things the Racketeer Influenced
and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., ("RICO") and
42 U.S.C. § 1983 ("Section 1983"). Presently before the Court is the
defendants' motion to dismiss the first amended complaint pursuant to
Federal Rules of Civil Procedure ("Fed.R. Civ. P.") 12(b)(6) and 9(b)).
At the outset, the Court notes that the amended complaint contains more
than 75 pages and is in excess of 175 paragraphs. This complaint is very
similar, except for the names, dates, and several facts, to two other
class action complaints filed by plaintiff's counsel in this Court. See
Brewer v. Village of Old Field, et al., No. 00 Civ. 6072 and Robert M.
Coco, Jr. v. Incorporated Village of Belle Terre, No. 01 Civ. 5061.
The facts are taken from the amended complaint and are taken as true
for purposes of this motion.
The plaintiff commenced this action on January 16, 2001, alleging that
at some point prior to 1991, the Village transferred, or was legally
bound to transfer by approval of the majority of its voters, its police
functions to Suffolk County (the "County").
Despite having allegedly transferred all of its police authority to the
County, the plaintiff claims that in or about 1991, the Village, led by
then Mayor Franklin Leavandosky ("Leavandosky"), "hatched the Scheme" to
create a private police force known as the
constabulary. Am. Compl. ¶ 86. At that time, the Village submitted
proposed statements outlining the duties of its constables (the "Duties
Statements") to the Suffolk County Civil Services Department (the "Civil
Services Department"). These Duties Statements indicated that holding a
gun permit was a qualification of employment as a constable.
In a March 23, 1994 letter to Leavandosky, the Commissioner of the New
York State Division of Criminal Justice Services ("Division of Criminal
Justice Services"), denied the Village's request to register their
constables in the County's Peace Officer Registry. The plaintiff alleges
that this letter placed Leavandosky on notice that "a Village
constabulary would be in violation of New York Criminal Procedure Law
("CPL") § 2.10(1) as being contrary to local law and controlling court
decisions." Am. Compl. ¶ 31.
By letter dated November 14, 1996, Edward Ihne ("Ihne"), acting as the
"Commissioner of the Village" made another request to the Division of
Criminal Justice Services to allow the Village's constables to be
registered in the County's Peace Officer Registry. This request was also
denied. The plaintiff alleges that this letter also served to remind Ihne
that the Village was not a "`duly authorized law enforcement agency.'"
Am. Compl. ¶ 89.
By letter dated June 23, 1998, the Civil Services Department advised
then Mayor Stephan Keegan ("Keegan") that, among other things, the
Village must cease the practice of allowing employees to carry guns while
enforcing the Village Code. This letter also
demanded that the Village respond with a confirmation that this practice
had ceased. It is alleged that Keegan never responded to this letter and
that the Village constables continued to carry guns in the course of
By letter dated July 9, 1998, Keegan advised the Civil Services
Department that the constables only wrote tickets for Village Code
violations. In a letter dated March 2, 1999, the Civil Services
Department again stated that because constables are not police officers,
it was inappropriate for them to carry guns during the course of their
employment. This letter also indicated that its prior approval of the
Duties Statements allowing constables to carry guns was erroneous. The
Civil Services Department requested that the Village submit new Duties
Statements affirming that constables do not carry guns. The plaintiff
alleges that as of 1999, the Village had not submitted the Duties
Statements requested by the Department.
It is further alleged that in a December 2, 1999 grant application, the
Village of Patchogue Justice Court (the "Justice Court") indicated that
it had adjudicated more than 6600 vehicle and traffic law citations.
The plaintiff also alleges that "two widely publicized involving
similar schemes lawsuits [one in 1967 involving the Village of Port
Jefferson and one in 1997 involving the Village of Old Field] were
adjudicated." Am. Compl. ¶ 93. These lawsuits provided the defendants
with knowledge that "the establishment of a private police force by a
village who had previously conceded law enforcement jurisdiction to the
county was illegal." Id. The
plaintiff also alleges that a 1984 New York Court of Appeals decision also
held that actions by an unauthorized Village constabulary were void.
The plaintiff further claims that the defendants made
misrepresentations to the County by submitting certified annual payroll
statements to the Civil Service Department, certifying that the employees
performed solely the duties as approved in the Duties Statements.
However, the plaintiff alleges that the Chief Constables Kracht and
Tomeo, and Mayors Ihne and Keegan allowed and directed the constables to
perform duties outside their authority with respect to the enforcement of
vehicle and traffic laws.
A. As to the Plaintiff Donald R. Wood, Jr.
On November 25, 2000, Wood was driving in Patchogue when he was
detained by Constable F. Taldone ("Taldone") for making an illegal right
turn. At that time, Taldone was driving a vehicle with a flashing red
emergency light, wearing a police uniform with a badge and carrying a
gun. Wood claims that Taldone held himself out as a police officer and
issued to Wood a "Uniform Traffic Ticket" (the "Ticket"). The Ticket
indicated that it was issued by the State of New York Department of Motor
Vehicles and that the police agency issuing the ticket was the Village.
This Ticket ordered the plaintiff to appear in the Patchogue Village
Court (the "Village Court").
Wood claims that on or about December 3, 2000 and January 4, 2001,
Village Clerks Nancy Auer ("Auer"), Gail Reilly ("Reilly"), and Deborah
(collectively, the "Village Clerks"), mailed written notices to him
directing him to appear in the Village Court regarding the citation.
These notices also informed Wood that he could plead guilty and pay a
fine to the Justice Court. This fine included a "Mandatory N.Y.S.
Surcharge," payable to "Justice Court, Village of Patchogue." After
allegedly being threatened that his driving privileges would be taken
away, Wood entered a plea of guilty and paid a fine under protest.
B. As to the Proposed Class
As stated above, the plaintiff purports to brings this action on behalf
of himself and a class of similarly situated persons. The plaintiff
claims that from 1991 to the date this action was commenced (the "Class
Period"), the defendants, which include the village constables, village
officials and village clerks, engaged in a scheme
that is designed to detain individuals traveling
through Patchogue, issue purported New York traffic
tickets, also called "appearance tickets," hold
village-court sessions to adjudicate the purported
traffic tickets that constituted acts outside the
village court's jurisdiction, assess unlawful fines
and/or court costs, threaten consequences if the
unlawful fines were not paid, and collect unlawful
fines and costs, all to the personal benefit of the
[d]efendants (the "Patchogue Private Police Force
Scheme" or the "Scheme").
The plaintiff claims that the Scheme was managed by Justices Yannacone
and O'Connell, Mayors Keegan and Ihne, and Chief Constables Kracht and
Tomeo. Other participants in the scheme include Village Constables Louis
Tomeo ("Tomeo"), F. Taldone
("Taldone"), Jeffrey T. Kracht ("Kracht"), Deidre O'Brien ("O'Brien"),
Jerry Avellino ("Avellino"), Salvatore Barbara ("Barbara"), Nicholas
Chirillo ("Chirillo"), Alexander Costello ("Costello"), Frances Cuozzo
("Cuozzo"), Richard DeBetta ("DeBetta"), Barry Donadio ("Donadio"),
Michael Donovich ("Donovich"), Daniel Durnick ("Durnick"), Scott Eckert
("Eckert"), Erick Everly ("Everly"), Richard Fiorucci ("Fiorucci"), Casto
Gonzalez ("Gonzalez"), William Hart ("Hart"), Donald Henderson
("Henderson"), Ranald Holcombe ("Holcombe"), Gerald Lenox ("Lenox"),
William Logan ("Logan"), Karl Makinen ("Makinen"), Peter Marks
("Marks"), Richard Matson ("Matson"), Erick McFarlan ("McFarlan"), James
Nudo ("Nudo"), Brian Panuccio ("Panuccio"), Kevin Peterson ("Peterson"),
Susan Ralph ("Ralph"), Stephen Ramsland ("Ramsland"), Ferdinando
Sabellichi ("Sabellichi"), Cosmo Stoia ("Stoia"), Luis Velez ("Velez"),
Basil Wattley ("Wattley"), Joseph Wood ("Wood"), and Nicholas Zambelli
("Zambelli") (collectively, the "Village Constables"); and Village Clerks
Mary Pontieri ("Pontieri"), Rose Marie Berger ("Berger"), Richard
Collocola ("Collocola"), Gail Reilly ("Reilly"), Nancy Auer ("Auer"),
Deborah Gustam ("Gustam") (collectively, the "Village Clerks").
The plaintiff alleges that the Village Constables at all times knew
that the Village had irrevocably assigned all of its police authority to
Suffolk County but nevertheless continued to represent themselves as
police officers and wore uniforms, badges, insignia, and other
paraphernalia which provided the impression that they were acting with the
authority of a legitimate police department. The plaintiff alleges that
during the Class Period, the constables issued in excess of 13,000
appearance tickets for vehicle and traffic law violations which were
similar to the above mentioned Ticket received by Wood. In addition, the
plaintiff further alleges that the Village Constables obtained civilian
weapons permits "even though their actual intention was to carry those
guns as if they were law enforcement officials acting under color of
state law," Am. Compl. ¶ 73. Moreover, although the Village Constables
did not undergo training at police academy or hold service certification
to perform law-enforcement functions, the Village purchased weapons for
In addition, the plaintiff claims that "on thousands of occasions" the
Village Clerks and former clerks mailed communications regarding the
citations and/or appearance tickets, Am. Compl. ¶ 154, and used the
wires in furtherance of the Scheme. Finally, the plaintiff alleges that
Justices Yannacone and O'Connell adjudicated the hearings and unlawfully
collected fines for the alleged violations of the vehicle and traffic
The plaintiff claims that all of the defendants violated
18 U.S.C. § 1962(b) and (d), the RICO statute; Berger, Pontieri,
Collocola, Auer, Gustam, Reilly, Yannacone, O'Connell, Keegan, Ihne,
Kracht and Tomeo violated 18 U.S.C. § 1962 (c)); and all of the defendants
violated 42 U.S.C. § 1983 ("Section 1983"). The plaintiff also brings a
New York State law cause of action for Money Had and Received against
Berger, Pontieri, Collocola, Auer, Gustam, Reilly, Yannacone, Keegan,
Ihne, Kracht, and Tomeo. Presently before the Court
is a motion by the defendants to dismiss the complaint pursuant to
Rules 12(b)(6) and 9(b).
A. The Standards
1. Rule 12(b)(6)
In reviewing a motion to dismiss for failure to state a claim under
Rule 12(b)(6), the Court should dismiss the complaint only if it appears
beyond doubt that the plaintiff can prove no set of facts in support of
his complaint which would entitle him to relief. King v. Simpson,
189 F.3d 284, 287 (2d Cir. 1999); Bernheim v. Litt, 79 F.3d 318, 321 (2d
Cir. 1996). The court must accept as true all of the factual allegations
set out in the complaint, draw inferences from those allegations in the
light most favorable to the plaintiff, and construe the complaint
liberally. See Tarshis v. Riese Org., 211 F.3d 30, 35 (2d Cir. 2000)
(citing Desiderio v. National Ass'n of Sec. Dealers, Inc., 191 F.3d 198,
202 (2d Cir. 1999)). In its analysis under Rule 12(b)(6), the court "must
confine its consideration to facts stated on the face of the complaint,
in documents appended to the complaint or incorporated in the complaint
by reference, and to matters of which judicial notice may be taken."
Tarshis, 211 F.3d at 39 (citing Allen v. WestPoint-Pepperell, Inc.,
945 F.2d 40, 44 (2d Cir. 1991)). The issue 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).
2. Rule 9(b)
Rule 9(b) sets forth additional pleading requirements with respect to
allegations of fraud. The reason for these requirements are three-fold:
(1) to provide the defendant with fair notice of the claims against her;
(2) to protect the defendant from harm to her reputation or goodwill as a
result of unfounded allegations of fraud; and (3) to reduce the number of
strike suits. See DiVittorio v. Equidyne Extractive Indus., Inc.,
822 F.2d 1242, 1247 (2d Cir. 1987). "[C]onclusory allegations that
defendant's conduct was fraudulent or deceptive are not enough." Decker
v. Massey-Ferguson, Ltd., 681 F.2d 111, 114 (2d Cir. 1982). To satisfy
the pleading requirements of Rule 9(b), the plaintiff must plead the
circumstances of the fraud with particularity and that the defendant
acted with fraudulent intent. Fed.R.Civ.P. 9(b).
a. Pleading the Circumstances of Fraud
Rule 9(b) requires that "[i]n all averments of fraud or mistake, the
circumstances constituting fraud or mistake shall be stated with
particularity." Fed.R.Civ.P. 9(b). In order to satisfy this requirement,
the complaint 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.'" Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d
Cir. 1994) (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175
(2d Cir. 1993)). As such, this requires the plaintiff
to identify which defendant caused each allegedly fraudulent statement to
be spoken, written, wired or mailed, and to whom the communication was
made; when the communication was made; and how it advanced the fraudulent
scheme. McLaughlin v. Anderson, 962 F.2d 187, 191 (2d Cir. 1992).
However, "[i]n cases in which the plaintiff claims that mail and wire
fraud were in furtherance of a larger scheme to defraud, the
communications themselves need not have contained false or misleading
information." Calabrese v. CSC Holdings, Inc., 2003 WL 22052824, at *6
(E.D.N.Y. Aug. 13, 2003). Under these circumstances, Rule 9(b) "only
requires the plaintiff to delineate, with adequate particularity, the
specific circumstances constituting the overall fraudulent scheme." Id.
(citations omitted); see also In re Sumitomo Copper Litig.,
104 F. Supp.2d 314, 319 (S.D.N.Y. 2000) (quoting In re Sumitomo,
995 F. Supp. 451, 456 (S.D.N.Y. 1996).
Where there are multiple defendants, Rule 9(b) requires that the
plaintiff allege facts specifying each defendant's contribution to the
fraud. See DiVittorio, 822 F.2d at 1247 ("Where multiple defendants are
asked to respond to allegations of fraud, the complaint should inform
each defendant of the nature of his alleged participation in the
fraud."). However, "it is not necessary to allege . . . that the
defendants have personally used the mails or wires; it is sufficient that
a defendant `causes' the use of the mails or wires." Sobel v. Fleck, No.
03 Civ. 1041, 2003 WL 22839799, at *6 (S.D.N.Y. Dec. 1, 2003)
(citing 18 U.S.C. § 1341, 1343).
B. Judicial Immunity
The plaintiff seeks declaratory and injunctive relief against Justice
Yannacone and Justice O'Connell. The plaintiff also seeks actual damages
against Justice Yannacone for his "non-judicial acts." Am. Compl.
"Prayer" ¶ 3.
Here, the plaintiff alleges that Justice Yannacone, among other
hatched the Scheme . . . knew at all times that
Patchogue had irrevocably assigned all [of] its police
authority to Suffolk County . . . [was] personally
involved in the management and control of the Scheme
. . . destroyed [the "mantel of impartiality"] through
his direct control and indirect financial interest
over the fines assessed in the cases he adjudicates .
. . was also an accomplice to criminal impersonations
by village personnel acting as police officers, mail
and wire fraud, filing false instruments, extortion,
and other illegal and improper activities . . . acted
outside his jurisdiction as a [V]illage [Justice] to
impose fines and penalties on class members . . .
acted beyond the jurisdiction of the [Village Justice
Court] as an accomplice to the other [d]efendants in
coercing members of the class to pay money in the
Scheme. . . .
Am. Compl. ¶ 80.
Judges have absolute immunity from suit for judicial acts performed in
their judicial capacities. Mireles v. Waco, 502 U.S. 9, 12, 112 S.Ct.
286 (1991) (per curium); see also Oliva v. Heller, 839 F.2d 37 (2d Cir.
1988). This absolute judicial immunity is not overcome by allegations of
bad faith or malice, nor can a judge "be deprived of immunity
because the action he took was in error . . . or was in excess of his
authority." Mireles, 502 U.S. at 13 (quoting Stump v. Sparkman,
435 U.S. 349, 356, 98 S.Ct. 1099, 1105 (1872)). Rather, a judge will be
subject to liability "only when he has acted in the clear absence of all
jurisdiction." Stump, 435 U.S. at 357 (citation omitted); see also Tucker
v. Outwater, 118 F.3d 930, 932 (2d Cir. 1997); Bradley v. Fisher, 80 U.S.
(13 Wall) 335, 352, 20 L.Ed. 646 (1872) (noting that "clear absence of
all jurisdiction" would be found if, for example, a probate judge, with
jurisdiction over only wills and estates, should try a criminal case. On
the other hand, if a judge of a criminal court should convict a defendant
of a nonexistent crime, he would merely be acting in excess of his
jurisdiction and would be immune.").
In the Court's view, the conclusory allegations against Justice
Yannacone are insufficient to sustain a claim for "actual damages . . .
against Yannacone in his non-judicial capacity." Am. Compl. "Prayer" ¶
3. Thus, the Court declines to destroy the expansive and broadly
construed doctrine of judicial immunity. See Alvarez v. Snyder,
264 A.D.2d 27, 33, 702 N.Y.S.2d 5, 11-12 (1st Dept. 2000) ("It has long
been recognized that few doctrines were more solidly established at
common-law than the immunity of judges from liability for damages for
acts committed within their judicial discretion." (Internal quotation and
citations omitted). Accordingly, the claim for actual damages against
Justice Yannacone is dismissed. See Stump, 435 U.S. at 356-7; see also
Mireles v. Waco, 502 U.S. 9, 12,
112 S.Ct. 286 (1991) (per curium) (judicial immunity is an immunity from
suit, not just from the ultimate assessment of damages.) (citation
Furthermore, the declaratory and injunctive relief sought against
Justice Yannacone and Justice O'Connell does not involve and is not
relevant to these defendants. In particular, the plaintiff seeks a
declaration that the
referendum transferring all Patchogue's police
functions to the Suffolk County police district is
binding on Patchogue . . . that Patchogue has no
authority to operate a private police force, detain
and/or arrest any persons residing in or traveling
through Patchogue, or to empower anyone to enforce the
New York Vehicle and Traffic Law or Patchogue local
ordinances, and that no one employed by or in
association with Patchogue has the authority or right
to issue New York Uniform Traffic Tickets or
Simplified Traffic Informations,
Am. Compl. ¶ 105, and that the defendants be enjoined from "benefitting
from their wrongful acts." These allegations do not involve Justices
Yannacone or O'Connell.
In any event, "to the extent [p]laintiff's claims seek injunctive and
declaratory relief (against the [Justices] in either their official or
individual capacities), the Rooker-Feldman doctrine is a barrier."
Tsabbar v. Booth, 293 F. Supp.2d 328, 335 (S.D.N.Y. 2003) (citing
Sundwall v. Leuba, No. 00 Civ. 1309, 2001 WL 58834, at *6-*7 (D. Conn.
Jan. 23, 2001). Under this doctrine, "federal district courts lack
jurisdiction to review state court decisions whether final or
interlocutory in nature," Gentner v. Shulman, 55 F.3d 87, 89 (2d
Cir. 1995), and "federal review, if any, can occur only by way of a
certiorari petition to the Supreme Court." Moccio v. New York State
Office of Court Admin., 95 F.3d 195, 197 (2d Cir. 1996). Thus, even
if the declaratory and injunctive relief sought was relevant to these
defendants, the Rooker-Feldman doctrine would bar such causes of
Accordingly, the causes of action against Justice Yannacone and Justice
O'Connell are dismissed in their entirety.
C. Civil RICO
18 U.S.C. § 1964(c) creates a private right of action for "[a]ny person
injured in his business or property by reason of a violation of section
1962." To state a claim for damages based upon a violation of section
1962, a plaintiff must establish that "a defendant, through the
commission of two or more acts constituting a pattern of racketeering
activity, directly or indirectly participated in an enterprise, the
activities of which affected interstate or foreign commerce." DeFalco v.
Bernas, 244 F.3d 286, 306 (2d Cir. 2001). Here, the plaintiff asserts
three separate causes of action under RICO pursuant to 18 U.S.C. § 1962
(b), (c), and (d).
1. As Against the Village
As stated above, the plaintiff seeks to hold the Village liable under
the civil RICO statute. However, "[w]hile a municipality is undoubtedly a
`person' within the meaning of 18 U.S.C. § 1961(3), it is incapable
of forming the requisite criminal intent for RICO liability."
Frooks v. Town of Cortlandt, 997 F. Supp. 438, 457 (S.D.N.Y. 1998); O & K
Trojan, Inc. v. Municipal & Contractors Equipment Corp., 751 F. Supp. 431,
434 (S.D.N.Y. 1990) ("[A] municipal corporation is incapable of having
the criminal intent to support RICO's predicate offense requirement.");
see also Nu-Life Construction Corp., 779 F. Supp. 248, 251 (E.D.N.Y.
1991). "[E]very court in [the Second] Circuit that has considered the
issue has held that a municipality cannot form the requisite criminal
intent to establish a predicate act, and has therefore dismissed the
claim against the municipality." Frooks, 997 F. Supp. at 457.
((collecting cases)). Moreover, mens rea on the part of the agents of the
municipality may not be imputed to the municipality through the doctrine
of respondeat superior." Rini v. Zwirn, 886 F. Supp. 270, 295 (E.D.N.Y.
The plaintiff argues that the decision of the United States Supreme
Court in Cook County v. United States ex rel. Chandler, 538 U.S. 119, 123
S.Ct. 1239 (2003) authorizes RICO actions against municipalities. The
Court disagrees. In Cook County, the Supreme Court held, among other
things, that municipalities are subject to treble damages under the False
Claims Act (the "FCA") because the FCA's definition of "person" was
intended to cover local governments. However, the Supreme Court did not
address the issue of whether a municipality could form the necessary mens
rea to commit predicate acts in a RICO case. Therefore, the Court will
follow the well-settled law within the Second Circuit and declines to
impose civil RICO liability on the Village. Accordingly, the civil
RICO claims against the Village are dismissed.
2. As Against All of the Defendants in their Official Capacity
Because the Village cannot be held liable in a civil RICO case as a
matter of law, neither may its employees be responsible in their official
capacities. See Frooks, 997 F. Supp. at 457. Accordingly, to the extent
that the defendants are sued in their official capacities, such claims
are also dismissed. However, the plaintiff may proceed against the
defendants in their individual capacities. Lathrop v. Juneay &
Associates, Inc. P.C., No. 03 Civ. 0194, 2004 WL 288635, at *5 (Feb. 11,
2004 S.D. Ill.) ("To assert a claim against an official in his individual
capacity, a plaintiff must assert `that the defendant did something that
is something that is tortious independent of the office that the
defendant holds.'" (citing Walker, et al. v. Rowe, 791 F.2d 507, 508 (7th
Cir. 1986) (J. Easterbrook)).
3. 18 U.S.C. § 1962(b) Against All of the Defendants.
As stated above, to state a claim for damages based upon a violation of
Section 1962, a plaintiff must establish that "a defendant, through the
commission of two or more acts constituting a pattern of racketeering
activity, directly or indirectly participated in an enterprise, the
activities of which affected interstate or foreign commerce." DeFalco
v. Bernas, 244 F.3d 286, 306 (2d Cir. 2001). Section 1962(b) states
[i]t shall be unlawful for any person through a
pattern of racketeering activity or through collection
of an unlawful debt to acquire or maintain, directly
or indirectly, any interest in or
control of any enterprise, which is engaged in, or the
activities of which affect, interstate or foreign
18 U.S.C. § 1962(b). For purposes of this cause of action, the plaintiff
defines the "enterprise" as the "Patchogue Village Court." Am. Compl. ¶
108. The plaintiff alleges the following predicate acts: Violation of New
York Penal Law ("Penal Law") § 190.65(1)(a) Scheme to defraud in the
first degree; Penal Law § 155.40 Grand larceny in the second degree; Penal
Law § 175.35 offering false instruments for filing; Penal Law § 20
Criminal liability for conduct of another; Penal Law § 190.26 Criminal
impersonation in the first degree; and 18 U.S.C. § 1341, 1343, and 1951.
To state a claim under Section 1962(b), the plaintiff must make two
basic allegations: (1) that the defendants acquired or maintained an
interest in the alleged enterprise through a pattern of racketeering
activity; and (2) that the plaintiff suffered injury as a result of the
acquisition of the enterprise. See O & G Carriers v. Smith,
799 F. Supp. 1528, 1543 (S.D.N.Y. 1992). The "acquisition or maintenance
injury" must be separate and apart from the injury suffered as a result
of the predicate acts of racketeering. Katzman v. Victoria's Secret
Catalogue, 167 F.R.D. 649, 657 (S.D.N.Y. 1996) (citing Official
Publications v. Kable News Co., 775 F. Supp. 631, 635 (S.D.N.Y. 1991)).
"Without a distinct `acquisition injury,' [a plaintiff] cannot state a
cause of action under subsection 1962(b)." Discon, Inc. v. NYNEX Corp.,
93 F.3d 1055, 1062-63 (2d Cir. 1996) rev'd on other
grounds, 525 U.S. 128 (1998); Redtail Leasing, Inc. v. Belleza, No. 95
Civ. 5191, 1997 WL 603496, at *3 (S.D.N.Y. Sept. 30, 1997) (the injury
must be caused by "acquisition of an interest in an enterprise, as
distinct from an injury resulting from the pattern of racketeering
activity, or the commission of predicate acts.). "Failure to allege such
an injury results in dismissal." United States Fire Ins. Co. v. United
Limousine Service, Inc., No. 01 Civ. 10821, 2004 WL 324477, at * 12
(S.D.N.Y. February 6, 2004).
Here, the plaintiff alleges that his "separate and independent" injury
is that he and the class members were "inter alia, coerced into being
absent from their jobs or schools and incurr[ed] travel expenses and
related costs to appear in the Village Justice Court." Am. Compl. ¶
130. In the Court's view, these alleged injuries are not separate from
those resulting from the predicate acts, namely that the plaintiff plead
guilty and paid a fine for committing an illegal right turn. Katzman, 167
F.R.D. at 657. Furthermore, the plaintiff's claim that the alleged
predicate acts caused him to, among other things, be absent from school or
employment does not afford a basis for Section 1962(b) liability.
The purpose of Section 1962(b) is "to prohibit the takeover of a
legitimate business through racketeering, typically extortion or
loansharking." Mark v. J.J. Racing, Inc., et al., No. 01 Civ. 10821, 1997
WL 403179, at * 3 (E.D.N.Y. 1997) (citation omitted). Because the
plaintiff has not alleged facts to suggest a separate acquisition or
maintenance injury, the purposes of section 1962(b) are not furthered.
See United States Fire Ins. Co.,
2004 WL 324477, at * 12.
Accordingly, the section 1962(b) claims against the defendants are
dismissed and the Court need not determine whether the Patchogue Village
Court constitutes a section 1962(b) "enterprise."
4. 18 U.S.C. § 1962(c) Against Berger, Pontieri, Collocola, Auer,
Gustam, Reilly, Yannacone, O'Connell, Keegan, Ihne, Kracht, and Tomeo
Section 1962(c) "was intended to prevent the operation of a legitimate
business or union through racketeering. Mark v. J.J. Racing, Inc., No. 92
Civ. 5285, 1997 WL 40319, at *3 (E.D.N.Y. July 9, 1997). This section
[i]t shall be unlawful for any person employed by or
associated with any enterprise engaged in, or the
activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or
indirectly, in the conduct of such enterprise's
affairs through a pattern of racketeering activity or
collection of unlawful debt.
18 U.S.C. § 1962(c).
To state a claim under this section, a plaintiff must allege "(1)
conduct (2) of an enterprise (3) though a pattern (4) of racketeering
activity." DeFalco. v. Bernas, 244 F.3d 286, 306 (2d Cir. 2001) (quoting
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275
(1985)). The elements of this section must be established as to each
individual defendant. DeFalco, 244 F.3d at 306 (citing United States v.
Perisco, 832 F.2d 705,
714 (2d Cir. 1987). "The focus of section 1962(c) is on the individual
patterns of racketeering engaged in by a defendant, rather than the
collective activities of the members of the enterprise, which are
proscribed by section 1962(d)." Id.
a. As to Justice Yannacone and Justice O'Connell
As stated above, due to the doctrines of judicial immunity and
Rooker-Feldman, the claims against Justice Yannacone and Justice
O'Connell are dismissed in their entirety.
b. As to Berger, Pontieri, Collocola, Auer, Gustam and Reilly
The plaintiff alleges that Village Clerks Berger, Pontieri, Collocola,
Auer, Gustam and Reilly were
personally involved in the management and control of
the Scheme through the Class Period by maintaining
records of purported citations and/or appearance
tickets, issuing notices to persons detained by
members of the Scheme, using the mails and wires on
thousands of occasions in an attempt to collect
unlawful fines and court costs imposed on individuals
traveling through Patchogue as part of the Scheme. .
Am. Compl. ¶ 82, 83. However, "[s]imply because one provides goods or
services that ultimately benefit the enterprise does not mean that one
becomes liable as a result." See LaSalle Nat'l Bank v. Duff & Phelps
Credit Reporting Co., 951 F. Supp. 1071, 1090 (S.D.N.Y. 1996) (quoting
University of Md. v. Peat, Marwick, Main & Co., 996 F.2d 1534
, 1539 (3d
Cir. 1993))); see also United States Fire Ins. Co., 2004 WL 324477, at
*12 (It is not enough to merely take directions and perform "`tasks
that are necessary and helpful' to the enterprise." (citing Schmidt
v. Fleet Bank, 16 F. Supp.2d 340, 346 (S.D.N.Y. 1998) (quotation
omitted)). Accordingly, the Section 1962(c) claims against Berger,
Pontieri, Collocola, Auer, Gustam, Reilly are dismissed.
c. As to Keegan, Ihne, Kracht, and Tomeo
With regard to this cause of action, the plaintiff alleges that Mayors
Keegan and Ihne and Chief Constables Kracht and Tomeo, among other
participated in and conducted the affairs of the
Patchogue Constabulary through a pattern of
racketeering activity by . . . personally overseeing
the administration and operation of the Patchogue
Constabulary, including hiring and equipping the
`constables,' directing, managing, and influencing the
efforts of the Patchogue Constabulary to enforce New
York laws, hiring and providing infrastructure to
support the imposition and collection of `fines' on
members of the class, and controlling the financial
affairs of the Patchogue Constabulary.
Am. Compl. ¶ 137.
i. The Enterprise
To survive a Rule 12(b)(6) motion in a civil RICO section 1962(c)
case, the plaintiff must allege the existence of an enterprise which is
"separate and distinct from the alleged pattern of racketeering
activity." Black Radio Network, Inc. v. NYNEX Corp., 44 F. Supp.2d 565,
580 (S.D.N.Y. 1999); see also United States v. Turkette, 452 U.S. 576,
101 S.Ct. 2524 (1981). Thus, "the enterprise must have some sort
of existence independent of the commission of the predicate acts."
Mark, 1997 WL 403179, at *4.
Here, the plaintiff alleges that for purposes of this section, the
enterprise is the "Patchogue Constabulary (a/k/a the Patchogue Police
Department or the Patchogue Code Enforcement Department)." Am. Compl. ¶
135. Although, the plaintiff does not specifically identify the
individuals who comprise this alleged enterprise, the Court will assume
that it consists of the above mentioned "Village Constables." With
respect to this cause of action, the plaintiff indicates that the
"Patchogue Constabulary is an enterprise distinct from the complained of
behavior that can exist separate and apart from that behavior because,
even in the absence of that behavior, the Patchogue `constables' could
properly be designated as code-enforcement officers to enforce non-traffic
local ordinances." Id.
The Court notes that this description of the Village Constables appears
to contradict the prior allegations that the Village Constabulary was
completely unlawful. See e.g., Am. Compl. ¶ 93 ("the establishment of a
private police force by a village who had previously conceded law
enforcement jurisdiction to the county was illegal."); ¶ 1 ("[The]
[p]laintiff seeks injunctive relief to end the [d]efendants' scheme of
running an illegal, illegitimate private police force . . ."); ¶ 70 (".
. . the [d]efendants received notice . . . that [it] had no authority to
perform traffic or law enforcement functions"); ¶ 105 ("[The] [p]laintiff
requests a declaration . . . that Patchogue has no authority to operate a
Nevertheless, "`in assessing whether an alleged enterprise has an
ascertainable structure distinct from that inherent in a pattern of
racketeering,' it is appropriate to consider whether `the enterprise
would still exist were the predicate acts removed from the equation.'"
Schmidt v. Fleet Bank, 16 F. Supp.2d 340, 349 (S.D.N.Y. 1998) (quoting
Handeen v. Lemaire, 112 F.3d 1339, 1352 (8th Cir. 1997)); see also
Turkette, 452 U.S. at 583. Because the plaintiff alleges that the
Patchogue Constabulary would exist even if the alleged predicate acts
were removed, for purposes of this motion the plaintiff has alleged a
section 1962(c) enterprise.
Although it is well-settled that in a Section 1962(c) claim "the person
and the enterprise referred to must be distinct," Riverwoods Chappauqua
Corp. v. Marine Midland Bank, N.A., 30 F.3d 339, 344 (2d Cir. 1994)
(citation omitted), a Section 1962(c) claim may be sustained where there
is only a partial overlap between the RICO person and the RICO
enterprise. Jacobson v. Cooper, 882 F.2d 717, 720 (2d Cir. 1989); see also
Riverwoods Chappaqua Corp., 30 F.3d at 344. Thus, because a defendant may
be a "RICO `person' and one of a number of members of the RICO
`enterprise,'" Cullen v. Margiotta, 811 F.2d 698, 730 (2d Cir. 1987) cert
denied 483 U.S. 1021, 107 S.Ct. 3266 (1987), Mayors Keegan and Ihne and
Chief Constables, Kracht and Tomeo are sufficiently distinct RICO persons
from the RICO enterprise.
ii. Racketeering Activity
Section 1961(1) defines "racketeering activity" as certain criminal
acts under state and federal law including, among other things, mail
fraud, 18 U.S.C. § 1341, and wire fraud, 18 U.S.C. § 1343. The statute
requires a plaintiff to plead at least two predicate acts of racketeering
activity. See 18 U.S.C. § 1961(5). The plaintiff alleges the following
predicate acts: Violation of New York Penal Law ("Penal Law") §
190.65(1)(a) Scheme to defraud in the first degree; Penal Law § 155.40
Grand larceny in the second degree; Penal Law § 175.35 offering false
instruments for filing; Penal Law § 20 Criminal liability for conduct of
another; Penal Law § 190.26 Criminal impersonation in the first degree; and
18 U.S.C. § 1341, 1343, and 1951.
Acts under New York State Law
None of the alleged New York State Penal Law violations constitute a
predicate act for purposes of civil RICO liability. Such is the case
because "the only state law crimes which constitute predicate acts of
racketeering activity under Section 1961 are those acts `chargeable under
State law and punishable by imprisonment for more than one year,' which
involve `murder, kidnaping, gambling, arson, robbery, bribery,
extortion, dealing in obscene matter, or dealing in a controlled
substance or listed chemical.'" Crown Heights Jewish Community Council,
Inc., et al. v. Fischer, 63 F. Supp.2d 231, 238 (E.D.N.Y. 1999) (citing
18 U.S.C. § 1961 (1)(a)) aff'd mem., 216 F.3d 1071, 2000 WL 794152 (2d
Cir. 2000). None of the state law claims enumerated by the plaintiff fall
within this definition. See
Crown Heights Jewish Community Council, Inc., et al., 63 F. Supp.2d at
238 (New York Penal Law §§ 175.35 and 155.42 are not predicate acts); Oak
Bevs., Inc. v. TOMRA of Mass., L.L.C., 96 F. Supp.2d 336, 348 (S.D.N.Y.
2000) (New York Penal Law § 190.65 cannot serve as a predicate act).
Moreover, the Court notes that "grand larceny does not constitute a
charge of robbery." Crown Heights Jewish Community Council, Inc., 63 F.
Supp.2d at 238 n. 4 (noting that the plaintiffs have not alleged any use
or threat of force, and therefore cannot claim that the defendants
committed robbery) (citing United States v. Gonzalez, 21 F.3d 1045, 1047
(11th Cir. 1994) (finding state law definition of robbery applicable
under RICO statute)).
With respect to Penal Law § 190.26, criminal impersonation in the
first degree, this crime does not constitute:
any act or threat involving murder, kidnaping,
gambling, arson, robbery, bribery, extortion, or
dealing in narcotic or other dangerous drugs,
which is chargeable under State law and punishable
by imprisonment for more than one year.
18 U.S.C. § 1961(A)(1). Because Penal Law § 190.26 does not constitute
any of the enumerated offenses under the RICO statute, this alleged
violation cannot serve as a predicate act for purposes of RICO
Moreover, because the plaintiffs failed to set forth a predicate act
under State Law, the plaintiffs cannot sustain a predicate act under
Penal Law § 20, namely, criminal liability for
the conduct of another.
Mail and Wire Fraud
A complaint alleging mail fraud must show (1) the existence of a scheme
to defraud, (2) the defendant's knowing and intentional participation in
the scheme, and (3) the use of interstate mails or transmission
facilities in furtherance of the scheme. S.Q.K.F.C., Inc. v. Bell Atl.
TriCon Leasing Corp., 84 F.3d 629, 633 (2d Cir. 1996) (citation
omitted). Similarly, the elements of wire fraud are (1) a scheme to
defraud and (2) use of interstate wire communication to further that
scheme. See United States v. Lemire, 720 F.2d 1327 (C.A.D.C. 1983)
(noting that the requisite elements of wire fraud, 18 U.S.C. § 1343, are
identical to those of mail fraud, 18 U.S.C. § 1341).
Here, the defendants challenge, among other things, the sufficiency of
the plaintiff's mail fraud allegations. In particular, the defendants
maintain that the plaintiff (1) does not particularize how each defendant
engaged in mail fraud and (2) fails to specify how these mailings were
fraudulent or misleading.
To establish a violation of Section 1962(c), the plaintiff must allege
that each defendant committed at least two predicate acts of racketeering
activity. See De Falco, 244 F.3d at 306. However, under the mail fraud
statute "it is not necessary to allege . . . that the defendants have
personally used the mails or wires; it is sufficient that a defendant
`causes' the use of the mails or wires." Sobel v. Fleck, 2003 WL
22839799, at *6 (S.D.N.Y. Dec.
1, 2003) (citing 18 U.S.C. § 1341, 1343); see also United States v.
Bortnovsky, 879 F.2d 30, 36 (2d Cir. 1989) ("[I]t is not significant for
purposes of the mail fraud statute that a third-party, rather than [the]
defendant wrote and sent the letter at issue, provid[ed] . . . the
defendants could reasonably have foreseen that the third-party would use
the mail in the ordinary course of business as a result of [the]
Here, the plaintiff alleges that on or about December 3, 2000 and
January 4, 2001, the plaintiff received mailed written notices directing
him to appear in the Village Court regarding his citation. Thus, the
complaint alleges a close connection between the defendants and the
alleged fraudulent scheme that each of these defendants "`could
reasonably have foreseen" that the mail would be used "in the ordinary
course of business as a result of' their acts." See Sobel v. Fleck, 2003
WL 22839799, at *7 (citing Bortnovsky, 879 F.2d at 36.).
With regard to the defendants' argument that the plaintiff did not
specify how these mailings were fraudulent or misleading,
[i]n cases in which the plaintiff claims that the
mails or wires were simply used in furtherance of a
master plan to defraud, the communications need not
have contained false or misleading information
themselves . . . In such cases, a detailed description
of the underlying scheme and the connection therewith
of the mail and/or wire communications, is sufficient
to satisfy Rule 9(b).
In re Sumitomo Copper Litigation, 995 F. Supp. 451, 456 (S.D.N.Y. 1998)
Schmuck v. United States, 489 U.S. 705
, 715, 109 S.Ct. 1443 (1989)); see
also Sobel v. Fleck, 2003 WL 22839799, at *5; Calabrese v. CSC Holdings,
Inc., 2003 WL 22052824, at *6 (E.D.N.Y. Aug. 13, 2003) ("In cases in
which the plaintiff claims that mail and wire fraud were in furtherance
of a larger scheme to defraud, the communications themselves need not
have contained false or misleading information."). Thus, under these
circumstances, Rule 9(b) "only requires the plaintiff to delineate, with
adequate particularity, the specific circumstances constituting the
overall fraudulent scheme." Calabrese v. CSC Holdings, Inc., 2003 WL
22052824, at *6 (citations omitted).
Accordingly, the defendants motion to dismiss the Section 1962(c)
claims against Keegan, Ihne, Kracht, and Tomeo is denied.
5. 18 U.S.C. § 1962(d) Against All Defendants
Section 1962(d) prohibits any person from conspiring to violate any of
the substantive provisions of Section 1962(a) (c). As set forth
above, the only remaining claims under the civil RICO statute are the
Section 1962(c) cause of action against Keegan, Ihne, Kracht and Tomeo.
Therefore, only the Section 1962(d) cause of action relating to the
Section 1962(c) against Keegan, Ihne, Kracht and Tomeo remains. See
Discon, Inc. v. NYNEX Corp., 93 F.3d 1055, 1062-63 (2d Cir. 1996)
("Since we have held that the prior claims do not state a cause of action
for substantive violations of RICO, the present [§ 1962(d)] claim
does not set forth a conspiracy to commit such violations.").
D. Section 1983 Against All Defendants
The plaintiff also purports to set forth a Section 1983 cause of action
"on behalf of all people who were detained by persons purporting to be
Patchogue police officers . . . from January 16, 1998 to the present
day." Am. Compl. ¶ 172. The plaintiff further alleges that "the
[d]efendants" among other things: (1) act[ed] illegally under color of
state law to deprive Wood . . . their rights under the Fourteenth
Amendment," Am. Compl. ¶ 164; (2) "denied Wood . . . property rights and
liberty interests without due process," id. at 165; (3) "negligently hired
and employed individuals purporting to be law enforcement officers who
are inadequately trained . . .," Am. Compl. ¶ 167; and (4) "act[ed] in
willful disregard of or acting with deliberate indifference to clearly
established constitutional rights. . . ." Am. Compl. ¶ 168.
The plaintiff's section 1983 cause of action must be dismissed for,
among other reasons, the following: (1) the complaint is "fatally
defective on its face" because it fails to allege any personal
involvement by the defendants, Alfaro Motors, Inc. v. Ward, 814 F.2d 883,
886 (2d Cir. 1987) (internal quotations and citations omitted); see also
McKinnon v. Patterson, 568 F.2d 930, 934 (2d Cir. 1977) (it is
well-settled that "personal involvement of defendants in alleged
constitutional deprivations is a prerequisite to an award of damages
under § 1983"); (2) negligence is not a valid basis for liability under
42 U.S.C. § 1983, Daniels v. Williams, 474 U.S. 327, 328 (1986) ("[T]he
Due Process clause is simply not
implicated by a negligent act of an official causing unintended loss of
or injury to life, liberty, or property." (emphasis in original)); and (3)
these allegations fail to comply with Fed.R.Civ.P. 8. See Salahuddin v.
Cuomo, 861 F.2d 40, 42 (2d Cir. 1988) (stating that "the principal
function of pleadings under the Federal Rules is to give the adverse
party fair notice of the claim asserted so as to enable him to answer and
prepare for trial." (citations omitted)); see also Fed.R.Civ.P. 8(a)(2)
(requiring that a complaint contain "a short and plain statement of the
claim showing that the pleader is entitled to relief. . . .").
Here, the plaintiff failed, among other things, to indicate the
specific person who allegedly violated the plaintiff's rights, how due
process was allegedly denied, and the specific injury that was allegedly
suffered. Accordingly, the plaintiff's Section 1983 claims are dismissed.
E. The New York State Law Cause of Action for Money Had and Received
Against All Defendants
As set forth above, the only federal law causes of action remaining in
this action, are the Section 1962(c) claims against cause of action
against Keegan, Ihne, Kracht and Tomeo. Having dismissed the plaintiff's
federal claims against all of the defendants except for those against
Keegan, Ihne, Kracht, and Tomeo, the Court will also dismiss the New York
state law claims for money had and received against all of the defendants
except for those against Keegan, Ihne, Kracht, and Tomeo. See Arroyo
v. City of New York, et al., No. 99 Civ.
1458, 2003 WL 22211500, at *3 (E.D.N.Y. Sept. 25, 2003) (citing United
Mine Workers v. Gibbs, 383 U.S. 715
, 726, 86 S.Ct. 1130 (1966)); see also
Karmel v. Claiborne, Inc., No. 99 Civ. 3608, 2002 WL 1561126, at * 3
(S.D.N.Y. July 15, 2002) ("[w]hen federal claims are dismissed early in
the litigation for example, before trial on a summary judgment motion
dismissal of state law claim[s] . . . is appropriate.") (citing Cobbs
v. CBS Broadcasting, Inc., 99 Civ. 3608, 1999 WL 244099, at *3 (S.D.N.Y.
April 26, 1999).
However, in light of the fact that the Court has jurisdiction over the
plaintiff's Section 1962(c) and (d) claims against Keegan, Ihne, Kracht,
and Tomeo the Court will exercise supplemental jurisdiction over the
state law claim for money had and received against these defendants.
A cause of action for "monies had and received" is an equitable claim
similar in theory to unjust enrichment. It has been described as "an
obligation which the law creates in the absence of an agreement when one
party possesses money that in equity and good conscience should not be
retained and which belongs to another." Bd. of Educ. of Cold Spring
Harbor v. Rettallata, 164 A.D.2d 900, 901, 559 N.Y.S.2d 758 (2d Dep't
1990), remanded on other grounds, 181 A.D.2d 648, 581 N.Y.S.2d 1007 (2d
Dep't 1992); Interlor by Mussa, Ltd. v. Town of Huntington, 174 Misc.2d 308,
311, 664 N.Y.S.2d 970 972 (Sup.Ct. Suffolk Cty. 1997).
A claim for monies had and received in New York is considered either a
"quasi-contract or [a] contract implied-in-law." Bd. of Educ. of Cold
Spring Harbor Cent. Sch. Dist., 78 N.Y.2d 128, 138, 572 N.Y.S.2d 885, 888
(1991) (citing State v. Barclays Bank of New York, N.A., 76 N.Y.2d 533,
540, 561 N.Y.S.2d 697 (1990)). Such a claim is recognized as follows:
[I]n the absence of an agreement when one party
possesses money that in equity and good conscience
[it] ought not to retain and that belongs to another.
It allows [a] plaintiff to recover money which has
come into the hands of the defendant impressed with a
species of trust because under the circumstances it is
against good conscience for the defendant to keep the
Id. (internal quotations and citations omitted). Although the claim rests
upon equitable principles because it concerns the broad considerations of
right, justice and morality, it is "considered an action at law." Id.
(internal quotations and citations omitted).
Accepting as true all of the factual allegations set out in the
complaint, drawing inferences from those allegations in the light most
favorable to the plaintiff, and construing the complaint liberally, see
Tarshis v. Riese Org., 211 F.3d 30, 35 (2d Cir. 2000), in the Court's
view, the plaintiff sets forth a cognizable cause of action for money had
and received against Keegan, Ihne, Kracht, and Tomeo. Accordingly, the
motion to dismiss the claim of money had and received against these
defendants is denied.
F. Leave to Amend
Rule 15(a) of the Federal Rules of Civil Procedure states that a party
shall be given leave to replead when justice so requires. Branum v.
Clark, 927 F.2d 698, 705 (2d Cir. 1991); see also Cortec Indus., Inc. v.
Sum Holding L.P., 949 F.2d 42, 48 (2d Cir. 1991) (it is the usual
practice upon granting a motion to dismiss to allow leave to replead).
Leave to amend should be freely granted, "especially where dismissal of
the complaint [is] based on Rule 9(b)." Acito v. IMCERA Group, Inc.,
47 F.3d 47, 54-55 (2d Cir. 1995); Luce v. Edelstein, 802 F.2d 49, 56-57
(2d Cir. 1986) ("Complaints dismissed under Rule 9(b) are `almost always'
dismissed with leave to amend." (citation omitted)). Here, the plaintiff
already filed an amended complaint. However, because the amended
complaint was filed pursuant to Fed.R.Civ.P. 15(a) ("amendment as of
right"), the Court will grant the plaintiff leave to file a second
amended complaint to correct the above mentioned pleading deficiencies.
The Court notes with approval Judge Leisure's thoughtful comments in
Spier v. Erber, No. 89 Civ. 1657, at *10, n. 8 (S.D.N.Y. May 24,
It has become an all too common practice for litigants
granted leave to replead to make only minor changes in
the original complaint based on an overly restrictive
reading of the dismissing court's order, prompting a
second motion to dismiss. An amended complaint which
fails to replead with sufficient particularity after a
finding of lack of specificity may well be regarded by
the Court as a frivolous filing in violation of
Fed.R.Civ.P. 11. Conversely, a renewed Rule 9(b)
motion after an adequate and thorough repleading can
be viewed as frivolous.
Finally, the Court notes that this decision is made at an early stage
in this litigation. Its determination regarding the allegations raised in
the amended complaint should not be construed as necessarily going to a
likelihood of success on the merits.
Based on the foregoing, it is hereby
ORDERED, that the defendants motion to dismiss the amended complaint is
granted except as to the Sections 1962(c) and (d) and the common law
money had and received claims against Keegan, Ihne, Kracht, and Tomeo in
their individual capacities; and it is further
ORDERED, that the plaintiff is granted leave to file a second amended
complaint within thirty days from the date of this order and that the
failure to file within this time period will render the dismissal of the
plaintiff's claims that were dismissed as a result of this decision, with
prejudice; and it is further
ORDERED, that within thirty dates after the filing of the second
amended complaint, the plaintiff shall file a RICO case statement
consistent with Section 9.2 of the Local Rules for the Northern District
of New York, attached to this Memorandum of Decision and Order as
Appendix 1; and it is further
ORDERED, that the parties are directed to contact United States
Arlene R. Lindsay forthwith to schedule the completion of discovery; and
it is further
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