United States District Court, S.D. New York
February 8, 2005.
236 CANNON REALTY, LLC, Plaintiff,
TIMOTHY ZISS, HOWARD PADERNACHT, MICHAEL PADERNACHT, GEORGE C. COFFINAS, MICHAEL CARRIERI, and FRANCIS KORZEKWINSKI, Defendants.
The opinion of the court was delivered by: WILLIAM PAULEY, District Judge
MEMORANDUM AND ORDER
Plaintiff 236 Cannon Realty, LLC ("Cannon") brings this action
alleging violations of the Racketeer Influenced Corrupt
Organizations ("RICO") Act, 18 U.S.C. § 1962(c) and § 1962(d).
Cannon alleges that Timothy Ziss, George C. Coffinas, Howard
Padernacht, Michael Padernacht, Michael Carrieri and Francis
Korzekwinski (collectively, "defendants") engaged in a scheme to
obtain control over the rental income of a residential building
(the "Property") owned by plaintiff. Cannon also asserts pendent
state law claims.
Presently before this Court is defendants' motion for summary
judgment, pursuant to Rule 56 of the Federal Rules of Civil
Procedure. For the following reasons, defendants' motion is
Cannon is a limited liability company owned by Jack Saljanin.
(Defendants' Rule 56.1 Statement of Material Facts*fn1
("Defs. 56.1 Stmt.") ¶ 25; Deposition of Jack Saljanin, dated
Jan. 30, 2004 ("Saljanin Dep."), at 58.) Since April 1999, Cannon
has held title to the Property, which is located in the Bronx.
(Defs. 56.1 Stmt. ¶¶ 3, 24-25, 50, 71; Saljanin Dep. at 58;
Deposition of Tony "Nua" Shala, dated Jan. 27, 2004 ("Shala
Dep."), at 81, 188.) Saljanin manages Cannon with the assistance
of Tony Shala. (Defs. 56.1 Stmt. 24-25; Saljanin Dep. at 58;
Shala Dep. at 81, 188.) On April 6, 1999, Cannon obtained a $6.35
million mortgage loan from Flushing Savings
Bank ("FSB" or the "Bank") to satisfy its outstanding debts on
the Property. (Defs. 56.1 Stmt. ¶ 28, 32-33; Saljanin Dep. at 31,
36, 58-60; Shala Dep. at 18, 22.) Michael Carrieri, a licensed
real estate broker, helped Cannon obtain that loan. (Defs. 56.1
Stmt. ¶ 29.)
In April 2000, Cannon fell behind in its mortgage payments.
(Defs. 56.1 Stmt. ¶ 35.) FSB commenced a foreclosure proceeding
in June 2000. (Defs. 56.1 Stmt. ¶ 35-37; Declaration of Jeffrey
L. Bernfeld, dated Apr. 30, 2004 ("Bernfeld Decl."), Ex. B: FSB
Letter to Cannon, dated May 10, 2000; Saljanin Dep. at 70-72;
Shala Dep. at 32-33.) On July 6, 2000, the New York State Supreme
Court (Bronx County) appointed a receiver to collect rents and
manage the Property. (Defs. 56.1 Stmt ¶¶ 36-37; Bernfeld Decl.
Ex. B: FSB Letter to Cannon, dated May 10, 2000; Saljanin Dep. at
70-72; Shala Dep. at 32-33.)
After the receiver was appointed, Cannon and FSB entered into a
forbearance agreement (the "Forbearance Agreement") on July 11,
2000. (Bernfeld Decl. Ex. C.) Francis Korzekwinski, an FSB senior
vice president, signed the Forbearance Agreement on behalf of the
Bank. (Defs. 56.1 Stmt. ¶ 41; Deposition of Francis Korzekwinski,
dated Jan. 26, 2004 ("Korzekwinski Dep."), at 114-15.) In return
for Cannon's bringing the loan current, FSB agreed to forgive the
default interest. (Defs. 56.1 Stmt. ¶ 40; Bernfeld Decl. Ex. C;
Dep. at 26-29.) The Forbearance Agreement also provided for the
removal of the receiver if Cannon remained current on its monthly
mortgage payments. (Defs. 56.1 Stmt. ¶ 40; Shala Dep. at 26-29;
Bernfeld Decl. Ex. C.)
However, Cannon failed to make any mortgage payments after the
Forbearance Agreement was executed. (Defs. 56.1 Stmt. ¶ 43;
Korzekwinski Dep. at 131.) Instead, it sought alternative
financing to pay off the entire FSB mortgage. (Defs. 56.1 Stmt.
¶¶ 43, 47; Pl. 56.1 Stmt. ¶ 47; Korzekwinski Dep. at 131; Shala
Dep. at 35-36.) Toward that goal, Shala discussed a proposed $10
million loan at ten percent interest with Jake Selechnik. (Defs.
56.1 Stmt. ¶¶ 3, 25, 50, 71; Saljanin Dep. at 58, 138-41; Shala
Dep. at 37-38, 81.) However, they never agreed on the terms.
(Shala Dep. at 81.)
Thereafter, Howard Padernacht, an acquaintance of Shala and
Saljanin, arranged a meeting for them with Timothy Ziss who had a
financing proposal for Cannon. (Defs. 56.1 Stmt. ¶ 51; Shala Dep.
at 38-40, 53-54, 191-92.) Plaintiff claims that Howard Padernacht
said that Ziss would offer a loan on the same terms as Selechnik.
(Shala Dep. at 149-50.)
On or about August 31, 2000, Shala and Saljanin met with Ziss
in the law offices of George Coffinas regarding a possible loan.
(Defs. 56.1 Stmt. ¶ 53.) Coffinas and Howard Padernacht also
attended the meeting. (Defs. 56.1 Stmt. ¶¶ 53,
60.) Although Ziss offered Cannon a loan, no agreement was
reached. (Defs. 56.1 Stmt. ¶¶ 69, 73; Shala Dep. at 93-95.) On
September 5, 2000, Saljanin executed a ground lease (the "Ground
Lease") for the Property on behalf of Cannon. (Defs. 56.1 Stmt. ¶
76; Pl. 56.1 Stmt. ¶ 76.) Ziss also signed the Ground Lease
(Bernfeld Decl. Ex. E), although the date he did so is unknown.
Saljanin acknowledges that he never read the Ground Lease before
signing it. (Saljanin Dep. at 155-58.)
Since Cannon was in default of its FSB mortgage, Ziss' company,
Allied Properties, LLC ("Allied"), assumed the mortgage on the
Property. Allied and FSB executed an assumption agreement (the
"Assumption Agreement") on September 14, 2000. (Defs. 56.1 Stmt.
¶ 78.) The record contains no evidence that Cannon participated
in the negotiations for the Assumption Agreement. In late
September 2000, Ziss informed Cannon that he had agreed with FSB
to assume the mortgage on the Property. (Defs. 56.1 Stmt. ¶ 99;
Pl. 56.1 Stmt. ¶ 99.)
On September 20, 2004, Coffinas recorded the Ground Lease with
the City Registrar. (Defs. 56.1 Stmt. ¶ 94; Bernfeld Decl. Ex. E:
Ground Lease.) The Ground Lease provides, inter alia, for a
forty-five (45) year term with four thirty-five (35) year
extensions. (Bernfeld Decl. Ex. E.) It also requires Allied to
satisfy the FSB mortgage. (Bernfeld Decl. Ex. E.) Plaintiff
claims that the recorded Ground Lease differs from the
copy Saljanin signed on September 5, 2000. (Pl. 56.1 Stmt. ¶¶ 76,
94.) Saljanin maintains that when he signed the Ground Lease he
initialed the bottom portion of each page. (Saljanin Dep. at
157-58.) However, the recorded Ground Lease does not bear his
initials on each page. (Bernfeld Decl. Ex. E.) Other than the
absence of Saljanin's initials, Cannon offers no evidence as to
how the Ground Lease was altered, or who might have altered it.
(See Pl. 56.1 Stmt. ¶¶ 76, 94.)
After Coffinas recorded the Ground Lease, Allied took control
of the Property in late September 2000. (Defs. 56.1 Stmt. ¶¶
94-96; Saljanin Dep. at 264; Shala Dep. at 83, 143-44.) Allied
then retained Midas Management, LLC ("Midas") to manage the
Property. (Defs. 56.1 Stmt. ¶¶ 96-97.) Midas is owned and
operated by Howard Padernacht's son, Michael. (Defs. 56.1 Stmt. ¶
96; Saljanin Dep. at 264; Shala Dep. at 83, 143-44.)
While Cannon still holds legal title to the Property, it does
not receive any of the rental income. (Defs. 56.1 Stmt. ¶¶ 102,
151; Pl. 56.1 Stmt. ¶ 102.)
I. Summary Judgment Standard
A court may grant summary judgment only if "there is no genuine
issue as to any material fact" and "the moving party is entitled
to summary judgment as a matter of law."
Fed.R.Civ.P. 56(c). The movant bears the burden of establishing that
no genuine issues of material fact exist. Celotex Corp. v.
Catrett, 477 U.S. 317, 322-24 (1986); accord McLee v.
Chrysler Corp., 109 F.3d 130, 134 (2d Cir. 1997). Once the
movant satisfies this requirement, the burden shifts to the
nonmoving party "to make a showing sufficient to establish the
existence of an element essential to that party's case, and on
which that party will bear the burden of proof at trial."
Celotex, 477 U.S. at 322. The court is required to resolve any
ambiguities and to make all reasonable inferences in favor of the
nonmoving party. Flanigan v. Gen. Elec. Co., 242 F.3d 78, 83
(2d Cir. 2001). A genuine issue of material fact exists when "a
reasonable jury could return a verdict for the nonmoving party."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
II. The RICO Claims
Section 1962(c) of RICO makes it "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." 18 U.S.C. § 1962(c). To establish a civil claim for
violation of section 1962(c), "a plaintiff must show that he was
injured by 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).
Cannon alleges that defendants perpetrated two schemes: first,
acquiring possession of the Property using a fraudulent ground
lease; and, second, depriving plaintiff of rents from the
Property once they unlawfully acquired such control. (See
Plaintiff's Memorandum of Law in Opposition to Defendants' Motion
for Summary Judgment ("Pl. Mem.") at 5.) Cannon asserts that
defendants made misrepresentations to induce Saljanin to sign the
Ground Lease, which defendants then altered and recorded with the
City Registrar. (See Pl. Mem. at 1-3.) Cannon further claims
that defendants engaged in a conspiracy to defraud under section
1962(d). (Compl. ¶¶ 109-10.)
Defendants argue that Cannon lacks standing because there is no
evidence they caused its claimed injury. Defendants also maintain
that there is no evidence they committed any racketeering acts
with the intent to deprive Cannon of possession over the
RICO provides redress for "[a]ny person injured in his business
or property by reason of a violation of section 1962."
18 U.S.C. § 1964(c). To have standing under RICO, a plaintiff must show:
"(1) a violation of section 1962; (2) injury to
business or property; and (3) causation of the injury by the
violation." Hecht v. Commerce Clearing House, Inc.,
897 F.2d 21, 23 (2d Cir. 1990). Because a plaintiff must demonstrate
injury "by the conduct constituting the [RICO] violation," see
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985), the
claimed harm must have been caused by the racketeering activity.
Hecht, 897 F.2d at 23; Bankers Trust Co. v. Rhoades,
859 F.2d 1096, 1100 (2d Cir. 1988). Factual, as well as proximate,
causation is required. See Hecht, 897 F.2d at 23-24; Sperber
v. Boesky, 849 F.2d 60, 64 (2d Cir. 1988).
Defendants maintain that Cannon lacks RICO standing because it
lost its right to receive rent from the Property once the
receiver was appointed. Defendants note that the receiver was
appointed before the August 31, 2000 meeting with Ziss and
defendants' alleged alteration of the Ground Lease. Cannon does
not dispute that it was in default under the FSB mortgage as of
June 2000. (See Saljanin Dep. at 71-72; Defs. 56.1 Stmt. ¶¶
36-37.) Nor does Cannon dispute that a receiver was appointed for
the Property on July 6, 2000. (See Defs. 56.1 Stmt. ¶¶ 36-37.)
When a receiver is appointed in a foreclosure proceeding, it is
entitled to collect the rent generated by the mortgaged property.
See N.Y. Real Prop. L. § 254 n. 98 (McKinney 2004) ("A receiver
appointed in a foreclosure action is entitled to receive all the
rents and profits which are an incident to
ownership of the property."); Dollar Sav. Bank of New York v.
Improved Real Estate Corp., 74 N.Y.S.2d 759, 761 (App.Div. 1st
Dep't 1947); S & H Bldg. Material Corp. v. European-Am Bank &
Trust Co., 428 N.Y.S.2d 140, 143-44 (Sup.Ct. 1980) ("[U]pon the
appointment of the receiver . . . the receiver became entitled to
collect rents then due and unpaid as well as future rents.");
see also Markantonis v. Madlan Realty Corp., 262 N.Y. 354,
359 (1933) ("A receiver appointed in a foreclosure action is
entitled to receive all the rents and profits . . . in advance of
and pending a judgment by the court in the foreclosure action and
a sale which transfers ownership to the purchaser."). Therefore,
once the receiver was appointed, Cannon lost its right to collect
rents from the Property.
Although the Forbearance Agreement provided that Cannon could
apply to have the receiver removed if it stayed current with the
FSB mortgage (Bernfeld Decl. Ex. C), there is no evidence that it
ever did so. Accordingly, Cannon's alleged injury the right to
control and receive rents from the Property is traceable to its
default and the appointment of the receiver, not to defendants'
actions. Thus, Cannon cannot establish standing under RICO, and
defendants are entitled to summary judgment. See Baisch v.
Gallina, 346 F.3d 366, 373 (2d Cir. 2003) ("[A] plaintiff does
not have standing if he suffered an injury that was indirectly
(and hence not proximately) caused
by the racketeering activity or RICO predicate acts, even though
the injury was proximately caused by some non-RICO violations
committed by the defendants."); Patrick Carter Assocs., Inc. v.
Rent Stabilization Ass'n of N.Y.C., 781 F. Supp. 207, 215
(S.D.N.Y. 1991) ("An essential element of each of the statutory
violations of the mail fraud statute underlying plaintiff's RICO
action is that the plaintiff be deprived of money or property by
the fraudulent acts of defendants." (emphasis added)).
B. Predicate Acts
Even if Cannon had standing, this Court finds that defendants
are entitled to summary judgment since there are no disputed
issues of material fact.
Under RICO, "racketeering activity" includes a wide array of
predicate criminal offenses, which are defined by federal and
state law. See 18 U.S.C. § 1961(1); Cofacredit, S.A. v.
Windsor Plumbing Supply Co., 187 F.3d 229, 242 (2d Cir. 1999).
Cannon alleges two distinct schemes. The first scheme involves
the commission of mail and wire fraud in furtherance of a scheme
to gain control over the Property. (Compl. ¶¶ 93-98.) The second
scheme entails money laundering and interstate transportation of
stolen goods and monies to divert rents from the Property to
defendants. (Compl. ¶¶ 93-98.)
Because Cannon alleges that defendants were engaged in a scheme
to defraud, it must show that each defendant committed two
predicate acts. See USA Certified Merchs., LLC v. Koebel,
262 F. Supp. 2d 319, 332 (S.D.N.Y. 2003) ("[W]here more than one
defendant is charged with fraud, it is necessary for a plaintiff
to particularize and prove each defendant's participation in the
fraud and each defendant's enactment of the two necessary
predicate acts."); Lakonia Mgmt. v. Meriwether,
106 F. Supp. 2d 540, 550 (S.D.N.Y. 2000) (under RICO, a "plaintiff must establish
that each defendant committed at least two acts of racketeering
or two `predicate acts' within a ten-year period").
A RICO plaintiff alleging mail or wire fraud must prove that
the defendants: (1) knowingly participated in a scheme to
defraud, (2) to get money or property, and (3) knowingly used the
interstate mails or wires to further the scheme. USA Certified,
262 F. Supp. 2d at 332; Laro, Inc. v. Chase Manhattan Bank,
866 F. Supp. 132, 136-37 (S.D.N.Y. 1994); see 18 U.S.C. § 1341
(mail fraud); 18 U.S.C § 1343 (wire fraud). A plaintiff must also
demonstrate that the defendants made material misrepresentations
on which it relied. See Metromedia Co. v. Fugazy,
983 F.2d 350, 368 (2d Cir. 1992) ("[T]o establish the required causal
connection, the plaintiff was required to demonstrate that the
defendant's misrepresentations were relied
on."); Vicon Fiber Optics Corp. v. Scrivo, 201 F. Supp. 2d 216,
219 (S.D.N.Y. 2002); see also Carpenter v. United States,
484 U.S. 19, 25 n. 6 (1987) (same analysis required for mail and wire
A plaintiff also must show that the defendants acted with the
specific intent to engage in the scheme to defraud. Beck v.
Mfrs. Hanover Trust Co., 820 F.2d 46, 49 (2d Cir. 1987),
overruled on other grounds by United States v. Indelicato,
865 F.2d 1370 (2d Cir. 1989); Laro, 866 F. Supp. at 137. An
inference of scienter may be established by "facts showing a
motive for committing fraud and a clear opportunity for doing
so." Beck, 820 F.2d at 50. Where motive is not apparent,
however, scienter may be established "by identifying
circumstances indicating conscious misbehavior by the defendant."
Beck, 820 F.2d at 50; see Atlantic Gypsum Co. v. Lloyds
Int'l Corp., 753 F. Supp. 505, 514 (S.D.N.Y. 1990).
Defendants maintain there is no evidence they engaged in a
pattern of mail or wire fraud. They also contend that without
those predicate acts, there is no proof that Ziss obtained
control of the Property illegally.
To establish the predicate act of mail fraud under RICO, a
plaintiff must show that the defendant made misrepresentations
that the plaintiff relied on. See Metromedia,
983 F.2d at 368. The record contains no evidence that Carrieri, the real
estate broker who helped Cannon obtain the mortgage from FSB,
made fraudulent representations to induce Cannon to sign the
Ground Lease or enter discussions with Ziss regarding a financing
arrangement. Both Saljanin and Shala testified that Carrieri did
not make any statements on which they relied. (Defs. 56.1 Stmt. ¶
118; Saljanin Dep. at 231-32; Shala Dep. at 132-33.) Carrieri's
participation in the alleged scheme was limited to his assistance
with the Forbearance Agreement (Defs. 56.1 Stmt. ¶ 39), and
Cannon has not alleged any fraud in connection with that
negotiation. Carrieri is therefore entitled to summary judgment
on the issue of whether he committed predicate acts of mail or
wire fraud in furtherance of the scheme to gain control of the
Property. See Vicon Fiber, 201 F. Supp. 2d at 219 (reliance
on a fraudulent representation "is the sine qua non of a
predicate act of wire fraud").
2. Michael Padernacht
The record is similarly bereft of any material
misrepresentations by Michael Padernacht on which Cannon relied.
Saljanin testified that he was unaware of any misrepresentations
by Michael Padernacht to him or to Shala. (Saljanin Dep. at
277-78.) Saljanin acknowledged, moreover, that Michael Padernacht
did not participate in the discussions over the Ground Lease or
the possible deal with Ziss. (Defs. 56.1 Stmt. ¶ 112-13; Saljanin
Dep. at 277-78.) Absent any identifiable misrepresentations by
Michael Padernacht, Cannon cannot sustain a RICO claim based on
mail or wire fraud against him. See Metromedia,
983 F.2d at 368 (mail and wire fraud predicates require plaintiff to show
materially misleading statements and reliance thereon); see
also Central Distrib. of Beer, Inc. v. Conn, 5 F.3d 181, 184
(6th Cir. 1993) ("[T]he fraud connected with the mail or wire
fraud must involve misrepresentations or omissions flowing from
the defendant to the plaintiff.").
3. Howard Padernacht
Cannon alleges that Howard Padernacht made two
misrepresentations. First, according to Saljanin, Howard
Padernacht stated that Ziss would offer Cannon a loan on the same
terms as proposed by Selechnik. (Saljanin Dep. at 236.) However,
as discussed below, there is no evidence that Saljanin relied on
that statement in signing the Ground Lease. Shala testified that
the arrangement Ziss described was "completely different" from
Selechnik's proposed loan. (Shala Dep. at 149.)
Saljanin testified that Ziss never offered Cannon a loan on the
same terms as Selechnik during the August meeting. (Saljanin Dep.
at 211-12.) Ziss made no further proposals to Saljanin after that
meeting. (Shala Dep. at 126-27.) Thus, when Saljanin signed the
Ground Lease, he knew that Ziss had not offered the same terms as
Selechnik. Cannon has proffered no evidence demonstrating
reliance on Howard Padernacht's representation in entering the
Ground Lease. Without evidence of reliance, Cannon's RICO claim
against Howard Padernacht based on his statement about the loan
from Ziss cannot proceed. See Bank of China, New York Branch v.
NBM LLC, 359 F.3d 171, 176-77 (2d Cir. 2004) ("[W]here mail
fraud is the predicate act for a civil RICO claim, the proximate
cause element . . . requires the plaintiff to show reasonable
Cannon also maintains that Howard Padernacht misrepresented
that the Ground Lease had to be signed and given to FSB. Saljanin
testified that he signed the Ground Lease on September 5, 2000
because Howard Padernacht told him the Bank required that he do
so immediately. (Saljanin Dep. at 157.) However, even if Howard
Padernacht induced Saljanin to sign the Ground Lease, Plaintiff
has not identified any other predicate acts by Howard Padernacht
in furtherance of the alleged scheme to gain control of the
Property. Under § 1962(c), Plaintiff bears the burden of showing
that each defendant committed at
least two predicate offenses in furtherance of the scheme to
defraud it out of the Property. See USA Certified,
262 F. Supp. 2d at 332. Having identified only one possible
misrepresentation by Howard Padernacht, Cannon is unable to
satisfy that burden. See United States v. Diaz, 176 F.3d 52,
93 (2d Cir. 1999) (stating that, to demonstrate a pattern of
racketeering activity, a plaintiff must show that the defendant
committed two predicate acts within ten years of each other).
Howard Padernacht is, therefore, entitled to summary judgment on
Cannon's § 1962(c) claim.
The only misrepresentation pertaining to Ziss is Howard
Padernacht's statement that Ziss would offer a loan on the same
terms as Selechnik. However, Ziss did not make that
representation himself. (Shala Dep. at 115-20.) Accordingly,
there are no misrepresentations that can be attributed to Ziss.
Because evidence of material misrepresentations, and reliance
thereon, is integral to mail and wire fraud claims under RICO,
there are no facts to sustain a RICO claim against Ziss. See
Bank of China, 359 F.3d at 176-77; Metromedia,
983 F.2d at 368.
The record shows that Korzekwinski's involvement with Cannon
was limited to his signing the Forbearance Agreement on behalf of
FSB. (Defs. 56. 1 Stmt. ¶ 41; Korzekwinski Dep. at 114-15.)
Cannon cites conversations between Korzekwinski, Ziss, Howard
Padernacht and Carrieri as "predicate acts in furtherance of the
fraud." (Pl. Mem. at 16.) However, plaintiff fails to identify
any specific misrepresentations by Korzekwinski on which Cannon
relied, and thus lacks any evidence that Korzekwinski committed
mail or wire fraud. See Bank of China, 359 F.3d at 176-77;
Metromedia, 983 F.2d at 368.
Moreover, even if the cited conversations were sufficiently
specific to give rise to liability under the mail and wire fraud
statutes, there is no evidence that Korzekwinski made any false
statements during those talks. Carrieri testified that he "may"
have spoken with Korzekwinski to inquire about the Assumption
Agreement (Carrieri Dep. at 29), and Howard Padernacht's
testimony reveals only that Korzekwinski said he no longer wished
to deal with Shala and Saljanin. (Deposition of Howard
Padernacht, dated Jan. 16, 2004, at 24.) Accordingly, there are
no material issues of fact as to whether Korzekwinski
fraudulently induced Cannon to enter into the Ground Lease.
Cannon claims that Coffinas misled Shala and Saljanin into
thinking he would represent Cannon in its dealings with FSB.
(Compl. ¶ 58.) Although Shala acknowledged that Coffinas made no
such statement to him (Shala Dep. at 321), Saljanin testified
that Coffinas offered to represent Cannon in the transaction with
Ziss (Saljanin Dep. at 137). Accordingly, whether Coffinas stated
that he would represent Cannon is a disputed issue. See
Rodriguez v. City of New York, 72 F.3d 1051, 1061 (2d Cir.
1995) ("If, as to the issue on which summary judgment is sought,
there is any evidence in the record from which a reasonable
inference could be drawn in favor of the nonmoving party, summary
judgment is improper.")
Defendants nevertheless contend that there is no evidence
Coffinas acted with the specific intent to defraud Cannon.
(Defendants' Joint Reply Memorandum of Law in Support of Motion
for Summary Judgment at 7.) For RICO liability, there must be
some showing that Coffinas intended to deprive Cannon of money or
property. See Wood v. Inc. Vill. of Patchogue of New York,
311 F. Supp. 2d 344, 354 (E.D.N.Y. 2004). Such intent can be
established through motive and opportunity, or circumstances
demonstrating conscious misbehavior. See Beck,
820 F.2d at 50. To establish motive sufficient for scienter, it is necessary
to show "a concrete and personal benefit to the individual
defendant? resulting from the fraud." Kalint v. Eichler,
264 F.3d 131, 139 (2d Cir. 2001); see also United States v.
Starr, 816 F.2d 94, 101 (2d Cir. 1987) (benefit to defendant may
help to establish motive).
While summary judgment is typically inappropriate where intent
is at issue, see Ramseur v. Chase Manhattan Bank,
865 F.2d 460, 465 (2d Cir. 1989), plaintiffs are "not entitled to a trial
simply because the determinative issue focuses upon the
defendant's state of mind." Dister v. Cont'l Group, Inc.,
859 F.2d 1108, 1115 (2d Cir. 1988). Accordingly, "[e]ven where a
defendant's intent is at issue, summary judgment will be granted
unless concrete evidence is offered that would permit a
reasonable juror to return a verdict in plaintiff's favor."
Laro, 866 F. Supp. at 137; see also Roger v. Yellow Freight
Sys., Inc., 21 F.3d 146, 148 (7th Cir. 1994) ("Summary judgment
will not be defeated simply because motive or intent are
involved."). Therefore, to establish its mail and wire fraud
claims against Coffinas, Cannon must adduce some evidence that he
made fraudulent statements with the specific intent to defraud.
See Laro, 866 F. Supp. at 137; Atlantic Gypsum,
753 F. Supp. at 514.
"Intent is commonly demonstrated by specifying a motive for
committing fraud, i.e., that the defendant benefited from the
alleged fraud, and an opportunity to do so. If motive
is not apparent, scienter can be demonstrated through a showing
of conscious behavior by the defendant." USA Certified,
262 F. Supp. 2d at 333. Here, there is no evidence in the record that
Coffinas benefited or intended to benefit from the alleged scheme
to get possession of the Property. Coffinas never received any
commission or any payment from the income generated by the
Property. See USA Certified, 262 F. Supp. 2d at 333 (granting
summary judgment on RICO claim where "[p]laintiffs indicate[d] no
benefit [that defendants] received or could have received from
defrauding the Plaintiffs in this case"); cf. Burke v.
Dowling, 944 F. Supp. 1036, 1058 (E.D.N.Y. 1995) (allegations of
scienter sufficient under RICO where corporate insiders stood to
benefit significantly from wrongful scheme).
Evidence of Coffinas' conscious wrongdoing is similarly
lacking. Fraudulent intent may be found from circumstantial
evidence that one party arranged matters with another party to
facilitate the commission of a fraud where the evidence shows
that the first party "gained money or advantage at the expense of
the second." See Crowe v. Henry, 115 F.3d 294, 297 (5th Cir.
1997); Powers v. British Vita, P.L.C., 57 F.3d 176, 184 (2d
Cir. 1995). The record does not show any benefit to Coffinas from
Cannon's dealings with Ziss and FSB. Cf. Landry v. Air Line
Pilots Ass'n Int'l AFL-CIO, 901 F.2d 404, 428 (5th Cir. 1990)
(evidence of intent for RICO mail fraud
claim sufficient to survive summary judgment where
defendant-employer materially benefited by misleading workers in
contract negotiations). Nor has plaintiff adduced evidence that
Coffinas had actual knowledge of the alleged RICO schemes. Cf.
Burke, 944 F. Supp. at 1058 (allegations of conscious
misbehavior sufficient where plaintiff pointed to communications
demonstrating defendants' knowledge of alleged fraudulent
Because plaintiff has not proffered any evidence of Coffinas'
specific intent to defraud, Coffinas' motion for summary judgment
on the RICO claim against him alleging mail and wire fraud is
Absent predicate acts of mail or wire fraud, defendants are
entitled to summary judgment on the issue of whether they engaged
in a fraudulent scheme to acquire control of the Property under §
1962(c). See, e.g., Laro, 866 F. Supp. at 138 (granting
motion for summary judgment where evidence was insufficient to
support predicate acts of mail or wire fraud); Aro Corp. v. Acts
Testing Labs, Inc., No. Civ.-89-1204E, 1990 WL 159059, at *2
(W.D.N.Y. Oct. 17, 1990) ("Inasmuch as there has been a complete
failure of proof as to the predicate offenses of wire fraud and
mail fraud underlying the plaintiff's RICO claims, summary
judgment will be granted dismissing those claims.").
Since Cannon cannot establish that defendants obtained
possession over the Property unlawfully, Cannon's claim that
defendants are engaged in a RICO scheme to deprive it of rents
from the Property, based on the predicate acts of money
laundering and interstate transportation of stolen goods, is
dismissed. See John Paul Mitchell Sys. v. Quality King
Distrib., Inc., No. 99 Civ. 9905 (SHS), 2001 WL 910405, at *6
(S.D.N.Y. Aug. 13, 2001) ("[Plaintiff] may not base its RICO
claim on the acts of transporting, receiving, storing and selling
fraudulently obtained products in violation of 18 U.S.C. §§ 2314
and 2315, as there has been no proper allegation that the
products at issue were fraudulently obtained.").
Similarly, because Cannon cannot demonstrate the predicate acts
of mail and wire fraud, defendants' motion for summary judgment
on the RICO conspiracy claim under § 1962(d) is also granted.
See Odyssey Re (London) Ltd. v. Stirling Cooke Brown
Holdings, 85 F. Supp. 2d 282, 303 (S.D.N.Y. 2000) ("Where a RICO
conspiracy claim is based upon predicate acts that have been
dismissed by the court, the conspiracy claim must be dismissed as
Plaintiffs' claim for some federal "violation of bank privacy"
is also dismissed. There is no statutory basis for such a federal
claim. Without a cognizable claim, summary judgment is
appropriate. See Stokes v. Cross, No. 04-5289, 2005
WL 79036, at *1 (D.C. Cir. Jan 13, 2005) (upholding grant of
summary judgment where appellant failed to allege a cognizable
claim); see also York v. Ass'n of the Bar of the City of New
York, 286 F.3d 122, 125 (2d Cir. 2002) (stating that, for a
plaintiff to receive any redress, the complaint must allege facts
which confer a judicially cognizable right of action).
Having granted summary judgment dismissing all of Cannon's
federal claims, this Court declines to exercise supplemental
jurisdiction over Cannon's pendant state law claims pursuant to
28 U.S.C. § 1367. See Marcus v. AT&T Corp., 138 F.3d 46, 57
(2d Cir. 1998) ("In general, where the federal claims are
dismissed before trial, the state claims should be dismissed as
For the foregoing reasons, defendants' motion for summary
judgment is granted. Plaintiff's federal claims are dismissed
with prejudice. Plaintiff's state law claims are dismissed
without prejudice to reinstatement in state court. The Clerk of
the Court is directed to mark this case closed.