Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

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

236 CANNON REALTY v. ZISS

United States District Court, S.D. New York


February 8, 2005.

236 CANNON REALTY, LLC, Plaintiff,
v.
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 granted. Page 2

  BACKGROUND

  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 Page 3 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; Shala Page 4 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, Page 5 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 Page 6 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.)

  DISCUSSION

  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." Page 7 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 Page 8 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 Property.

  A. Standing

  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 Page 9 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 Page 10 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 Page 11 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.) Page 12

  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 Page 13 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 fraud statutes).

  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. Page 14

  1. Carrieri

  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. Page 15 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.) Page 16 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 reliance.").

  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 Page 17 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.

  4. Ziss

  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. Page 18

  5. Korzekwinski

  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. Page 19

  6. Coffinas

  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 Page 20 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 Page 21 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 Page 22 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 scheme).

  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 granted.

  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."). Page 23

  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 well.").

  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 Page 24 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 well."). Page 25

  CONCLUSION

  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.

  SO ORDERED.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

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