The opinion of the court was delivered by: WILLIAM PAULEY, District Judge
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. ...