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Fresh Meadows Food Services, LLC v. RB 175 Corp.

September 25, 2006


The opinion of the court was delivered by: Gershon, United States District Judge


Defendants RB 175 Corp. ("RB 175") and Raphy and Tovit Benaim (jointly the "Benaims") own and lease several real estate properties, principally in the County of Queens, New York. At issue in this case is the property located at 175-14 Horace Harding Expressway, Fresh Meadows, New York (the "Premises") which for many years had been operated as either a gasoline station or an auto repair center. On March 21, 2001, the Benaims leased the Premises to plaintiff Thomas Clarke, who subsequently subleased it to plaintiff Fresh Meadows Food Services, LLC ("Fresh Meadows") for the purpose of operating a fast food restaurant chain. Amended Complaint, Ex. C. Upon excavating the premises, Clarke discovered the existence of underground gasoline storage tanks ("USTs"), which he believed were previously removed on November 7, 1989. The removal of the tanks and the resulting soil contamination cost Clarke and Fresh Meadows in excess of $160,000 to remedy, $100,000 of which was reimbursed by the Benaims under the terms of the lease.

In the Amended Complaint, Clarke claims that the Benaims' actions prior to entering into the lease, as well as during the negotiations of the lease, entitle him to damages pursuant to the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§1961 et seq. Plaintiffs also bring various supplemental state law claims (Counts Two through Six). RB 175 and the Benaims have moved to dismiss the Amended Complaint in its entirety. For the reasons discussed below, defendants' motion is granted.


The allegations in the Amended Complaint, described below, are taken as true for the purposes of defendants' motion to dismiss:

From approximately 1968 to 1988, the Benaims, either as lessees or through various subtenants and/or entities that they controlled, operated a gasoline station on the Premises. In or around 1987 or 1988, they leased the Premises to a company that, for a short time, additionally operated a "facility that lubricated motor vehicles and changed the oil used by them." Amended Complaint ¶ 19. During this period, four above-ground gasoline pumps were removed from the Premises. By an indenture dated August 26, 1988, the Benaims purchased fee simple absolute to the Premises from the then-owner, and obtained physical possession of the property in or around 1989.

Upon obtaining physical possession of the Premises, the Benaims discovered that the gasoline station had been operating in violation of the terms and provisions of the New York City Zoning Ordinance. Specifically, a variance, which the New York City Board of Standards and Appeals ("BSA") originally issued in 1931, had expired and not been renewed by the previous owner. It is unclear when the variance had expired; however, in 1991, Raphy submitted an application to the BSA to extend the renewal. Additionally, Raphy had to retroactively legalize an addition that was made to the gas station without the BSA's prior approval.

The BSA application process required Raphy to appear before Community Board #8 (the "Community Board"), to answer questions regarding the Premises. Specifically, the Community Board questioned him about the removal of four gasoline pumps and the status of the USTs. In response to the Community Board Member's questions, plaintiffs allege that Raphy stated that:

(i) the gas tanks were removed, (ii) everything was [supervised] by the fire department, (iii) it [the removal of the pumps and tanks] was done by the previous people before me, (iv) I gave the lease to somebody. They did from the place fast lube and they removed the tanks. They removed the pumps. They did it on their own without me.

Amended Complaint ¶ 38.

Plaintiffs allege that, at the time of the hearing, Raphy knew that, at least some of the USTs remained in place and that he fraudulently misrepresented this fact to the Community Board in order to induce the Community Board to approve the application for the extension of the variance and retroactive legalization of the gasoline station addition.

In or around 1997, Raphy hired Camin Cargo Control, Inc., ("Camin") and Soil Mechanics Environmental Services, Inc. ("Soil") to prepare an environmental report "to determine if the previously removed underground gasoline storage tanks had any impact on the surrounding soils." Amended Complaint, Ex. A at 4. At a state court deposition in 2004, Raphy stated that he commissioned Camin to prepare the report in order to solict an oil company to open up a gasoline and service station on the Premises. Amended Complaint ¶ 43. Camin and Soil's investigation included site visits, during which they extracted soil samples from the ground. Plaintiffs assert that Raphy faxed Camin an affidavit which stated that, "on November 7, 1989, Trinity Petroleum Systems, Inc. . . removed eleven (11) underground or tanks from [the Premises] . . . 10-550 gallon, single wall steel tanks and 1-4000 gallon all steel tank." Amended Complaint ¶ 46. Plaintiffs claim that the affidavit, which was on Trinity's letterhead and signed by Reed Turoff, was actually created by or at the direction of Raphy, and contained information that Raphy knew was false.

Upon completion of the environmental study, Camin issued a Tank Closure Report (the "Report"), in which it summarized its findings. With respect to the UST removal, Camin reported that:

Tank removal operations were initiated and completed on November 7, 1989, by Trinity Petroleum Systems, a tank Contractor experienced in the removal of underground storage tanks. The tanks had been pumped empty, vented and squeegee cleaned. Subsequently, the interior and exterior of the tanks were visually inspected for holes, cracks and other signs of structural instability. There were no signs of any structural damage to the tanks nor any indications of soil contamination ...

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