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484 Associates, L.P. v. Moy

March 5, 2007


The opinion of the court was delivered by: Honorable Paul A. Crotty, District Judge


Plaintiff 484 Associates, L.P. brings this action in diversity against Defendants Perry Moy ("Moy"), CHM Abstract, LLC, and CHM Abstract Land Title Research Corp. (collectively "CHM").*fn1 Plaintiff alleges unjust enrichment, fraud, and aiding and abetting fraud under the laws of the State of New York and also seeks to compel the determination of its own and Defendants' claims to certain properties pursuant to Article 15 of the New York Real Property Actions and Proceedings Law. Defendants now move pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss the unjust enrichment, fraud, and aiding and abetting fraud claims.


I. Factual History*fn2

This claim arises out of a series of loans made by Plaintiff to one David Bok ("Bok"). In late 2002, Bok approached Plaintiff about investing in the international scrap metal market. This investment, which Bok suggested could yield significant returns, would take the form of a loan to Bok to be invested in his putative scrap metal business in China. Plaintiff agreed and made a loan in the amount of $105,000 on January 17, 2003, as evidenced by a Promissory Judgment Note. At about that time, Bok asked for a separate loan of $200,000 for investment in a residential construction project in Dubai, and offered as a security the deed to two apartments in Manhattan that his company, Aspic Corp., allegedly owned (the "Properties"). Bok provided Plaintiff with a comprehensive Appraisal Report of the Properties (the "Appraisal Report," Exhibit B to the Complaint), setting their market value at $1,440,000, and a "Certification and Report" of title to the Properties prepared by Defendants (the "Certification and Report," Exhibit C to the Complaint). Plaintiff never spoke with or had direct communications with Moy. Nor did Plaintiff conduct its own investigation, but chose instead to rely on the documents which Bok provided. Nonetheless, Plaintiff maintains that Defendants defrauded Plaintiff by falsifying the Certification and Report, which was part of Bok's scheme to defraud Plaintiff.

Defendants' Certification and Report stated that as of January 24, 2003, title to the Properties, "subject to the liens, encumbrances and other matters, if any, set forth in this report, is as follows: Recertified recorded owner: Aspic Corp." Exhibit C. No such liens or encumbrances were set forth in the report. The Appraisal Report was dated June 24, 2002, six months prior to the loans to Bok, and differed from the Certificate and Report in a critical respect. It reported that the Properties were owned not by Bok or Aspic Corp., but rather by Bok's mother, Joyce Qua Bok. The Appraisal Report stated the ownership of the Properties three times: in the cover letter from the appraiser ("The subject apartment is owned by Joyce Qua Bok."); in the "Summary of Salient Facts" ("Owner: The subject property is owned by Joyce Qua Bok."); and in the "Introduction" ("Ownership History: Public records indicate title to the subject property is held by Joyce Qua Bok since 1997."). Exhibit B.

Plaintiff loaned Bok the requested $200,000, and on January 9, 2003 received in return the putative deed to the Properties, proof of a $1,000,000 life insurance policy on Bok for the term of the loan, with Plaintiff as beneficiary, and a payment guarantee from Bok's Dubai construction business. On April 10, 2003, Bok asked for a larger loan of $429,900 for the scrap metal business, incorporating an extension of the earlier $105,000. Plaintiff extended the loan in return for a new Promissory Judgment Note, relying on the Properties as collateral.

On November 17, 2003, Plaintiff demanded payment on the Note in the amount of $472,890. Bok failed to repay the Note at which point Plaintiff also demanded repayment of the $200,000 loan. Bok disappeared for a time, but on December 19, 2003 he wrote Plaintiff stating that while he intended to honor his obligations, he could not do so at that time, due to setbacks in his businesses. A Pennsylvania state court then entered a judgment by confession against Bok in the amount of $525,634.62 on December 30, 2003. Plaintiff attempted to execute the judgment against the Properties and found that they were owned by Joyce Bok and were also encumbered by mortgages held by Defendants. Plaintiff alleges that the mortgages are fraudulent, and that Joyce Bok was convinced by Defendants and Bok to record them unwittingly. On November 15, 2005, Joyce Bok assigned her entire interest in the Properties to Plaintiff.


I. Rule 12(b)(6) Standard

The district court may dismiss a claim under Federal Rule of Civil Procedure 12(b)(6) only if "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 249-50 (1989) (citing Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)). The court must accept as true all well-pleaded factual allegations in the complaint, and view them in the light most favorable to the plaintiff. See De Jesus v. Sears, Roebuck & Co., 87 F.3d 65, 70 (2d Cir. 1996). Despite the Rule's liberal standard, "conclusory allegations or legal conclusions masquerading as factual conclusions" are not sufficient to withstand a motion to dismiss. Id.

Under Rule 12(b)(6), the Court may either exclude evidence outside the Complaint or convert the motion to dismiss to a motion for summary judgment under Federal Rule of Civil Procedure 56. Fed.R.Civ.P. 12(b). For these purposes, the complaint "is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference." Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991), cert. denied, 503 U.S. 960 (1992). Accordingly, the Court considers only the documents attached to the Complaint, and does not rely at all on Defendants' evidentiary submissions, as the Complaint does not "rel[y] heavily upon [their] terms and effect."Int'l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995) (per curiam).

II. Fraud

Under New York law, fraud has five ...

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