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Smallwood v. Lupoli

September 14, 2007


The opinion of the court was delivered by: Joseph F. Bianco, District Judge


Plaintiffs Editha Hills ("Hills") and Alice Collins ("Collins"), the special representatives of Keishma Smallwood ("Smallwood") and Alice Dailyda ("Dailyda"), respectively, (collectively, "plaintiffs") filed the instant action alleging violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), as well as state claims against defendants Matthew Lupoli ("Lupoli"), Albert Basal, Fred Basal, Tony Zadeh ("Zadeh"), Plaza Homes, LLC ("Plaza"), and Universal Development, LLC ("Universal") (collectively, the "Universal defendants"); George J. Brucker ("Brucker"); and Peter M. Redmond ("Redmond") and Peter M. Redmond, P.C. (collectively, the "Redmond defendants").*fn1 The action arises out of the sale at auction of two properties that, according to plaintiffs, was the result of a scheme by defendants to take advantage of plaintiffs. All defendants filed motions for summary judgment. For the reasons that follow, defendants' motions are granted as to the civil RICO claims and the Court declines to exercise supplemental jurisdiction over the remaining state law claims. Accordingly, the action is dismissed in its entirety.


A. Facts*fn2

1. The Smallwood Property

Defendant Lupoli was appointed and commissioned by the Supreme Court of New York, Queens County, as the "Guardian for Property Management" for Smallwood pursuant to a commission issued by the Clerk of Queens County on November 7, 2000. (Pls.' Counter-56.1 Stmt. to the Redmond Defs.' 56.1 Stmt. (hereinafter "Pls.' Redmond Counter-56.1") ¶ 24; Ex. E.) Hills was appointed as the guardian of the person of Smallwood. (Pls.' Redmond Counter-56.1 Stmt ¶ 10.)

After Lupoli was appointed guardian, he sought to sell the Smallwood property by public auction, but was instead directed by the court to present a contract of sale from a thirdparty purchaser. (Lupoli Dep. at 7, 36, 39.) Pursuant to the terms of the commission appointing Lupoli guardian for the Smallwood property, Lupoli was authorized to retain counsel, if necessary, subject to the approval of fees by the court. (Redmond Ex. E. at 2.) Lupoli retained the Redmond defendants to represent him with respect to the special proceeding wherein Lupoli recommended that the Smallwood property be sold.*fn3 (Redmond Tr. at 10.) Lupoli consulted with an appraiser, Stephen E. Gutleber ("Gutleber"), to establish a value at which the Smallwood property might be offered for sale. (Lupoli Dep. at 41-42.) Gutleber appraised the Smallwood property at $154,000.00 as of February 3, 2001. (Bailey Decl. Ex. 5.) Lupoli advertised the property for approximately eight weeks. (Lupoli Dep. at 51.) In July 2001, in a proposed order to show cause, Lupoli represented to the Supreme Court:

[T]he subject premises were advertised for over forty days and offered for sale extensively over the past four months, without producing a purchaser who was ready, willing and able to proceed to contract.

(Redmond Ex. F.) In the order to show cause that was issued by the Supreme Court of New York, Queens County, on July 7, 2001, the court appointed Brucker as the court's expert appraiser for the purpose of establishing the fair market value of the Smallwood property. (Id.) Brucker appraised the Smallwood property at $110,000.00. (Redmond Ex. G.) Brucker testified regarding this appraisal on September 4, 2001, and addressed the differences between his appraisal and that of Gutleber. (Redmond Ex. G, H at 10-11.) In addition, on that date, Redmond represented to the court that there was no buyer for the property. (Redmond Ex. H.) Hills did not appear at the September 4, 2001 proceeding. (Redmond Ex. H.)

On October 17, 2001, the state court issued an order directing the sale of the Smallwood property at public auction to be held on November 13, 2001, at 9:30 a.m. (Redmond Ex. I.) However, Lupoli indicated in a subsequent advertisement that the auction would take place at 12:00 p.m. (Baily Decl. Ex. 12.) As such, an amended order was issued on November 9, 2001, which changed the auction time to 12:00 p.m. (Redmond Ex. J; Lupoli Dep. at 99.) Lupoli testified that it was his decision to switch the time of the auction. (Lupoli Dep. at 101.) The public auction of the Smallwood property was conducted by the Supreme Court of New York, Queens County at 12:00 p.m. on November 13, 2001, pursuant to bidding rules established by the court. (Redmond Ex. K.)

Lupoli testified that he attended the advertised inspection at the Smallwood property on November 12, 2001. (Lupoli Dep. at 106-07.) However, Hills testified that she retained the keys and did not recall going to the house on November 12, 2001, to let anyone in. (Hills Dep. at 42-43.)

According to plaintiffs, Hills and her daughter arrived at the courtroom where the auction was to take place between approximately 9:30 and 9:45 a.m on November 13, 2001. (Hills Dep. at 59-60.) According to Hills, Lupoli was there with Zadeh, and Lupoli informed Hills that Zadeh had purchased the Smallwood house for $112,500.00. (Id.)

The transcript of the November 13, 2001 auction indicates that the auction took place between 12:00 p.m. and 12:17 p.m. (Redmond Ex. K.) There were three bidders who participated in the public auction, including defendants Zadeh and Fred Basal (Id.) Zadeh is a member of defendant Universal. Fred Basal is a member of defendant Plaza. The two companies were located in the same premises during the relevant time and the companies "bought properties as partners." (Zadeh Dep. at 19, 24-25.) According to Basal, there were thirty or forty people in the courtroom at the time of the Smallwood auction. (Basal Dep. (Redmond Ex. AS) at 10, 17.) The bidding started at $100,000 and proceeded in increments of $2,500.00. (Redmond Ex. K) The auction transcript indicates that the winning bid was $112,000.00 (Id.) However, the contract for sale indicates that the sale price of the Smallwood property was $112,500.00. (Redmond Ex. M.) According to Lupoli, the discrepancy between the transcript and the contract was due to court reporter error. (Lupoli Dep. at 131.) The Redmond defendants prepared the Contract for Sale of the Smallwood Property. (Redmond Dep. at 51-55.) On the front page of the contract, the date November 13, 2001 is typed in. (Redmond Ex. M.)

According to Fred Basal, immediately after the auction, in the court hallway, Plaza and Universal arrived at a deal to partner on the property. (Basal Dep. (Redmond Ex. AS) at 29.) According to Lupoli, Zadeh called his office to have a check brought over for the down payment. (Lupoli Dep. at 134-35.) The check arrived at the courthouse fifteen to twenty minutes later. (Lupoli Dep. at 136.) The down payment is a certified check from Universal in the amount of $11,250.00. (Redmond Ex. N.)

There is a letter, signed by Zadeh, that states that Plaza/Universal paid Lupoli $145,000.00 for the Smallwood property. (Bailey Decl. Ex. 15.) Zadeh testified that this amount was "a mistake on the papers, a typo." (Zadeh Dep. at 113.)

On May 31, 2003, the Smallwood property was re-sold for $215,000. (Lupoli Ex. BC; Pls.' Mem. at 31.)

2. The Dailyda Property

By commission dated August 28, 2001, Lupoli was also appointed as the guardian of the person and property of Dailyda. (Pls.' Lupoli and Universal Counter-56.1 ¶ 1; Redmond Ex. W.) Collins, as discussed supra, is the daughter and the executor of the estate of Dailyda. (Pls.' Redmond Counter-56.1 ¶ 11.) Lupoli retained the Redmond defendants to represent him in his role as guardian with respect to various proceedings relating to the Dailyda estate in the New York Supreme Court, Queens County. (Redmond Dep. at 12.) Lupoli requested an auction of the property, but was directed by the court to present a contract of sale on the Dailyda property from a purchaser. ...

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