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Mehdi Gabayzadeh v. Benjamin Brafman

May 11, 2011

MEHDI GABAYZADEH, PLAINTIFF,
v.
BENJAMIN BRAFMAN, ET AL., DEFENDANTS.



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

USDC SDNY

DOCUMENT ELECTRONICALLY FILED

DOC #: _________________

ORDER ADOPTING R&R

Pro se plaintiff Mehdi Gabayzadeh ("Plaintiff" or "Gabayzadeh") is currently an inmate at Fort Dix Federal Correctional Institution in New Jersey after his 2005 conviction for bank fraud, wire fraud, securities fraud, bankruptcy fraud, perjury, and obstruction of justice. On April 27, 2009, he filed this action against his former attorney Benjamin Brafman, Esq. ("Brafman"), and the law firms Brafman & Ross, P.C. and Brafman & Associates, P.C. (collectively, "Defendants"), alleging fraudulent misrepresentation and false billing. On November 30, 2009, Defendants filed the instant motion to dismiss. On June 18, 2010, Magistrate Judge Francis issued his Report and Recommendation ("R&R") that this Court grant the Defendants' motion to dismiss with prejudice. For the following reasons, the Court adopts Magistrate Judge Francis's R&R in its entirety. Accordingly, Defendants' motion to dismiss is GRANTED and the case is dismissed with prejudice.

BACKGROUND

I. Facts*fn1

Plaintiff was formerly the President and CEO of American Tissue, Inc. ("ATI"), a large paper products corporation. On September 10, 2001, ATI filed for Chapter 11 bankruptcy and, in November 2001, Plaintiff was removed from his leadership positions at ATI. In the year preceding the bankruptcy, Plaintiff engaged in many schemes to defraud LaSalle National Bank Association, ATI's lender, including falsification of records and financial books and creating fictitious invoices.

Eventually, the United States Department of Justice commenced an investigation which led to a grand jury indictment in the United States District Court for the Eastern District of New York. In February 2002, before being formally indicted, Plaintiff hired Brafman to represent him and arranged to have the representation continue post-indictment. After evaluating the government's case, Brafman urged Plaintiff to consider a plea agreement instead of proceeding to trial. Plaintiff refused, however, and subsequently retained a different lawyer, Raymond G. Perini ("Perini"), for trial.

On April 13, 2005, a jury convicted Plaintiff of multiple counts of fraud and conspiracy to commit fraud. Following the conviction, Plaintiff again retained Brafman for representation at sentencing. On September 25, 2006, Plaintiff was sentenced to 15 years in prison, and was ordered to pay over $64 million in restitution to LaSalle National Bank and Wells Fargo Equipment Finance, Inc. Plaintiff's appeal is currently pending in the United States Court of Appeals for the Second Circuit. United States v. Gabayzadeh, No. 06-5466-cr.

Plaintiff's fee arrangement with Brafman varied throughout the representation. For the pre-indictment stages, Plaintiff agreed to pay Brafman a $100,000 retainer fee, against which he would be charged an hourly rate. Following his indictment, however, Plaintiff requested, and Brafman agreed, to convert the original retainer arrangement to a flat fee of $500,000, which would cover all pre-trial matters. After his conviction, Plaintiff's family arranged to have Brafman represent him at sentencing for a flat fee of $200,000. Plaintiff claims that he has paid Brafman a total of $1,027,085.75.

II. The First Amended Complaint

Plaintiff's First Amended Complaint ("FAC") was filed on September 30, 2009. In the FAC, Plaintiff claims that Brafman engaged in fraud by "demanding" that he turn over two $50,000 cash payments on December 9, 2003 and January 9, 2004, respectively, (FAC ¶¶ 50-65), that Brafman committed fraud and "contract fraud" by misrepresenting his professional credentials, (FAC ¶¶ 67-68), and that Brafman was unqualified to represent ATI, a "billion dollar corporation[]." (FAC ¶ 179.) His fraud claims pertaining to Brafman's credentials are based on a single phrase used in Brafman's retainer agreements, which, as Magistrate Judge Francis indicates, Plaintiff recites "[a]lmost like a mantra" - in bold, capitalized, and underlined type - on 37 of the 49 pages of the FAC: "[M]y degree of expertise and experience in handling cases of this nature." (FAC ¶ 132, Ex. 2; R&R 14.) Plaintiff argues that by including the phrase in the retainer agreements, "Brafman 'conceal[ed]' and 'misstate[d]' his experience and deceived [Plaintiff] into believing that he had possessed the skills and knowledge needed to represent him." (R&R 15 (citing FAC ¶ 76).) In addition, Plaintiff claims that Defendants failed to keep adequate time records pursuant to New York Association for Retarded Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983), and asserts a claim under the Federal Debt Collection Procedure Act, 28 U.S.C. § 3001. (FAC ¶10, 25, 35.)

III. Procedural History

On November 30, 2009, Defendants moved to dismiss the FAC for failure to state a claim. Fed. R. Civ. P. 12(b)(6). Defendants' claim (1) that Plaintiff does not have standing to bring a claim under the Federal Debt Collection Procedure Act, 28 U.S.C. § 3001; (2) that Plaintiff's fraud claims should be dismissed as being insufficiently pled; (3) that Plaintiff's claim under Carey is "facially frivolous;" and (4) that Plaintiff's claim that Brafman's associate Jennifer Liang aided and abetted in the underlying fraud is insufficiently pled.

On March 12, 2010, Plaintiff filed a motion for partial summary judgment. Magistrate Judge Francis has not required that Defendants respond ...


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