United States District Court, S.D. New York
ARTHUR ANGERMEIR, NITESH BHAGWANANI, BECKY D. GLYNN, LOUIS MARROU, DR. SHIVA NANCY SHABNAM, KEN ELDER, RAJAT GOYAL, KRISTINA GREENE, and MARILYN MURRELL, Plaintiffs,
JAY COHEN, LEONARD MEZEI, SARA KRIEGER, LOUIS CUCINOTTA, LEASE FINANCE GROUP, LLC, MBF LEASING LLC, NORTHERN LEASING SYSTEM, INC., JENNIFER CENTENO, RICARDO BROWN, ROBERT TAYLOR, JOSEPH I. SUSSMAN, and JOSEPH I. SUSSMAN, P.C., Defendants
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For Plaintiffs: Krishnan Shanker Chittur, Esq., Chittur & Associates, P.C., New York, NY.
For Defendants: Robert D. Lillienstein, Esq., Jordan Daniel Greenberger, Esq., Scott Evan Silberfein, Esq., Moses & Singer LLP, New York, NY.
OPINION AND ORDER
KENNETH M. KARAS, UNITED STATES DISTRICT JUDGE.
Arthur Angermeir (" Angermeir" ), Nitesh Bhagwanani (" Bhagwanani" ), Ken Elder (" Elder" ), Becky D. Glynn (" Glynn" ), Rajat Goyal (" Goyal" ), Kristina Greene (" Greene" ), Louis Marrou (" Marrou" ), Marilyn Murrell (" Murrell" ), and Dr. Shiva Nancy Shabnam (" Shabnam" ) (collectively, " Plaintiffs" ) filed the instant Complaint against Jay Cohen (" Cohen" ); Sara Krieger (" Krieger" ); Jennifer Centeno (" Centeno" ); Louis Cucinotta (" Cucinotta" ); Ricardo Brown (" Brown" ); Robert Taylor (" Taylor" ) (collectively, " Individual Defendants" ); Joseph I. Sussman (" Sussman" ); Joseph I. Sussman, P.C. (" Sussman, P.C." ) (collectively, " Sussman Defendants" ); Lease Finance Group, LLC (" LFG" ); MBF Leasing LLC (" MBF" ); and Northern Leasing Systems, Inc. (" NLS" ) (collectively, " Corporate Defendants" ) (with Individual Defendants and Sussman Defendants, collectively, " Defendants" ), alleging one count of a violation of the Racketeer Influence and Corrupt Organizations Act (" RICO" ), 18 U.S.C. § 1964(c), one count of conspiracy to violate RICO, 18 U.S.C. § 1964(d), and one count of a violation of New York's General Business Law § 349, N.Y. Gen. Bus. Law § 349. ( See Am. Compl. (" Compl." ) (Dkt. No. 8).) Before the Court is Defendants' Motion To Dismiss the Complaint pursuant to Federal Rules of Civil Procedure 8(a), 9(b), and 12(b)(6). ( See Mot. (Dkt. No. 14).) For the following reasons, Defendants' Motion is granted in part and denied in part.
A. Factual Background
The following facts are drawn from Plaintiffs' Complaint and are taken as true for the purposes of resolving the instant Motion. Defendant NLS is a New York corporation that has " employees, bank accounts, offices, office equipment, and other assets," and that " controls and services" various " pass through" entities, including Defendants MBF and LFG. (Compl. ¶ ¶ 21-23.) Each of the Individual Defendants is a " principal, an officer, and [a] controlling person" of the Corporate Defendants. ( Id. ¶ ¶ 13-18.) Individual Defendants Cohen and Krieger are " masterminds" of an alleged " racketeering enterprise" (" Enterprise" ), the former as President and Chief Executive Officer of Defendant NLS, and the latter as Vice President of Operations for Defendant NLS and " some of the shell entities through which the Enterprise is conducted." ( Id. ¶ ¶ 13-14.) Individual Defendants Centeno, Cucinotta, Brown, and Taylor are each " active, wilful participants in the Enterprise" as, respectively, Legal Administrative Manager, Legal Collections Manager, Director of Legal Collections, and Legal Collections Manager for Corporate Defendants. ( Id. ¶ ¶ 15-18.) Defendant Sussman is an attorney, and Defendant Sussman, P.C., Sussman's law firm, is a New York Professional Corporation that shares offices and resources with the Corporate Defendants. ( Id. ¶ ¶ 19-20.) Sussman Defendants are " fully integrated with Defendants' operations" and are " wilful" and " active participant[s] in the Enterprise." ( Id. ¶ 19.)
" Defendants are ostensibly engaged in the business of leasing small business equipment, mostly credit card processing machines." ( Id. ¶ 24.) But Defendants are also engaged in a " racketeering scheme to intimidate out of state individuals into paying unwarranted sums of money," ( id. ¶ 1), which the Complaint describes as a " systematic and repeated . . . 'shakedown' effort . . . to bully [individuals] into paying the Enterprise monies to which the Enterprise was never entitled," ( id. ¶ 25). Specifically, the Complaint alleges
that Defendants used equipment leases " [b]ased on forged documents, which Defendants knew were forged," to " intimidate Plaintiffs with dunning letters and phone calls" demanding payment pursuant to the terms of the fraudulent leases. ( Id. (emphasis removed); see also id. ¶ 1 (alleging that " Defendants were aware . . . that the documents underlying [their] claims against Plaintiffs were forged" ).) When Plaintiffs, none of whom lived in New York, contested the validity of the leases and refused to comply with Defendants' payment demands, Defendants would " harass, intimidate, and thereby extort money from Plaintiffs through threats of expensive long-distance litigation [in New York state court], of damage to credit rating, and/or entry of default judgments." ( Id. ¶ 1; see also id. ¶ 25 (alleging that Defendants " sought to intimidate Plaintiffs . . . [by] telling them that it would be more expensive for them to dispute the Enterprise's claims in New York City Civil Court than it would be to pay tribute to the Enterprise" ).) When making these threats, Defendants " were well aware" that " [t]he relatively small amounts at issue would have . . . prevented these Plaintiffs from obtaining counsel or from otherwise developing their defense," given the " additional expenses and inconveniences of long-distance litigation." ( Id. ¶ 26.) Defendants' " scheme" was thus " designed to ensure that Plaintiffs had no real opportunity to raise defenses to the Enterprise's bogus lawsuits, so that the entry of a default judgment was all but certain." ( Id.)
Although none of the Plaintiffs alleges that he or she succumbed to Defendants' threats and paid money directly to Defendants, all of them allege that Defendants filed fraudulent lawsuits against them in New York state court. ( See id. ¶ ¶ 37, 47, 58, 71, 82, 95, 108, 117, 122.) Five of the Plaintiffs allege that the lawsuits resulted in default judgments. ( See id. ¶ ¶ 38, 47, 58, 99, 123.) But all of the Plaintiffs allege that " Defendants . . . made derogatory entries in [their] personal consumer credit report[s]," that they " had to waste considerable time and effort" in dealing with these lawsuits, that they " retain[ed] attorneys and incurr[ed] legal expenses in New York," and that they were " subjected to considerable annoyance, embarrassment, emotional distress, and mental anguish." ( Id. ¶ ¶ 40, 52, 60, 75, 88, 102, 110, 120, 129 (emphasis removed).)
B. Procedural History
Plaintiffs filed the initial Complaint in January 2012. ( See Dkt. No. 1.) The Court held a pre-motion conference in June 2012 and set a briefing schedule for a motion to dismiss. ( See Dkt. No. 7.) Before Defendants filed a motion, however, Plaintiffs filed an Amended Complaint in August 2012, alleging the same three counts as the original Complaint, adding four new plaintiffs and five new defendants, and dropping one defendant. ( See Dkt. No. 8.) The Court then held another
pre-motion conference in November 2012 to discuss Defendants' renewed request to file a motion to dismiss. ( See Dkt. (minute entry for Nov. 20, 2012).) Pursuant to the scheduling order entered after that conference, ( see Dkt. No. 10), the Parties filed their papers in March 2013. ( See Mot.; Mem. of Law in Supp. of Defs.' Mot. To Dismiss the First Am. Compl. (" Mem." ) (Dkt. No 16); Mem. of Law in Opp'n to Defs.' Mot. To Dismiss (" Opp'n" ) (Dkt. No. 22); Reply Mem. of Law in Further Supp. of Defs.' Mot. To Dismiss the First Am. Compl. (" Reply" ) (Dkt. No. 17).)
A. Standard of Review
The Supreme Court has held that although a complaint " does not need detailed factual allegations" to survive a motion to dismiss, " a plaintiff's obligation to provide the 'grounds' of his [or her] 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (second alteration in original) (citations omitted). Instead, the Court has emphasized that " [f]actual allegations must be enough to raise a right to relief above the speculative level," id., and that " once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint," id. at 563. Plaintiffs must allege " only enough facts to state a claim to relief that is plausible on its face." Id. at 570. But if a plaintiff has " not nudged [his or her] claims across the line from conceivable to plausible, the complaint must be dismissed." Id.; see also Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (" Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not 'show[n]'--'that the pleader is entitled to relief.'" (alteration in original) (citation omitted) (quoting Fed.R.Civ.P. 8(a)(2))).
In considering Defendants' Motion To Dismiss, the Court is required to consider as true the factual allegations contained in the Complaint. See Ruotolo v. City of New York, 514 F.3d 184, 188 (2d Cir. 2008) (" We review de novo a district court's dismissal of a complaint pursuant to Rule 12(b)(6), accepting all factual allegations in the complaint and drawing all reasonable inferences in the plaintiff's favor." (internal quotation marks omitted)); Gonzalez v. Caballero, 572 F.Supp.2d 463, 466 (S.D.N.Y. 2008) (same). Moreover, " [i]n adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken." Leonard F. v. Isr. Disc. Bank of N.Y., 199 F.3d 99, 107 (2d Cir. 1999) (internal quotation marks omitted).
Plaintiffs allege three counts in connection with Defendants' alleged fraudulent scheme. They bring two civil RICO claims under 18 U.S.C. § 1964(c), which establishes a cause of action for " [a]ny person injured in his business or property by reason of a violation of [18 U.S.C. § 1962]." 18 U.S.C. § 1964(c). First, Plaintiffs allege a violation of § 1962(c), which makes it " unlawful for any person employed by or associated with any enterprise . . . to conduct or participate . . . in
the conduct of such enterprise's affairs through a pattern of racketeering activity." Id. § 1962(c). ( See Compl. ¶ 146.) In this context, they allege four types of racketeering activity: mail fraud, in violation of 18 U.S.C. § 1341, ( see Compl. ¶ ¶ 147-52), wire fraud, in violation of 18 U.S.C. § 1343, ( see id. ¶ ¶ 153-59), federal-law extortion, in violation of 18 U.S.C. § 1951, ( see id. ¶ ¶ 160-75); and state-law extortion, in violation of N.Y. Penal Law § 155.05, ( see id. ¶ ¶ 176-80). Second, Plaintiffs allege a violation of § 1962(d), which makes it " unlawful for any person to conspire to violate [§ 1962(c)]." 18 U.S.C. § 1962(d). ( See Compl. ¶ ¶ 190-96.) Finally, Plaintiffs bring a claim under New York's General Business Law § 349, which makes unlawful " [d]eceptive acts or practices in the conduct of any business, trade or commerce or in ...