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Reich v. Lopez

United States District Court, S.D. New York

April 13, 2015

THE HONORABLE OTTO J. REICH and OTTO REICH ASSOCIATES, LLC, Plaintiffs,
v.
LEOPOLDO ALEJANDRO BETANCOURT LOPEZ, PEDRO JOSE TREBBAU LOPEZ, and FRANCISCO D'AGOSTINO CASADO, Defendants.

OPINION AND ORDER

J. PAUL OETKEN, District Judge.

Plaintiffs Otto J. Reich, a former United States ambassador to Venezuela, and his consulting company, Otto Reich Associates, LLC (collectively, "Plaintiffs"), allege that the activities of Leopoldo Alejandro Betancourt Lopez, Pedro Jose Trebbau Lopez, and Francisco D'Agostino Casado (collectively, the "Defendants"), caused injury to their property and reputation. They assert claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"), as well as various claims under New York State common law. ( See Dkt. No. 29 ("Am. Compl.").) On February 28, 2014, Defendants moved to dismiss the complaint. (Dkt. No. 31.) In an Opinion and Order dated August 18, 2014 (the "Opinion"), the Court granted the motion in part and denied it in part. (Dkt. No. 59.) Plaintiffs have moved for partial reconsideration of the Court's decision, or, in the alternative, for certification for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). (Dkt. No. 64 ("Motion for Reconsideration").) For the reasons that follow, Plaintiffs' motion is denied.

I. Background

The Court assumes familiarity with the underlying facts and procedural history, as set forth in the Court's Opinion. As explained in the Opinion, the Court dismissed Plaintiffs' civil RICO claims (Claims I and II), [1] and Plaintiffs' civil conspiracy claim (Claim VII). For the remaining claims, the Court held that Plaintiffs have not made a prima facie showing that the Court has personal jurisdiction over defendants Betancourt and Trebbau, and granted Plaintiffs permission to engage in discovery on this issue. Finally, the Court held that it has personal jurisdiction over defendant D'Agostino, and that Plaintiffs have adequately pleaded various state law claims against him.

Plaintiffs ask the Court to reconsider its dismissal of their civil RICO claims. The Court dismissed the civil RICO claims on two independent grounds. The Court held, first, that Plaintiffs have failed to allege the elements of one of the predicate acts, namely wire fraud; and second, that Plaintiffs have failed to show that the predicate acts together form "a pattern of racketeering activity, " as required to plead a RICO violation under 18 U.S.C. § 1962(c). Plaintiffs contend that both holdings are erroneous.

II. Legal Standard

"A motion for reconsideration is an extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources." Drapkin v. Mafco Consol. Grp., Inc., 818 F.Supp.2d 678, 695 (S.D.N.Y. 2011) (internal quotations omitted). The standard for granting a motion for reconsideration is accordingly high, Nakshin v. Holder, 360 F.Appx. 192, 193 (2d Cir. 2010) (summary order), and such motions "are properly granted only if there is a showing of: (1) an intervening change in controlling law; (2) the availability of new evidence or (3) a need to correct a clear error or prevent manifest injustice, " Drapkin, 818 F.Supp.2d at 696 (citing Bergerson v. N.Y. State Office of Mental Health, Cent. N.Y. Psychiatric Ctr., 652 F.3d 277, 288-89 (2d Cir. 2011)). "Reconsideration should not be granted where the moving party seeks solely to relitigate an issue already decided; in addition, the moving party may not advance new facts, issues or arguments not previously presented to the Court.'" Christoforou v. Cadman Plaza N., Inc., No. 04 Civ. 8403 (KMW), 2009 WL 723003, at *7 (S.D.N.Y. Mar. 19, 2009) (quoting Shamis v. Ambassador Factors Corp., 187 F.R.D. 148, 151 (S.D.N.Y. 1999)). "The decision to grant or deny the motion is within the sound discretion of the district court." Id. (citing Devlin v. Transp. Commc'n Int'l Union, 175 F.3d 121, 132 (2d Cir. 1999)).

III. Discussion

A. Wire Fraud

Plaintiffs argue that the Opinion misstates the elements of wire fraud. Specifically, they assert that, in interpreting "scheme to defraud" within the meaning of the wire fraud statute, the Court erred in requiring Plaintiffs to allege both that Defendants intended to deprive them of money or property, and that Defendants intended to obtain money or property as a result of the scheme. Only the former showing, Plaintiffs argue, is required under Supreme Court and Second Circuit precedent. (Motion for Reconsideration at 3-8.)

The Court acknowledges that this issue is not as clear as the Opinion may suggest.[2] In fact, there is disagreement among the federal courts of appeals on this very issue, namely, whether a plaintiff must show-or at this stage, must allege-that a defendant intended to obtain money or property as part of a scheme to defraud. Compare, e.g., United States v. Hedaithy, 392 F.3d 580, 601-02 (3d Cir. 2004) (rejecting the argument that "any violation of the mail fraud statute must involve a scheme for obtaining the victim's property"), with United States v. Walters, 997 F.2d 1219, 1227 (7th Cir. 1993) ("[W]e hold that only a scheme to obtain money or other property from the victim by fraud violates [18 U.S.C.] § 1341.")[3] Although the Second Circuit has not directly addressed the question, it has suggested, in a case distinguishable from this one, that it is inclined to follow the Third Circuit's holding that a plaintiff need not allege that a defendant intended to obtain money or property to make out a wire fraud claim. See United States v. Males, 459 F.3d 154, 158 (2d Cir. 2006) ("We... agree[] with the Third Circuit that a mail fraud violation may be sufficiently found where the defendant has merely deprived another of a property right.'" (quoting Hedaithy, 392 F.3d at 602 n.21)); see also Porcelli v. United States, 404 F.3d 157, 162 & n.5 (2d Cir. 2005) ("Under this Court's analysis, the defendant does not need to literally obtain' money or property to violate the [mail fraud] statute." (citing Hedaithy, 392 F.3d at 602 n.21)).[4] On reconsideration, the Court concludes that it need not decide this issue because Plaintiffs' civil RICO claim fails on a separate ground, namely that Plaintiffs have failed to show that the alleged predicate acts upon which their civil RICO claim is based are sufficiently "related" such that they constitute a pattern of racketeering activity.

B. Relatedness

In its Opinion, the Court held that Plaintiffs have failed to allege predicate acts that are sufficiently "related" such that they form "a pattern of racketeering activity, " as required under 18 U.S.C. § 1962(c). (Opinion at 15-18.) Plaintiffs assert that, in so holding, the Court erroneously distinguished between "relatedness" in civil and criminal RICO cases. (Motion for Reconsideration at 11-13.) To the extent that the Court suggested such a distinction, it was incorrect. See Koal Indus. Corp. v. Asland, S.A., 808 F.Supp. 1143, 1161 (S.D.N.Y. 1992) ("The proof required to show a pattern of racketeering activity in a civil RICO suit brought under § 1964(c) is the same as that required in a criminal action."); see also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 489 (1985) ("Section 1962 renders certain conduct unlawful'; § 1963 and § 1964 impose consequences, criminal and civil, for violations' of § 1962. We should not lightly infer that Congress intended the term to have wholly different meanings in neighboring subsections."). The fact that "relatedness" bears the same meaning in civil and criminal RICO cases does not, however, change the outcome in this case.[5]

In determining whether predicate acts are sufficiently related such that they form a "pattern" of racketeering activity, the Court considers the factors articulated by the Supreme Court in H.J. Inc. v. Northwestern Bell Tel. Co.: whether the acts "have the same or similar purposes, results, participants, victims or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." 492 U.S. 229, 240 (1989) (internal quotation marks omitted). Plaintiffs contend that the Court's Opinion "runs afoul of the holding in H.J. Inc. by seeming to require that Plaintiffs satisfy each of the H.J. Inc. factors." (Motion for Reconsideration at 15.) Plaintiffs are mistaken. The Court used the elements articulated in H.J., Inc. merely as "a guidepost, a starting point for the relatedness inquiry as a whole, not a list of elements, each of which must be proven in order to establish a pattern of racketeering activity." United States v. Daidone, 471 F.3d 371, 375 (2d Cir. 2006). Indeed, the Court heeds-both in its Opinion and now-the Second Circuit's warning against an "overly formal conception" of relatedness.[6] Id. "In essence, the overall pattern requirement, of which relatedness is one ...


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