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Kriss v. Bayrock Group LLC

United States District Court, S.D. New York

May 8, 2017

JODY KRISS, et al., Plaintiffs,
v.
BAYROCK GROUP LLC, et al., Defendants.

          OPINION AND ORDER

          LORNA G. SCHOFIELD, District Judge

         Plaintiffs Jody Kriss and Michael Chu'di Ejekam commenced this action asserting violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (“RICO”), and various state laws. The Court previously dismissed some claims and one defendant in an Order and Opinion dated December 2, 2016 (the “Opinion”), Kriss v. Bayrock Group LLC, No. 10 Civ. 3959, 2016 WL 7046816 (S.D.N.Y. Dec. 2, 2016). Defendants Felix Satter; Alex Salomon, Jerry Weinreich and Salomon & Co., P.C. (collectively, the “Salomon Defendants”); Elliot Pisem and Roberts & Holland LLP (collectively, the “R&H Defendants”); and Mel Dogan timely move for reconsideration of the Opinion's denial in part of their motion to dismiss the Third Amended Complaint (“TAC”). For the following reasons, the R&H Defendants' and Dogan's motions are granted, and Satter's and the Salomon Defendants' motions are denied.

         Familiarity with the Opinion, the underlying facts and procedural history is assumed.

         I. LEGAL STANDARD

         “A motion for reconsideration should be granted only when the defendant identifies an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.” Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, 729 F.3d 99, 104 (2d Cir. 2013) (internal quotation marks omitted). The standard “is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked.” Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (internal quotation marks omitted). A motion for reconsideration is “not a vehicle for relitigating old issues, presenting the case under new theories, securing a rehearing on the merits, or otherwise taking a second bite at the apple.” Id. at 52 (internal quotation marks omitted). The decision to grant or deny a motion for reconsideration, whether under Local Rule 6.3, Rule 59(e) or 60(a), rests within “the sound discretion of the district court.” See Aczel v. Labonia, 584 F.3d 52, 61 (2d Cir. 2009).

         II. DISCUSSION

         As explained below, Satter's and the Salomon Defendants' motions are denied, and the R&H Defendants' and Dogan's motions are granted.

         A. RICO

         Satter moves for reconsideration of the order to sustain the RICO claims against him. Satter argues that the Opinion erred in concluding that (1) the TAC adequately alleges violations of the National Stolen Property Act, 18 U.S.C. §§ 2314, 2315 (“NSPA”), as RICO predicate acts and (2) Defendants had a duty to disclose three categories of information under the “special facts doctrine.”

         1. NSPA Violations

         Satter's motion is denied to the extent it seeks reconsideration of the Opinion's conclusion that the TAC adequately alleges NSPA violations as predicate acts.

         First, Satter argues that Plaintiffs' alleged membership interests in various Bayrock Entities are not “securities” within the meaning of the NSPA. Defendants raised this argument in their motion to dismiss, but in a single sentence in a footnote with no citations to case law. That alone is reason to deny reconsideration, because a motion for reconsideration is not a vehicle to “plug the gaps of a lost motion.” Almazo v. M.A. Angeliades, Inc., No. 11 Civ. 1717, 2016 WL 5719748, at *3 (S.D.N.Y. Sept. 29, 2016).

         Satter nonetheless argues that reconsideration is warranted “to correct clear error and prevent manifest injustice.” Satter does not meet that standard because, whether or not his reading of the NSPA is correct, it would not change the outcome of the motion to dismiss. The TAC alleges multiple instances of mail or wire fraud as RICO predicate acts, and only two predicate acts are necessary to state a RICO claim. See 18 U.S.C. § 1961(5); Kalimantano GmbH v. Motion in Time, Inc., 939 F.Supp.2d 392, 405 (S.D.N.Y. 2013) (predicate acts requirement satisfied based on several instances of alleged mail or wire fraud). Also, because the TAC pleads both mail or wire fraud and NSPA violations for most of the alleged wrongdoing, dismissing the predicate acts based on NSPA violations would not narrow the scope of the case. Satter's motion to reconsider based on the definition of “securities” is therefore denied, but he may raise this issue on summary judgment.

         Second, Satter argues that Plaintiffs' alleged membership interests could not be “stolen” or “converted” within the meaning of the NSPA because their disposition was governed by contract. To the extent Satter argues that Plaintiffs' membership interests had not vested, the Opinion addressed that argument and explained that it involves factual determinations that do not go to the sufficiency of the pleadings at issue on a motion to dismiss. Kriss, 2016 WL 7046816, at *14. Satter's alternative argument that Plaintiffs did not have a “present possessory interest” in the membership interests is not persuasive. The cases Satter relies on for this argument involved claims for conversion. See Orchid Constr. Corp. v. Gonzalez, 932 N.Y.S.2d 125, 127 (2d Dep't 2011); Onanuga v. Pfizer, Inc., No. 03 Civ. 5405, 2003 WL 22670842, at *4 (S.D.N.Y. Nov. 7, 2003). Under New York law, “[i]ntangible property, such as ownership interests, generally cannot be converted unless a physical or electronic record of the intangible property, such as a stock certificate, is converted.” Kriss, 2016 WL 7046816, at *22 (citing Thyroff v. Nationwide Mut. Ins. Co., 864 N.E.2d 1272, 1275-78 (N.Y. 2007)). The Opinion recognized that requirement and dismissed Plaintiffs' conversion claims. Id. The NSPA, however, applies not only to property that has been “unlawfully converted” but also to property that was “stolen” or “taken.” 18 U.S.C. §§ 2314, 2315. These concepts are not limited to the taking of tangible property. See, e.g., People v. Barden, 98 ...


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