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Lynn v. McCormick

United States District Court, S.D. New York

December 18, 2017


          John W. Lynn Geralynn Lynn Pomona, New York Plaintiffs Pro Se.

          Jonathan B. Nelson, Esq. Dorf & Nelson LLP Rye, New York Counsel for Defendants.


          CATHY SEIBEL, U.S.D.J.

         Before the Court is the motion to dismiss of Defendants Robert J. McCormick; Michelle Simmons; Trustco Bank; The Law Offices of McNamee Titus Lochner & Williams P.C.; Kenneth Gellhaus; Peter A. Pastore; Kevin Laurilliard; Francis J. Smith; Bailey, Kelleher & Johnson, P.C.; and John W. Bailey (collectively “Defendants”). (Doc. 47.) For the following reasons, the Defendants' motion is GRANTED.

         I. BACKGROUND

         I accept as true the facts, but not the conclusions, set forth in Plaintiffs' Amended Complaint. (Doc. 38 (“AC”).)

         A. Facts

         Plaintiffs John Lynn and Geralynn Lynn (collectively “Plaintiffs”) are a married couple who own businesses in New York. (Id. ¶ 3.) In 2003, Defendant Trustco Bank (“Trustco”) extended financing to one of Mr. Lynn's businesses, Lynn Homes, totaling $5, 200, 000. (Id. ¶ 17.) The loans were secured by mortgages in favor of Trustco on real property referred to as the “Highgate properties, ” and Mr. Lynn executed a personal guarantee as well. (Id.) The loans were to be paid back over time as the properties were sold. (Id.) On September 5, 2006, “the installment loan was paid down with a remaining balance [of] $950, 000.” (Id. ¶ 18.) Mr. Lynn then sought and received an additional cash amount of $550, 000, “bringing the outstanding [l]oan to $1, 500, 000, ” and Lynn Homes executed a new note on September 25, 2006. (Id.)

         On or about July 17, 2008, Mr. Lynn offered Trustco a deed in lieu of foreclosure after he was unable to sell the properties. (Id. ¶ 19.) By then, the indebtedness had risen to $2, 300, 000. (Id.) Trustco instead accelerated the loan, issued a demand for payment of all amounts due, and on October 17, 2008, brought an action in New York Supreme Court in Schenectady County against Lynn Homes, Highgate Development Corp., and Mr. Lynn (the “2008 Action”). (Id. ¶ 21.) Later that month, Lynn Holmes filed a petition for Chapter 11 bankruptcy in the Southern District of New York, listing among its debts the amounts owed to Trustco. (Id.) Two judgments were entered in the 2008 Action in Trustco's favor: first, an August 24, 2009 judgment in the amount of $2, 787, 831; and second, a December 2, 2009 judgment in the amount of $35, 409.50 for attorney's fees. (Id. ¶ 22.)

         In 2009, Mr. Lynn wrote a book titled Highgate to Hell, which detailed his experiences in the construction and sale of custom homes and identified “outrageous government failures, oppression and retaliation that left him exposed.” (Id. ¶ 23.) He sent a copy of the book to Defendant McCormick, Trustco's CEO, “in an effort to explain to [Trustco] the rational[e] for [his] inability to service his loan, and to ask for more time to be able to sell the properties, without the risk of having the bank seize his personal assets.” (Id.) After Plaintiffs' attempts to resolve the matter with Defendants failed, a second copy of Mr. Lynn's book was sent to Defendant McCormick in or around mid-May 2010. (Id. ¶ 24.)

         Defendants elected to pursue Mr. Lynn on the note. (Id. ¶ 25.) At a deposition, Mr. Lynn stated that he was the sole owner of another business entity, Pearl Mont Commons, LLC (“PMC”), which he asserts was an “honest mistake, ” in that he and his wife each owned fifty percent of PMC. (Id.) In October 2010, Trustco commenced another action in New York Supreme Court in Schenectady County (the “2010 Action”), seeking, “among other things, to enforce the above referenced judgments by seeking to avoid certain transfers by [John Lynn] to Geralynn Lynn . . . and seeking a judicial determination that said transfers were in fact fraudulent conveyances.” (Id. ¶ 27 (internal quotation marks omitted).) Apparently the transferred assets related to PMC because Plaintiffs assert that “[t]his lawsuit was very deceptive” in that Defendants knew PMC was jointly owned. (Id.) Plaintiffs further allege that Defendants improperly sought an injunction in the 2010 Action by withholding information from the court that would have undermined their claim for such relief. (See Id. ¶¶ 28-33.)

         On June 10, 2013, Trustco commenced a mortgage foreclosure action in New York Supreme Court in Rockland County to recover the real property securing its loans to Mr. Lynn. (Id. ¶ 39.) Plaintiffs allege that Defendants made false statements in their complaint and in other court filings by averring, for example, that the Rockland County Sherriff returned an execution unsatisfied when, according to Plaintiffs, no such execution via the Rockland County Sherriff was ever attempted. (Id. ¶¶ 39, 43, 46.) The same false statement was allegedly made in June 2016 in opposition to Ms. Lynn's motion for summary judgment in the 2010 Action. (Id. ¶¶ 45-46.)

         B. Procedural History

         On February 16, 2017, Plaintiffs filed the instant suit against Defendants asserting claims for: (1) violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq., (2) civil conspiracy, (3) fraud, (4) tortious interference with contract, (5) trespass to chattels, and (6) violations of New York Judiciary Law § 487. (Doc. 1.) On March 13, 2017, Defendants filed a letter seeking a pre-motion conference in anticipation of their motion to dismiss on the basis that Plaintiffs' claims were insufficiently pleaded under Federal Rules of Civil Procedure 12(b)(6) and 9(b). (Doc. 16.) On March 30, 2017, Plaintiffs filed a response letter. (Doc. 28.) On March 31, 2017, a pre-motion conference was held at which Defendants' possible motion to dismiss was discussed.[1] On that date the Court granted Plaintiffs leave to file an amended complaint. (Minute Entry dated Mar. 31, 2017.) The AC, filed on May 1, 2017, asserts the claims raised in Plaintiffs' original complaint, with the exception of civil conspiracy and trespass to chattels, and added claims for malicious prosecution and abuse of process. (See Doc. 38.) On June 15, 2017, Defendants moved to dismiss the AC, (Doc. 47), raising four grounds for dismissal: (1) res judicata, (2) litigation privilege, (3) standing, and (4) failure to state a claim, (Doc. 49). Plaintiffs filed a brief in opposition on August 30, 2017, (Doc. 51 (“Ps' Opp.”)), and Defendants replied on September 13, 2017, (Doc. 53).


         A. ...

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