Opinion
No. 16-CV-688 (CBA) (ST)
09-30-2017
EVERETTE WEAVER, Plaintiff, v. SARA Z. BORISKIN, ESQ; GENA GOLDBERGER, ESQ; CITIMORTGAGE, INC.; KIM KRAKOVIAK; BRANDON D. LEWIS; PATRICK J. HACKETT, ESQ; ALEXANDER KLESTOV; SCOTT B. GROUP, ESQ; KATHLEEN R. FITZPATRICK, ESQ; and NINA KHAIMOVA, ESQ, Defendants.
NOT FOR PUBLICATION
MEMORANDUM & ORDER AMON, United States District Judge :
Plaintiff Everette Weaver filed the instant action pro se against Defendants Sara Z. Boriskin, Esq ("Boriskin"), CitiMortgage, Inc. ("CitiMortgage"), Kathleen R. Fitzpatrick, Esq ("Fitzpatrick"), Gena Goldberger, Esq ("Goldberger"), Scott B. Group, Esq ("Group"), Patrick J. Hackett, Esq ("Hackett"), Nina Khaimova, Esq ("Khaimova"), Alexander Klestov ("Klestov"), Kim Krakoviak ("Krakoviak"), and Brandon D. Lewis ("Lewis"), asserting claims under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq.; the Racketeer Influenced and Corruption Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq.; the New York General Business Law ("GBL"), N.Y. Gen. Bus. Law § 349(a); and New York tort law.
Before the Court are (1) a joint motion by Boriskin and Goldberger to dismiss for failure to state a claim, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, (D.E. # 30); (2) a joint motion by Hackett and Klestov to dismiss under Rule 12(b)(6) or for summary judgment pursuant to Rule 56(a), (D.E. # 38); (3) a motion by Khaimova to dismiss under Rule 12(b)(6) or for summary judgment under Rule 56(a), (D.E. # 43); (4) a joint motion by CitiMortgage, Fitzpatrick, and Group to dismiss under Rule 12(b)(6), (D.E. # 51); (5) a motion by CitiMortgage, Fitzpatrick, and Group to enjoin Plaintiff from Filing certain lawsuits, (D.E. # 52-1 at 14); (6) a joint motion by Krakoviak and Lewis to dismiss under Rule 12(b)(6) and for failure to serve process under Rule 12(b)(5), (D.E. # 53); (7) a motion by Plaintiff to strike Boriskin and Goldberger's reply brief and reply declaration in support of their joint motion to dismiss, (D.E. # 57); and (8) an application by Plaintiff to order the Clerk of Court to refer this action to the U.S. Attorney's Office and the New York state bar, (D.E. # 37 ("Opp. Br.") at 32). For the following reasons, the Court dismisses all of Plaintiff's claims; denies as moot the summary judgment motions; denies the motion by CitiMortgage, Fizpatrick, and Group to enjoin Plaintiff from filing lawsuits; denies as moot Plaintiff's motion to strike Boriskin and Goldberger's reply briefing; and denies Plaintiff's application for referral.
Hackett and Klestov filed the same joint motion and initial brief twice, first on July 22, 2016, (D.E. # 26), and second on September 8, 2016, (D.E. # 38). The Clerk of Court is directed to terminate Hackett and Klestov's July 22, 2016, joint motion.
BACKGROUND
For purposes of the Rule 12(b)(6) motions, the Court draws its facts from the Amended Complaint, "unless contradicted by more specific allegations or documentary evidence." L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011). The Court also considers documents attached to it or incorporated by reference and "matters subject to judicial notice." N.Y. Pet Welfare Ass'n, Inc. v. City of N.Y., 850 F.3d 79, 86 (2d Cir. 2017). Moreover, because the Court should liberally construe a pro se litigant's pleadings, it reads the Amended Complaint as adopting any legal issues or factual allegations made in Plaintiff's memoranda of law opposing dismissal and the exhibits attached to the memoranda. See, e.g., Le Grand v. Evan, 702 F.2d 415, 416 n.3 (2d Cir. 1983); Alexander v. Coughlin, No. 90-CV-3231 (RR), 1991 WL 150674, at *1 (E.D.N.Y. July 26, 1991); Langert v. Festa, 563 F. Supp. 692, 696 (E.D.N.Y. 1983), overruled in part on other grounds by Owens v. Treder, 873 F.2d 604 (2d Cir. 1989). Finally, for purposes of the Rule 12(b)(5) joint motion for insufficient service of process, the Court "must look to matters outside the complaint . . . ." Darden v. DaimlerChrysler N. Am. Holding Corp., 191 F. Supp. 2d 382, 387 (S.D.N.Y. 2002).
Plaintiff's claims involve an active foreclosure action starting in 2009 in the New York State Supreme Court. (D.E. # 5 ("Am. Compl.") ¶ 25, Ex. A); see also CitiMortgage, Inc. v. Weaver, No. 18430/2009 (Kings Cry. N.Y. Sup. Ct.) (Knipel, J.). The state lawsuit relates to a mortgage executed on August 28, 2008, by Plaintiff and a third party to Mortgage Electronic Registration Systems, Inc. ("MERS"), as nominee for All American Home Mortgage Corp. (See Am. Compl., Ex. A.) The mortgagors secured the mortgage to pay for a property at 489 Classon Avenue in Brooklyn, New York (the "Property"). (See id.) In court filings prepared by Goldberger on June 29, 2009, CitiMortgage states that MERS assigned the mortgage to it, and that the mortgagors defaulted on payments. (See id. ¶ 25, Exs. A-B.) The lawsuit, according to Plaintiff, has "created a cloud upon [his] title and made the subject property unmarketable." (Id. ¶ 84.)
Plaintiff alleges the following: CitiMortgage and Goldberger falsely claim that an assignment occurred. (See id. ¶¶ 29-30.) To deceive the state court and Plaintiff, Goldberger worked with Boriskin to create fraudulent assignment papers on July 21, 2009. (See id. ¶¶ 30-32.) Krakoviak also "engaged in [the] conspiracy" by signing the papers as a purported MERS vice president and backdating them to June 16, 2009. (Id. ¶ 33.) Lewis also notarized the papers and backdated his notary seal to June 16, 2009. (Id. ¶ 34.)
Plaintiff also alleges that Defendants "engage[d] in sewer service" to prevent Plaintiff from learning of the foreclosure action. (Opp. Br. at 2.) Boriskin and Goldberger hired the professional servicing firm PDY Process, Inc. ("PDY"). (Id. ¶ 66.) In an affidavit notarized by Hackett, a third-party PDY employee described attempts by her colleagues to serve Plaintiff at four locations and testified that Klestov was one of those colleagues. (Id. ¶ 68, Ex. K.) Plaintiff contends that Klestov tried to serve him at the Property despite knowing that he did not reside there. (Id. ¶ 66.) Plaintiff makes no allegations about the attempts to serve him at the three other locations. Regardless, Plaintiff appeared in the state case no later than July 14, 2014, when he filed an answer to CitiMortgage's complaint. (See Opp. Br. at 12, Ex. P.)
According to Plaintiff, Group, an attorney, learned of Klestov's defective service and on May 26, 2015, filed in state court an order to show cause to extend the time to serve process on Plaintiff. (Am. Compl. ¶ 74; see also id., Ex. P.) But Group withdrew the order in January 2016 "to avoid further investigation into the conspiracy" regarding Klestov's defective service. (Am. Compl. ¶ 75.) Group then "used his connections" to get the case transferred to another Supreme Court justice and on February 3, 2016, filed a motion for summary judgment against Plaintiff and default judgment against others in the case. (Id. ¶¶ 76-77, Ex. R.) Nine days later, Plaintiff filed his initial Complaint in the instant action. (D.E. # 1.) With the federal action pending, Khaimova and Fitzpatrick proceeded to argue the state summary judgment motion, both in an oral argument on March 7, 2016, and in a reply affirmation on March 18, 2016. (Id. ¶¶ 78, 82.) The motion is pending.
Plaintiff's opposition brief makes additional assertions concerning Fitzpatrick. (See Opp. Br. at 29-30.) On August 8, 2016, she filed a motion for an injunction that would prevent him from filing additional motions in the state action without leave from the state Supreme Court. (Id. at 29, Ex. X.) In the motion, Fitzpatrick allegedly described Plaintiff as a "professional seasoned litigant" who is "Mad, Insane, Crazy and Sue Happy." (Id. at 30.) The brief in support of her motion is not attached to the opposition brief or the Amended Complaint.
Plaintiff filed his Amended Complaint on April 21, 2016, seeking, among other relief, damages, a declaratory judgment that the assignment is void, and an injunction requiring Defendants to take "corrective action" in the state lawsuit. (See Am. Compl. ¶¶ B-H.) On July 8, 2016, Plaintiff filed proof of service of process for Defendants, providing declarations from two professional servers. (D.E. # 25.) Relevant here, Louis Wright, a server for Missouri-based K&L Courts Process Service, declared that he had served process for Krakoviak and Lewis on "Pat Allen, Legal Department, who is designated by law to accept service of process on behalf of . . . CitiMortgage" and works at Krakoviak and Lewis' place of employment. (Id. at 14, 17, 31, 34; see also D.E. # 24 at 1.) Although he provided proof that process was served to Klestov by mail, (see D.E. # 25 at 26), Plaintiff did not offer such proof for Krakoviak or Lewis.
Motions to dismiss or for summary judgment were filed on behalf of all Defendants. On September 7, 2016, Boriskin and Goldberger filed a joint motion to dismiss, (D.E. # 30; see also D.E. # 32 ("B&G Br.")), and Hackett and Klestov filed a joint motion for dismissal or summary judgment, (D.E. # 38; see also Mem. of Law ("H&K Br."), D.E. # 38 at 5-30; Aff. in Reply, D.E. # 41 at 3-5). On September 9, 2016, Khaimova, (D.E. # 43; see also Mem. of Law. ("K Br."), D.E. # 43 at 12-38; D.E. # 44); CitiMortgage, Fitzpatrick, and Group, (D.E. # 51; see also D.E. # 52-1 ("CF&G Br."); D.E. # 55-1); and Krakoviak and Lewis, (D.E. # 53; see also D.E. # 53-1 ("K&L Br."); D.E. # 55-1), filed their respective dismissal motions.
Plaintiff filed the same opposition brief for all the dismissal and summary judgment motions. (D.E. # 37; D.E. # 40; D.E. # 54.) In the opposition brief, Plaintiff asked the Court to refer the matter to federal prosecutors and the local bar. (See Opp. Br. at 32.) Plaintiff also described Boriskin's and Klestov's involvement in three other foreclosure actions in New York state court. (See id. at 3-7.) Plaintiff does not indicate his involvement, if any, with those lawsuits.
On October 13, 2016, Plaintiff filed a motion to strike Boriskin and Goldberger's reply brief and reply declaration. (D.E. # 57.)
STANDARD OF REVIEW
To survive a motion to dismiss under Rule 12(b)(6), Plaintiff must allege "sufficient factual matter" to "nudge[]" Plaintiff's claims "across the line from the conceivable to plausible." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2008)). Drawing upon its "experience and common sense," the Court must determine whether liability is a "reasonable inference" from the allegations. Id. at 678-79. The Court must dismiss the Complaint if its "well-pleaded facts do not permit the [C]ourt to infer more than the mere possibility of misconduct . . . ." Id. at 679. The Court also is "not bound to accept as true a legal conclusion couched as a factual allegation." Id. at 678. Still, the Court must adopt all factual allegations, even the "doubtful" ones. Twombly, 550 U.S. at 555.
Because Plaintiff proceeds pro se, the Court holds him to less stringent pleading standards than it would hold lawyers. See Erickson v. Pardus, 551 U.S. 89, 94 (2007). The Court interprets the pleadings as raising the strongest legal arguments they suggest. Abbas, 480 F.3d at 639. As stated above, the Court also reads the Amended Complaint as adopting any legal claims Plaintiff made in his memoranda of law opposing dismissal. See, e.g., Langert, 563 F. Supp. at 696. Still, the Court may dismiss sua sponte frivolous pro se claims—that is, ones that "plainly 'lack[] an arguable basis either in law or fact.'" See, e.g., Grabaukas v. CIA, 381 F. App'x 45, 46 (2d Cir. 2010) (quoting Neitzke v. Williams, 490 U.S. 319, 325 (1989)); Fitzgerald v. First E. Seventh Street Tenants Corp., 221 F.3d 362, 364 (2d Cir. 2000).
Moreover, "when a defendant moves to dismiss under Rule 12(b)(5), the plaintiff bears the burden of proving adequate service." Burda Media, Inc. v. Viertel, 417 F.3d 292, 298 (2d Cir. 2005). Plaintiff must show its "reasonable effort to effect service," Dickerson v. Napolitano, 604 F.3d 732, 753 (2d Cir. 2010), by offering "specific factual allegations and any supporting materials," Sikhs for Justice v. Nath, 850 F. Supp. 2d 435, 440 (S.D.N.Y. 2012).
DISCUSSION
In their various motions, Defendants argue, among other things, that Plaintiff has failed to assert facts plausibly showing certain elements of his claims and that he has failed properly to serve Krakoviak and Lewis. Although he does not dispute the arguments concerning service, Plaintiff contests the other arguments. Plaintiff also files a motion to strike a reply brief and reply declaration by Boriskin and Goldberger, (see D.E. # 34; D.E. # 35), and an application for referral of this action to the local U.S. Attorney's Office and the state bar. In turn, the Court considers several procedural issues, the merits of Plaintiff's claims, and his application for referral.
For the following reasons, the Court dismisses all of Plaintiff's claims. Because the Court dismisses the claims on the pleadings, it denies as moot the summary judgment motions by Hackett, Khaimova, and Klestov.
In his motion to strike, Plaintiff argues that Boriskin and Goldberger intentionally included false statements in their reply brief and affirmation, in violation of Rules 11(b) and 12(f) of the Federal Rules of Civil Procedure. (See D.E. # 57 at 1-2; D.E. # 59 at 6.) Even if the filings were stricken, the Court would dismiss Plaintiff's claims. Accordingly, the Court denies the motion as moot.
I. The Court's September 27, 2012, Injunction
On September 27, 2012, this Court issued an injunction barring Plaintiff from filing certain actions in this District without first obtaining the Court's permission. See Weaver v. Vaughan ("Weaver II"). No. 11-CV-3281 (CBA), 2012 WL 4482043, at *1 (E.D.N.Y. Sept. 27, 2012). In relevant part, the injunction targeted lawsuits "against any judicial officer or other individual or entity" and "related in any way to . . . [Plaintiff's] alleged purchase of the Property. Id. Boriskin, Goldberger, Hackett, and Klestov argue that Plaintiff has violated the Court's order. (See B&G Br. at 6, H&K Br. ¶¶ 58-60.) However, they rely on an overly expansive reading of the Court's injunction. Plaintiff's new claims involve purportedly fraudulent foreclosure proceedings against him and his mortgage on the Property. (See generally Am. Compl.; Opp. Br.). The purchase of the Property has only a tenuous relationship to the claims in this case. The Court therefore finds no violation.
In their dismissal brief, CitiMortgage, Fitzpatrick, and Goldberger mention the September 27, 2012, injunction but separately request an injunction against Plaintiff "from bringing any further lawsuit against them, or anyone else, related in any way to the foreclosure of his mortgage on" the Property. (CF&G Br. at 14-15.) The Court construes the request as a motion for a new injunction separate from the September 27, 2012, order. "A district court may, in its discretion, impose sanctions against litigants who abuse the judicial process." Shafii v. British Airways, PLC, 83 F.3d 566, 571 (2d Cir. 1996). However, the Court does not find that Plaintiff has initiated vexatious litigation. The Court denies the motion.
II. Defective Service of Process
Krakoviak and Lewis contend that Plaintiff failed adequately to serve process on them. (K&L Br. at 10-12.) As stated above, Plaintiff does not contest this point, despite having the burden of proving adequate process. See Burda Media, 417 F.3d at 298. Indeed, a review of Plaintiff's proof of service does not reveal a reasonable attempt by Plaintiff to serve the pair. (See D.E. # 25.) Krakoviak and Lewis were not personally served; rather, a representative of their employer was served on their behalf. (See id.) As relevant here, Rule 4(e) of the Federal Rules of Civil Procedure permits such constructive service only if it complies with state law in Missouri or New York. The attempt fails to comply with New York law because Plaintiff has not shown that he mailed the materials to Plaintiff. See N.Y. C.P.L.R. 308, 312-a (McKinney 2016). And Missouri law does not provide for service of individuals at their places of business. See Mo. Sup. Ct. R. 54.13(b)(1) (2016). Because Plaintiff failed adequately to serve Krakoviak and Lewis by July 20, 2016, 90 days after the filing of his Amended Complaint, and because Plaintiff does not show good cause for the failure, the Court dismisses Plaintiff's claims against them. See Fed. R. Civ. P. 4(m). Even assuming the pair were properly served, however, the Court dismisses the claims against them on the merits.
III. The Merits
The Court considers in turn Plaintiff's claims under the FDCPA, RICO, and New York law. For the following reasons, the Court dismisses all the claims.
A. FDCPA
Plaintiff asserts FDCPA claims against Boriskin, CitiMortgage, Fitzpatrick, Goldberger, Group, and Khaimova (collectively, the "FDCPA Defendants"). (See Am. Compl. ¶¶ 85-90.) Plaintiff alleges that, by participating in the foreclosure proceedings against him, the FDCPA Defendants have violated provisions banning "false, deceptive, or misleading representation[s] or means in connection with the collection of any debt," 15 U.S.C. § 1962e, and "unfair or unconscionable means to collect or attempt to collect any debt," 15 U.S.C. § 1962f. (See Am. Compl. ¶¶ 85-90; Opp. Br. at 32-33.) Defendants each make their own arguments for dismissal of the FDCPA claims. The Court addresses the only one raised by all the FDCPA Defendants, (B&G Br. at 10-11; K Br. ¶¶ 13-18; CF&G Br. at 3-4), and finds that the claims should be dismissed.
The FDCPA targets the debt collection industry and "authorizes private lawsuits and weighty fines to deter wayward collection practices." Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718, 1720 (2017). Courts in the Eastern District have interpreted the statute as requiring three interrelated elements to establish an FDCPA claim: (1) the plaintiff "is a person who was the object of efforts to collect a consumer debt"; (2) the defendant is a "debt collector" under the FDCPA; and (3) "the defendant has engaged in some act or omission in violation of the FDCPA's requirements"—in this case, §§ 1962e and 1962f. Cohen v. Ditech Fin. LLC, No. 15-CV-6828 (LDW), 2017 WL 1134723, at *3 (E.D.N.Y. Mar. 24, 2017) (citing Scaturro v. Northland Grp., Inc., No. 16-CV-1314 (SJF), 2017 WL 415900, at *2 (E.D.N.Y. Jan. 9, 2017)). A threshold issue underlying the second and third prongs is whether the initiation and prosecution of a foreclosure action in New York constitutes "representation[s] or means in connection with the collection of any debt," 15 U.S.C. § 1962e, or "means to collect or attempt to collect any debt," id. § 1962f. The question is one of federal statutory interpretation informed, but not controlled, by state property law. Cf. Gallego v. Northland Grp. Inc., 814 F.3d 123, 127 (2d Cir. 2016); Export-Import Bank of U.S. v. Asia Pulp & Paper Co., Ltd., 609 F.3d 111, 116-18 (2d Cir. 2010). The FDCPA Defendants argue that their litigation conduct does not constitute debt collection per se. (B&G Br. at 10-11; K Br. ¶¶ 13-18; CF&G Br. at 3-4.) The Court agrees.
The FDCPA regulates so-called "debt collectors," which it defines as "person[s] who use[] any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." See 15 U.S.C. § 1692a(6). The FDCPA defines "debt" as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." 15 U.S.C. § 1692a(5). The FDCPA does not define what it means to "collect[]" or "attempt[] to collect" debt, see Hooks v. Forman Holt Eliades & Ravin LLC, No. 11-CV-2767 (LAP), 2015 WL 5333513, at *9 (S.D.N.Y. Sept. 14, 2015), but the Second Circuit has defined "collect" as to "gather[] money on behalf of [a] creditor," Vincent v. The Money Store, 736 F.3d 88, 100 (2d Cir. 2013), and the Supreme Court has indicated that "obtain[ing] payment of consumer debts through legal proceedings" may constitute an attempt at debt collection, Heintz v. Jenkins, 514 U.S. 291, 294 (1995).
The Second Circuit has noted that "the protective purposes of the FDCPA typically are not implicated 'when a debtor is . . . protected by the court system and its officers.'" Gabriele v. Am. Home Mortg. Servicing, Inc., 503 F. App'x 89, 96 n.1 (2d Cir. 2012) (quoting Simmons v. Roundup Funding, LLC, 622 F.3d 93, 96 (2d Cir. 2010)). Nonetheless, the Second Circuit twice reserved judgment on whether foreclosure actions constitute debt collection under the statute, see Carlin v. Davidson Fink LLP, 852 F.3d 207, 213 n.1 (2d Cir. 2017); Boyd v. J.E. Robert Co., 765 F.3d 123, 127 n.3 (2d Cir. 2014), and other circuit courts are split, compare, e.g., Wilson v. Draper & Goldberg, P.L.L.C., 443 F.3d 373, 376 (4th Cir. 2006) (yes), with Warren v. Countrywide Home Loans, Inc., 342 F. App'x 458, 460-61 (11th Cir. 2009) (no). See also Henson, 137 S. Ct. at 1724 (assuming, "without granting," the premise that "a person cannot be both a creditor and a debt collector with respect to a particular debt").
Most district courts considering the issue have held that "where . . . no monetary judgment is sought against a debtor, the enforcement of a security interest through lien foreclosure does not constitute debt collection for purposes of the FDCPA." Boyd v. J.E. Robert Co., No. 05-CV-2455 (KAM), 2013 WL 5436969, at *9 (E.D.N.Y. Sept. 27, 2013), aff'd on other grounds, 765 F.3d 123 (2d Cir. 2014). Boyd noted that the FDCPA generally "contemplates a distinction between the 'collection of any debts' and 'the enforcement of security interests.'" Id. at *9-11 (quoting 15 U.S.C. § 1692a(6)). One judge in the Eastern District has extended Boyd to FDCPA claims predicated on a foreclosure action filed against a pro se litigant. See Rutty v. Esagoff, No. 17-CV-1485 (BMC), 2017 WL 2178432, at *3 (E.D.N.Y. May 17, 2017).
Under the terms of § 1692a and the logic of Boyd, § 1692f(6) of the FDCPA may make liable the "enforcement of security interests" if it involves "[t]aking or threatening to take any nonjudicial action to effect dispossession or disablement of property." See 15 U.S.C. §§ 1692a(6), 1692f(6); Boyd, 2013 WL 5436969, at *10. Plaintiff asserts conduct related to the foreclosure action, and his Amended Complaint gives no indication that relevant "nonjudicial action[s]" have occurred. Therefore, the Court will not consider § 1692f(6) for purposes of the instant motions.
This Court agrees with Boyd and dismisses Plaintiff's FDCPA claims. New York property law is instructive. As another court in the Eastern District has explained, "the FDCPA might apply 'where there is an attempt to collect money in addition to the enforcement of a security interest' in a foreclosure action." Hill v. DLJ Mortg. Capital, Inc., No. 15-CV-3083 (SJF), 2016 WL 5818540, at *7 n.9 (E.D.N.Y. Sept. 30, 2016) (quoting Derisme v. Hunt Leibert Jacobson P.C., 880 F. Supp. 2d 311, 326 (D. Conn. 2012)). However, Defendants cannot simultaneously seek a money judgment and enforce the security interest as they pursue a foreclosure action in New York. See id.; cf. Derisme, 880 F. Supp. 2d at 326 (Connecticut law). "[U]nder New York law, a creditor is required to elect between the remedies of an action for money damages on a debt or an equitable action to foreclose a mortgage that secures the debt," Westnau Land Corp. v. U.S. Small Bus. Admin., 1 F.3d 112, 115 (2d Cir. 1993), because "a mortgagee is entitled to one satisfaction of his debt and no more," Whitestone Sav. & Loan Ass'n v. Allstate Ins. Co., 270 N.E.2d 694, 696 (N.Y. 1971). In relevant part, the New York Real Property Actions and Proceedings Law provides that, while a foreclosure action is pending, "no other action shall be commenced or maintained to recover any part of the mortgage debt, without leave of the court . . . ." N.Y. Real Prop. Acts. Law § 1301(3). In the foreclosure action, the state court may issue a judgment directing a sale of the mortgaged property to "discharge the mortgage debt." Id. § 1351(1). However, if it fears receiving insufficient funds, a mortgagee may not make a motion for a deficiency judgment until the transaction has occurred. See id. § 1371(2). Accordingly, under the secured-transactions regime set up by the New York legislature, a mortgagee may participate in a foreclosure proceeding without seeking money from the mortgagor, and a mortgagee electing to participate in the proceeding may not demand money until it receives a favorable judgment.
The foreclosure sale is intended to settle a mortgagor's debt, but the mortgagor need not participate. Cf., e.g., In re Winter, 439 F.2d 808, 809 (2d Cir. 1971); Whitestone, 270 N.E.2d at 695-96. Put another way, the money earned is from either a third party or the mortgagor, who is under no "obligation . . . to pay money" to the mortgagee during the sale, see 15 U.S.C. § 1692a(5). Accordingly, funds from the foreclosure sale do not constitute "debt" under the FDCPA, and a mortgagee may collect them without triggering FDCPA liability.
The statutory safeguards for foreclosure actions in New York persuade the Court that when a plaintiff alleges only conduct necessary to initiate and advance such an action (at least until the defendant makes a motion for deficiency judgment), the allegations do not plausibly show that the defendant is attempting to collect debt for purposes of the FDCPA. Without more, those allegations concern litigation conduct "merely consistent with" debt collection activities, see Iqbal, 556 U.S. at 678, and the alleged defendant just as likely (perhaps more so) is legitimately pursuing an equitable remedy that does not necessarily demand money from the debtor. Had the alleged defendant wanted to seek money, it had a much more convenient and direct remedy: the legal action for money damages on the debt owed, see Westnau Land, 1 F.3d at 115. Accordingly, allegations of mere participation in a New York foreclosure action "stop[] short of the line between possibility and plausibility" and do not satisfy federal pleading requirements for an FDCPA claim. Id. at 678.
The Court emphasizes that it limits its holding to pleadings alleging only necessary litigation conduct. A defendant might be liable if, for instance, it sends a letter advising the plaintiff of a potential foreclosure action and requesting the debt in advance, see Williams v. Bayview Loan Servicing, LLC, No. 14-CV-7427 (KAM), 2016 WL 8711209, at *8 (E.D.N.Y. Jan. 22, 2016), or if it sends during the foreclosure action a settlement request seeking a sum-certain amount. "A debt is still a 'debt' even if it is secured." Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1218 (11th Cir. 2012).
Nearly all of Plaintiff's allegations relate only to conduct necessary to initiate and pursue the Weaver lawsuit. Therefore, those allegations do not plausibly show debt collection under the FDCPA. The Court pauses to assess one additional assertion Plaintiff has made: Defendants' "[f]iling [of] an opposition to [Plaintiff's] motion for criminal referral to the Kings County District [A]ttorney for an investigation into" the allegedly illegal conduct in the foreclosure action, (see Am. Compl. ¶¶ 88, 99(d)). Though an optional filing in the litigation, the opposition brief cannot reasonably be construed as a demand for any money from, let alone money allegedly owed by, Plaintiff. (See B&G Br. at 12 n.4.)
Moreover, the Court declines to grant Plaintiff leave to amend the pleadings. The Court notes that it "generally should not dismiss a pro se complaint 'without granting leave to amend at least once when a liberal reading of the complaint gives any indication that a valid claim might be stated.'" Vansertima v. Dep't of Corr., No. 10-CV-3214 (RJD), 2012 WL 4503412, at *7 (E.D.N.Y. Sept. 28, 2012) (quoting Thompson v. Carter, 284 F.3d 411, 416 (2d Cir. 2002)). However, Plaintiff already has amended his complaint to cure deficiencies in his pleadings. In any event, "leave to amend need not be given where it is clear that amendment would be futile." Lautman v. 2800 Coyle Street Owners Corp., No. 14-CV-1868 (ARR), 2014 WL 4843947, at *14 (E.D.N.Y. Sept. 26, 2014) (pro se case). At this current stage of state litigation, no set of allegations will give rise to an FDCPA claim, because they all would relate to an ongoing foreclosure action. There is no indication that the state court would issue judgment in CitiMortgage's favor or that a resulting foreclosure sale would fail to satisfy any debts purportedly owed by Plaintiff. Accordingly, any amendment at this stage is futile. See Marchi v. Bd. of Coop. Educ. Servs. of Albany, 173 F.3d 469, 479 (2d Cir. 1999) (permitting denial of leave to amend when amendments would "fail to present controversies ripe for judicial decision"); see also Lautman, 2014 WL 4843947, at * 14. Therefore, the Court dismisses the FDCPA claims.
B. RICO
Plaintiff also contends that Defendants' conduct constitutes a RICO claim pursuant to 18 U.S.C. § 1962(c) and predicated on the federal mail and wire fraud statutes. (See Am. Compl. ¶¶ 91-132; Opp. Br. at 36); see also 18 U.S.C. §§ 1341, 1343. The heart of his purported claim is that Defendants hatched a scheme to defraud him of his property by recording a fraudulent assignment and pursuing various legal actions in the ensuing foreclosure suit. The Court concludes that Plaintiff fails to plead a RICO claim.
Plaintiff asserts RICO claims predicated on § 487 of the New York Judiciary Law, which is a criminal misdemeanor. But § 487 violations cannot constitute "racketeering activity" under RICO, because state law predicates must be "punishable by imprisonment for more than one year," 18 U.S.C. § 1961(A), and prison sentences for misdemeanors in New York last at most one year, see N.Y. Penal Law § 70.15. Accordingly, the Court sua sponte dismisses as frivolous Plaintiff's RICO claims predicated on § 487. See Grabaukas, 381 F. App'x at 46; Fitzgerald, 221 F.3d at 364.
Under § 1962(c) of RICO, on which Plaintiff relies, it is "unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt." 18 U.S.C. § 1962(c). RICO provides a private cause of action for "[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter." Id. § 1964(c). To make a civil RICO claim, Plaintiff must allege (1) conduct of (2) an enterprise (3) through a pattern of racketeering activity and (4) injury to his business or property (5) as a result of the RICO violation. Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 119 (2d Cir. 2013) (quoting Anatian v. Coutts Bank (Switz.) Ltd., 193 F.3d 85, 88 (2d Cir. 1999)). "Because the mere assertion of a RICO claim has an almost inevitable stigmatizing effect on those named as defendants, courts should strive to flush out frivolous RICO allegations at an early stage of the litigation." Sky Med. Supply Inc. v. SCS Support Claims Servs., Inc., 17 F. Supp. 3d 207, 220 (E.D.N.Y. 2014) (citations and internal alterations and quotation marks omitted). "The failure of any one element is fatal to a RICO claim." Turner v. N.Y. Rosbruch/Harnik, Inc., 84 F. Supp. 3d 161, 170 (E.D.N.Y. 2015). Plaintiff has failed to allege at least two.
First, Plaintiff fails sufficiently to allege an "enterprise" under RICO. (See B&G Br. at 12-13; H&K Br. ¶¶ 29-35; K Br. ¶¶ 35-41; CK&G Br. at 7; K&L Br. at 4.) A RICO enterprise "includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). Because Defendants here do not form one legal entity, the Amended Complaint must plausibly show a de facto RICO enterprise. For "an association of individuals to constitute an enterprise, the individuals must share a common purpose to engage in particular fraudulent course of conduct and work together to achieve such purposes." First Capital Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 174 (2d Cir. 2004) (citations omitted). The Amended Complaint fails to assert such an enterprise in fact, because it does not "detail any course of fraudulent or illegal conduct separate and distinct from the alleged predicate racketeering acts themselves," make any allegations explaining the purported enterprise's "hierarchy" and "organization," or describe how the individuals "functioned 'as a continuing unit.'" Id. (citations omitted). Instead, the Amended Complaint seeks to show an enterprise through a "conclusory naming of a string of entities," which the Court rejects. Id. at 175.
Second, Plaintiff fails plausibly to assert a "pattern of racketeering activity" under RICO. (See B&G Br. at 13-15; H&K Br. ¶¶ 20-28; K Br. ¶¶ 26-34; CK&G Br. at 6-8; K&L Br. at 4-7.) To allege a pattern of racketeering activity, Plaintiff must "plead at least two predicate acts" and "show that the predicate acts are related, and that they amount to, or pose a threat of, continuing criminal activity." Schlaifer Nance & Co. v. Estate of Warhol, 119 F.3d 91, 97 (2d Cir. 1997). Plaintiff adequately pleads neither the predicate acts nor the threat of continued criminal activity.
Plaintiff fails to aver federal mail and wire fraud. To allege such fraud, Plaintiff must satisfy Rule 9 of the Federal Rules of Civil Procedure, which provides that "a party must state with particularity the circumstances constituting fraud . . . ." In particular, Plaintiff "must specify the time, place, speaker, and content of the alleged misrepresentations, explain how the misrepresentations were fraudulent and plead those events which give rise to a strong inference that the defendant[] had an intent to defraud, knowledge of the falsity, or a reckless disregard for the truth." Cohen v. S.A.C. Trading Corp., 711 F.3d 353, 359 (2d Cri. 2013). Here, Plaintiff made conclusory allegations that Defendants used the wires in their fraud against him, (Am. Compl. ¶ 105), and he alleged without any factual support that Defendants had mail, phone, and wire communications with each other during the seven years of that fraud, (id. ¶ 98). Although Plaintiff alleges that the fraudulent assignment papers for the Property were mailed to Klestov's purported law firm, Berkman, Henoch, Peterson, Peddy & Fenchel, P.C., (id. ¶ 141), the contention fails to satisfy Rule 9's requirements because Plaintiff does not identify, among other things, the Defendants responsible for the mailing and the date of the mailing, see, e.g., Persaud v. Bode, No. 04-CV-4475 (ARR), 2006 WL 1419397, at *4 (E.D.N.Y. Feb. 8, 2006). Accordingly, Plaintiff fails to allege mail and wire fraud predicates.
Although he never expressly mentions bank fraud in the pleadings, Plaintiff cites to the bank fraud statute, 18 U.S.C. § 1344, once in the RICO section of his opposition brief. (See Opp. Br. at 36.) The Court construes the citation as the assertion of a RICO claim based on bank fraud. However, the bank fraud claim "suffers from the same pleading defects as the mail and wire fraud" predicates. Conte v. Newsday, Inc., 703 F. Supp. 2d 126, 137 (E.D.N.Y. 2010) (pro se RICO case). "Plaintiff also has not pled how a bank was defrauded by any of these alleged acts, which is a crucial element of the claim." Id. In fact, upon review of the record, the Court finds that all of his RICO allegations are premised on fraud against individual victims, primarily himself. "[W]here the fraud . . . is aimed not at the bank but an individual, the offense is not bank fraud." United States v. Jacobs, 117 F.3d 82, 92 (2d Cir. 1997); see also Conte, 703 F. Supp. 2d at 137. Therefore, Plaintiff has failed to assert a bank fraud predicate.
In any event, Plaintiff cannot use litigation conduct as the basis for a RICO predicate act. Abundant case law makes clear that mailings and wires involving lawsuits, such as the foreclosure proceedings here, do not give rise to a RICO claim as a matter of law. See, e.g., Tooker v. Guerrera, No. 15-CV-2430 (JS), 2017 WL 3475994, at *10 (E.D.N.Y. Aug. 11, 2017); Estate of Izzo v. Vanguard Funding, LLC, No. 15-CV-7084 (ADS), 2017 WL 1194464, at *11 (E.D.N.Y. Mar. 30, 2017); Curtis & Assocs. v. Law Offices of David M. Bushman, Esq., 758 F. Supp. 2d 153, 177 (E.D.N.Y. 2010), aff'd on other grounds, 443 F. App'x 582 (2d Cir. 2011).
Plaintiff also fails to plead continuity of criminal activity. He "must allege either an 'open-ended' pattern of racketeering activity (i.e., past criminal conduct coupled with a threat of future criminal conduct) or a 'closed-ended' pattern of racketeering activity (i.e., past criminal conduct extending over a substantial period of time)." GICC Capital Corp. v. Tech. Fin. Grp., Inc., 67 F.3d 463, 466 (2d Cir. 1995). Plaintiff alleges neither. To plead a closed-ended pattern, Plaintiff "must provide some basis for a court to conclude that defendants' activities were neither isolated nor sporadic" and extended "over a substantial period of time." DeFalco v. Bernas, 244 F.3d 286, 321 (2d Cir. 2001) (internal quotation marks omitted). Here, Plaintiff alleges only a single foreclosure action against him, and such a case lasts only for a limited period of time. The contentions, which "amount at most to a handful of fraudulent filings, over a brief period, in state court," do not constitute more than isolated activity against Plaintiff. Sanchez v. Abderrahman, No. 10-CV-3641(CBA), 2012 WL 1077842, at *6 (E.D.N.Y. Mar. 30, 2012). As for open-ended patterns, Plaintiff "must show that there was a threat of continuing criminal activity beyond the period during which the predicate acts were performed." Cofacredit, S.A. v. Windsor Plumbing Supply Co., 187 F.3d 229, 242 (2d Cir. 1999). Plaintiff attempts to suggest ongoing criminal activity by making reference to other state foreclosure actions that did not involve Plaintiff or the same assignee (CitiMortgage, Inc.) but did involve two other Defendants in this case. (See Opp. Br. at 3-7.) Plaintiff alleges that such actions included fraudulent assignment papers, but the averments are conclusory and not entitled to the presumption of truth. Therefore, Plaintiff fails plausibly to allege continuity under RICO.
For the reasons discussed, the Court dismisses Plaintiff's RICO claims. The Court also declines to grant leave to further amend the Amended Complaint to state a RICO claim, because such an amendment would be futile. See Lautman, 2014 WL 4843947, at *14.
C. Other Federal Law Claims
Plaintiff appears to allege violations of two federal criminal statutes: 18 U.S.C. § 371, which prohibits conspiracies against the United States or its agencies, and § 2314, which bans the transportation of stolen goods, money, and securities. (See Am. Compl. ¶ 152; Opp. Br. at 38-39.) "It is . . . a general precept of criminal law that unless the statute specifically authorizes a private right of action, none exists." Vasile v. Dean Witter Reynolds Inc., 20 F. Supp. 2d 465, 477 (E.D.N.Y. 1998). Sections 371 and 2314 do not confer Plaintiff a private right of action. The Court dismisses Plaintiff's claims under §§ 371 and 2314 and denies leave to amend, because any such amendment would be futile. See, e.g., Jones v. N.Y. State Div. of Military & Naval Affairs, 166 F.3d 45, 50 (2d Cir. 1999).
D. State Law Claims
Having dismissed the federal causes of action, the Court now considers whether it should assert jurisdiction over the state law claims. Here, Plaintiff has brought claims under the GBL and New York tort law. Plaintiff does not assert diversity jurisdiction, nor do the pleadings suggest that he could. (See, e.g., Am. Compl ¶¶ 3-14.) Therefore, the Court has no independent jurisdiction over the state law claims. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553-54 (2005). Accordingly, the Court has only supplemental jurisdiction over them. See 28 U.S.C. § 1367.
Plaintiff asserts "civil conspiracy" claims, (see Am. Compl. ¶¶ 145-51, 153-57), but civil conspiracy is not a cause of action under New York law, see Alexander & Alexander of N.Y., Inc. v. Fritzen, 503 N.E.2d 102, 102-03 (N.Y. 1986); (see also B&G Br. at 17; H&K Br. ¶¶ 46-47). "Allegations of conspiracy are permitted only to connect the actions of separate defendants with an otherwise actionable tort." Alexander & Alexander of N.Y., 503 N.E.2d at 103. Therefore, the Court construes the "civil conspiracy" claims as substantive tort claims under New York law.
"The exercise of supplemental jurisdiction is within the sound discretion of the district court." Lundy, 711 F.3d at 117. The Court must consider judicial economy, convenience, and other factors, but generally, "where the federal claims are dismissed before trial, the state claims should be dismissed as well." Delaney v. Bank of Am. Corp., 766 F.3d 163, 170 (2d Cir. 2014); see also 28 U.S.C. § 1367(c)(3). Here, because it has dismissed the federal claims at the pleadings stage, the Court finds that the balance of factors counsels in favor of dismissing the state law claims. Pursuant to 28 U.S.C. § 1367(d), the Court advises Plaintiff that his state law claims, if they were timely filed in this Court, are tolled for 30 days after today, unless New York law provides for a longer tolling period.
E. Plaintiff's Application for Referral
In his opposition brief, Plaintiff requests referral of the instant action to federal prosecutors and the state bar for investigation. (Opp. Br. at 32.) Having dismissed all of Plaintiff's claims, the Court finds that he has failed to show that he is entitled to such relief.
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants' various dismissal motions. The Court dismisses the RICO claims as to all named Defendants. The Court dismisses the FDCPA claims as to the FDCPA Defendants: Boriskin, CitiMortgage, Fitzpatrick, Goldberger, Group, and Khaimova. The Court sua sponte dismisses the claims under §§ 371 and 2314 of Title 18 as to all named Defendants. The Court declines to exercise supplemental jurisdiction over the state law claims as to all named Defendants. The Court also dismisses the claims as to Krakoviak and Lewis for insufficient service of process.
The Court further DENIES the motion by CitiMortgage, Fitzpatrick, and Group to enjoin Plaintiff from filing certain lawsuits; DENIES as MOOT the summary judgment motions by Hackett, Khaimova, and Klestov; DENIES as MOOT Plaintiff's motion to strike the reply briefing by Boriskin and Goldberger; and DENIES Plaintiff's application for referral to federal prosecutors and the state bar for investigation of Defendants' actions.
The Clerk of Court is directed to close this case.
SO ORDERED. Dated: September 30, 2017
Brooklyn, New York
/s/ Carol Bagley Amon
Carol Bagley Amon
United States District Judge