770 F. Supp. 2d 627
S.D.N.Y.2011Background
- DDR Construction sues Siemens/Schlesinger/First Keystone and others for RICO and state-law claims arising from SSE and SFD joint ventures and related NYCDEP projects.
- DDR alleges mismanagement and fraud within SSE/SFD, including JR and Ostrovsky schemes, MBE/Master Electrician fraud, and improper fund transfers.
- Queens Action in state court involved similar entities; the Queens court partially granted DDR an accounting but dismissed other claims.
- This federal action seeks multiple reliefs, including a RICO claim and declaratory judgment about SSE’s structure and DDR’s status as a joint venturer.
- District court grants motions to dismiss most claims, finding collateral estoppel and issues of standing/proximate causation bar DDR’s claims; some claims survive only against First Keystone and Solomon.
- DDR seeks amendments and sanctions, which are resolved or denied in the court’s order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| RICO standing and proximate causation | DDR contends it was the intended victim and injury flows from predicate acts. | Defendants argue lack of proximate causation and no direct injury. | RICO claim dismissed for lack of proximate causation. |
| Collateral estoppel and SSE membership | DDR argues it was a joint venturer with SSE and thus entitled to related rights. | Court had held DDR not a member; estoppel applies. | Collateral estoppel precludes DDR from claiming SSE membership. |
| Declaratory judgment against SSE’s structure | DDR seeks declaration of DDR’s rights in SSE via SFD; related to Queens Action. | State proceedings govern these issues; Wilton abstention applies. | Court declines jurisdiction under Wilton abstention; dismisses declaratory judgment claim. |
| Fraud and 9(b) pleading standards | DDR asserts fraud and concealment by SSE/affiliates. | Alleges failure to plead with particularity under Rule 9(b). | Fraud claim dismissed without prejudice for failure to plead with particularity. |
| Unjust enrichment and conversion dependence on declaratory relief | DDR seeks monetary relief based on SSE profits and misappropriations. | Relies on declaratory judgment; if declaratory relief denied, basis dissolves. | Unjust enrichment and conversion claims dismissed as dependent on declaratory judgment. |
Key Cases Cited
- Hemi Group, LLC v. City of New York, 130 S. Ct. 983 (2010) (establishes proximate causation standards for RICO standing)
- Holmes v. SIPC, 503 U.S. 258 (1992) (proximate causation and standing under RICO framework)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) (direct victim requirement; harms must be proximate to the violation)
- Dittmer v. Cnty. of Suffolk, 146 F.3d 113 (2d Cir.1998) (parallelism and abstention considerations under Colorado River analysis)
- Baisch v. Gallina, 346 F.3d 366 (2d Cir.2003) (proximate causation and standing in RICO context; limitations from Hemi Group)
- In re American Express Co. Shareholder Litig., 39 F.3d 395 (2d Cir.1994) (standing and proximate cause principles in fiduciary/financial contexts)