Melrose Credit Union v. Canizares
2021 NY Slip Op 04128
| N.Y. App. Div. | 2021Background
- Melrose Credit Union sued Canizares to recover on a promissory note, alleging default.
- Canizares failed to timely answer; Melrose moved for a default judgment.
- Canizares later appeared, opposed the default judgment, and cross-moved for leave to interpose a late answer.
- The proposed late answer included affirmative defenses and counterclaims alleging violations of 18 U.S.C. § 1962(c) (RICO) and § 1962(d) (RICO conspiracy).
- The Supreme Court (Nassau County) granted leave to file a late answer but barred the RICO-based defenses and counterclaims as insufficiently pleaded.
- Canizares appealed; the Appellate Division affirmed the exclusion of the RICO claims and upheld the order permitting a late answer otherwise.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court should allow a late answer but exclude proposed RICO claims | Melrose urged default and contended the RICO allegations were deficient | Canizares argued his proposed answer sufficiently pleaded RICO and conspiracy claims | Court allowed late answer but excluded the RICO claims as insufficiently pleaded |
| Whether the proposed RICO and conspiracy claims satisfied particularity and pattern requirements | RICO elements not pleaded with required specificity | RICO elements and predicate acts were adequately alleged | Court held RICO claims lacked particularity: failed to plead an enterprise and at least two predicate acts showing a pattern; conspiracy claim failed as derivative |
Key Cases Cited
- Fekety v. Gruntal & Co., 191 A.D.2d 370 (RICO elements must be pleaded with particularity)
- Board of Mgrs. of Beacon Tower Condominium v. 85 Adams St., LLC, 136 A.D.3d 680 (RICO pleadings require particularity)
- Simpson Elec. Corp. v. Leucadia, Inc., 72 N.Y.2d 450 (pattern of racketeering activity requirement)
- Greenstone/Fontana Corp. v. Feldstein, 72 A.D.3d 890 (insufficient RICO pleading)
- Becher v. Feller, 64 A.D.3d 672 (insufficient RICO pleading)
- Daskal v. Tyrnauer, 123 A.D.3d 652 (conspiracy claim fails when substantive RICO claim is deficient)