I. Introduction
Plаintiff Weizmann Institute of Science (“Weizmann”) commenced an action against defendants Janet C. Neschis (“Neschis”), Robert R. Littman (“Lift-man”), and Marilyn G. Diamond (“Diamond”) (collectively, “Defendants”) on or about October 16, 2000. Weizmann’s complaint (‘Weizmann Complaint”) alleges six causes of action: (i) declaratory judgment that Weizmann is entitled to 37% of the assets of the Anturia Foundation, a non-party; (ii) conversion; (hi) tortious interference with contractual relations; (iv) tor-tious interference with expectancy of inheritance; (v) violation of 18 U.S.C. § 1962(c); and (vi) violation of 18 U.S.C. § 1962(d). 1 Weizmann alleges that the Court has jurisdiction over its claims pursuant to 18 U.S.C. § 1965(a) (RICO), 28 U.S.C. § 1331 (federal question), 28 U.S.C. § 1332(a)(2) (diversity), and 28 U.S.C. § 1367 (supplemental jurisdiction). (Weizmann Complaint (“WC”) ¶ 4).
Plaintiffs Alice Ann Jung, Josef Jung, Michelle Jung, and Jaroslav Jung, a/k/a Jerry Jung (collectively, “Jungs”) commenced an action against Defendants on or about July 30, 2001. 2 The Jungs’ complaint (“Jung Complaint”) alleges nine causes of action: (i) declaratory judgment that the Jungs are entitled to 20% of the assets of the Anturia Foundation, a non-party; (ii) conversion; (iii) tortious interference with contractual relations; (iv) tor-tious interference with expectancy of inheritance; (v) violation of 18 U.S.C. § 1962(c); (vi) violation of 18 U.S.C. § 1962(d); (vii) injunctive relief; and (viii) two counts seeking a constructive trust. The Jungs allege that the Court has jurisdiction over their claims pursuant to 18 U.S.C. § 1965(a) (RICO), 28 U.S.C. § 1331 (federal question), and 28 U.S.C. § 1367 (supplemental jurisdiction); they appear not to have plead diversity jurisdiction. (Jung Complaint (“JC”) ¶ 13).
On September 26, 2001, the Court consolidated these two cases for pre-trial purposes, including motion practice. On or about October 19, 2001, Defendants moved jointly, pursuant to Federal Rules of Civil Procedure (“Fed. R. Civ.P.”) 12(b)(6) and 12(b)(7), to dismiss Plaintiffs’ claims for,
inter alia,
failure to state a claim upon which relief can be granted and failure to join a necessary party, ie., the Anturia Foundation.
See
Defendants’ Joint Memorandum of Law in Support of Their Motion to Dismiss the Complaints, dated October 19, 2001 (“Def.Mem.”). On November 15, 2001, Plaintiffs filed their Joint Brief in Opposition to Motion to Dismiss (“PI. Opp.” or “Opposition Brief’). Defendants filed a reply brief, dated November 20, 2001 (“Def.Reply”). On December 17,
For the reasons set forth below, Defendants’ motion to dismiss is granted in part and deniеd in part and Plaintiffs’ motion for a preliminary injunction is denied. 3
II. Background
The following allegations from the Weizmann Complaint and the Jung Complaint are taken as true for the purposes of this motion. Jacques and Natasha Gelman, a married couple with no children, amassed a great personal fortune as a result of Mr. Gelman’s successful career as an entertainment agent and film producer. (WC ¶ 10; JC ¶¶ 29-30). In 1985, the Gelmans deposited a substantial portion of their assets into a Liechtenstein “stiftung” called the Anturia Foundation (“Anturia” or “Foundation”). 4 (WC ¶ 11; JC ¶ 31). The Foundation’s Board of Trustees (“Board”) enacted various sets of by-laws over time, all of which provide for the distribution of the Foundation’s assets upon the death of the surviving Gelman spouse. 5 (WC ¶ 13; JC ¶ 34).
After Mr. Gelman’s death on July 23, 1986, Mrs. Gelman instructed the Board to make two sets of changes to the Foundation’s by-laws. 6 (WC ¶¶ 15, 20; JC ¶¶ 37-38). Pursuant to her instructions, the Board adopted by-laws, dated August 10, 1989 (“August 10, 1989 By-Laws”) which provided that, in the event of Mrs. Gel-man’s death, the Foundation’s assets would be divided as follows: (1) 20% to Weizmann; (2) 34% (collectively) to the Jungs; and (3) 46% (collectively) to other named charities and beneficiaries. 7 In 1991, pursuant to Mrs. Gelman’s instructions, the Board adopted by-laws dated August 13, 1991 (“August 13, 1991 ByLaws”). The August 13, 1991 By-Laws рrovided for the following distribution of the Foundation’s assets upon Mrs. Gel-man’s death: (1) 20% to Weizmann; (2) 37% (collectively) to the Jungs; (3) 1% to Littman; and (4) 42% (collectively) to other named charities and beneficiaries. (WC ¶ 18; 30¶41).
Plaintiffs allege that Mrs. Gelman developed Alzheimer’s disease in late 1991 and that either the August 10, 1989 By-Laws or the August 13, 1991 By-Laws (or both
Mrs. Gelman possessed other assets which were not part of the Foundation and which were to be disposed of by will to be probated in New York (“New York assets”). (WC ¶ 17; JC ¶40). Until 1989, Sidney Cohn, Esq. (“Cohn”) prepared the Gelmans’ wills and codicils. (WC ¶22; JC ¶49). Thereafter, Mrs. Gelman was represented by Diamond until Diamond became a Justice of the New York State Supreme Court, New York County, in 1991. (WC ¶¶9, 22; JC ¶¶26, 50). Neschis, Cohn’s daughter and Diamond’s former partner, became Mrs. Gel-man’s attorney in 1991. Id. Plaintiffs allege that beginning in late 1991, after Neschis became Mrs. Gelman’s legal representative and continuing until Mrs. Gel-man’s death on May 2, 1998, Neschis and Littman took (unfair) advantage of Mrs. Gelman’s mental condition by, among other things, “cementing themselves as the sole custodiаns of her substantial estate and charitable trust, unlawfully taking millions of dollars from Anturia Foundation and Mrs. Gelman’s personal assets, and increasing the bequests, commissions and/or fees to be received by these defendants.” (WC ¶ 23; JC ¶ 51).
Plaintiffs allege that Neschis and Litt-man “fraudulently assum[ed] fiscal authority over Mrs. Gelman’s assets,” by, among other things, securing the following documents after Mrs. Gelman no longer possessed mental or testamentary capacity: (1) general powers of attorney in favor of Neschis and Littman and (several) powers of attorney which gave Neschis the authority to conduct transactions at Mrs. Gel-man’s New York banks; (2) a last will and testament, executed on April 23, 1993 (“1993 Will”), appointing Neschis as executor and appointing Diamond and Littman as alternate executors; and (3) an affidavit by Mrs. Gelman, signed on October 28, 1994, stating that, at the time of the 1993 Will, she intended that Neschis receive a commission for her services as executor and that Neschis’ law firm receive legal fees for administering her estate. 9 (WC ¶¶ 23-29; JC ¶¶ 51-53, 75-88).
In or about October 1992, Neschis presented a letter to the Board from Mrs. Gelman and dated September 29, 1992 (“September 29, 1992 Letter”) purporting to contain Mrs. Gelman’s instructions for amending the Foundations by-laws. (WC ¶ 37; JC ¶ 68). In accordance with the September 29, 1992 Letter, the Board adopted new by-laws on or about October 19, 1992 (“October 19, 1992 By-Laws”) which, inter alia, eliminated Weizmann as a beneficiary, reduced the Jungs’ allocation to 5% of the Foundation’s assets, increased Littman’s share from 1% to 31% of the assets, added Diamond as a beneficiary of 3% of the assets, and added the Testamentary Trust as a beneficiary of 57% of the assets. 11 (WC ¶¶ 37-38; JC ¶¶ 69-70).
Plaintiffs further allege that “[i]n April 1992 and continuing through 1998, Neschis caused substantial distributions to be made from the assets of the ... Foundation to herself or for her personal benefit.” (WC ¶ 41; JC ¶ 89). Neschis presented a handwritten note, dated April 30, 1992 and purportedly signed by Mrs. Gelman, directing Credit Suisse to “ ‘arrange for the immediate transfer to my Credit Suisse, New York account of $150,000 (U.S.)’ from the accounts of the ... Foundation and/or from accounts held for the Gelmans.” (WC ¶ 42; JC ¶ 91). In addition, the April 1992 note instructed the bank to send all future interest payments directly to the same New York account. (WC ¶ 42; JC ¶ 92). Credit Suisse complied with these instructions and transferred approximately $ 2.5 million from the Credit Suisse Zurich account to the Credit Suisse New York account between November 30, 1992 and February 28, 1995. (WC ¶43; JC ¶ 94). Plaintiffs also allege that Credit Suisse Zurich periodically sent other distributions to the Credit Suisse New York account “in excess of $ 10 million.” (WC ¶43; JC ¶ 95).
Plaintiffs allege that on or about November 18, 1997, Nеschis fraudulently induced Mrs. Gelman to execute an instrument creating a second trust, also named the Jacques and Natasha Gelman Trust (“In
Mrs. Gelman died on May 2, 1998. (WC ¶53; JC ¶ 110). On or about September 21, 1999, the Court of Arbitration in Liechtenstein began arbitration proceedings (“Liechtenstein Arbitration”) between Neschis and Diamond, as trustees for the Jacques and Natasha Gelman Trust, and the Foundation. 14 See Decision of the Court of Arbitration (“Arbitration Order”), dated September 21, 1999, at 1. The Arbitration Order, among other things, lists the names of the arbitrators (“Arbitration Panel”), states that “the Court of Arbitration is duly formed pursuant to Article 13 of the bylaws of the Anturia Foundation, dated May 29, 1985,” and outlines the procedures governing the Liechtenstein Arbitration. See id. at 1-4. On or about January 12, 2000, the Foundation filed its arbitration Answer to the Complaint/Interlocutory Motion for a Determination (“Answer”). On or about March 20, 2000, Weizmann filed its arbitration Joinder as Intervener/Answer to the Complaint/Preliminary Pleading (“Joinder”). The Joinder states, in pertinent part: “we have a legal interest in seeing the [Foundation] prevail, and we therefore join [the Foundation] as an intervening third party.” Joinder at 1. On or about June 8, 2001, the Arbitration Panel issued its Award in Arbitration (“Arbitration Award”), finding, among other things, “that the 1992 and 1998 [foundation] by-laws are legally valid.” Arbitration Award at 51. Pursuant to the January 27, 1998 By-Laws, 57% of the Foundation’s assets will be distributed to the Inter Vivos Trust. (WC ¶ 49; JC ¶ 107).
III. Standard of Review
In resolving a Fed. R. Civ.P. 12(b)(6) motion to dismiss, the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor оf the plaintiff..
See Bernheim v. Lift,
At the same time, while “the well-pleaded material allegations of the complaint are taken as admitted ... conclusions of law or unwarranted deductions of fact are
not
admitted.”
First Nationwide Bank v. Gelt Funding Corp.,
A. Materials and Matters Outside the Pleadings
In resolving a motion to dismiss, “a court may consider ‘documents attached to the complaint as an exhibit or incorporated in it by reference, ... matters of which judicial notice may be taken, or ... documents either in plaintiffs’ possession or of which plaintiffs had knowledge and relied on in bringing suit.’ ”
Chambers v. Time Warner, Inc.,
“Despite the submission of extra-pleading documents, [the Court does] not convert this motion into a motion for summary judgment under Rule 56(c).”
18
Scherer v. Equitable Life Assurance Soc’y,
“A court may consider documents attached to the complaint as exhibits, or incorporated by reference, as well as any documents that are integral to, or explicitly referenced in, the pleading.”
19
Preston v. State of New York,
B. Collateral Estoppel
Collateral estoppel bars a party from relitigating “an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point.”
Khandhar v. Elfenbein,
1. Liechtenstein Arbitration
Defendants argue that “collateral estoppel precludes Plaintiffs from re-litigating the factual predicate' for their claims here when [the Liechtenstein Arbitration] conclusively determined the same issues adversely to Plaintiffs.” Def. Mem. at 5. In response, Plaintiffs argue that “the Convention [on Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, 21 U.S.T. 2517 (1970) (“Convention”)] governs this dispute and, because Liechtenstein is not a signatory, bars all recognition of the Liechtenstein arbitration decision.” PI. Opp. at 8.
Ratified by the United States in 1970,
see
9 U.S.C. § 201, the Convention governs “the recognition and enforcement of arbi-tral awards' made in the territory of a State other than the State where the recognition and enforcement of such awards are sought.” 21 U.S.T. at 2519. In ratifying the Convention, the United States reserved the right to “apply the Convention, on the basis of reciprocity, to the recognition and enforcement of only those awards made in the territory of another Contracting State.” 21 U.S.T. at 2566;
see
notes following 9 U.S.C. § 201. Plaintiffs argue that this reciprocity reservation “bars all
The reciprocity provision of the Convention signifies that the United States will recognize and enforce pursuant to the Convention “only arbitral awards made in nations that also adhere to the Convention.” Pl. Opp. at 6 (quoting
Lander Co. v. MMP Invs., Inc.,
Plaintiffs also claim that this Court should not give preclusive effect to the Liechtenstein Arbitration because they “were deprived of a full and fair opportunity to partiсipate in the arbitration.” PI. Opp. at 8.
22
Defendants argue that Plaintiffs, “have failed to produce any evidence of any actual prejudice, and none of their assertions establishes a denial of full and fair participation.” Def. Reply at 3. At this stage of the litigation (i.e. absent further discovery) it is inappropriate for the Court to make a determination of whether or not Plaintiffs had a full and fair opportunity to participate in the Liechtenstein Arbitration.
See e.g., Schenk v. Mine Management Co.,
89 Civ. 97,
2. New York Surrogate’s Court Proceeding
Defendants argue that the Jungs “are further barred by the collateral estoppel effects of a probate proceeding in the New York County Surrogate’s Court.... ” Def. Mem. at 5. Plaintiffs reply that the sole issue in the Surrogate’s Proceeding was the validity of the 1993 Will and the Jung Complaint “challenge^] a series of events and transactions that occurred at times other than April 23, 1993, including creation of the [I]nter [V]ivos [Tjrust in November 1997 and the September [29,] 1992 letter directing changes to the [Foundation’s] by-laws.” PL Opp. at 13.
Although thе Jungs initially objected to probate of the 1993 Will, they eventually withdrew those objections and the 1993 Will was admitted to probate on October 16, 2001.
See
Withdrawal of All Objections (Alice Jung) (“Pursuant to the Stipulation of the parties dated April 26, 2001, Alice Jung, Executrix of Miroslav Jung, hereby withdraws her Objections to Probate verified April 16, 1999, and Amended Objections to Probate verified May 4, 1999.”); Withdrawal of All Objections (Jaroslav Jung) (“Pursuant to the Stipulation of the parties dated April 26, 2001, Jaroslav Jung hereby withdraws his Objections to Probate verified April 16, 1999, and Amended Objections to Probate
At the same time, collateral estoppel does not preclude the Jungs from raising issues and challenging those documents, if any, that were not part of the probate proceeding.
See e.g. In re Will of Joseph P. Reardon,
C. Applicable Law
The parties disagree whether Liechtenstein or New York law governs Plaintiffs’ tort claims. Defendants argue that the Court should apply Liechtenstein law, see Def. Mem. at 6, while Plaintiffs contend that New York law applies. See PI. Opp. at 14-15.
“A federal court sitting in diversity or adjudicating state law claims that are pendent to a federal claim must apply the choice of law rules of the forum state.”
Rogers v. Grimaldi,
Based on the Complaints, it appears that the acts giving rise to the alleged conversion and tortious interference by Defendants occurred, in large part, in New York. For example, Plaintiffs allege that Neschis and Littman obtained control over Mrs. Gelman’s New York bank accounts and directed the transfer of (some of) the Foundation’s assets to her Credit Suisse New York account, (WC ¶¶ 24, 42-44; JC ¶¶ 52, 91-96), and that Defendants’ alleged scheme to gain control over Mrs. Gelman’s assets was formed and (largely) effected in New York by Defendants, (WC ¶¶ 1, 5; JC ¶¶ 5, 14).
See e.g., Solow v. Stone,
This does not mean, however, that this Court may not apply Liechtenstein law in determining some of the issues arising out of the Plaintiffs’ claims. “There is no reason why all issues arising out of a tort claim must be resolved by reference to the law of the same jurisdiction.”
Lund’s, Inc. v. Chemical Bank,
Under New York’s choice, of law rules, in deciding contract issues the Court will apply a “center of gravity” or “grouping of contacts” approach.
See Brink’s Ltd. v. South African Airways,
D. Declaratory Judgment
Defendants move to dismiss Plaintiffs’ claim for declaratory judgment,
inter alia,
on the^ grounds that Plaintiffs have failed to join Anturia, an allegedly indispensable party, as a defendant. Plaintiffs “seek a declaratory judgment that they are Anturia’s proper distributees,” making the Foundation an necessary party pursuant to Rule 19, “because complete relief cannot be granted without it.” Def. Mem. at 9. Defendants also argue that .joinder of Anturiа is not feasible because the Foundation “is a Liechtenstein entity without any American contacts, and its Board is comprised of Liechtenstein and Swiss citizens.”
Id.
at 10. Plaintiffs counter that Anturia is not an indispensable party they are not seeking relief against the Founda
“Fed.R.Civ.P. 19 sets forth a two-step test for determining whether the court must dismiss an action for failure to join an indispensable party. First, the court must determine whether an absent party belongs in the suit
i.e.,
whether the party qualifies as a ‘necessary’ party under Rule 19(a).”
Viacom Int’l v. Kearney,
Based on the relief requested by Plaintiffs in the Complaints, Anturia is a necessary party. That is, the Complaints explicitly request relief directly implicating Anturia. Count I of both Complaints, for example, alleges that Plaintiffs are “entitled to receive a distribution of [57%] of the assets, wherever located, of the Antu-ria foundation.” (WC ¶ 58, JC ¶ 115). . In addition, Plaintiffs prayer for relief asks for “a declaration that the [Plaintiffs] are entitled to receive a distribution of [57%] of the assets, wherever located of the An-turia Foundation,” (WC at 32, JC at 36).
25
Because Plaintiffs themselves allege that complete relief cannot be granted without involving Anturia, the Foundation is a “necessary” party.
See e.g. Associated Dry Goods Corp. v. Towers Financial Corp.,
The Court is not convinced at this point that Anturia’s “joinder.. .is not feasible for jurisdictional or other reasons.”
Viacom,
E. Statute of Limitations/Estoppel
Defendants also argue,
inter alia,
thаt Plaintiffs’ conversion and tortious interference with contract claims are barred by the statute of limitations. Def. Mem. at 13-14, 17-18. Plaintiffs contend that
“While a statute of 'limitations defense may be raised in a motion to dismiss ... such a motion should not be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”'
Ortiz v. Cornetta,
Under New York law, a three-year statute of limitations applies to conversion claims.
See
N.Y.C.P.L.R. § 214(3) (McKinney 1990);
see also Songbyrd, Inc. v. Estate of Grossman,
Under New York law, “[i]t is the rule that a defendant may be estopped to plead the Statute of Limitations where plaintiff was induced by fraud, misrepresentations or deception to refrain from filing a timely action.”
Simcuski v. Saeli,
The Court reaches no conclusion as to compliance with the applicable limitations periods at this time. “It is not possible or appropriate ... on the present motion addressed to the pleading, presenting us as it must with only a skeletal record, to determine whether [Plaintiffs] met [their] obligation of due diligence when [they] instituted the present action....”
F. Conversion
Defendants argue that Plaintiffs’ conversion claim is precluded because “Plaintiffs ... did not have legal ownership or an immediate superior right of possession to [the Foundation’s] funds under New York law” and because “[u]ntil Mrs. Gelmaris
“Conversion is the unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner’s rights.”
Vigilant Ins. Co. of Am. v. Housing Auth. of the City of El Paso, Tex.,
Conversion is concerned with possession, not title, and the plaintiff need only have a possessory right to the chattel that is superior to that of the defendant. Either actual possession or the right to immediate possession is sufficient, and a person entitled to future possession may also recover for the injury to her or her reversionary interest though not strictly in conversion.
New York Pattern Jury Instructions— Civil, PJI 3:10 cmt. (cum.supp.2002) (internal citations omitted.) It appears at this stage that Plaintiffs have adequately plead a conversion claim premised upon their future interest in the Foundation’s funds pursuant to the August 10, 1989 By-Laws and/or the August 13, 1991 By-Laws. 26
G. Tortious Interference with Contract
“Under New York law, the elements of a tortious interference claim are: (a) that a valid contract exists; (b) that a ‘third party’ had knowledge of the contract; (c) that the third party intentionally and improperly procured the breach of the contract; and (d) that the breach resulted in damage to the plaintiff.”
Albert v. Loksen,
Defendants challenge Plaintiffs’ tortious interference with contract claims on the ground that Plaintiffs cannot plead the existence of a valid contract. Plaintiffs allege that the “Last Valid By-Laws, together with Anturia Foundation Charter and all express and implied understandings between the Gelmans and the Anturia Foundation, constituted a valid, enforceable contract between the Gelmans and the Anturia Foundation.” (WC ¶ 66, JC ¶ 125). Defendants argue that, “[u]nder
Assuming
arguendo
that Liechtenstein law applies, the Court is not in a position, at this time, to resolve the issue of whether or not a contract existed. That is, while the Defendants state that, “[t]here was no contract between the Gelmans and Anturia which would allow a third party to claim any rights,” (Burger Aff. ¶26), neither party has yet made a convincing presentation.
See e.g., Walpex Trading Co. v. Yacimientos Petroliferos Fiscales Bolivianos,
H. Tortious Interference with Expectancy of Inheritance
Defendants argue that “New York does not recognize this tort at all.” Def. Mem. at 18. Plaintiffs respond that tor-tious interference with expectancy of inheritance is an “emerging tort” in New York, which “has long afforded redress against those who, by fraud or other wrongdoing, deprive others of an expected inheritance.” PI. Opp. at 19.
“New York ... has not recognized a right of action for tortious interference with prospective inheritance.”
Vogt v. Witmeyer,
I. RICO — 18 U.S.C. § 1962(c)
The Complaints allege that, beginning in 1990 or 1991:(1) “Neschis and Littman engaged in a scheme to defraud Mrs. Gelman designed to gain control over her substantial wealth and to divert her money and property to their personal use and benefit;” (2) “[i]n furtherance of the fraudulent scheme, Neschis, Mrs. Gelman’s attorney, and Littman, Mrs. Gelman’s close personal companion, assumed control over Mrs. Gel-man’s financial affairs, including her estate plan and the ... Foundation ... and created fraudulent documents purporting to carry out Mrs. Gelman’s intent but which actually furthered the fraudulent scheme;” and (3) “[t]hrough their acts of fraud and concealment, Neschis and Littman became Mrs. Gelman’s sole advisors and caretakers, and thereby cemented themselves as the exclusive custodians of Mrs. Gelman’s worldwide assets for the purpose of converting those assets to their personal use and benefit” — in violation of the civil RICO laws. (WC ¶¶ 78-79; JC ¶¶ 138, 140, 142). Defendants counter, among other things, that: (1) Plaintiffs have failed to plead the requisite predicate acts of “racketeering activity” (18 U.S.C. § 1961(1)), Def. Mem. at 18-19, 22; (2) Plaintiffs have failed to plead a “pattern” of racketeering activity (18 U.S.C. § 1962(c)), Def. Mem. at 18-21; and (3) Plaintiffs were not injured “by reason of’ a RICO violation involving Defendants (18 U.S.C. § 1964(c)), Def. Mem. at 21-22.
To state a civil claim for damages under RICO, “a plaintiff has two pleading burdens.”
Moss v. Morgan Stanley,
1. RICO Elements
a. Racketeering Activity
“Racketeering activity” is defined in 18 U.S.C. § 1961(1) to include a variety of federal and state crimes including,
inter alia,
murder, kidnaping, gambling, arson, robbery, bribery, extortion, wire fraud, and mail fraud. 18 U.S.C. § 1961(1). A plaintiff must plead at least two acts,
ie.,
“predicate acts,” of racketeering activity. 18 U.S.C. § 1961(5);
see also Sedima S.P.R.L. v. Imrex Co.,
The Complaints allege that Littman committed one act of wire fraud in 1992, in violation of 18 U.S.C. § 1343, and numerous acts of larceny by embezzlement and larceny by false promise, in violation of New York Penal Law § 155.05.
See WC
¶¶ 86-89; JC ¶ 149. But as Defendants correctly contend. “[t]he only predicate acts Plaintiffs allege that Littman agreed to, or allegedly committed, were the predicate acts of larceny and the transmission [by wire] of the December 15, 1992 memo.... ” Def. Mem. at 22, n. 19. Neither larceny by embezzlement nor larceny by false promise falls within the RICO statutory definition of racketeering activity.
28
See
18 U.S.C. § 1961(1);
see also Segarra v. Messina,
Nor do Plaintiffs cite persuasive legal authority to support the argument that “false procurement” of documents constitutes a RICO predicate act. Plaintiffs have failed to plead two predicate acts of racketeering activity by Littman and their § 1962(c) claim cannot stand against him.
Plaintiffs have met their burden of pleading two or more predicate acts of racketeering activity by Neschis. Indeed, the Complaints allege that Neschis committed four predicate acts of mail fraud in violation of 18 U.S.C. § 1341.
29
See
WC
b. Pattern
Defendants also argue that Plaintiffs have failed to plead a “pattern” of racketeering. Def. Mem. at 19. Plaintiffs respond that “[ajllegations that a fiduciary engaged in numerous transactions of diversion of funds, all related to the overall purpose of stealing and diverting the funds, satisfy the requirement of a ‘pattern of racketeering activity.’ ” PL Opp. at 21.
To establish “pattern,” a plaintiff must allege facts tending to show that “the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity.”
H.J. Inc. v. Northwestern Bell Tel. Co.,
The Complaints fail to plead that Nes-ehis’ alleged predicate acts constitute either a closed-ended or an open-ended pattern. “Closed-ended continuity is demonstrated by predicate acts that amount to continued criminal activity by a particular defendant.”
Id.
Several factors may be considered, including,
inter alia:
“the length of time over which the alleged predicate acts took place, the number and variety of acts, the number of participants, the number of victims, and the presence of separate schemes.”
GICC Capital Corp. v. Technology Fin. Group, Inc.,
Defendants argue that Nesehis’ alleged predicate acts after 1992 may not be considered “[bjecause replacing Plaintiffs as secondary] beneficiaries was ‘effectively accomplished’ when the 1992 By-[L]aws replaced the 1991 By-[L]aws.... ” Def. Mem. at 19. Plaintiffs state that the “goal of the purported scheme — control over Mrs. Gelman’s wealth — will not be accomplished until the New York Trust, Littman and Diamond receivе their distributions of Anturia funds,” PI. Opp. at 22, ie., the scheme “began in 1992 and continued at least through the completion of the Liechtenstein arbitration and the receipt of the proceeds of the fraud by the New York Trust.” Id. at 22-23. Assuming arguendo that each of Nesehis’ four (alleged) acts of mail fraud, beginning on April 30,1992 and ending on July 16, 1999, is relevant to assessing continuity, Nesehis’ actions lasted approximately seven years.
At the same time, “a scheme’s duration alone is not dispositive.”
Pier Connection,
J. RICO Conspiracy — 18 U.S.C. § 1962(d)
Defendants argue (correctly) that “[bjecause Plaintiffs’ substantive RICO claim fails, Plaintiffs’ claim of conspiracy to commit a violation of 18 U.S.C. § 1962(c), pursuant to § 1962(d), must also fail.” Def. Mem. at 22.
See Vicon,
K. Constructive Trust
The Jungs allege that they are entitled to a constructive trust on Defendants assets because Defendants “took advantage of or otherwise abused” the confidential fiduciary relationship as trustees of the Inter Vivos Trust and the Testamentary Trust. 31 (JC ¶¶ 178-79). Defendants contend, inter alia, that the Jungs fail to “allege that Defendants made them a promise or their reliance on said promise.” Def. Reply at 8.
A constructive trust is an equitable remedy designed to “prevent unjust enrichment, although unjust enrichment does not necessarily implicate the performance of a wrongful act.”
Counihan v. Allstate Ins. Co.,
“However, even given the Court’s flexibility, plaintiffs must at least show a promise and a transfer of property in reliance thereof.”
Weber v. Multimedia Entertainment, Inc.,
97 Civ. 0682(PKL),
L. Injunctive Relief
. The Jungs’ assert that they are “entitled to a preliminary and permanent injunction against all of the Defendants enjoining and restraining the Defendants from exercising any dominion or control .... over any of the assets of the ... Foundation and/or the estate of Natasha Gelman.” 32 (JC ¶ 171). The Jungs seek a permanent injunction “enjoining all [Defendants from using or transferring any part of the assets received from the ... Foundation directly to any person or entity, other than to [the Jungs], until [the Jungs] ha[ve] received their proportionate share of the assets in the ... Foundation at the time of the death of Mrs. Gelman.” {Id. at 36). Plaintiffs contend that “[t]he Jungs’ claim for injunctive relief is necessary to insure that [Defendants’ elaborate scheme to defraud the Gelmans’ rightful beneficiaries does not continue.” PI. Opp. at 24.
Defendants argue, among other things, that the Jungs’ claim for injunctive relief should be dismissed “because the Jungs fail to demonstrate that irreparable harm exists or that money damages would be insufficient.” Def. Mem. at 23.
To obtain a preliminary injunction, a party must establish: “(1) irreparable harm in the absence оf the injunction and (2) either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the mov-ant’s favor.”
Random House, Inc. v. Rosetta Books LLC,
The Jungs seek monetary relief.
See
PI. Opp. at 24 (“Absent injunctive relief, [Defendants will continue to exercise
Y. Conclusion and Order
For the foregoing reasons, Defendants’ motion to dismiss [14-1] is granted in part and denied in part and Plaintiffs’ motion for a preliminary injunction [23-1] is denied. Plaintiffs’ application for leave to amend (see PI. Opp. at 5, n. 4) is granted provided the (alleged) facts so warrant. Plaintiffs shall serve and file their claims, amended in accordance with this Order, by October 25, 2002.
'Counsel are directed forthwith to appear at a settlemeni/scheduling conference with the Court on November 15, 2002, at 2:30 p.m., in Courtroom 706 of the U.S. Courthouse, 40 Centre Street, New York, New York. 'The parties are directed to engage in good faith settlement negotiations prior to the conference with the Court.
Notes
. Weizmann's fifth and sixth causes of action arise under the Racketeering Influenced and Corrupt Organization Act of 1970 (“RICO”). Section 1962(c) provides that "[i]t shall be 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....” 18 U.S.C. § 1962(c). Section 1962(d) makes it illegal “for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.” 18 U.S.C. § 1962(d).
. Weizmann and the Jungs are referred to collectively as "Plaintiffs.” The Weizmann Complaint and the Jung Complaint are referred to collectively as "Complaints."
. The Court is not here passing upon the ultimate merit of Plaintiffs' claims.
. “A stiftung is a creation of the laws of Liechtenstein ..., resembling a trust, but not limited to specific lives in being. A stiftung can own property and is controlled by an administrator (known as a stiftungerat) whose powers and duties are comparable to a trustee.”
Kraus v. Comm’r,
. The Gelmans and the Board allegedly had a mutual (unwritten) understanding that the bylaws would be amended to change beneficiaries and alter bequests only upon the Gel-mans’ instructions. (WC ¶ 14; JC ¶ 35).
. Each time Mrs. Gelman instructed the Board to make a change to the by-laws, she allegedly traveled to Zurich and noted the proposed changes, in her own handwriting, on a copy of the (then) current by-laws. (WC ¶ 15; JC ¶ 38).
. Weizmann, a, charitable organization located in Rehovet, Israel, is community of 2,400 scientists and graduate students which performs research and development activities in the areas of disease and hunger, environmental protection, and economic growth. (WC ¶ 6). The Jungs are Mrs. Gelman's blood relatives. (WC ¶ 18).
. In March 1995, Dr. Fred Plum, a neurologist, stated in a written report that "Mrs. Gelman appears to have progressive Alzheimer's Disease with a fairly typical pattern of memory loss leading all other cognitive disabilities in their deterioration,” and that "the results of the present examination indicate that she lacks testamentary mental capacity.” (WC$21; JC ¶ 47). Plaintiffs allege that Mrs. Gelman began to experience symptoms of Alzheimer's "[s]ome time in late 1991.” (WC ¶ 20; JC ¶ 44).
. Under the 1993 Will, Miroslav Jung, Jaros-lav Jung and Mario Sebastian — Mrs. Gel-man's closest living relatives — each received a bequest of $10,000, while Littman received a bequest of $500,000. (WC ¶ 26; JC ¶¶ 77-78). Plaintiffs allege that "[t]he bequests to the Jung Family are significantly lower, and the bequest to Littman is significantly higher, than bequests in earlier wills executed by Mrs. Gelman.” (WC ¶ 26; see also JC ¶ 79). The 1993 Will also established the Jacques and Natasha Gelman Trust ("Testamentary Trust”) for charitable, literary and educational purposes, which was to be funded from Mrs. Gelman’s residuary estate, i.e., that portion of her estate which was not specifically devised or bequeathed. (WC ¶ 27; JC ¶ 80). Neschis and Diamond were appointed as co-trustees of the Testamentary Trust, and Litt-man was appointed as alternate trustee. (WC ¶ 27; JC ¶ 81). The trustees are authorized to spend the income and principal of the Testamentary Trust in their sole discretion. Id. Plaintiffs allege that "[t]he reduction of the bequests to the Jung family substantially increased Mrs. Gelman’s residuary estate, which was to be placed into the Testamentary Trust, to the substantial personal benefit of defendant Neschis.” (WC ¶ 27; see also JC ¶ 82).
. In or about June 1992, Neschis had asked Levis to explain the procedure for changing the Foundation’s by-laws and specifically inquired whether a letter from Mrs. Gelman would suffice. (WCV31; JC ¶ 56).
. It is not clear from the Complaints how the Testamentary Trust, which was not apparently created until April 23, 1993 (WC ¶ 27; JC ¶ 80), came to be named as a beneficiary of the Foundation on October 19, 1992.
. Plaintiffs challenge the validity of the Inter Vivos Trust instrument because, among other things, (i) Mrs. Gelman's signature was not verified by a notary public — rather the notary attested only that “Neschis stated to him that Neschis saw Mrs. Gelman execute the instrument’’ — and (ii) “Mrs. Gelman’s execution of the instrument was purportedly witnessed by Neschis and a witness whose signature is utterly illegible’’ and unverified. (WC ¶ 47; JC ¶¶ 100-103).
. The trust instrument gives Neschis and Diamond "absolute discretion” to spend the Inter Vivos Trust assets "for use exclusively within the United States for religious, charitable, scientific, literary or educational purposes or for the prevention of cruelty to children or animals.” (Id.).
.Neither the Weizmann Complaint nor the Jung Complaint mentions the Liechtenstein Arbitration. The factual allegations in this paragraph are taken from the documents filed in the Liechtenstein Arbitration and supplied by Defendants in support of their motion to dismiss. As discussed
infra
at Section IV.A., the Court takes judicial notice of these documents "not for the truth of the matters asserted [therein], but solely to establish the fact of such litigation and related filings.”
Kramer v. Time Warner,
. The factual allegations in this paragraph are taken from the documents filed in the Surrogate's Proceeding and supplied by Defendants in support of their motion to dismiss. As discussed fully
infra
at Section IV.A., the Court takes judicial notice of these documents.
See Kramer,
. " ‘Civil RICO is an unusually potent weapon— the litigation equivalent of- a thermonuclear - device.’ ”
Schmidt v. Fleet Bank,
. Federal Rule of Evidence (''Fed.R.Evid.”) 201, entitled "Judicial Notice of Adjudicative Facts,” permits the Court to take judicial notice of a fact "not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b).
. In a telephone conference held on August 1, 2002, the Court requested that the parties provide additional briefing on whether the instant motion to dismiss should be converted to a motion for summary judgment with respect to the collateral estoppel issue. On August 5, 2002, the parties provided their joint response ("Ltr. Br.”), opposing summary judgment: "[Djefendants submit that [the] record does not require conversion to summary judgment to enable the Court to consider the submissions by [Defendants on the motion[] to dismiss.” Ltr. Br. at 1. "Plaintiffs[ ] ... do not consent to the resolution of the collateral estoppel issue ... by summary judgment.” Ltr. Br. at 2. "While a court may transform a 12(b)(6) motion into a summary judgment motion pursuant to Rule 56(c) if the parties submit evidence beyond the pleadings, such action is inappropriate unless the parties are given notice and an opportunity to respond appropriately.”
Jordan (Bermuda) Inv. Co., Ltd. v. Hunter Green Investments,
.The Court has considered the following documents, incorporated by reference in the Comрlaints, in deciding the motion to dismiss: (1) the Charter of the Anturia Foundation; (2) the Articles of Incorporation of the Anturia Foundation; (3) the June 7, 1985 bylaws of Anturia Foundation; (4) the October 1, 1985 by-laws of Anturia Foundation; (5) the October 27, 1986 by-laws of Anturia Foundation; (6) the August 10, 1989 by-laws of Anturia Foundation; (7) the August 13, 1991 by-laws of Anturia Foundation; (8) the October 19, 1992 by-laws of Anturia Foundation; (9) the January 27, 1998 by-laws of Anturia Foundation; (10) Mrs. Gelman’s April 26, 1989 will; and (11) Mrs. Gelman's October 7, 1989 will. Document 1 herein is attached as an exhibit to the Declaration of Dr. Iur. Peter Monauni, dated November 9, 2001 ("Monauni Dec.”), submitted by Plaintiffs. Documents 2-9 are attached as exhibits to the Affirmation of Johannes Michael Burger, dated October 19, 2001 ("Burger Aff.”), submitted by Defendants. Documents 10-11 are attached as exhibits to the Affidavit of Seth Rubenstein, sworn to October 18, 2001 ("Ru-benstein Aff.”), submitted by Defendants.
. The Court takes judicial notice of the following documents pertaining to the New York Surrogate’s Proceeding: (1) the May 4, 1999 amended objections to probate and jury demand; (2) the January 19, 2001 order of the Surrogate framing the issues; (3) a transcript of the March 28, 2000 hearing before the Surrogate; (4) the April 11, 2000 order of the Surrogate; (5) the April 26, 2001 letter from Henry Gradstein regarding agreement to withdraw objections; (6) June 19, 2001 withdrawal of all objections to probate by Alice Jung; (7) June 19, 2001 withdrawal of all objections to probate by Jaroslav Jung; and (8) the October 16, 2001 decree granting probate. These documents are attached as exhibits to the Rubenstein Aff.
. Plaintiffs have also submitted the Declaration of Jerry Jung, sworn to November 8, 2001 ("Jung Dec.”), to "provide a brief background of the issues set forth in the [C]om-plaints ... and to rebut some of the 'facts' provided by the Defendants.” Jung Dec. ¶¶ 2-3. And, portions of the Burger Affirmation, the Burger Reply Affirmation, and the Rubenstein Affirmation attempt to introduce evidence and legal arguments presented to the Arbitration Panel and the Surrogate’s Court in these prior proceedings. The Court has not considered these materials, which "attempt to introduce evidence or legal arguments presented to the ... court[s] in the prior related action[s]” in deciding the motion to dismiss. See id. at 690.
. In a somewhat surprising call to chambers on September 30, 2002, counsel for the Jungs sought to supplement their brief on this point.
. Weizmann is domiciled in Israel (WC ¶ 4), the Jungs are domiciled in California (JC ¶¶ 15-17), and the Defendants are domiciled in New York (WC 1HT7-9; JC ¶¶ 19, 22, 26).
. Rule 19(a) defines a party as "necessary” when: "(1) in the person’s absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.” Fed.R.Civ.P. 19(a).
. In their motion papers, however, Plaintiffs argue that they seek "judgements against Nes-chis and Littman,” and "a declaration concerning plaintiffs' right to receive funds held by defendants in New York...” (Pi. Opp. at 16).
. As discussed infra., the Court does not here determine whether the Anturia by-laws formed a “valid enforceable contract” as alleged in the Complaints. (WC ¶ 60, JC ¶ 117).
. Most pertinent to the resolution of the present motion are the RICO claim elements principally challenged by Defendants, namely, “racketeering activities” and "pattern.”
. The state law crimes which constitute predicate acts are those acts or threats "chargeable under State law and punishable by imprisonment for more than one year,” which involve "murder, kidnaping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical.” 18 U.S.C. § 1961 (1)(A).
.For the reasons stated above. Plaintiffs’ allegations of larceny by Neschis do not constitute predicate acts of racketeering activity.
. “To satisfy open-ended continuity, the plaintiff need not show that the predicates extended over a substantial period of time but must show that there was a threat of continuing criminal activity beyond the period during which the predicate acts were performed.”
Cofacredit,
. Only the Jung Complaint alleges claims for constructive trust. (JC ¶¶ 172-80). Weizmann, however, has indicated that ”[i]n the event leave to replead is granted, [it] would assert a similar claim for constructive trust.” PI. Opp. at 24, n. 18.
. The Weizmann Complaint does not state a claim for injunctive relief.
. Plaintiffs' motion for a preliminary injunction "pending the Court’s decision on [Defendants’ currently pending motion[] to dismiss,” is likewise denied for failure to establish irreparable harm.
See, Sturm, Ruger & Co. v. Chase Manhatten Bank,
No. 93 Civ. 73165(SHS)