Bell v. Carey

• Decision Date: 01 July 2020
• Docket Number: 18-CV-2846 (PAE) (OTW)
• Parties: RENZER BELL, Plaintiff, v. JOHN CAREY et al., Defendants.
• Court: U.S. District Court — Southern District of New York

RENZER BELL, Plaintiff, v. JOHN CAREY et al., Defendants.

18-CV-2846 (PAE) (OTW)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

July 1, 2020

OPINION & ORDER

ONA T. WANG, United States Magistrate Judge:

I. Introduction

Plaintiff, proceeding pro se,¹ has moved for leave to amend his complaint. (ECF 55). The proposed amended complaint (the "PAC") seeks to add:

(1) a fifth and sixth cause of action for fraud in the inducement - alleging that Defendants² did not disclose:

(a) a civil RICO action against two of the defendants, and

(b) that defendants Dancy and Dancy Auto Group, LLC were delinquent in their taxes; and

(2) defendants Richard Caplan and John and Jane Does 1-50.³ (ECF 55 PAC ¶¶ 21, 167-210).

For the reasons discussed below, Plaintiff's request for leave to amend the complaint (ECF 55) is DENIED.

II. Background and Procedural History⁴

Plaintiff filed this action in March 2018, alleging breach of contract arising out of several 2014 purchase agreements with Defendants, who contracted to purchase Range Rovers from Plaintiff. (ECF 1). The parties executed three agreements in November 2013 and March 2014 for the purchase of two 2014 Range Rovers Autobiography Long Wheel Base. (ECF 1 ¶¶ 69, 70, 86-87, 102). Plaintiff alleges that the Defendants used Metro-Gem Leasing & Funding Corp. as their agent. (ECF 1 ¶ 96). Plaintiff alleges that despite the agreements and his timely intention to tender the vehicles, Defendants reneged on the agreements to purchase, and Plaintiff lost out on the consideration that would have been due to him. (ECF 1 ¶¶ 112-15). Plaintiff claims federal diversity jurisdiction. (ECF 1 ¶ 1). This action was referred to me for general pretrial supervision on April 6, 2019.⁵

Before filing the instant motion in November 2019, Plaintiff obtained Clerk's Certificates of Default in July 2019 against Defendants Tyrone Hill, Macky Dancy, John Carey, Macky Dancy Enterprises, LLC, Great Neck Auto Sale, LLC, Dancy Auto Group of Great Neck, LLC, and Dancy Auto Group, LLC. (ECF 42-48).

However, Plaintiff has yet to move for default. This Court first ordered that Plaintiff move for default by August 12, 2019. (ECF 49). In August 2019, this Court granted an extension to file the motion for default to October 3, 2019 and warned Plaintiff "that this case has beenmoving at a sluggish pace, and failure to file a motion for default by October 3 may result in the Court recommending dismissal for failure to prosecute." (ECF 51). This Court granted a third additional extension to November 4, 2019 for the motion due to disruptions caused by Hurricane Dorian. (ECF 54). On November 20, 2019, this Court issued an order for Plaintiff to show cause "why he has failed to comply with the Court's order to file a motion for default judgment." (ECF 57). Plaintiff responded, arguing that he determined that amending the Complaint, by adding new claims, would be his best remedy. (ECF 58).

Now, having had the certificates of default against the Defendants for almost a year, Plaintiff moves to amend the complaint instead of filing for default, which, if granted, would delay any recovery of damages.

The fifth proposed cause of action alleges that Defendants Dancy and Hill fraudulently induced Plaintiff into entering the purchase agreements by not disclosing that there was a civil RICO lawsuit against Dancy and Hill in Metro-Gem Leasing & Funding Corp. v. Dancy, No. 16-cv-5245 (SJF) (AYS) (E.D.N.Y.). (ECF 55 PAC ¶ 120 ("[P]rior to the signing of the subject contracts is the existence of criminal RICO activity engaged in by equity owners/principals Macky Dancy, and Tyrone Hill which if disclosed would cause a reasonable business person to seek alternate business counterparts.")).

The sixth proposed cause of action, also for fraudulent inducement, alleges that Dancy and Dancy Auto Group owed over $8 million in delinquent taxes, and whose tax liabilities also were not disclosed to Plaintiff. (ECF 55 PAC ¶¶ 118-19 ("[T]he collective tax liabilities of defendants Macky Dancy, and Dancy Auto Group, LLC represent material facts that areasonable business person would consider in determining whether Macky Dancy, and Dancy Auto Group, LLC are suitable business counterparts.").

For both the fifth and sixth proposed causes of action, Plaintiff claims that Defendants had a duty to disclose both the lawsuit and tax liabilities but did not do so, "in order to induce the Plaintiff to enter into the subject contracts, and to induce reliance on the defendants' fidelity, and intent to proceed to contract in good faith by the Plaintiff." (ECF 55 PAC ¶ 125). Plaintiff alleges he "reasonably relied upon the defendants' presentation of themselves as competent businessmen" and suffered damage as a result. (ECF 55 PAC ¶¶ 126-133).

Plaintiff also seeks to add fifty-one new defendants: (1) Richard Caplan, who is purportedly a member of Macky Dancy Enterprises, LLC, Dancy Auto Group, LLC, Great Neck Auto Sales, LLC, and Dancy Auto Group of Great Neck, LLC, and (2-51) John and Jane Does 1-50. (ECF 55 PAC ¶ 21 and case caption). Plaintiff does not specify who John and Jane Does 1-50 are, nor does Plaintiff allege any facts against them.

III. Discussion

A. Legal Standard

Rule 15 of the Federal Rules of Civil Procedure provides that courts should "freely give leave [to amend a pleading] when justice so requires." Fed. R. Civ. P. 15(a)(2). Applying that standard, the Second Circuit "has held that a Rule 15(a) motion should be denied only for such reasons as undue delay, bad faith, futility of the amendment, and perhaps most important, the resulting prejudice to the opposing party." Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404 F.3d 566, 603 (2d Cir. 2005) (per curiam) (internal quotation marks omitted). The party opposing a motion to amend bears the burden of establishing that amendment would be futile.See, e.g., Ouedraogo v. A-1 Int'l Courier Serv., Inc., No. 12-CV-5651 (AJN), 2013 WL 3466810, at *6 (S.D.N.Y. July 8, 2013). An amendment is not "futile" if it could withstand a motion to dismiss under Rule 12(b)(6). See, e.g., Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012). Put differently, a proposed claim is futile if, accepting the facts alleged by the party seeking amendment as true and construing them in the light most favorable to that party, it does not "plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

Courts are "ordinarily obligated to afford a special solicitude to pro se litigants." Tracy v. Freshwater, 623 F.3d 90, 92, 101 (2d Cir. 2010) (holding that a general withdrawal of the special status is "inappropriate absent a showing that the particular litigant has acquired the experience necessary to deal generally with all aspects of his case.").

B. Analysis

i. The claims against John and Jane Does 1-50 are futile

As a preliminary matter, the addition of defendants John and Jane Does 1-50 should be denied with prejudice. There are no claims or facts pleaded against these fifty individuals, and their names are only added to the case caption. See Ho Myung Moolsan Co., Ltd. v. Manitou Mineral Water, Inc., 665 F. Supp. 2d 239, 251 (S.D.N.Y. 2009) ("When a complaint names defendants in the caption but makes no substantive allegations against them in the body of the pleading, the complaint does not state a claim against these defendants."). This dismissal is with prejudice because further amendments are untimely and without good cause. See Holmes, 568 F.3d at 334-35 (requiring good cause for amendment once the time for amendments has passed). The action has been pending since March 2018, and Plaintiff has had certificates ofdefaults against the existing defendants since July 2019. Plaintiff has not shown good cause to add unspecified causes of action against fifty unnamed and unmentioned defendants.

ii. The claims against Richard Caplan are futile (and untimely)

The addition of Richard Caplan as a defendant is futile.⁶ Plaintiff added Caplan because he is purportedly an equity owner in the four limited liability company ("LLC") defendants - Macky Dancy Enterprises, LLC, Dancy Auto Group, LLC, Great Neck Auto Sales, LLC, and Dancy Auto Group of Great Neck, LLC (collectively, the "LLCs"). (ECF 55 PAC ¶¶ 16, 21). Under New York law, a member of an LLC is generally not liable on behalf of the LLC, unless Plaintiff can pierce the corporate veil. See Bd. of Managers of Beacon Tower Condo. v. 85 Adams St., LLC, 136 A.D.3d 680, 681 (2d Dep't 2016) ("[A] member of a limited liability company will not be held liable for the liabilities of the company solely by reason of being a member of the company or acting in such capacity or participating in the conduct of the business of the company."). In order to reach a member of the LLC, a Plaintiff must allege facts that show "(1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury." United States ex rel. Raffington v. Bon Secours Health Sys., Inc., 285 F. Supp. 3d 759, 769 (S.D.N.Y. 2018) (internal quotation marks omitted) (citing New York veil piercing law). "Proving these elements has been characterized as a 'heavy burden.'" Id.(quoting TNS Holdings, Inc. v. MKI Sec. Corp., 92 N.Y.2d 335, 338 (1998)); EED Holdings v. Palmer Johnson Acquisition Corp., 228 F.R.D. 508, 512-13 (S.D.N.Y. 2005) ("[T]he Second Circuit has stated that veil piercing is a narrow exception to the doctrine of limited liability for corporate entities, and that courts should permit veil-piercing only under 'extraordinary circumstances.'" (citing Murray v. Miner, 74 F.3d 402, 404 (2d Cir. 1996) (emphasis added)). A plaintiff seeking to pierce the corporate veil "must come forward with factual allegations as to both elements" and "allegations concerning the fraud or wrongful act element are subject to the...