Center Cadillac v. Bank Leumi Trust Co., No. 91 Civ. 7776 (CBM).

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtMOTLEY
Citation808 F. Supp. 213
Docket NumberNo. 91 Civ. 7776 (CBM).
Decision Date13 April 1992
PartiesCENTER CADILLAC, INC., Center Cadillac Leasing, Inc., Irwin Steinhauser, Elaine Steinhauser, Michael Steinhauser, Marleen Steinhauser, Marilyn Steinhauser, Josh Steinhauser as Administrator of the Estate of Marvin Steinhauser, James Sandler, and Rosalyn Sandler, Plaintiffs, v. BANK LEUMI TRUST COMPANY OF NEW YORK, Martin A. Simon, Eliot Robinson, Leonard Levine, Eftihia Piper, Vincent Garvey and Rachel Bergsohn, Defendants.

808 F. Supp. 213

CENTER CADILLAC, INC., Center Cadillac Leasing, Inc., Irwin Steinhauser, Elaine Steinhauser, Michael Steinhauser, Marleen Steinhauser, Marilyn Steinhauser, Josh Steinhauser as Administrator of the Estate of Marvin Steinhauser, James Sandler, and Rosalyn Sandler, Plaintiffs,
v.
BANK LEUMI TRUST COMPANY OF NEW YORK, Martin A. Simon, Eliot Robinson, Leonard Levine, Eftihia Piper, Vincent Garvey and Rachel Bergsohn, Defendants.

No. 91 Civ. 7776 (CBM).

United States District Court, S.D. New York.

April 13, 1992.


808 F. Supp. 214
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808 F. Supp. 215
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Gold & Wachtel, Randy Steinhauser, New York City, for plaintiffs
808 F. Supp. 219

Parker Chapin Flattau & Klimpl, Stephen Rinehart, New York City, for defendants.

MOTLEY, District Judge.

This action was commenced in United States District Court for the District of New Jersey. The complaint alleges violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962, and pendant state law claims for fraud and breach of contract. Defendants moved to dismiss the complaint for failure to state a claim or, in the alternative, to transfer venue pursuant to 28 U.S.C. § 1404(a). Judge Nicholas H. Politan, United States District Judge, District of New Jersey, transferred the case to the Southern District of New York by order dated October 28, 1991. Defendants' motion to dismiss is now before the Court.

In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court may not dismiss the complaint unless it appears beyond a doubt that Plaintiffs can prove no set of facts upon which relief may be granted. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). For purposes of this motion, the court accepts the facts alleged in the complaint as true.

STATEMENT OF FACTS

During the times relevant to the complaint, Plaintiffs Irwin Steinhauser, Michael Steinhauser, Marvin Steinhauser and James Sandler (collectively, the "Officers") were officers of Center Cadillac and Center Leasing, two corporations authorized to do business in the state of New York. Plaintiffs in this action, Center Cadillac, Center Leasing, the Officers,1 and the Officers' spouses, brought suit against Defendants Bank Leumi Trust Company of New York ("Bank Leumi") and certain officers of Bank Leumi. Defendant Martin Simon was the Chief lending officer of Bank Leumi from 1979 to 1986. Defendants Eliot Robinson and Leonard Levine were senior lending officers at Bank Leumi until 1986, and Defendant Eftihia Piper was an officer of Bank Leumi until 1986. Simon left Bank Leumi in 1986 to create the First New York Bank for Business ("First New York Bank"), which is not a named Defendant. At approximately the same time, Robinson, Levine and Piper also left Bank Leumi and joined First New York Bank. Defendants Vincent Garvey and Rachel Bergsohn were officers at Bank Leumi at all relevant times. The thrust of the complaint is that Defendants, acting as Plaintiffs' bankers, engaged in a series of illegal and fraudulent actions which deprived them of their money and property and ultimately resulted in their financial ruin.

Plaintiffs' tortured relationship with Defendants spans a period of nearly fifteen years and involves a complicated series of transactions. In 1975, Plaintiffs entered into an agreement with American Bank & Trust Company to obtain a $475,000 mortgage loan to purchase a cadillac dealership. The terms of the loan included specified monthly payments, two large lump-sum payments, and a rate of interest at 1.5% above the prime rate. Plaintiffs made regular payments in accordance with the agreement. In 1977, Bank Leumi acquired American Bank and became Plaintiffs' obligee and mortgagee. At that time, a lump sum payment of $125,000, in addition to regular monthly payments, remained due. From 1977 to August of 1979, Bank Leumi made further loans to Center Cadillac and the Officers totaling approximately $750,000 to finance the operations of Center Cadillac, in addition to other unsecured loans to finance Plaintiffs' other business holdings. All of the loans were made pursuant to oral agreements whereby all additional loans would be repaid at the same interest rate that the Officers had agreed to pay American Bank, 1.5% above the prime rate.

In July of 1979, the Officers requested an additional loan of $360,000 for increased business costs. At the request of Robinson, Garvey, Levine and Simon, the Officers prepared and sent to Levine a letter

808 F. Supp. 220
delineating the nature and purposes of the requested funds. On August 1, 1979, Simon, Robinson, Garvey, and Levine told Plaintiffs that in order to receive the requested funds, they must appear at the offices of Bank Leumi's counsel, Parker Chapin Flattau & Klimpl ("Parker Chapin"), to execute the necessary documents. Plaintiffs appeared at Parker Chapin as requested, expecting to receive the requested $360,000 loan at the same interest rate as the prior loans based on the representations made by Defendants' in July, 1979. Garvey and Levine were present at the Parker Chapin meeting. Much to their surprise, Plaintiffs were told that in order to receive the $360,000, each Plaintiff must execute: (1) certain documents reflecting an agreement for Bank Leumi to tender $1.1 million to Plaintiffs, with no specified repayment or interest terms; (2) certain documents referring to nonexistent agreements for material terms, including repayment and interest provisions; (3) signature pages, unattached to any document, but which affirmed the signor's consent to the terms of the "attached" document; and (4) numerous guarantees making each Plaintiff personally liable for all obligations incurred in the above documents (collectively, the "Documents")

Plaintiffs refused to sign the Documents and demanded the opportunity to have an attorney present. Garvey and Levine refused, ignoring their counsel's advice to let Plaintiffs consult an attorney. Garvey, in the presence of Levine, told Plaintiffs that the Documents were only a formality and that previous oral agreements would still govern the terms of all of the loans. Plaintiffs continued to refuse to execute the documents. Garvey, after speaking to Simon on the phone, then told Plaintiffs that if they did not sign the Documents, Bank Leumi would immediately close all accounts that financed Plaintiffs' business operations. Plaintiffs, fearing that Defendants would act on their threats and force Plaintiffs out of business, signed the documents. Garvey and Levine again reassured Plaintiffs that their previous oral agreements would control.

Immediately after the meeting at Parker Chapin, Garvey suggested to the Officers that they go to a nearby penthouse suite to meet with a Mr. Zohar who might help them reduce their indebtedness to Bank Leumi. The Officers went with Garvey to meet Zohar, who offered $500,000 for one of Plaintiffs' shopping centers which was then valued at $2 million. Plaintiffs refused Zohar's offer. Zohar then offered Plaintiffs a long term usurious loan. The Officers rejected the offer and left the meeting.

Over the next several months, the Officers received by mail various of the Documents with material terms filled in where they had previously been blank, and other documents, not seen before by Plaintiffs, to which Plaintiffs' signatures had been affixed. These documents obligated Plaintiffs to make exorbitant monthly and lump sum payments. Defendants warned Plaintiffs that failure to make the required payments would result in foreclosure on all of Plaintiffs' real estate holdings and refusal to honor any check drawn on any Bank Leumi account. Over the next several years, Plaintiffs were forced to sell many of their assets at below market value, including two shopping centers, two personal homes, and the businesses of Center Leasing and Center Cadillac in order to comply with Defendants' demands.

On three known occasions during 1979 and 1980, Defendants debited a total amount of over $29,000 from Center Cadillac's account. Defendants did not obtain Plaintiffs' consent for these debits and did not send written statements documenting the debits. The two largest debits were ostensibly for legal services rendered by Parker Chapin on behalf of Defendants, and Defendants refused to give any explanation for the third amount debited. Plaintiffs believe that unauthorized debits may have been made on other occasions as well, but are unable to determine the existence of such debits due to Defendants' refusal to provide Plaintiffs with regular written statements.

Plaintiffs claim that Defendants used their financial leverage to extort money

808 F. Supp. 221
and property from them on a number of occasions. In 1980, Simon used his influence over Plaintiffs' loan accounts to force Center Cadillac to sell him a car for $2,000 below cost, and without payment for taxes and fees. Also in 1980, James Sandler learned through a friend, who had noticed an advertisement for a yacht for sale, that Defendants had advertised, negotiated, and effected the sale of a yacht owned by Center Cadillac. When the Officers protested, they were forced, under threat of foreclosure, to execute all documents necessary to effectuate the sale. In November of 1980, Plaintiffs liquidated Center Cadillac and sold the company's assets in order to comply with the terms set forth in the Documents

After Center Cadillac was liquidated, Center Leasing assumed all remaining obligations to Bank Leumi and continued to make regular payments on the loans. In 1982, Plaintiffs were forced to sell Center Leasing and liquidate its assets in order to meet their repayment obligations under the Documents. Simon then demanded that the entire outstanding debt be repaid immediately, and began foreclosure...

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77 practice notes
  • Dietrich v. Bauer, No. 95 Civ. 7051(RWS).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • March 4, 1999
    ...for the purpose of executing some `scheme or artifice.'" Id. (citing 18 U.S.C. §§ 1341, 1343; Center Cadillac v. Bank Leumi Trust Co., 808 F.Supp. 213, 229 (S.D.N.Y.1992)). The court explained that "[t]he only scheme or artifice Defendants are alleged to have engaged in involves Defendants'......
  • Rini v. Zwirn, No. CV 93-2968 (MLO).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • May 5, 1995
    ...conduct is a method of doing business regularly employed by Defendants." Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, 808 F.Supp. 213, 234 (S.D.N.Y.1992). Mere speculation will not suffice; the "threat of continuity" must appear likely. Id. "The absence of continuity or its th......
  • Mathon v. Feldstein, No. 03-CV-2898 (ADS)(ETB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • February 17, 2004
    ...on mail and wire fraud, must be plead with particularity under Rule 9(b), Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, 808 F.Supp. 213, 228 (S.D.N.Y.1992), Mathon's reliance on the predicate acts of mail and wire fraud must b. Extortion A plaintiff claiming a Hobbs Act violati......
  • In re Integrated Resources Real Estate, MDL No. 897. Misc. No. 21-61 (RWS).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • April 4, 1994
    ...(Defendants' alleged predicate acts occurred at moment Plaintiff purchased securities.). Center Cadillac Inc. v. Bank Leumi Trust Co., 808 F.Supp. 213, 225 (S.D.N.Y.1992) (barring RICO claims on injuries which occurred or should have been discovered more than four years in the past); But se......
  • Request a trial to view additional results
77 cases
  • Dietrich v. Bauer, No. 95 Civ. 7051(RWS).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • March 4, 1999
    ...for the purpose of executing some `scheme or artifice.'" Id. (citing 18 U.S.C. §§ 1341, 1343; Center Cadillac v. Bank Leumi Trust Co., 808 F.Supp. 213, 229 (S.D.N.Y.1992)). The court explained that "[t]he only scheme or artifice Defendants are alleged to have engaged in involves Defendants'......
  • Rini v. Zwirn, No. CV 93-2968 (MLO).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • May 5, 1995
    ...conduct is a method of doing business regularly employed by Defendants." Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, 808 F.Supp. 213, 234 (S.D.N.Y.1992). Mere speculation will not suffice; the "threat of continuity" must appear likely. Id. "The absence of continuity or its th......
  • Mathon v. Feldstein, No. 03-CV-2898 (ADS)(ETB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • February 17, 2004
    ...on mail and wire fraud, must be plead with particularity under Rule 9(b), Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, 808 F.Supp. 213, 228 (S.D.N.Y.1992), Mathon's reliance on the predicate acts of mail and wire fraud must b. Extortion A plaintiff claiming a Hobbs Act violati......
  • In re Integrated Resources Real Estate, MDL No. 897. Misc. No. 21-61 (RWS).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • April 4, 1994
    ...(Defendants' alleged predicate acts occurred at moment Plaintiff purchased securities.). Center Cadillac Inc. v. Bank Leumi Trust Co., 808 F.Supp. 213, 225 (S.D.N.Y.1992) (barring RICO claims on injuries which occurred or should have been discovered more than four years in the past); But se......
  • Request a trial to view additional results

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