Jacobson v. Cooper, 1179

Citation882 F.2d 717
Decision Date18 August 1989
Docket NumberNo. 1179,D,1179
PartiesRICO Bus.Disp.Guide 7299 Howard JACOBSON, Plaintiff-Appellant, v. Sam COOPER and David Jacobson, Defendants-Appellees. ocket 89-7217.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Charles C. Luetke, Peekskill, N.Y., for plaintiff-appellant.

Isaac Anolic, New York City (Isaac Anolic, P.C., New York City), for defendant-appellee Sam Cooper.

David Jacobson, defendant-appellee pro se.

Before NEWMAN and MINER, Circuit Judges, and WARD, District Judge. *

MINER, Circuit Judge:

This is an appeal from a judgment entered in the United States District Court for the Southern District of New York (Keenan, J.) dismissing the amended complaint of plaintiff-appellant Howard Jacobson ("Jacobson") for failure to state a claim We find that Jacobson, although awkward in his characterization of the RICO enterprise, alleged a RICO enterprise distinct from the individual defendants. Furthermore, a "pattern" of racketeering activity, a necessary element of a RICO action, also was alleged. Accordingly, we reverse the judgment of the district court and remand for reinstatement of the amended complaint.

                upon which relief can be granted. 1   See Fed.R.Civ.P. 12(b)(6).  In his amended complaint, Jacobson alleged, inter alia, that his son, David Jacobson ("David"), and Sam Cooper ("Cooper"), the defendants-appellees in this action, violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1962(a), (b) & (d) (1982 & Supp. V 1987), by engaging in a scheme to appropriate Jacobson's real estate enterprise.  The district court dismissed the action, finding that the amended complaint did not describe an enterprise distinct from the individual defendants, as the court held was required under RICO
                
BACKGROUND

Because the Rule 12(b)(6) motion here was granted, the facts alleged in the amended complaint are taken as true for purposes of this appeal. See Procter & Gamble Co. v. Big Apple Indus. Bldg., Inc., 879 F.2d 10, 14 (2d Cir.1989). According to the amended complaint, Jacobson formed an "enterprise" in 1972 for the purpose of investing in and developing real estate properties. In 1977 he "took" his son David "into his ... enterprise" in some unspecified manner. From time to time prior to 1980, Cooper, once a partner with Jacobson in a brownstone renovation project, loaned money to Jacobson for various real estate purchases. Jacobson was imprisoned in 1980 on a conviction for a murder unrelated to his real estate endeavors. Because of his confinement, he turned over control of his enterprise to Cooper and David, who promised "that they would act as his fiduciaries."

Instead of preserving Jacobson's interest in the business, the defendants set about to control and wrongfully appropriate his "real estate enterprise and properties." Pursuant to their scheme, defendants sold certain real estate properties owned by Jacobson, and purchased other properties with the proceeds of the sales. David and Cooper falsely represented to Jacobson that he owned fifty percent of the properties so acquired. Defendants also began cooperative apartment conversions on the purchased properties, without identifying Jacobson in the Offering Statements as an owner, and did not account to Jacobson for any of the resulting income.

In addition, Cooper borrowed money from Jacobson's former wife to purchase or convert into a cooperative apartment building one of the properties in which Jacobson claims an interest, and falsely promised that she would be repaid with interest. As well, Jacobson complains that Cooper manipulated and controlled David by lending David money to support a drug addiction and that Cooper charged David unlawful interest on a $125,000 loan. Also, Cooper acquired liens and security interests on enterprise properties that were in David's name and then improperly foreclosed on those properties.

After repeatedly demanding and not receiving from defendants an accounting of the affairs of the enterprise, Jacobson commenced this suit. The amended complaint encompasses five causes of action, three under RICO, one for breach of fiduciary duty, and one for conversion. In the RICO claims, Jacobson asserts that the defendants (i) "acquired or maintained, directly or indirectly, interest in or control over Upon Cooper's motion, the district court dismissed the RICO claims for failure to state a claim upon which relief can be granted, see Fed.R.Civ.P. 12(b)(6); the court held that the amended complaint did not allege the existence of an enterprise distinct from the individual defendants. The court declined jurisdiction over the remaining pendent state claims (breach of fiduciary duty and conversion), and the entire amended complaint consequently was dismissed. This appeal followed.

plaintiff's real estate enterprise ... through a pattern of racketeering activity," see 18 U.S.C. Sec. 1962(b); (ii) "received income derived directly from a pattern of racketeering activity and through the collection of unlawful debts in which defendants have participated as a principal to use and invest said income in the acquisition of plaintiff's enterprise," see id. Sec. 1962(a); and (iii) "conspired to violate 18 U.S.C. Sec. 1962(b) to obtain control over plaintiff's enterprise," see id. Sec. 1962(d). Alleged as RICO predicate acts are instances of mail and wire fraud, see id. Secs. 1341 & 1343; extortion, see id. Sec. 1951; larceny, see N.Y.Penal Law Sec. 155.05(2)(d) (McKinney 1988); offering false instruments for filing, see id. Sec. 175.35; and usury, see id. Sec. 190.40. These acts are said to comprise a pattern of racketeering activity. See 18 U.S.C. Sec. 1961(5).

DISCUSSION

RICO proscribes four types of conduct: using or investing income derived from a pattern of racketeering to acquire an enterprise engaged in or affecting commerce, 18 U.S.C. Sec. 1962(a); acquiring an interest in or control of such an enterprise through a pattern of racketeering activity, id. Sec. 1962(b); conducting the affairs of an enterprise through a pattern of racketeering activity, id. Sec. 1962(c); and conspiring to commit any of the aforementioned violations, id. Sec. 1962(d). "Enterprise" is defined in the statute as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." Id. Sec. 1961(4).

We have held that for a claim brought under section 1962(c) to be viable, the RICO "person" engaged in the proscribed conduct, see id. Sec. 1961(3), and the "enterprise" must be different from one another, i.e. they must be separate entities. See Bennett v. United States Trust Co. of New York, 770 F.2d 308, 315 (2d Cir.1985), cert. denied, 474 U.S. 1058, 106 S.Ct. 800, 88 L.Ed.2d 776 (1986). "[U]nder 1962(c) a corporate entity may not be simultaneously the 'enterprise' and the 'person' who conducts the affairs of the enterprise through a pattern of racketeering activity." Id. Assuming that the holding of Bennett was to apply to claims brought under subsections (a), (b) or (d) of section 1962--the subsections implicated in this action--see Petro-Tech, Inc. v. Western Co. of N. Am., 824 F.2d 1349, 1360-61 (3d Cir.1987); Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1396-98 (9th Cir.1986); Schofield v. First Commodity Corp. of Boston, 793 F.2d 28, 31-32 (1st Cir.1986); Masi v. Ford City Bank & Trust Co., 779 F.2d 397, 401-02 (7th Cir.1985). But see Rush v. Oppenheimer & Co., 628 F.Supp. 1188, 1196-97 (S.D.N.Y.1985), Jacobson adequately has pleaded RICO persons distinct from a RICO enterprise.

The enterprise described in the amended complaint is "plaintiff's real estate enterprise," a legitimate business formed by plaintiff for real estate investment and development. The continuing existence of that business is assumed in the various charges of wrongdoing attributed to the defendants throughout the amended complaint. See Procter and Gamble Co., 879 F.2d at 18 (complaint adequate if it "provide[s] allegations sufficient to infer that an enterprise exists"). Although Jacobson apparently conferred upon David some interest in the business, the enterprise remained a separate entity throughout the entire period beginning with its formation and continuing to the time of the commencement of the action. It is clearly alleged that Jacobson voluntarily relinquished...

To continue reading

Request your trial
72 cases
  • Aarp v. American Family Prepaid Legal Corp., Inc., Case No. 1:07cv202.
    • United States
    • U.S. District Court — Middle District of North Carolina
    • 25 February 2009
    ...have been sustained under section 1962(c) where there is only partial overlap between the person and the enterprise, Jacobson v. Cooper, 882 F.2d 717, 720 (2d Cir.1989), and where the defendant may be a RICO person yet one of a number of members of the alleged enterprise, Cullen v. Margiott......
  • World Wrestling Entertainment v. Jakks Pacific
    • United States
    • U.S. District Court — Southern District of New York
    • 21 December 2007
    ...2893) (finding predicate acts unrelated where the only connection was that they involved the same parties); accord Jacobson v. Cooper, 882 F.2d 717, 720 (2d Cir.1989) (finding separate acts related where they involved the same alleged purpose, victim, and effect). "Although closed-ended con......
  • Brewer v. Village of Old Field
    • United States
    • U.S. District Court — Eastern District of New York
    • 31 March 2004
    ...1962(c) claim may be sustained where there is only a partial overlap between the RICO person and the RICO enterprise. Jacobson v. Cooper, 882 F.2d 717, 720 (2d Cir.1989); see also Riverwoods Chappaqua Corp., 30 F.3d at 344. Thus, because a defendant may be a "RICO `person' and one of a numb......
  • Beard v. Worldwide Mortgage Corp.
    • United States
    • U.S. District Court — Western District of Tennessee
    • 3 February 2005
    ...(3d Cir.1991) (collecting cases where racketeering activities ranged from four-and-a-half years to seventeen years); Jacobson v. Cooper, 882 F.2d 717, 720 (2d Cir.1989) (concluding that predicate acts occurring over an eight year time span satisfied continuity requirement)). The Echols Cour......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT