Mavl Capital, Inc. v. Marine Transp. Logistics, Inc.
| Decision Date | 26 March 2018 |
| Docket Number | 13-cv-7110 (PKC) (RLM) |
| Parties | MAVL CAPITAL, INC. et al., Plaintiffs, v. MARINE TRANSPORT LOGISTICS, INC. et al., Defendants. |
| Court | U.S. District Court — Eastern District of New York |
This case has a long and complicated history.1 For purposes of the motions pending before the Court, the relevant portion of that history began on September 8, 2015, when Judge Townes issued a Memorandum & Order, dismissing Plaintiffs Maxim Ostrovskiy, MAVL Capital, Inc. and IAM & AL Group Inc.'s (collectively, "Plaintiffs") federal statutory claims under the Shipping Act of 1948, 46 U.S.C. § 40101, et seq., and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq. ("RICO"). (Dkts. 48, 72.)2 In her September 8, 2015 Order, Judge Townes also directed Plaintiffs to show cause why the remainder of their complaint, alleging state law and common law claims, should not be dismissed for lack of admiralty jurisdiction. (Dkt. 48 at 13.) Instead of responding directly to the show cause directive, Plaintiffs argued that "newly discovered evidence" warranted relief from Judge Townes's dismissal of their RICO claim, seeking to invoke subject matter jurisdiction under RICO rather than the Court's admiralty powers in the first instance. Construing Plaintiffs' response as seeking relief under Rule 60(b) of theFederal Rules of Civil Procedure ("Rule 60(b)"), Judge Townes directed the parties to re-brief these issues under that standard.
On February 14, 2017, Plaintiffs filed a Rule 60(b) motion, seeking, in effect, to vacate Judge Townes's dismissal of Plaintiffs' RICO claim and permitting Plaintiffs to amend their complaint to allege additional facts to revive that claim. Defendants Marine Transport Logistics, Inc. ("MTL"), MTL's director, Dimitry Alper, Aleksandr Solovyev, Royal Finance Group, Inc. ("RFG"), and Car Express & Import Inc. ("Car Express") (collectively, "Defendants") vigorously opposed that motion in several filings. (See Dkts. 57-59, 62, 64, 67, 69, 73, 76.)
These events prompted both sides to file cross-motions for sanctions. (See Dkts. 53, 55-57, 61, 67.) Judge Townes dismissed those cross-motions as premature. (Dkt. 66.) Defendants sought reconsideration of Judge Townes's dismissal of the sanctions motions, contending that they should be decided in the first instance because they were "not contingent on the merits" of the underlying case. (Dkt. 67.) Judge Townes held Defendants' reconsideration motion in abeyance pending further briefing. (Dkt. 71.)
For the reasons set forth herein, Plaintiffs' Rule 60(b) motion is DENIED. (Dkt. 72.) Defendants' Motion for Reconsideration (Dkt. 67) is GRANTED to the extent it seeks to revoke dismissal of the parties' cross-motions for sanctions, (Dkts. 55 & 61), which are both DENIED.
Plaintiffs purchase vehicles domestically and resell them to customers in Europe. As a group, Defendants finance the purchase of vehicles, store them, and ship them to foreign ports.Defendant MTL is a licensed Non-Vessel Operating Common Carrier ("NVOCC") and acts as a "logistics service company," handling various aspects of international shipping for its customers, and at times finances the purchase of the same vehicles it ships. (Compl., Dkt. 1, at ¶¶ 3, 34-38, 47-48, 53.) The Plaintiffs allege that remaining Defendants essentially act as MTL's agents. (Id. at ¶¶ 6-9, 21-27.) Defendant RFG issues invoices and collects payments owed for MTL's services. (Id. at ¶ 9.) Defendant Car Express is a licensed automobile dealer that purchases used and salvaged cars from auctions and dealerships on behalf of MTL customers and coordinates the purchase and shipment of those vehicles from the United States to various ports abroad. (See id. at ¶¶ 6-8.) Defendant Alper is the director of operations of MTL. (Id. at ¶ 24.) Defendant Solovyev is a principal of both RFG and Car Express. (Id. at ¶ 18.)
Between January and August of 2013, Plaintiffs contracted with MTL to ship vehicles abroad and, as a condition of that agreement, agreed to pay certain commissions, fees, and financing costs to RFG for services provided by both MTL and Car Express. (Compl., Dkt. 1 at ¶¶ 45-51.) In the summer of 2013, the parties' relationship soured after Plaintiffs worked out a more favorable arrangement with another shipping company and notified Defendants of their intent to wind down their relationship. (Id. at ¶¶ 62-70.) Defendants, at that time, still had several of Plaintiffs' vehicles in their possession, including a 2006 Mercedes SL65 ("Mercedes") and a 2011 Porsche Panamera ("Porsche"), both of which Plaintiffs had previously retained Defendants to store, along with other property, until shipment by a third party.
When Plaintiffs demanded the return of that property, Plaintiffs alleged that the Defendants refused under the pretext of being owed payments to which they had no right under the parties' operative agreements. (Id. at ¶¶ 66-68.) For example, Plaintiffs allege that Defendants demandedinflated storage fees to which Plaintiffs had never agreed. (See id. at ¶ 66.)4 Specifically, Defendants began "invoicing Plaintiffs for amounts never agreed upon, such as commissions, and in some cases, double-billing for vehicles that were financed but already paid in full." (Compl., Dkt. 1, at ¶ 66.) Ultimately, Plaintiffs allege that when Plaintiffs refused to pay, Defendants obtained title to some of the property by asserting maritime liens and shipped some of the property overseas, without proper title, including three of Plaintiffs' motorcycles, as well as the Mercedes and Porsche. (See id. at ¶¶ 83, 86-87, 91-92, 97-98, 103-04, 108-27.)
Plaintiffs commenced this action on December 12, 2013, asserting claims under the Shipping Act, RICO, and state law. (See id. at ¶¶ 29-30, 128-79.) Their allegations, as relevant here, asserted that Defendants held their property hostage under an extortionate scheme, whereby Defendants claimed to be owed fees they were not due and, based on non-payment of those fees, secured false title to Plaintiffs' property or simply held it by force. (See generally id. at ¶¶ 62, 65, 67-70, 119.) More generally, Plaintiffs alleged that they "believed and therefore averred that [Defendants] are criminals who lure customers into a business relationship on purportedly favorable terms" before "orchestrat[ing] . . . extra-judicial seizure of goods and demand[ing] a ransom under the threat that the seized goods will be sold off without regard for the value which would cause significant financial damage to its victims." (Id. ¶¶ 69-70.)
On September 8, 2015, Judge Townes granted Defendants' Motion for Judgment on the Pleadings in part, dismissing each of the federal claims and declining to exercise discretionarysupplemental jurisdiction over the remaining state claims. With regard to Plaintiffs' RICO claim, Judge Townes held that Plaintiffs had failed to allege a "pattern of racketeering" because the facts they complained of constituted only one predicate act (of extortion) and did not establish the "continuity" needed to state a claim under section 1962(c) of the RICO statute. (Dkt. 48, at 8.) Judge Townes rejected Plaintiffs' efforts to construe their allegations as presenting multiple acts of extortion and thereby "artificially fragment[ ] a singular act into multiple acts simply to invoke RICO" jurisdiction. Id. (quoting Schlaifer Nance & Co. v. Estate of Warhol, 119 F.3d 91, 98 (2d Cir. 1997)). However, while Judge Townes dismissed each of Plaintiffs' federal statutory claims, it noted that Plaintiffs had invoked the Court's admiralty jurisdiction without an intelligible basis and ordered Plaintiffs to show cause as to why the Court should not dismiss the Complaint in its entirety for lack of jurisdiction over any potentially remaining claims. (Id. at 11-12.)
In response to the Court's directive to show cause, Plaintiffs attempted to revive their RICO claim and invoke federal jurisdiction thereunder, rather than under the Court's admiralty powers in the first instance. In their April 2016 show-cause submission, Plaintiffs argued that "newly discovered evidence" would enable them to state a claim under RICO. (Dkt. 53.) This "new evidence" was offered principally in the form of an affidavit from Alexander Safonov, owner of several businesses involved in selling, repairing, and delivering vehicles overseas—Crocus Investments, LLC and Crocus, FZE (collectively, "Crocus entities"), and Middle East Asia Alfa FZE ("MEAA").5 In his affidavit, Safonov provides information relating to Plaintiffs' Mercedes;specifically, Safonov states, inter alia, that: (i) MEAA never purchased the Mercedes from Defendants, but instead contracted to receive, repair, and clear it through customs in Dubai as a salvage vehicle for Defendants, (ii) Defendants still owe MEAA $50,000 for fees incurred from importing and repairing the Mercedes, and (iii) the December 2014 $4,950 wire transfer was in payment for boat trailers, not the Mercedes. (See Safonov Aff., Dkt. 53-9, at 1-4.) Plaintiffs also claimed "new evidence" in the form of Defendants having made statements in the FMC proceeding about the December 2014 wire transfer that contradicted their representations in this case, which Plaintiffs characterized as newly discovered "fraud".6
Relying primarily on Safonov's affidavit, Plaintiffs asserted that this "new evidence" established that Defendants had actively concealed information "which would have significantly altered the course of this litigation", thereby "prejudicing" Plaintiffs' ability to "support a viable cause of action under the RICO Statute." (Dkt. 53, at 7-8.) Plaintiffs requested leave to amend their complaint to add new plaintiffs and facts, and to re-open discovery. (Id. at 4-13.) Plaintiffsalso...
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