McCormack Intern. Corp. v. Vohra

• Decision Date: 21 July 1994
• Docket Number: No. 91 Civ. 3638 (DNE).,91 Civ. 3638 (DNE).
• Citation: 858 F. Supp. 415
• Parties: McCORMACK INTERNATIONAL CORP., Plaintiff, v. Satinder VOHRA, Sunil Vohra a/k/a "Sunny" Vohra, Sunil Bhasin a/k/a "Lucky" Bhasin, Walji Raghvani, William Capparelli, the Sarova Group, Empat Enterprises, Inc., M.R.N. & S., Inc., M.D. Contractors (N.Y.) Corp., Service Plus Demolition, Inc., OD & P, Inc., 304 East 42nd Street Corp., Bank of Tokyo Trust Co., Hong Kong Bank, Ltd., and James Capel Bankers, Ltd., Defendants.
• Court: U.S. District Court — Southern District of New York

858 F. Supp. 415

McCORMACK INTERNATIONAL CORP., Plaintiff, v. Satinder VOHRA, Sunil Vohra a/k/a "Sunny" Vohra, Sunil Bhasin a/k/a "Lucky" Bhasin, Walji Raghvani, William Capparelli, the Sarova Group, Empat Enterprises, Inc., M.R.N. & S., Inc., M.D. Contractors (N.Y.) Corp., Service Plus Demolition, Inc., OD & P, Inc., 304 East 42nd Street Corp., Bank of Tokyo Trust Co., Hong Kong Bank, Ltd., and James Capel Bankers, Ltd., Defendants.

No. 91 Civ. 3638 (DNE).

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

July 21, 1994.

Ernest H. Hammer, New York City, for plaintiff McCormack Intern. Corp.

Rosen, Preminger & Bloom, New York City (David S. Preminger, Helen J. Lukievics, of counsel), for defendants Satinder Vohra, Sanjit Vohra, Sunil Bhasin, Walji Raghvani, The Sarova Group, Empat Enterprises, Inc., M.R.N. & S., Inc., and M.D. Contractors (N.Y.) Corp.

Judd Burstein, P.C., New York City, for defendant Service Plus Demolition, Inc.

Jay Goldberg, P.C., New York City, for defendant William Capparelli.

OPINION & ORDER

EDELSTEIN, District Judge:

This action was brought by plaintiff McCormack International Corp. pursuant to the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968 (1988). Plaintiff's complaint also includes supplemental state law claims to foreclose a lien, impress a trust, and for conversion. Defendants Satinder Vohra, Sunil Vohra,¹ Sunil Bhasin, Walji Raghvani, the Sarova Group, Empat Enterprises, Inc., M.R.N. & S., Inc., and M.D. Contractors (N.Y.) Corp. move to dismiss the complaint, pursuant to Federal Rule of Civil Procedure ("Rule") 9(b) and Rule 12(b)(6), and also move for the imposition of sanctions, pursuant to Rule 11, 28 U.S.C. § 1927, and this Court's inherent power. Defendants Service Plus Demolition, Inc., and William Capparelli filed a separate motion to dismiss the complaint. These motions were referred to Magistrate Judge Leonard Bernikow for report and recommendation. In his Report and Recommendation, Magistrate Bernikow recommended that the motions to dismiss be granted and that the motion for the imposition of sanctions be denied. In a Supplemental Report and Recommendation,² Magistrate Bernikow recommended that leave to amend the complaint be denied. For the reasons discussed below, this Court adopts both the original and the supplemental Report and Recommendation in their entirety.

BACKGROUND

The following account of the background of this litigation is derived from the complaint, as well as the parties' motion papers. As noted below, defendants³ dispute many of the facts alleged in the complaint. For the purpose of evaluating defendants' motions to dismiss this action, however, the Court treats the facts alleged in the complaint as true. See Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 1561, 118 L.Ed.2d 208 (1992).

This action arises out of a contract under which plaintiff McCormack International Corp. ("McCormack" or "plaintiff") acted as contractor for the renovation of the Tudor Hotel ("the Hotel"), located in Manhattan. McCormack is a construction contractor that was founded for the purpose of undertaking the Tudor Hotel renovations.

There are several defendants in this case. M.R.N. & S., Inc. ("MRN & S") is the owner of the ground lease of the Tudor Hotel. Empat Enterprises, Inc. ("Empat") is the manager and operator of the Hotel, as well as the owner of the furniture, fixtures, equipment, and other personalty of the Hotel. The complaint alleges that the Sarova Group is the parent company of MRN & S and Empat. M.D. Contractors (N.Y.) Corporation ("M.D. Contractors") is a general construction contractor controlled by MRN & S and Empat. According to the complaint, Satinder Vohra is the president of the Sarova Group; Sunil (Sanjit) Vohra is the president of MRN & S and Empat, and an officer of the Sarova Group; Sunil Bhasin is the vice-president and secretary of MRN & S and Empat, and an officer of the Sarova Group; and Walji Raghvani is the president of M.D. Contractors. The complaint groups together all of the above defendants save for M.D. Contractors and Raghvani, and refers to these defendants collectively as "the Sarova defendants." Defendants object to this grouping, averring that the Sarova Group is merely an affiliation of independent hotels that use the name "Sarova Group" for marketing purposes only, and that plaintiff's conglomeration of these defendants in the complaint is misleading. For the purpose of reviewing defendants' motions to dismiss, and for clarity, the Court will adopt plaintiff's terminology.

Service Plus Demolition, Inc. ("Service Plus") is engaged in the business of demolition and waste removal. Plaintiff alleges that Service Plus is under the direction and control of defendant William Capparelli ("Capparelli"), whose son Carmine Capparelli is president of the company. OD & P, Inc. ("OD & P") is engaged in the business of general contracting and construction management, and is alleged to be also under the control of Capparelli. The complaint avers that Capparelli is a member of the Bonanno organized crime family who, either directly or through his associates, controls Service Plus and OD & P; the complaint refers to these three defendants collectively as the "Organized Crime Defendants."

Defendants Bank of Tokyo Trust Co., Hong Kong Bank, Ltd., and James Capel Bankers, Ltd. are financial institutions that are either mortgagees of the Tudor Hotel or have a secured interest in the Hotel. These defendants have been dismissed by stipulation and are no longer involved in this action. 304 East 42nd Street Corp. is alleged to be the owner of the real property on which the Tudor Hotel is situated.

In August 1989, defendant MRN & S purchased the net lease for the Tudor Hotel, while defendant Empat purchased the furniture, fixtures, equipment, and personalty of the Hotel. MRN & S then entered into an agreement with Empat whereby Empat was to manage the Hotel. The complaint alleges that, around this time, the Sarova defendants developed plans for an extensive renovation of the Hotel, and negotiated an agreement with plaintiff to have McCormack act as the prime contractor for those renovations. McCormack commenced work on the Hotel in August 1989.

On or around May 9, 1990, McCormack signed a second agreement whereby M.D. Contractors became the general contractor and McCormack became a subcontractor on the renovations; the complaint alleges that this was a mere formality undertaken for "financing purposes" only, and that McCormack remained the real general contractor on the job.

The original budget for the renovations was approximately nineteen million dollars. This subsequently was increased to approximately thirty-five million dollars as a result of requests by the Sarova defendants for additional renovations. Plaintiff avers that McCormack rendered full and timely performance of the renovation work and related services under the terms of the contract.

According to the complaint, the Sarova defendants devised a scheme to replace McCormack as general contractor mid-way through the project and to bring in a substitute that could finish the job at a reduced cost. This scheme was allegedly implemented in two phases. During the first phase, of the series of checks issued over a period of several months by the Sarova defendants to cover installment payments due McCormack under the terms of the contract, six were returned for insufficient funds. The complaint alleges that the Sarova defendants intentionally provided McCormack with "bad checks" in order to induce McCormack to incur expenses that it would be unable to cover, forcing plaintiff to withdraw from the project.⁴ The complaint further alleges that these checks were issued after McCormack had completed the bulk of the renovations, including work that required McCormack's special expertise, such that the Sarova defendants would receive the benefit of this work without having to pay for it.

According to the complaint, when these initial attempts to induce McCormack to withdraw from the project proved unsuccessful, the Sarova defendants enlisted the aid of the Organized Crime Defendants to help force McCormack off the job. The complaint alleges that during this second phase of the Sarova defendants' alleged scheme, defendant Capparelli undertook a pattern of extortionate acts in order to intimidate McCormack employees and ultimately induce McCormack to withdraw from the Tudor Hotel renovations. It should be noted that Service Plus, represented by Capparelli, was originally hired by plaintiff to undertake certain demolition work at the Hotel, as well as to assist plaintiff in avoiding "labor troubles." Nonetheless, the complaint alleges, it was the Sarova defendants who subsequently enlisted the aid of Capparelli in furtherance of their alleged conspiracy.

The complaint alleges that in February 1991, after repeated attempts to remove McCormack from the project through the issuance of bad checks, the Sarova defendants conspired with Capparelli to remove plaintiff from the job by means of threats, violence, and extortion and to substitute defendant OD & P as general contractor.⁵ According to the complaint, Capparelli had made it known to both plaintiff and the Sarova defendants that he was a member of the Mafia. The Sarova defendants took advantage of Capparelli's particular "skills" to remove plaintiff from the project and invited Capparelli to engineer the substitution of his own company for McCormack.

According to the complaint, Capparelli immediately commenced a campaign of terror. On March 24, 1991 Capparelli met with McCormack's president, Sean McCormack, and warned him that he, his son, and a fellow McCormack employee would be murdered if McCormack did not immediately withdraw as general contractor for the Tudor Hotel renovations. On March 29, 1994, Capparelli allegedly assaulted a McCormack...