Morin v. Trupin
| Decision Date | 29 September 1990 |
| Docket Number | No. 88 Civ. 5743 (RWS).,88 Civ. 5743 (RWS). |
| Citation | 747 F. Supp. 1051 |
| Parties | Simeon MORIN, Delano Morin, Anant Mauskar, Stewart Blaikie, James Brockenbrough, Celia Brockenbrough, William Brunner, Doris Brunner, Richard J. Chaban, Roberta M. Chaban, Mable Creten, Madelyn Dennis, Trustee for Dennis Family Trust, Earl J. Field, Subhash Gajendragadkar, Morris Goldsmith, Lon A. Graves, Sandis P. Graves, Julius Groner, Hong-Zen Lin Hung, JFA Associates, Crl Kirk, Roger Kirk, Louis Linker, James C. Magidson, James Marshall, Charles R. McNamee, Coremco, Inc., Charles F. Pratt, John A. Romito, Cynthia L. Romito, Richard L. Rouhe, Gerard F. Ryan, Barbara Ryan, James Schlenker, Frank A. Schuler, III, Harry Simon, Maurice A. Van Lerberg, Paul C. Van Lerberg, Joyce B. Seal and Joyce B. Seal personal representative for the Estate of H. Max Seal, Robert J. Nejdl, Mary M. Nejdl, James E. Wheeler, Arnold L. Petersen, II, Donald T. Hlubucek and Richard Ratner, Plaintiffs, v. Barry H. TRUPIN, Bennett W. Trupin, Arthur Berlin, Salvatore A. Bucci, Gerald Schaffer, Marvin Schaffer, Frederick Gnesin, David Kaye, Herb Silverstein, Robert D. Abrams, George Cohen, Rothschild Registry International, Inc., Rothschild Reserve International, Inc., Tru Management Corp., Tru Properties Corp., Sarasota Management Corp., Mellon Management Corp., MHT Properties Corp., MHT Corporation, Prudential American Realty Corp., Prudential American Financial Corp., BWT Corporation, The Tara Jill Trupin 1985-B Trust, RRI Realty Corp., Continental Realty Corp., Emanuel Organek, American Realty Associates, North American Associates, Stuart Stern, Jerry Bills, Pass-Through Mortgage Corp., Jackson-Cross Company, George C. Hoez, Russell E. Snyder, Network Appraisal Company, Inc., Joseph J. Savilia, Stephen H. Schuster, Gary Rogers, H. Stewart Carrico, II, Charterhouse Capital Investment Corp., Charterhouse Financial Ltd., Westwind Leasing Corp., Alan Asher, Laventhol & Horwath, Elliot Lesser, Mintz, Fraade & Zeiger, P.C., Frederick M. Mintz, Alan Fraade, Eisenberg Honig & Fogler, Martin Honig, Stuart Becker & Company, P.C., Stuart Becker, Ferber Greilsheimer Chan & Essner, William Greilsheimer and Robert Chan, Defendants. |
| Court | U.S. District Court — Southern District of New York |
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Fink Weinberger, P.C., Jeremy D. Morley, New York City (Eric W. Berry, of counsel), for plaintiff.
Summit Rovins & Feldman, New York City, for defendants Barry H. Trupin, Bennett W. Trupin and Stuart Stern.
Meyers Tersigni Luri Feldman & Gray, New York City (Jacob Aschkenasy, of counsel), for defendants Tru Management, Mellon Management Corp., MHT Properties Corp., MHT Corporation, Gary D. Rogers, Charterhouse Capital Inv. Corp. and H. Stewart Carrico, III.
Jack B. Friedman, Carle Place, for defendants Network Appraisal Co., Joseph Savilia and Stephen Schuster.
Jackson & Nash, New York City (Victoria Stewart, of counsel), for defendants Jackson-Cross Co., George C. Hoez and Russell E. Snyder.
Townley & Updike, New York City (Elliot Paskoff, of counsel), for defendant George Cohen.
Eaton & Van Winkle, New York City (Jonathan A. Chase, of counsel), for defendants Continental Realty Corp. and Emanuel Organek.
Squadron Ellenoff Plesent & Lehrer, New York City (Genie Gavenchak, of counsel), for defendant Salvatore Bucci.
Eisenberg Honig & Fogler, New York City (William Greenawalt, of counsel), pro se.
Wilson, Elser, Moskowitz, Edelman & Dicker, New York City (A.J. Golder, of counsel), for defendants Stuart Becker and Stuart Becker & Co.
Gaston & Snow, for defendants Laventhol & Horwath and Elliot Lesser.
Numerous defendants, described with greater particularity below, have moved to dismiss the complaint of plaintiffs Simeon Morin and Delano Morin (together, the "Morins"), Morin v. Trupin, No. 88 Civ. 5743, and plaintiffs in consolidated actions of Blaikie v. Trupin, No. 88 Civ. 8464, Petersen v. Trupin, No. 89 Civ. 3102, and Seal v. Trupin, No. 89 Civ. 5746, on a variety of grounds, including, most prominently, failure to plead in conformity with the requirements of Rule 9(b) and failure to state claims of securities or common law fraud or violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq. ("RICO"). Defendants Continental Realty and Emanuel Organek and Eisenberg Honig & Fogler and Martin Honig have also moved in the alternative pursuant to Rule 56(b) Fed.R.Civ.P. for summary judgment; Continental and Organek have also moved for sanctions.
For the reasons set forth below, the motions to dismiss the claims against the defendants are granted, but leave is granted to amend the complaint. The motions for summary judgment are granted. The motion for sanctions is denied.
In August 1988 the Morin action was initiated against Barry Trupin ("Trupin") and numerous other defendants. That suit was followed in December 1988 by a separate action by the Blaikie plaintiffs, in May 1989 by a third group, the Petersen plaintiffs, and in September 1989 by the Seal plaintiffs. In April 1988 the Morin and Blaikie actions were consolidated, which was followed by the filing of a consolidated and amended complaint in February 1989. All four of these actions were consolidated under index number 88 Civ. 5743 in December 1989.
The instant dispositive motions were first brought in April 1989, following the court's Opinion dated April 13, 1989, Morin v. Trupin, 711 F.Supp. 97, dismissing the Greilsheimer law firm defendants. After several extensions, argument was to be heard in July 1989. Prior to such argument, however, a disqualification and suppression motion was brought against plaintiffs' counsel (then affiliated with another firm), resulting in the instant motions being held in abeyance. Hearing was had instead on the disqualification motion, resulting in a ruling of December 12, 1989, denying the disqualification request but granting certain ancillary relief. Argument on the remaining motions was set down for January 19, 1990, but again was adjourned to February 1990, at which time the matter was to have been taken on submission.
Consideration at that time was interrupted by collateral proceedings brought on February 8, 1990, involving a realignment of plaintiffs' counsel, a matter that after several appearances was settled in March, only to be followed that same month by plaintiffs' applications by order to show cause for an order of attachment of certain New York properties of certain of the Trupin defendants. Briefing and consideration of that application was advanced ahead of these motions, and an opinion denying the application was issued on May 3, 1990. Morin v. Trupin, 738 F.Supp. 98.
A final, further round of briefing and argument was then initiated by defendants Organek and Continental, who requested the court's consideration of a supplemental submission in support of their motion to dismiss and for summary judgment then under consideration, and sought further argument on those motions and their request for sanctions against plaintiffs. Following extensions sought by the parties to brief and argue the renewed motions, the matter was again taken under submission as of June 29, 1990.
The Morins, and the plaintiffs in the Blaikie, Seals and Petersen actions (collectively, the "plaintiffs"), are investors in various tax-advantaged limited partnerships, principally in the real estate area (the "Investor Partnerships"), who claim to have been defrauded by the defendants.1
According to the Complaint, each of the Investor Partnerships had as their general partner of a company named Tru Management Corp. ("TMC"), a defendant to this action. The Investor Partnerships owned limited partnership interests in four entities holding real estate assets (themselves organized as limited partnerships and referred to as the Owning Partnerships): Dallas Realty Associates, which owned commercial real estate in Dallas, Texas (the "Dallas Property"), Lincoln Center Associates, which owned commercial real estate in Indianapolis, Indiana (the "Indianapolis Property"), the Mutual Home Bank Building Partnership, which owned commercial real estate in Grand Rapids, Michigan (the "Grand Rapids Property"), and Sarasota Plaza Associates, which owned commercial real estate in Sarasota, Florida (the "Sarasota Property") (collectively, the "Properties"). Each of these Owning Partnerships had as its general partner a corporation, MHT Properties Corp., also a defendant to this action. MHT Properties and TMC were each subsidiaries of defendant MHT Corp. The Owning Partnerships purchased the Properties from other Trupin-affiliated entities, the general partner of each of which was Tru Properties Corp. ("TPC").
Defendants to the consolidated complaint number over fifty. For ease, they may be classified as follows:
(a) The Trupin Defendants:
— Barry Trupin ("Trupin") is alleged to have founded and controlled a network of companies referred to by plaintiffs as the "Rothschild Group," consisting of, inter alia, TPC, TMC, Rothschild Registry International, Inc. ("Registry"), Rothschild Reserve International, Inc. ("Reserve"), RRI Realty Corp. ("Realty"), MHT Properties, MHT Corp., BWT Corp., several other corporations and a series of trusts (the "Trusts").2
— Bennett Trupin, Trupin's father ("Bennett"), is identified as the Chairman of TMC prior to March, 1987. Bennett is also alleged to have been sole owner of TPC, the general partner of the Acquiring Partnerships, and chairman of MHT Corp., the corporate parent of TMC and MHT Properties, which was the general partner of the Owning Partnerships. Bennett is alleged to have been one of several controlling persons of the companies comprising the Rothschild Group.
— Gerald Schaffer, Herb Silverstein, Arthur Berlin, Salvatore Bucci...
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