Park South Associates v. Fischbein, 85 Civ. 9705 (WK).

• Decision Date: 23 January 1986
• Docket Number: No. 85 Civ. 9705 (WK).,85 Civ. 9705 (WK).
• Citation: 626 F. Supp. 1108
• Parties: PARK SOUTH ASSOCIATES, a New York Partnership, Plaintiff, v. Richard FISCHBEIN, David Rozenholc, Herman Badillo, individually, Fischbein, Olivieri, Rozenholc & Badillo, and Does 1 through 20, Defendants.
• Court: U.S. District Court — Southern District of New York

626 F. Supp. 1108

PARK SOUTH ASSOCIATES, a New York Partnership, Plaintiff, v. Richard FISCHBEIN, David Rozenholc, Herman Badillo, individually, Fischbein, Olivieri, Rozenholc & Badillo, and Does 1 through 20, Defendants.

No. 85 Civ. 9705 (WK).

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

January 23, 1986.

COPYRIGHT MATERIAL OMITTED

A. Richard Golub, New York City, for plaintiff.

Martin London, Paul Weiss, Rifkind, Wharton, & Garrison, New York City, for defendants.

MEMORANDUM AND ORDER

WHITMAN KNAPP, District Judge.

Plaintiff Park South Associates brings this action against Richard Fischbein, David Rozenholc, Herman Badillo and against their law firm, Fischbein, Olivieri, Rozenholc & Badillo seeking injunctive relief and treble damages totalling $105,000,000.00 under the Racketeer Influenced And Corrupt Organizations Act, 18 U.S.C. §§ 1961, 1962(c) and (d) ("RICO") and asserting a pendent state law claim for abuse of process. Defendants have moved to dismiss the complaint pursuant to F.R.Civ.P., Rule 12(b)(6) for failure to state a claim upon which relief can be granted. For the reasons that follow defendants' motion is granted.

FACTS

The allegations presented in the amended complaint, supplemented by plaintiff's motion papers and plaintiff's representations to the Court during extensive oral argument, drawing all inferences in plaintiff's favor and attempting chronological order where possible, paint the following picture.

Plaintiff is a New York partnership engaged in the business of ownership and management of real property. Its principal is Donald Trump.

Defendant Fischbein Olivieri Rozenholc & Badillo is a New York law firm. The individual defendants are attorneys admitted to practice in the State of New York and are partners in the law firm. Defendant Herman Badillo, as well as being a partner in the law firm, is Chairman of the State of New York Mortgage Agency (SONYMA) and is "a political figure of consequence in the City, County and State of New York." Amended complaint at paragraph 8.

In the summer of 1981 defendants obtained knowledge that plaintiff was imminently purchasing the real property and building located at 100 Central Park South, New York, New York. At that time defendants also learned that plaintiff intended to convert 100 Central Park South to a cooperative or condominium entity, or alternatively to demolish it and construct a mixed use commercial and residential structure in its place. Also in the summer of 1981, defendants commenced legal representation of the tenants of 100 Central Park South.

In August of 1981 plaintiff purchased 100 Central Park South.

Shortly thereafter, defendants, on behalf of the tenants, initiated a number of legal proceedings aimed at delaying and preventing plaintiff from undertaking its above stated plans for the building.

Defendants, acting on behalf of tenants in sixty of the building's apartments, filed complaints against plaintiff with the New York State Department of Housing and Community Renewal ("DHCR") alleging harrassment and diminution of services.

Defendants, on behalf of eighteen tenants, brought actions in Landlord-Tenant Court against plaintiff alleging a decrease in service.

Seven tenants, acting on defendants' recommendations, withheld rent from plaintiff claiming that the premises were not fit for habitation, causing plaintiff to bring actions against them in Civil Court for the back rent owed. In these suits defendants raised "boilerplate defenses and counterclaims without regard to the merits therein." Amended complaint at paragraph 22.

On February 28, 1985 defendants "caused the City of New York through its Corporation Counsel to institute litigation in conjunction with defendants and a concomitant application for a preliminary injunction at the Supreme Court of the State of New York (The City of New York v. Park South Associates, et al., Index No. 40489/85)." Amended complaint at paragraph 20. The relief requested was denied by the Court (Kirschenbaum, J.) both upon the original application and upon reargument.

Defendants, on behalf of tenants, applied on five separate occasions for stays in the Supreme Court and Appellate Division in order to prevent plaintiff from receiving the necessary approvals to demolish 100 Central Park South. All of these applications were denied.

Defendants have used similar tactics before against other landlords in other actions. These tactics constitute defendants' "modus operandi." Amended complaint at paragraph 22.

During the pendency of these court and administrative proceedings, the following events also occurred.

In November of 1984 a representative of defendants offered Thomas Macari, a Park South employee, $50,000 "to work on behalf of the tenants at 100 Central Park South in a spying capacity while Macari was still employed by plaintiff." In October of 1985 Rozenholc "confirmed and reiterated such bribe to Macari." Complaint at paragraph 29.

In November, 1984 defendant Badillo stated to Trump that the administrative proceedings before the DHCR were "rigged" and that Park South should get out of 100 Central Park South. William Eimeck, Commissioner of the DHCR is a member of the board of directors of SONYMA of which, as above stated, Badillo is Chairman.

In October, 1985 defendant Rozenholc approached Trump and stated that he and his law firm represented the Allegheny Corporation. The Allegheny Corporation owned an office building in Houston, Texas. Rozenholc offered Trump the opportunity to buy the Houston property as long as Trump would agree to give Rozenholc and his firm "a piece of the action." Amended complaint at paragraph 25. Rozenholc also offered Trump the prospect of participating in the purchase of a hotel on Lexington Avenue and East 57th Street in New York City. During these discussions Rozenholc acknowledged to Trump that these offers constituted a conflict of interest with defendants' representation of tenants at 100 Central Park South.

In November, 1985 defendants Rozenholc and Fischbein again met with Trump and offered him the opportunity to purchase the building in Houston at a favorable price. Also present at that meeting were Charles P. Horne, President of Allegheny International Realty Development Corporation, owner of the Houston property, and another officer of that corporation.

On an unspecified date in the Civil Court of the City of New York, one David Brody, an associate of defendant law firm threatened and punched Frank Kaiman, an attorney for Park South.

DISCUSSION

Based on the foregoing, plaintiff contends that defendants have violated RICO.

18 U.S.C. § 1962(c) (RICO) provides that it is a crime for any:

person employed by or associated with an enterprise engaged in or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of an unlawful debt.

Racketeering activity is defined in 18 U.S.C. § 1961(1) to include specified state law crimes which are punishable by more than a year in jail and certain federal crimes.

Pattern of racketeering activity is defined in 18 U.S.C. § 1961(5) as at least two of the acts defined in subsection (1) committed within a ten year period.

18 U.S.C. § 1964(c) provides for a civil RICO cause of action and treble damages to a prevailing plaintiff.

Therefore, to deny this motion to dismiss, we must find that plaintiff has alleged that each defendant, acting through an enterprise, committed at least two racketeering acts. Let us turn first to the "enterprise" requirement.

1. The "Enterprise."

Plaintiff alleges two different forms of racketeering "enterprise" for purposes of RICO. It first alleges that the individual defendants acted through the enterprise of their law firm. It next alleges that all the defendants acted through the enterprises of the New York State court system, the DHCR and the Corporation Counsel by bringing, defending or "causing" actions to be brought involving Park South.

For the reasons that follow we conclude that the law firm is a proper "enterprise" but that the court system, DHCR, and Corporation Counsel are not. Since the individual defendants are alleged to have acted through the law firm, the first conclusion satisfies the "enterprise" requirement as to them. However, since the law firm is only alleged to have acted through the enterprises of the courts, DHCR, and Corporation Counsel, the second conclusion finding necessitates dismissal of the law firm from this action.

It is well settled within this circuit that a defendant may not fulfill both the role of "person" and "enterprise" for purposes of § 1962(c), Bennett v. United States Trust Co. (2d Cir.1985) 770 F.2d 308. Therefore, in order to be a defendant in this action, the law firm must have been acting through an enterprise other than itself. Plaintiff alleges that the law firm engaged in the course of proscribed conduct through the enterprises of the New York Courts, the DHCR, and the Corporation Counsel. This presents the question of whether a defendant can violate RICO by participating as a mere litigant in a court system or before an administrative body.

Plaintiff has presented us with considerable authority for the proposition that a court system or an administrative agency can be an enterprise for purposes of RICO. However, in each such case, at least one of the defendants was an employee of the governmental "enterprise" who had allegedly corrupted his office in the commission of the racketeering acts. See e.g. United States v. Qaoud, (6th Cir.1985) 777 F.2d 1105, (one of the defendants was a judge); United States v. Murphy, (7th Cir.1985) 768 F.2d 1518 (defendant was an associate judge of a county circuit court); United States v. Angelilli (2d Cir.1981) 660 F.2d 23 (defendants were New York City Marshals). There is no such allegation here. The crux of this...