Ruotolo v. Fannie Mae

Decision Date13 March 2013
Docket NumberCase No. 09–CV–7851 (KMK).
Citation933 F.Supp.2d 512
PartiesAngelo RUOTOLO, Plaintiff, v. FANNIE MAE, Patty Conti, Patty Conti Realty, Margaret Stewart, Marylin VanAken, Defendants.
CourtU.S. District Court — Southern District of New York

OPINION TEXT STARTS HERE

Angelo Ruotolo, Cornwall, NY, pro se.

Michael John Walsh, O'Melveny & Myers LLP, Washington, DC, for Defendant Fannie Mae.

Joseph A. Catania, Jr., Rebecca Grace Baldwin Manetllo, Tarshis, Catania, Liberth, Mahon & Milligram, Newburgh, NY, for Defendants Patty Conti, Margaret Stewart, Marylin VanAken, and Patty Conti Realty.

OPINION AND ORDER

KENNETH M. KARAS, District Judge.

According to the allegations in his Second Amended Complaint (the “SAC”), pro se Plaintiff Angelo Ruotolo hoped to purchase a home in foreclosure from Defendant Fannie Mae, the owner of the property. Plaintiff claims that he attempted to submit an all-cash offer of $131,000 for the property, but Fannie Mae ultimately sold the property to someone else for $130,000. (SAC ¶¶ 15, 15(a).)

Plaintiff attempts to make a federal case out of the failed real estate transaction. Plaintiff's SAC includes a series of wide-ranging allegations against Fannie Mae and various real estate professionals also involved in the property's sale, who are also named as defendants. These include allegations that all Defendants engaged in an unlawful antitrust conspiracy and that Fannie Mae violated various federal statutes, including the Sarbanes–Oxley Act of 2002 and the legislation that created the Troubled Asset Relief Program, when Fannie Mae “shortchanged the U.S. Treasury by delivering less than what the plaintiff offered.” (SAC ¶¶ 20, 21, 21(a).) Fannie Mae and the realtor defendants now separately move to dismiss nearly all of the claims. For the reasons below, the motions are granted, and the federal claims are dismissed. Further, the Court declines to exercise jurisdiction over the few remaining state law claims. Accordingly, the state law claims are also dismissed.

I. Background

The following facts, alleged in the Second Amended Complaint, are taken as true for purposes of deciding the instant motions. See Ruotolo v. City of New York, 514 F.3d 184, 188 (2d Cir.2008).1

According to the SAC, Plaintiff sought to purchase a single-family residential property at 14 Shivertown Road in New Paltz, New York (“Shivertown Road Property”). (SAC ¶ 3 & Ex. D.) The Shivertown Road Property was offered for sale by Defendant Fannie Mae and brokered by Defendants Patty Conti, Margaret Stewart, and Marilyn VanAken, all of the firm Defendant Patti Conty Realty (the “Realtor Defendants). ( Id.)

On May 26, 2009, Plaintiff submitted an offer for $130,000, with 20 percent down and 80 percent to be financed by a mortgage, but this offer was not accepted. (SAC ¶ 23 n.*.) Later, on an unspecified date, Plaintiff allegedly submitted an all-cash offer of $131,000 for the Shivertown Road Property, and this offer “was either not communicated by real estate brokers to Fannie Mae, or intentionally communicated late” to Fannie Mae. (SAC ¶ 7.) Instead, on June 20, 2009, Fannie Mae accepted another buyer's bid of $130,000, and the Shivertown Road Property closed on July 9, 2009. (SAC ¶ 18(a).) As a result of his unsuccessful efforts to purchase the Shivertown Road Property, Plaintiff alleges that he suffered losses from foregone rental income in an amount exceeding $500,000. (SAC ¶ 19.)

Plaintiff also alleges that he unsuccessfully attempted to purchase two additional properties owned by Fannie Mae: one at 314 Hudson Street, Cornwall, New York, (SAC ¶ 18(c)), and another at 377 Grove Street, Brooklyn, New York, (SAC ¶ 18(d)). Each of these properties was allegedly sold for an amount less than the all-cash offer made by Plaintiff. (SAC ¶¶ 18(c), 18(d).) Plaintiff alleges that both of these properties were offered for sale by Fannie Mae, but he does not specify whether the named Realtor Defendants were also involved in these transactions. ( Id.) Plaintiff also does not specify whether he incurred any monetary damages as a result of his failure to purchase these properties.

On September 11, 2009, Plaintiff filed a complaint in this Court. (Dkt. No. 1.) After twice amending the Complaint with leave of the Court, Plaintiff now states six causes of action. (SAC ¶¶ 22–27.) First, Plaintiff alleges that Defendants entered into an unlawful conspiracy to restrain trade, in violation of federal and state antitrust laws. (SAC ¶ 22.) Second, Plaintiff alleges that Defendants defrauded the U.S. Government, and he brings a claim pursuant to the Fraud Enforcement and Recovery Act, Pub.L. 111–21, 123 Stat. 1617 (2009), a statute that amended, among other laws, the False Claims Act. (SAC ¶ 23.) Third, Plaintiff alleges that Defendant Fannie Mae received funds under the Troubled Asset Relief Program (TARP), a government program created in 2008, Pub.L. 110–343, 122 Stat. 3765 (2008), and that Fannie Mae's actions violated various provisions of that Act. (SAC ¶ 24.) Fourth, Plaintiff contends that the Realtor Defendants breached a state law fiduciary duty they owed to him. (SAC ¶ 25.) Fifth, Plaintiff contends that Defendants engaged in unfair and deceptive business practices, in violation of New York General Business Laws §§ 349 and 350. (SAC ¶¶ 26(a), 27(a).) Finally, though not explicitly listed as a cause of action, Plaintiff's SAC can be construed as attempting to state a claim that Fannie Mae violated various provisions of the Sarbanes–Oxley Act of 2002, Pub. L. 107–204, 116 Stat. 745 (2002).2 (SAC ¶¶ 18, 18(e), 18(f).)

Defendant Fannie Mae has moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss all claims against it for failure to state a claim. (Dkt. No. 36.) Separately, the Realtor Defendants have moved under the same federal rule to dismiss nearly all claims against them for failure to state a claim. (Dkt. No. 34.) The Court considers both of these motions in this Opinion.

II. Discussion

A. Standard of Review

“On a Rule 12(b)(6) motion to dismiss a complaint, the court must accept a plaintiff's factual allegations as true and draw all reasonable inferences in [the plaintiff's] favor.” Gonzalez v. Caballero, 572 F.Supp.2d 463, 466 (S.D.N.Y.2008); see also Ruotolo, 514 F.3d at 188 (We review de novo a district court's dismissal of a complaint pursuant to Rule 12(b)(6), accepting all factual allegations in the complaint and drawing all reasonable inferences in the plaintiff's favor.” (internal quotation marks omitted)). In adjudicating a Rule 12(b)(6) motion, a district court ‘confines its consideration to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken.’ Meisel v. Grunberg, 651 F.Supp.2d 98, 107 (S.D.N.Y.2009) (alteration omitted) (quoting Leonard F. v. Isr. Disc. Bank of N.Y., 199 F.3d 99, 107 (2d Cir.1999)).

“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (alteration, citations, and internal quotation marks omitted). Instead, the Supreme Court has emphasized that [f]actual allegations must be enough to raise a right to relief above the speculative level,” id., and that “once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint,” id. at 563, 127 S.Ct. 1955. A plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 570, 127 S.Ct. 1955. If a plaintiff “ha[s] not nudged [his] claims across the line from conceivable to plausible, [his] complaint must be dismissed.” Id.; see also Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ( “Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]‘that the pleader is entitled to relief.’ (quoting Fed.R.Civ.P. 8(a)(2)) (alteration in original) (citation omitted)).

Finally, [i]t is well-established that the submissions of a pro se litigant must be construed liberally and interpreted to raise the strongest arguments that they suggest.” Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir.2006) (per curiam) (emphasis omitted) (internal quotation marks omitted). However, even a pro se party is not exempt from “compliance with relevant rules of procedural and substantive law.” Id. at 477 (internal quotation marks omitted).

B. Analysis1. Overall Considerations

At the outset, it is useful to step back from the details of each claim and notice that Plaintiff's theory of the case as a whole is contradictory. This does not mean that the case is an automatic non-starter—plaintiffs are entitled to plead multiple theories in the alternative—but the contradictory nature of the very heart of the case does make the entire case somewhat implausible from the beginning. This is important because making a threshold showing of plausibility is the oft-repeated requirement of surviving a motion to dismiss. See Twombly, 550 U.S. at 554–63, 127 S.Ct. 1955;see also Mary Jo C. v. N.Y. State & Local Ret. Sys., 707 F.3d 144, 151 (2d Cir.2013) (“The complaint must state a claim that is plausible on its face.”). The tension arises because the necessary result of violations of the different provisions invoked by Plaintiff is that Fannie Mae was simultaneously making exorbitant profits but also shortchanging the U.S....

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