Scheiner v. Wallace
| Decision Date | 16 August 1994 |
| Docket Number | No. 93 Civ. 0062 (RWS).,93 Civ. 0062 (RWS). |
| Citation | 860 F. Supp. 991 |
| Parties | Randy SCHEINER, Royce Scheiner, Cindy Royce Creations, Inc. and Maximus Creations Limited, Plaintiffs, v. Derek WALLACE, Brian Daniels, Paul Hunt, and David Williams, sued on their own behalf and on behalf of all other Lloyd's Underwriters subscribing to Policy Numbers ZJB8901346 251NM and ZJB900233 255M, White, Fleischner, Fino & Wade, Dennis Wade, Holmes Protection of New York, Inc., Hartley Cooper Associates, Ltd., Levmore-Finch, Inc., Graham Miller, Inc., Shaun Coyne, Karl Alizade, City Safe, Inc. and J.M. McNicholas, Defendants. |
| Court | U.S. District Court — Southern District of New York |
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Lapidus & Frankel, P.A., Miami, FL by Robert P. Frankel, of counsel, Hein Hazelberg, New York City, for plaintiffs.
Morvillo, Abramowitz, Grand, Iason & Silberberg, P.C., New York City by Michael C. Silberberg, of counsel, for defendants Derek Wallace, Brian Daniels, Paul Hunt, David Williams, Lloyd's Underwriters, White, Fleischner, Fino & Wade, Graham Miller, Inc., Shaun Coyne, Karl Alizade, City Safe, Inc. and John M. McNicholas.
Mangone & Schnapp, New York City, for defendant Holmes Protection.
Nourse & Bowles, New York City by Peter Torben Jensen, of counsel, for defendant Hartley Cooper Associates, Ltd.
Defendants Derek Wallace, Brian Daniels, Paul Hunt, David Williams, Lloyd's Underwriters Subscribing to Policy Numbers ZJB8901346 251NM and ZJB900233 255M ("Lloyd's"), White, Fleischner, Fino & Wade ("WFFW"), Holmes Protection of New York, Inc. ("Holmes"), Graham Miller, Inc. ("Miller"), Shaun Coyne, Karl Alizade, City Safe, Inc. ("City Safe") and Detective John M. McNicholas ("McNicholas") (collectively the "Defendants") have moved, pursuant to Rule 12(b), Fed.R.Civ.P., for an order dismissing the Complaint of Randy Scheiner, Royce Scheiner, Cindy Royce Creations, Inc. ("Cindy Royce"), and Maximus Creations Limited ("Maximus") (collectively the "Plaintiffs"). Defendant Hartley Cooper Associates, Limited ("Hartley Cooper") has moved separately, pursuant to Rule 12(b)(6), for an order dismissing all claims against it based upon the collateral effect of the prior proceedings in this action.
The Defendants and Hartley Cooper further seek Rule 11 sanctions, pursuant to Fed.R.Civ.P. 11, against the Plaintiffs.
For the reasons set forth below, the Defendants' motion to dismiss the Plaintiffs' federal RICO claim with prejudice is granted. The remaining motions to dismiss are temporarily stayed in conformance with the findings set forth below. Defendants' motions for sanctions are denied.
Plaintiff Cindy Royce is a New York corporation. Its principal office is in New York City and its primary business is the manufacture and sales of jewelry.
Plaintiff Maximus is a New York corporation. Its principal office is in New York City and its primary business is the manufacture and sales of jewelry.
Samuel Scheiner was and is Secretary/Treasurer and fifty-percent shareholder of Cindy Royce and Secretary/Treasurer and one-third owner of Maximus. Samuel Scheiner supervised the overall operations and finances of both Cindy Royce and Maximus.
Randy Scheiner is a New York citizen and resident residing in Cedarhurst, New York. He was a salesman for Maximus. He is the son of Samuel Scheiner and Plaintiff Royce Scheiner, the wife of Samuel Scheiner.
Derek Wallace, Brian Daniels, Paul Hunt and David Williams are citizens of the United Kingdom, with their principal place of business in London. As Lloyd's underwriters, they subscribed to the insurance policies in this case.
WFFW, a law firm, is a general partnership organized and existing under the laws of the State of New York. Attorneys in WFFW are licensed to practice law in the State of New York. Dennis Wade is a partner in WFFW. Dennis Wade worked first as an Assistant District Attorney and second as Deputy Chief of the Rackets Bureau in the New York County District Attorney's Office.
Holmes is a corporation organized and existing under the laws of New York. Cindy Royce and Maximus contracted Holmes to provide security services.
Hartley Cooper, an insurance brokerage, is an English Corporation with its principal place of business in England. Hartley Cooper acted as a "placing broker" by placing primary and excess insurance policies for Cindy Royce and Maximus on the London market.
Levmore-Finch, an insurance brokerage, is a New York corporation with its principal place of business in New York City.
Miller is an adjustment firm retained by Lloyd's. Shaun Coyne is a loss adjuster at Miller.
City Safe, a New Jersey corporation, has its principal place of business in New Jersey and New York. The firm provides safe expertise for Lloyd's. Karl Alizade is a principal of City Safe.
Detective McNicholas, formerly with the New York City Police Department, helped investigate the reported burglary of Cindy Royce and Maximus.
The prior proceedings and facts in this diversity action are set forth in the previous opinion of this Court, familiarity with which is presumed. See Scheiner v. Wallace, 832 F.Supp. 687 (S.D.N.Y.1993) (Scheiner I or the "Opinion"). A brief review of the pertinent facts and prior proceedings follow.
On January 5, 1989, underwriters from Lloyd's issued to Cindy Royce and Maximus Jewelers' Block Policy No. ZJB8901346 251NM which insured their premises for the 12 month period beginning July 10, 1989 against loss by theft up to a maximum of $2,500,000, with a $25,000 deductible. On February 9, 1989, Plaintiffs took out an additional "excess policy" for losses in excess of $2,500,000.
On August 18, 1989, while both policies were still in effect, the premises of Cindy Royce and Maximus were burglarized. On November 2, 1989, Samuel Scheiner, in his capacity as Secretary/Treasurer for Cindy Royce and Maximus, filed a Proof of Loss with Lloyd's for more than $5 million which was rejected by Lloyd's on December 19, 1989.
On February 7, 1990, Cindy Royce and Maximus filed a law suit in London against Lloyd's for breach of contract (the "English Action"). In defense, Lloyd's alleged: (1) an employee or a principal of Cindy Royce and Maximus was dishonestly involved in the burglary, which entitled the Underwriters to refuse to make payment under the false swearing clause; (2) the Underwriters were entitled to reject the Proof of Loss because there was no burglary; the outer vault door was "torched" while in the open position and other physical evidence reasonably indicated that the theft was staged and perpetrated by someone on the inside with access to the premises, alarm system, safe and vault combinations; (3) Samuel Scheiner, a principal of Cindy Royce and Maximus, was fraudulently involved with the burglary; (4) Cindy Royce and Maximus breached the policies by failing to properly maintain a detailed and itemized inventory of their property; (5) Cindy Royce and Maximus fraudulently inflated the amount of their claim; (6) Cindy Royce and Maximus breached a condition of their policies by keeping inadequate records; and (7) Cindy Royce and Maximus committed a variety of breaches of warranty, misrepresentations and nondisclosures, which entitled the Underwriters to avoid their policies.
The English action began on April 23, 1991. The English judge, Justice Waller, travelled to New York, visited the premises, the vault and safe. On October 2, 1991, the thirtieth day of trial, the Plaintiffs asked for a discontinuance on terms that they would not bring other proceedings elsewhere and that the court should order costs accordingly. Justice Waller denied their application for discontinuance. The next day, the Plaintiffs abandoned their claims and Justice Waller entered a dismissal in favor of the Defendants. The Plaintiffs later lost their appeal of the denial of discontinuance in the English Court of Appeal.
On March 25, 1992, Samuel Scheiner, Morton Gold, Daniel Squillante, Benoit Dreyfus, Randy Scheiner, Cindy Royce, and Maximus were indicted by the Grand Jury of the County of New York on three counts: (1) Conspiracy in the Fourth Degree, in violation of Penal Law § 105.10(1); (2) Insurance Fraud in the First Degree, in violation of Penal Law § 176.30; and (3) Attempted Grand Larceny in the First Degree, in violation of Penal Law §§ 110.00, 155.42.
In a plea agreement entered into on October 16, 1992, all charges against the Plaintiffs — Randy Scheiner, Cindy Royce and Maximus — were dismissed. At the same time, Samuel Scheiner, Morton Gold and Daniel Squillante pled guilty to Attempted Grand Larceny in the Fourth Degree, which the Plaintiffs claim merely represents an admission to the inflation of their insurance claim by an amount between one and three thousand dollars.
Also in 1992, Cindy Royce and Maximus filed suit in the Southern District of New York against their English counsel, Simmons & Simmons. On July 27, 1993, the Honorable Robert P. Patterson granted Simmons & Simmons' motion for summary judgment against Cindy Royce and Maximus' claims of professional malpractice, breach of contract, and violation of New York Judiciary Law § 487 and denied summary judgment on their claims of unjust enrichment. Judge Patterson also granted Simmons & Simmons' motion to dismiss pursuant to the doctrine of forum non conveniens.
On January 6, 1993, Plaintiffs Randy Scheiner, Royce Scheiner, Cindy Royce and Maximus filed their first Complaint in this action against the Defendants. The Complaint alleged the following: (1) Lloyd's breached its contract for both the primary and excess policies; (2) Lloyd's practiced deceptive business policies and acts proscribed by New York General Business Law of New York § 349; (3) Defendants maliciously prosecuted Randy Scheiner, Cindy Royce and Maximus for their personal unjust enrichment and benefit; (4) Defendants intentionally inflicted emotional distress upon Randy Scheiner; (5) Defendants...
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