Simpson v. Putnam County Nat. Bank of Carmel
| Decision Date | 22 September 1998 |
| Docket Number | No. 97 CIV. 6403(BDP).,97 CIV. 6403(BDP). |
| Parties | Richard SIMPSON, Plaintiff, v. PUTNAM COUNTY NATIONAL BANK OF CARMEL; Ryder Trust; Wayne Ryder; John A. Porco, P.C.; John A. Porco; Curtiss Leibell & Shilling, P.C.; and William Shilling; Defendants. |
| Court | U.S. District Court — Southern District of New York |
Clifford James, Brock, Fensterstock Silverstein & McAuliffe LLC, New York, NY, for Plaintiff.
Daniel A. Seymour, Servino & Seymour, White Plains, NY, for Curtiss Leibell & Shilling P.C. and William Shilling.
Don Abraham, Wilson Elser Moskowitz Edelman & Dicker, New York, NY, for Defendants Putnam County National Bank of Carmel, Ryder Trust, Wayne Ryder, John A. Porco, P.C., John A. Porco.
Plaintiff Richard Simpson asserts claims against defendants Putnam County National Bank of Carmel (the "Bank"), Ryder Trust, Wayne Ryder, John A. Porco P.C., John A. Porco, Curtiss Leibell & Shilling, P.C. ("Curtiss Leibell"), and William Shilling, under the Racketeer Influenced and Corrupt Organizations Act of 1970 ("RICO"), 18 U.S.C.1961 et seq., and under state law for fraud, tortious interference with contract, intentional infliction of emotional distress, breach of contract, and civil conspiracy.
The Bank, Ryder Trust, Wayne Ryder, John A. Porco P.C., and John A. Porco now move pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss plaintiff's complaint on the grounds that plaintiff's RICO claims are barred by the statute of limitations and that plaintiff has failed to state a claim against the defendants for violations of RICO.1 Defendants also contend that plaintiff is barred from relitigating his claims in federal court by the Rooker-Feldman doctrine — which implicates subject matter jurisdiction — as well as res judicata and collateral estoppel.2 Plaintiff has filed a cross-motion to serve and file an amended complaint to remedy any deficiencies in the original complaint, and to continue the motion to dismiss until after plaintiff takes discovery on certain issues. For the reasons stated below, defendants' motion to dismiss is granted. Plaintiff's cross-motion to serve and file an amended complaint is denied. Plaintiff's motion for discovery is denied.
In deciding a motion pursuant to Rule 12(b)(6), the court is obligated to construe the pleadings in the plaintiff's favor. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir.1993); Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1098 (2d Cir.1988). Likewise, in considering a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), "the Court must accept as true all material factual allegations in the Complaint and refrain from drawing inferences in favor of the party contesting jurisdiction." Serrano v. 900 5th Avenue Corp., 4 F.Supp.2d 315, 316 (S.D.N.Y.1998). The following facts are accordingly construed.
On or about January 17, 1989, Simpson and his wife executed a mortgage with the Bank as mortgagee. The Simpsons borrowed $750,000 from the Bank and mortgaged five parcels of commercial and residential property. An IGA supermarket building and another retail store were situated on parcel I. Other retail establishments and some residential units were located on parcels II and III, and parcels IV and V contained the Simpsons' home. Simpson was to make monthly payments to the Bank of $9,055.31 for five years.
In the latter part of 1989, Simpson's payments to the Bank fell into arrears; shortly thereafter, the Bank, through Porco and his firm, initiated a foreclosure action. Simpson contends that he then entered into an oral agreement with Wayne Ryder, the Bank's vice-president, by which Ryder agreed that the Bank would drop the foreclosure action if Simpson made the payments due on his mortgage and other payments associated with the foreclosure. On or about February 1, 1990, Simpson paid the Bank about $60,000 in full satisfaction of the Bank's demands, and the Bank discontinued the foreclosure action.
In early May 1990, Simpson was again unable to make his monthly mortgage payments. As before, he approached Ryder and told Ryder of his circumstances. Simpson contends that at that time, Ryder told him that the Bank would forbear from foreclosing on the properties. The Bank, however, commenced a second foreclosure action in September 1990. Simpson alleges that after the commencement of the second foreclosure action, he entered another oral agreement with Ryder, that if Simpson paid the arrears, costs, and expenses of the Bank, and used Arnold DiGregorio, a mortgage broker recommended by Ryder, to obtain a loan sufficient to make the payment to the Bank, the Bank would drop the foreclosure action. Simpson agreed, but DiGregorio was unable to arrange funding. On April 10, 1991, the Bank obtained from Putnam County Supreme Court a final judgment of foreclosure on the properties.
On June 7, 1991, Simpson and the Bank entered a forbearance agreement by which the Bank agreed to postpone the foreclosure sale if Simpson made a lump sum payment of two months' arrears upon execution of the agreement and made a further payment of $9,055.31 before July 31, 1991. On September 11, 1991, Simpson and the Bank entered into an amended forbearance agreement further adjourning the foreclosure sale, and specifying that three further monthly payments of $9,055.31 would be made by November 10, 1991. Simpson contends that he obtained and submitted to the Bank proof of funding sufficient to satisfy his obligation to the Bank, but which was contingent on lifting the April 10, 1991 final judgment of foreclosure so that upon payment, a lien could be placed on the properties in favor of the new lender. The Bank, however, did not lift the judgment.
On or about October 28, 1991, Simpson moved by Order to Show Cause to set aside the judgment of foreclosure on the grounds of the Bank's misconduct and bad faith. This motion was denied on February 25, 1992. On April 7, 1992, Simpson moved by Order to Show Cause to reargue the February 25, 1992 order declining to vacate the judgment of foreclosure. The Court, however, adhered to its order and permitted foreclosure proceedings to continue. Simpson appealed the order denying the motion to vacate the judgment of foreclosure. On May 2, 1994, the Appellate Division affirmed the order. Putnam County Nat'l Bank of Carmel v. Simpson, 204 A.D.2d 297, 614 N.Y.S.2d 149 (2d Dept.1994).
On April 9, 1992, Simpson commenced a proceeding pursuant to Chapter 11 in the United States Bankruptcy Court for the Southern District of New York. Pursuant to 11 U.S.C. § 362, the pending foreclosure action was subject to the automatic stay. Simpson, however, remained obligated to make his monthly mortgage payments to the Bank.
On November 18, 1992, the Bank moved in Bankruptcy Court to terminate the stay for nonpayment of taxes, insurance premiums, and mortgage payments. On February 1, 1993, the Bankruptcy Court granted the Bank's motion. The Bank resumed foreclosure and sale proceedings in Putnam County State Court, and the properties were sold to the Bank at a foreclosure sale on or about March 15, 1993.
Simpson contends that the defendants took "illegal, secret, and conspiratorial actions" in order to prevent him from making his mortgage payments to the Bank, and that, but for those actions, he would have been able to make all required payments on the properties. Specifically, Simpson cites to what he terms the "Velardo conspiracy," which concerned two leases that he entered into on October 25, 1990 with Majag Food Corporation ("Majag"), whose stockholders and controlling principals were Angelo Velardo and his wife, Maria Velardo. One of the two leases was a fifteen-year lease for the IGA supermarket on parcel I; the second was a ten-year lease for equipment, stock in trade, fixtures, use of the IGA name, and goodwill. In addition, on October 29, 1990, Angelo Velardo gave Simpson a promissory note for $40,000 in connection with the transaction. Payment on the note was due on February 26, 1991.
Simpson contends that around August 1991, Velardo consulted William Shilling and his firm about the possible effects of the threatened foreclosure on the properties. Simpson claims that Shilling said that Majag had a legal right to refuse to make the lease payments. Simpson contends that the following month, Shilling told Velardo that if Majag ceased making payments to Simpson, the Bank could foreclose on the properties, and would ultimately sell parcel I to Velardo. Simpson alleges that Shilling promised to represent Majag and Velardo and prolong any legal action Simpson brought to force Velardo to pay Simpson until the Bank could foreclose. Around October 1991, Velardo ceased making rental payments to Simpson. Velardo did not pay the $40,000 due on the promissory note.
Simpson contends that he learned of Velardo's dealings and agreement with Shilling on August 29, 1996, after he, Velardo, and Majag entered an agreement to satisfy Velardo's nonpayment under the leases and promissory note between Velardo and Simpson. Simpson commenced this action on August 28, 1997.
Under the Rooker-Feldman doctrine, the federal district courts are not authorized to exercise what in effect amounts to appellate review of state court judgments. District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 482, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923); Gentner v. Shulman, 55 F.3d 87 (2d Cir.1995). Since a challenge under this doctrine implicates subject matter jurisdiction, it may be raised at any time by either party or sua sponte by the Court. Moccio v. New York State Office of Court Admin., 95 F.3d 195, 198 (2d Cir.1996). Under Rooker-Feldman, a district court may not review a claim that is "inextricably intertwined" with a state court's judgment. Feldman, 460 U.S. at 483, n. 16, 103 S.Ct....
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