United States Fire Ins. v. United Limousine Serv.
| Citation | 303 F.Supp.2d 432 |
| Decision Date | 06 February 2004 |
| Docket Number | No. 01 CIV. 10821(CM)(LMS),01 CIV. 10821(CM)(LMS) |
| Parties | UNITED STATES FIRE INSURANCE COMPANY, Plaintiff, v. UNITED LIMOUSINE SERVICE, INC., Pierson & Smith, Inc., Holyland Travel Brokerage Corp., Abdul Ziad, Kemial Kastrat, Douglas David d/b/a Douglas David Insurance, Douglas David Insurance, MISV Car Service Corp., D.E.F. Limo, Corp., Jenny and S Corp., Z & Z Executive Transportation, Inc., Triple a Transportation, Inc., MLM Limousine, Inc., R & R Executive Co., Inc., RMP Limo Co., Inc., ABC Executive Cars, Corp., N.Y. Luxury Transportation, Corp., Luis Madrigal, Luis Madrigal, Inc., Brian Egan, C & M Transportation, Carlos Alvarez and Mohammad Aldeb, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Kevin P. Carroll, D'Amato & Lynch, New York, NY, for United States Fire Insurance Company, Plaintiff.
Thomas M. Cassone, Bello, Lapine & Cassone, Stamford, CT, for Brian Egan, Defendant.
Michael A. Cerussi, Jr., Cerussi & Spring, White Plains, NY, for Pierson & Smith, Inc., Defendant.
Plaintiff, United Fire Insurance Co. ("US Fire") brings an action alleging, among many other things, a widespread insurance fraud perpetrated upon Plaintiff by Defendants United States Limousine Service, Inc. ("ULS") and Kemial Kastrat ("Kastrat"), Pierson & Smith, Inc. ("P & 5"), Holyland Travel Brokerage Corp. ("Holyland") and Abdul Ziad ("Ziad"), Douglas David d/b/a Douglas David Insurance ("David"), Douglas David Insurance ("DDI"), MISV Car Service Corp. ("MISV"), D.E.F. Limo, Corp.("D.E.F."), Jenny and S Corp. ("Jenny"), Z & Z Executive Transportation, Inc. ("Z & Z"), Triple A Transportation, Inc. ("Triple A"), MLM Limousine, Inc. ("MLM"), R & R Executive Co., Inc. ("R & R"), RMP Limo Co., Inc. ("RMP"), ABC Executive Cars, Corp. ("ABC"), N.Y. Luxury Transportation Corp. ("NY Luxury"), Luis Madrigal ("Madrigal"), Luis Madrigal Inc. ("LM"), Brian Egan ("Egan"), C & M Transportation ("C & M"), Carlos Alvarez ("Alvarez") and Mohammad Aldeb ("Aldeb") in violation of the RICO statute, 18 U.S.C. § 1962.
Plaintiff filed a Complaint with this Court on November 30, 2001, and an Amended Complaint on April 15, 2002.
Defendants Holyland and Ziad, P & S, and Egan (collectively, the "Moving Defendants") have filed three separate motions to dismiss the RICO claims pursuant to Fed.R.Civ.P. 12(b)(6), asserting that Plaintiff has failed to state a claim on which relief can be granted. No other named Defendant has sought dismissal.1 In addition, Moving Defendants have filed a motion for sanctions under Fed.R.Civ.P. 11.
For the reasons stated below, the motion is granted as to claims asserted pursuant to §§ 1962(a) and (b), and is otherwise denied. Moving Defendants' motion for sanctions is denied.
The following facts are taken from the Amended Complaint dated March 25, 2002 and subsequent Rico Case Statement, dated April 15, 2002, unless otherwise noted.
United States Fire Insurance Co. is an insurance company incorporated in New York, with its principal place of business in Morristown, New Jersey. US Fire is licensed to write various lines of insurance in the State of New York, among them commercial vehicle policy insurance.
Defendant Pierson & Smith is a licensed Connecticut insurance broker and agent that submitted insurance risks to U.S. Fire for underwriting, quotation and binding, pursuant to a written agency agreement dated as of June 1989. P & S has its principal place of business in Norwalk, Connecticut. Defendant Brian Egan is alleged to be "an officer and employee" of P & S.
Pursuant to an agency agreement with U.S. Fire, P & S was authorized to issue and countersign endorsements on contracts of insurance that would increase or extend U.S. Fire's liability or extend the term of any insurance contract, but only after receiving written approval from U.S. Fire.
Defendant Kemial Kastrat is the president of Defendant United Limousine Service, a commercial livery cab (commonly referred to as a "black car") company. In correspondence dated January 21, 1999 (the "January 21, 1999 Letter"), P & S allegedly represented to U.S. Fire that it had "black car" vehicles that were good risks for insurance coverage by U.S. Fire. P & S's letter stated that it "targeted" businesses of Following this letter, P & S represented to U.S. Fire that ULS was a corporate limousine service that did mostly corporate office or corporate airport work.
Plaintiff claims to have relied on these and other representations by P & S in issuing a commercial vehicle policy to ULS, beginning February 1, 1999 and running through February 1, 2000. The policy covered one vehicle that ULS and P & S represented to plaintiff to be owned by ULS and garaged in Shrub Oak, a rural hamlet in Northern Westchester County.
Plaintiff alleges that P & S continued to communicate with U.S. Fire regarding the nature of its "black car" business. In a March 1999 written communication (the "March 1999 Communication"), P & S stated that it "always avoided, and will continue to avoid the limousine that's parked curbside waiting for a call ... We don't think there are enough controls in place and it's much more like a taxi ..." P & S further represented that its "procedure" included "prescreening," which involved verifying that the insured did corporate work and evaluating management.
By its terms, additional vehicles could be added to the policy so long as they were owned or controlled by ULS and garaged in Westchester. During the first year, 1999-2000, P & S, on behalf of ULS, faxed to U.S. Fire approximately 25 separate commercial policy change request forms. Plaintiff accepted the changes and added approximately 24 vehicles to the policy.
The policy was renewed for successive one-year terms in 2000 and again in 2001. During those two years, P & S, acting on behalf of ULS, faxed over 100 separate commercial policy change request forms to U.S. Fire in order to add these vehicles to the policy. Again, Plaintiff accepted the changes. In the policy's second year, 2000-2001, the total number of vehicles covered increased to 114. By the end of the policy's last year, the total had increased to over 450 vehicles, including vehicles owned by other Defendants.
Plaintiff claims that the policy change requests were accepted, and the policy renewed in 2000 and 2001 based on ULS and P & S's specific representations, made via wire, mail and over the telephone, that the vehicles were owned and controlled by ULS, garaged in Westchester County and that vehicle operations were pre-screened by P & S. For example, on July 17, 2001, P & S sent a facsimile (the "July 17, 2001 Fax") to U.S. Fire representing that ULS or Kastrat had acquired ownership or control over vehicles owned by the Defendants MISV, D.E.F., Jenny, Z & Z, Triple A, MLM, R & R, RMP, ABC and N.Y. Luxury (collectively the "Livery Defendants") as a result of ULS's taking ownership or control over those corporations. On the same day, P & S presented U.S. Fire with copies of the minutes from the board of directors meetings for some or all of those corporations. On July 20, 2001, P & S faxed a document (the "July 20, 2001 Fax") to U.S. Fire stating that Defendant Kastrat had purchased Defendant C & M.
Plaintiff claims that it later discovered that the vehicles were not in fact owned or controlled by ULS or Kastrat, were not being used exclusively with corporate accounts, were not garaged in Westchester County and did not have owners pre-screened by P & S.
In addition, Plaintiff alleges that Defendants P & S and Holyland, among others, submitted to Plaintiff false and fraudulent Vehicle Identification Numbers ("VIN") for cars that were being insured, and otherwise submitted VIN's that did not match the particular cars that were to be insured.
In its RICO Case Statement, Plaintiff next asserts that P & S, U.S. Fire, and DDI, with the aid of ULS,2 issued false and fraudulent documents purporting to be U.S. Fire insurance to other livery drivers without the knowledge, consent or acquiescence of U.S. Fire, charged those livery drivers excessive premiums and retained the excess over the amount Plaintiff would have charged for the insurance had it been legitimately issued. Those funds were also allegedly used in establishing, operating and maintaining the enterprise.
Finally, Plaintiff alleges that Defendants P & S, Holyland and DDI, with the aid of ULS, charged the Livery Defendants and others who were the actual owners of vehicles which became "insured" under the policy, additional amounts which went beyond the premium charge included in U.S. Fire's policy. The Defendants allegedly kept these funds and used them to invest in their enterprise and to further its goals.
Plaintiff claims to have discovered the scheme while conducting an investigation of the ULS policy. As a result of the discovery, Plaintiff sent a notice of cancellation of the policy to ULS and P & S, effective December 3, 2001.
Plaintiff's Amended Complaint asserts ten causes of action under federal and state law. Relevant to this motion are the first four, which allege violations of the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. § 1962, et seq. — specifically subsections (a), (b), (c) and (d) of § 1962. The RICO claims are the only federal claims alleged in the Amended Complaint and therefore are the sole basis for federal jurisdiction in this action.
Essentially, U.S. Fire claims that the Defendants...
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