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POLING v. HOVNANIAN ENTERPRISES

May 24, 2000

J. CLARK POLING, ET AL., PLAINTIFFS,
V.
K. HOVNANIAN ENTERPRISES, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hochberg, District Judge.

  OPINION

This matter comes before the Court upon motions by defendants Summit Bancorp., PNC Bank Corp., K. Hovnanian Enterprises, Mellon Bank, N.A., Toll Brothers, Inc., Dechert, Price & Rhoads and individual defendants Harry Hill, Esq., Leonard Cohen, Thomas Jamieson, Albert C. Barclay., Jr., Florence Winston, William Barclay, Elizabeth Barclay, Ellen DeBlois, and I. David Barclay to dismiss plaintiffs' complaint in its entirety for failure to plead fraud with particularity, lack of jurisdiction, failure state a claim upon which relief can be granted, failure to join indispensable parties and failure to provide defendants with a short plain statement of the claim showing that the pleader is entitled to relief. See Fed.R.Civ.P. 9(b), 12(b)(1), 12(b)(6), 19(a), 8(a), (e). Also before the Court are plaintiffs' (i) cross-motion for partial summary judgment, (ii) motion to strike the reply brief of Mellon Bank and (iii) motion to strike defendant William S. Barclay's motion to dismiss defendant K. Hovnanian Enterprises' motion for sanctions. This Court has reviewed the extensive submissions of the parties, without oral argument pursuant to Fed. R.Civ.P. 78, and for the reasons stated below, the defendants' motions to dismiss will be granted.*fn1

STATEMENT OF FACTS

Plaintiffs, brothers J. Clark Poling and John C. Poling, are grandsons of Isaiah and Gladys Barclay. The gravamen of plaintiffs' Second Amended Complaint is that the 36 defendants named therein have fraudulently and criminally deprived plaintiffs of assets rightfully owed them under the wills of Isaiah and Gladys Barclay. This Court takes judicial notice of the January 13, 1999 Opinion of Hon. Wilkie D. Ferguson, Jr., transferring this case from the United States District Court for the Southern District of Florida to this Court, which sets forth the facts of this case as follows:

On December 13, 1995, an action captioned Barclay v. Albert C. Barclay, Jr., Trustee was filed in the Chancery Division of the Superior Court of New Jersey. The state court action was brought against, inter alia, J. Clark and John Poling, the same plaintiffs as in the instant federal case, seeking partition and sale of the Chamberlain Farm in East Windsor, New Jersey. On November 13, 1996, K. Hovnanian Companies of Central New Jersey, Inc. was joined as a defendant in the New Jersey state court partition action. On February 24, 1997, the partition action was consolidated with an action brought by K. Hovnanian Companies of Central New Jersey, Inc. seeking specific performance of the contract for purchase of the Chamberlain Farm. On September 24, 1998 the New Jersey Superior Court appointed a partition commissioner for the Chamberlain Farm. The commissioner was given plenary authority to manage the property and effect its sale. The court also empowered the commissioner to negotiate a settlement or other resolution to the litigation between the parties.

By Order of January 13, 1999, the instant action was transferred from the United States District Court for the Southern District of Florida to this Court. Plaintiffs filed a Second Amended Complaint on May 3, 1999 (hereinafter the "Complaint"). The seventeen-count Complaint alleges the following federal causes of action: (1) violation of the Racketeer Influenced and Corrupt Organizations Act § 1962(c) and (d) ("RICO") (Count I); (2) civil rights violations under 42 U.S.C. § 1983 (Count III); (3) conspiracy to defraud the United States (Count XIV); (4) violation of the Sherman Anti-trust Act (Count XV); (5) violation of the Securities Exchange Act § 10(b) and Rule 10b-5 (Count XVI); and (6) violation of the Securities Exchange Act 20(a) (Count XVII). Plaintiffs also ask this Court to compel arbitration pursuant to 9 U.S.C. § 4 (Count II). The remaining twelve causes of action are founded upon state law and include, inter alia, causes of action alleging fraud, malpractice, civil conspiracy, defamation, negligent and intentional infliction of emotional distress and tortious interference with prospective economic advantage.

The thirty-six defendants in this action include, inter alia: fellow beneficiaries under the wills of Isaiah and Gladys Barclay; several, but not all, of the trustees and executors (and their successors) under the wills of Isaiah and Gladys Barclay; several, but not all, of plaintiffs' fellow Barclays Brothers and Barclays Farm partners, including various Barclay family estates; K. Hovnanian Enterprises, Inc., the purported purchaser of the Chamberlin Farm, which is allegedly owned by the plaintiffs and several of the defendants as tenants-in-common; Leonard Cohen, plaintiffs' real estate broker in connection with the sale of the Chamberlin Farm; Thomas C. Jamison, the court-appointed partition commissioner in the New Jersey state court proceedings; Toll Brothers, Inc., a company which was engaged in construction and granted an easement in 1984 with respect to the Chamberlin Farm; several attorneys and law firms that allegedly represented either the plaintiffs or various defendants over the course of the last thirty years; two insurance companies; the New Jersey Department of Transportation and the East Windsor Township.

Several of the defendants have moved to dismiss plaintiffs' complaint pursuant to Fed.R.Civ.P. 9(b) for failure to plead fraud with particularity, Fed. R.Civ.P. 12(b)(1) for lack of jurisdiction, Fed.R.Civ.P. 12(b)(6) for failure to state a cause of action upon which relief can be granted, Fed.R.Civ.P. 19(a) for failure to join necessary parties to this action and Fed.R.Civ.P. 8(a) and (e) for failure to provide defendants with a short plain statement of the claim showing that the pleader is entitled to relief. Given the plaintiffs' pro se status, and affording every possible consideration to their 436 paragraph, 111 page complaint, this Court painstakingly reviewed the extensive submissions of the parties to discern whether plaintiffs made out even a single cognizable federal claim against a single defendant.*fn3 They have not. This Court having concluded that plaintiffs have failed to plead fraud with the requisite particularity, have failed to state a federal claim upon which relief can be granted, and it appearing that no diversity jurisdiction exists here as to those claims premised upon state law, plaintiffs' complaint is dismissed in its entirety. The viable aspects of this dispute, if any, are already where they belong: in the New Jersey Superior Court. That is where plaintiffs can obtain and are being given a full and fair airing of all their grievances.

DISCUSSION

I. Defendants' 12(b)(6) Motions Attacking Substantive Allegations of Federal Question Claims Alleged in Plaintiffs' Complaint
A. Standard of Review of a Fed. R.Civ.P. 12(b)(6) Motion to Dismiss

In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court may consider only the complaint, exhibits attached to the complaint, matters of public record, and undisputedly authentic documents if the plaintiff's claims are based upon those documents. Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993), cert. denied, 510 U.S. 1042, 114 S.Ct. 687, 126 L.Ed.2d 655 (1994). Motions to dismiss under Fed.R.Civ.P. 12(1)(6) for failure to state a cause of action result in a determination on the merits at an early stage of plaintiff's case. Mortensen v. First Federal Savings and Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). As a result, "plaintiff is afforded the safeguard of having all its allegations taken as true and all inferences favorable to plaintiff will be drawn." Id. In order to grant a 12(b)(6) motion to dismiss, the Court must find that plaintiffs will be unable to prevail even if they prove all of the allegations in the complaint, basing its decision solely on the legal sufficiency of the complaint. Id. Only well-pleaded material allegations are taken as true, however, and conclusions of law or unwarranted deductions of fact are not admitted. See Morse v. Lower Merion School District, 132 F.3d 902, 906 (3d Cir. 1997).

B. Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c) and (d) (Count I)

1. Elements of a Civil RICO Violation

Plaintiffs allege violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) and (d), as against each and every of the thirty-six (36) defendants. Section 1962(c) provides that: "[i]t shall be unlawful for any person employed by or associated with any 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 racketeering activity or collection of unlawful debt." Subsection (d) of that same statute makes it unlawful for any person to conspire to violate 18 U.S.C. § 1962 subsections (a) through (c). In order to survive the defendants' motions to dismiss the RICO claim, plaintiffs' complaint must adequately set forth the following elements of civil RICO: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Sedima, S.P.R.L., v. Imrex Company, Inc., 473 U.S. 479, 496, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985). Additionally, plaintiffs must allege that they have been injured in their business or property as a result of the alleged racketeering activity. Id.

A "pattern" of racketeering activity requires at least two predicate acts of racketeering. See 18 U.S.C. § 1961(5); Sedima, S.P.R.L. v. Imrex Company, Inc., 473 U.S. at 496 n. 14, 105 S.Ct. at 3285 n. 14. Section 1961 provides an exclusive list of those acts that can constitute racketeering activity for the purposes of pleading violation of RICO. See Annulli v. Panikkar, 200 F.3d 189, 199 (3d Cir. 1999). The predicate acts that plaintiffs here rely upon in attempting to plead violation of RICO are mail and wire fraud.*fn4 (See e.g., Complt. ¶¶ 9, 36, 40, 85, 229).

2. Failure to Plead Fraud with Particularity

Where plaintiffs allege mail and wire fraud as the basis of a RICO violation, the allegations of fraud must comport with the Fed.R.Civ.P. 9(b)*fn5 heightened pleading standard. Saporito v. Combustion Engineering Inc., 843 F.2d 666, 673 (3d Cir. 1988), vacated on other grounds, 489 U.S. 1049, 109 S.Ct. 1306, 103 L.Ed.2d 576 (1989). To plead mail or wire fraud with sufficient particularity, plaintiffs must "plead with particularity the `circumstances' of the alleged fraud in order to place the defendants on notice of the precise misconduct with which they are charged, and to safeguard defendants against spurious charges of immoral and fraudulent behavior." Seville Indus. Machinery Corp. v. Southmost Machinery Corp., 742 F.2d 786, 791 (3d Cir. 1984), cert. denied, 469 U.S. 1211, 105 S.Ct. 1179, 84 L.Ed.2d 327 (1985). To satisfy the pleading requirement, plaintiffs may plead the specific conduct alleged to be fraudulent along with the "date, place and time" that the alleged fraud occurred or use some "alternative means of injecting precision and some measure of substantiation into their allegations of fraud." Id. Vague or conclusory allegations of fraud will not survive a motion to dismiss. In re Burlington Coat Factory Securities Litig., 114 F.3d 1410, 1418 (3d Cir. 1997). Moreover, allegations that generally allege fraud as against multiple defendants, without informing each defendant as to the specific fraudulent acts he or she is alleged to have committed do not satisfy Rule 9(b). See Mayor & Council of Borough of Rockaway v. Klockner & Klockner, 811 F. Supp. 1039, 1060 (D.N.J. 1993).

Notwithstanding the explicit order of the Court on April 15, 1999, directing plaintiffs to complete the RICO Case Statement provided for in Appendix O of the United States District Court Rules for the District of New Jersey, plaintiffs have failed to file an adequate statement in compliance with the Order of this Court. Instead, they merely sent a cursory form that did nothing more than refer back to the same paragraphs of their Complaint which were deficient in the first place. Plaintiffs' conduct defied Magistrate Judge Cavanaugh's Order to file a RICO Case Statement.*fn6


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