Opinion
Index No. 653444/2022
06-08-2023
Joseph Bavaro, RONALD CHAPMAN, JOHN GAMBLE, NIGEL HUTCHENSON, GEORGE PARRILLA, EDGAR BRAVO, WILLIAM CAIRNS, DAVID BENOWITZ, YASSER ISMAIL, MARY OLSEN, and DANIEL ARGENTINA, Plaintiffs, v. Runway Towing Corp., RUNWAY TOWING & RECOVERY CORP., CYNTHIA PRITSINEVELOS, CHRIS PRITSINEVELOS, KEECHANT L. SEWELL, VILDA VERA MAYUGA, NEW YORK CITY POLICE DEPARTMENT, NEW YORK CITY DEPARTMENT OF CONSUMER AND WORKER PROTECTION, and DEFENDANT JOHN DOE No. 1, Defendants.
Rosen Law LLC, Great Neck, NY (Gary Rosen of counsel), for plaintiffs. Margolin & Pierce, LLP, Bridgehampton, NY (Errol F. Margolin of counsel), for defendants Runway Towing Corp., Runway Towing & Recovery Corp., Cynthia Pritsinevelos, and Chris Pritsinevelos.
Unpublished Opinion
Rosen Law LLC, Great Neck, NY (Gary Rosen of counsel), for plaintiffs.
Margolin & Pierce, LLP, Bridgehampton, NY (Errol F. Margolin of counsel), for defendants Runway Towing Corp., Runway Towing & Recovery Corp., Cynthia Pritsinevelos, and Chris Pritsinevelos.
GERALD LEBOVITS, J.
In motion sequence 001, plaintiffs move for default judgment under CPLR 3215 against defendants Runway Towing Corp., Runway Towing & Recovery Corp., Cynthia Pritsinevelos, and Chris Pritsinevelos (the Runway defendants). Defendants cross-move for sanctions under 22 NYCRR 130-1.1. In motion sequence 002, the Runway defendants move to dismiss plaintiffs' complaint under CPLR 3211 (a) (4) and (a) (7). The motions are consolidated for disposition.
This court denies plaintiffs' default-judgment motion and defendants' cross-motion for sanctions in motion sequence 001. In motion sequence 002, defendants' motion to dismiss under CPLR 3211 (a) (4) is denied. Defendants' motion under CPLR 3211 (a) (7) is granted only as to plaintiffs' twelfth and thirteenth causes of action.
DISCUSSION
I. Plaintiffs' Motion for Default Judgment and the Runway Defendants' Cross-Motion for Sanctions (Mot Seq 001)
On September 27, 2022, plaintiffs served defendants Runway Towing Corp. and Runway Towing & Recovery Corp. under CPLR 311. (NYSCEF Nos. 2, 3 [affidavits of service on corporations].) On the same day, plaintiffs served defendants Cynthia Pritsinevelos and Chris Pritsinevelos under CPLR 308 (2). (NYSCEF Nos. 4, 5 [affidavits of service on individuals].) Plaintiffs moved for default judgment against defendants on November 19, 2022. Defendants argue that they are not in default because plaintiffs agreed by email to extend defendants' time to answer or respond until November 29, 2022. (NYSCEF No. 45 at 2 [email from plaintiffs' counsel to defendants' counsel] [stating that because plaintiffs were "giving the City [defendants] until November 29 to respond," the corporation defendants could "have that time as well"].) Defendants also argue that plaintiff's motion is frivolous because it was filed after defendants filed their motion to dismiss.
Plaintiffs argue that their counsel's email to defendants was to facilitate execution a stipulation permitting defendants an extension of time to respond, but that defendants refused to execute the stipulation. (NYSCEF No. 53 at ¶ 10.) Plaintiffs' email to defendants, however, does not request that defendants execute a stipulation to extend their time to answer. Rather, the email explicitly states that defendants can have "until November 29 to respond." (NYSCEF No. 45 at 2.) Because plaintiffs agreed to extend defendants' time to answer or respond to the complaint, this court denies plaintiffs' motion for default judgment.
Plaintiff's default-judgment motion is also meritless in any event as against defendants Cynthia Pritsinevelos and Chris Pritsinevelos, because the branch of the motion seeking dismissal of the claims against them would have been timely even absent the stipulation. Plaintiffs served these defendants under CPLR 308 (2) and filed the affidavits of service on October 11, 2022. Under CPLR 308 (2), service was complete on October 21. CPLR 320 (a) affords the defendants 30 days from the completion of service to appear and respond. The 30th day of the period, November 20, 2022, was a Sunday, so defendants' deadline was the next business day, November 21. (See General Construction Law § 25-a.) Defendants moved to dismiss on November 16.
Defendants cross-move for an order granting them costs in the form of sanctions against plaintiff's counsel. According to defendants, plaintiffs' counsel "knows that he granted the defense until November 29, 2022, to file a response, knows that courts do not grant default motions made after responsive pleadings are filed, yet he made [the default-judgment motion] anyway." (NYSCEF No. 35 at ¶ 15.) Although plaintiffs' claims are unpersuasive, the court concludes that plaintiffs' counsel's conduct does not rise to the level of being sanctionably frivolous. Defendants' cross-motion is denied.
II. The Runway Defendants' Motion to Dismiss (Mot Seq 002)
A. Whether the Motion Should be Denied as Academic
The Runway defendants move to dismiss plaintiffs' complaint under CPLR 3211 (a) (7) for failure to state a claim, and under CPLR 3211 (a) (4) because "there is another action pending between the same parties for the same cause of action."
Plaintiffs argue that defendants' motion to dismiss is moot because plaintiffs have filed an amended complaint. According to plaintiffs, their amended complaint cures any deficiencies that may have existed in their original complaint. (NYSCEF No. 52 at 15.) Defendants, however, assert that plaintiffs' argument fails because defendants' motion is directed at the complaint, not the amended complaint. (NYSCEF No. 61 at ¶ 16.)
It is "well settled that an amended complaint supersedes the original complaint, thus rendering without legal effect the defective earlier pleading." (Nimkoff Rosenfeld & Schechter, LLP v O'Flaherty, 71 A.D.3d 533, 533 [1st Dept 2010].) Plaintiffs' filing of the amended complaint, however, does not automatically render defendants' motion to dismiss moot. Rather, "the moving party has the option to decide whether its motion should be applied to the new pleadings." (Sage Realty Corp. v Proskauer Rose, 251 A.D.2d 35, 38 [1st Dept 1998].) Thus, a court may apply a motion to an amended complaint if the moving party consents and "the amended complaint [does] not substantively alter the challenged causes of action." (Calcagno v Roberts, 134 A.D.3d 1292, 1292 n [3d Dept 2015].)
Here, defendants argue that plaintiffs' amended complaint does not render defendants' motion moot, because "the merits of the amended complaint are not before the court" and "the new pleading does not substantively alter the existing causes of action." (NYSCEF No. 61 at ¶¶ 12, 14.) The court agrees. Plaintiffs' amended complaint still alleges RICO causes of action against Runway defendants. As defendants note, plaintiffs only deleted from their complaint the RICO allegations directed at the New York City Police Department (NYPD) and New York City Department of Consumer and Worker Protection (DCWP) defendants. (NYSCEF No. 61 at 4.) Thus, because defendants do not wish to withdraw their motion and the causes of action that defendants' motion addresses remain unaltered, this court applies the motion to plaintiffs' amended complaint.
Plaintiffs have also removed their cause of action against the Runway defendants under 18 USC § 1962 (a). (See NYSCEF No. 14 at ¶¶ 577-581.) But because plaintiffs' causes of action under section 1962 (c) and (d) remain unchanged, this court applies defendants' motion to plaintiffs' amended complaint.
B. Whether Dismissal is Warranted under CPLR 3211 (a) (4) or (a) (5)
In 2019, plaintiffs' counsel filed an action against Runway Towing Corp., Chris Pritsinevelos, and Cynthia Pritsinevelos in the U.S. District Court for the Eastern District of New York, Abbey v Runway Towing Corp., Dkt No. 19-cv-07116 (the Abbey action). When defendants brought the current motion to dismiss, the Abbey action was still being litigated. Defendants thus argued in their motion papers that the similarities between this action and the Abbey action warranted dismissal of this action under CPLR 3211 (a) (4). After this motion was fully submitted, the Abbey action was settled and discontinued with prejudice.
Upon becoming aware of the Abbey settlement, this court sought letter briefing on whether and to what extent that settlement should affect this court's resolution of the pending motion to dismiss. Defendants' letter brief asserts that given the settlement, the court should dismiss the complaint as barred by claim and issue preclusion, i.e., under CPLR 3211 (a) (5). (See NYSCEF No. 85 at 1-2.) This court does not agree that a preclusion-based dismissal is warranted here.
Under claim preclusion, "a valid final judgment bars future actions between the same parties on the same cause of action." (Parker v Blauvelt Volunteer Fire Co., 93 N.Y.2d 343, 347 [1999].) Issue preclusion, on the other hand, applies where "the issue in the second action is identical to an issue which was raised, necessarily decided and material in the first action, and the plaintiff had a full and fair opportunity to litigate the issue in the earlier action." (Id. at 349.)
Here, claim and issue preclusion do not bar plaintiffs' claims. Plaintiffs in this action are not the same as those in the Abbey action. There were two named plaintiffs in the Abbey action. Neither of them are named plaintiffs in this action. And because the plaintiff class in the Abbey action was never certified, the Abbey settlement lacks preclusive effect as to the unnamed class members from that action. (See Astil v Kumquat Props., LLC, 125 A.D.3d 522, 523 [1st Dept 2015] [noting that "when a class is not certified, unnamed plaintiffs are not subject to res judicata effects of judicial decisions pertaining to the class"] [internal quotation marks omitted].) Thus, this court denies the branch of defendants' motion seeking dismissal under CPLR 3211 (a) (4) and (a) (5).
Defendants assert that Daniel Argentina was a named plaintiff in both the Abbey action and the current action. (NYSCEF No. 98 at 1.) Argentina, however, is not included as a plaintiff in the Abbey action's caption. Further, plaintiffs' complaint in the Abbey action also does not designate Argentina as one of the plaintiffs whose allegations are brought "on behalf of all others similarly situated." (NYSCEF No. 47 at 1 [ Abbey action complaint] [stating that "[p]laintiffs TIMOTHY ABBEY and WOLVERINE XPRESS LLC... alleges as follows for this Class Action Complaint against Defendants"].) As defendants note, the Abbey action plaintiffs did identify Argentina as an example of a consumer who was allegedly overcharged by Runway defendants. (see NYSCEF No. 98 at ¶ 24 [B].) But merely mentioning a class member in the body of a proposed class-action complaint is insufficient to designate that person as a named plaintiff in the action.
C. Whether Dismissal of Plaintiffs' RICO Claims Against the Runway Defendants is Warranted under CPLR 3211 (a) (7)
The 12th and 13th causes of action in plaintiffs' complaint (as amended) assert civil RICO claims against the Runway defendants under 18 USC §§ 1962 (c) and 1962 (d). 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 of racketeering activity." Section 1962 (d) makes it unlawful for a person to conspire to violate any provision of section 1962. The Runway defendants assert that plaintiffs have failed to allege a viable RICO claim. (NYSCEF No. 20 at 13.) This court agrees.
When considering allegations of a civil RICO violation, "courts have imposed a heightened pleading requirement." (Besicorp, Ltd. v Kahn, 290 A.D.2d 147, 151 [3d Dept 2002].) Because such allegations impose "an almost inevitable stigmatizing effect on those named as defendants,... courts should strive to flush out frivolous RICO allegations at an early stage of the litigation." (Katzman v Victoria's Secret Catalogue, 167 FRD 649, 655 [SD NY 1996] ["Civil RICO is an unusually potent weapon-the litigation equivalent of a thermonuclear device."].)
Plaintiffs assert that defendants' racketeering activity involves violations of the federal mail fraud statute (18 USC § 1341) and the federal wire fraud statute (18 USC § 1343). To allege fraud satisfactorily, a party must plead the circumstances constituting the fraud with particularity. (Browning Ave. Realty Corp. v Rubin, 207 A.D.2d 263, 267 [1st Dept 1994].) The complaint's allegations must specify "the manner in which the purported misrepresentations were fraudulent and... establish fraudulent intent." (Id. at 266; see DiVittorio v Equidyne Extractive Industries, Inc., 822 F.2d 1242, 1247 [2d Cir 1987] [stating that "fraud allegations ought to specify the time, place, speaker, and content of the alleged misrepresentations"].)
Plaintiffs' amended complaint alleges that defendants used the United States mail service, cellular phone calls, emails, and text messages to send payments to NYPD and DCWP; to send bills, statements, and invoices to Runway customers; to receive payments from customers; and to apply for a Paycheck Protection Program loan. (See NYSCEF No. 50 at ¶¶ 543-545, 547, 556-557.) Plaintiffs allege that these communications furthered defendants' scheme "to defraud plaintiffs of monies and property and illegally furthered the monetary interests of" defendants, as well as to allow defendants to continue to operate as the exclusive towing company on New York City's arterial highways. (Id. at ¶¶ 524, 534.) The complaint, however, does not specify the time and content of these communications. Plaintiffs' vague and repetitive allegations are insufficient to satisfy the particularity requirement under the federal wire and mail fraud statutes.
Plaintiffs also do not show how defendants' communications and other predicate acts related to the alleged racketeering enterprise were the cause of plaintiffs' injuries, as required to state a RICO claim. (See UFCW Local 1776 v Eli Lilly & Co., 620 F.3d 121, 132 [2d Cir 2010] [requiring that a plaintiff alleging a RICO violation show that "there was a direct relationship between the plaintiff's injury and the defendant's injurious conduct," and that "but for the RICO violation, he would not have been injured"] [internal quotation marks omitted].) As defendants note, plaintiffs' allegations rely on Better Business Bureau reviews, which are not admissible evidence. And besides these reviews, plaintiffs do not submit any specific facts detailing the time, place, and manner of plaintiffs' alleged injuries. Without these details, this court can only speculate about the relationship between defendants' violation and plaintiffs' harm. The court therefore concludes that plaintiffs have failed to state a civil RICO claim against the Runway defendants.
Because this court concludes that plaintiffs' substantive RICO claim is meritless, the court also dismisses plaintiffs' RICO conspiracy claim under § 1962 (d). (See Pludeman v Northern Leasing Sys., Inc., 40 A.D.3d 366, 368 [1st Dept 2007] ["Dismissal of the underlying substantive RICO claim mandates dismissal of the conspiracy claim."].)
D. Whether Dismissal of Plaintiffs' Other Claims Against the Runway Defendants is Warranted under CPLR 3211 (a) (5) and (a) (7)
Plaintiffs' amended complaint also asserts claims for breach of contract, unjust enrichment, civil conspiracy, and violations of Labor Law article 6 and General Business Law § 349. (NYSCEF No. 50 at 9-10.)
Defendants argue that plaintiffs' "[c]ivil RICO claims asserted as part of the State Labor Law claims are barred by the Statute of Limitations." (NYSCEF No. 20 at 21.) It is unclear what defendants mean by this statement. To the extent that defendants are arguing that the Labor Law claims are time-barred based on the statute of limitations applicable to the RICO claims, this court is unpersuaded. To the extent that defendants are arguing that the RICO claims allegedly subsumed within the Labor Law claims are time-barred, this court need not reach this issue because the court has already concluded that plaintiffs' RICO claims are meritless. (See supra Section 2 [b].)
Defendants also allege that the former tow truck drivers employed by Runway Towing Corp. are not owed any money under the Labor Law "because each was fired at some point in their employment for theft." (NYSCEF No. 61 at ¶ 19.) But defendants submit this claim in their attorney's affirmation, not in an affidavit from an individual with personal knowledge. Moreover, this claim-and the facts that defendants allege in support-are submitted for the first time in defendants' reply papers. (See Wal-Mart Stores, Inc. v United States Fid. & Guar. Co., 11 A.D.3d 300, 301 [1st Dept 2004] [finding that "[t]he motion court properly declined to reach defendants' argument... on the ground that it was improperly raised for the first time in reply"].) This court therefore declines to consider this allegation on defendants' motion.
Defendants do not argue that plaintiffs' other causes of action besides the RICO-related claims should be dismissed for failure to state a cause of action. Thus, this court denies both the branch of defendants' motion seeking to dismiss plaintiffs' non-RICO causes of action and defendants' request that plaintiffs be required to replead their state-law claims.
E. Whether to Grant the Runway Defendants' Requests to Strike Matter in the Complaint and for Sanctions Against Plaintiffs
Defendants' memorandum of law in support of their motion to dismiss includes a request to strike the allegedly scandalous and prejudicial matter presented in plaintiffs' complaint. (NYSCEF No. 20 at 22.) Defendants also argue that plaintiffs present no facts to support the allegations in their complaint, making the filing of the complaint itself frivolous conduct warranting sanctions under 22 NYCRR 130-1.1. (Id. at 23.)
The Runway defendants' notice of motion does not expressly seek these forms of relief. (See NYSCEF No. 12.) But the notice of motion does ask this court to grant "such other, further and different relief as may be just and proper." (Id. at 2.) This catch-all remedial provision is sufficient to put before the court the requests to strike and for sanctions.
In moving to strike, defendants argue that plaintiffs' allegations that "Runway is a 'criminal enterprise: because it has a "monopoly" on seven (7) Arterial highways is scandalous and prejudiced and unnecessary." (NYSCEF No. 20 at 22.) Defendants also assert that "newspaper articles, inadmissible hearsay statements and Better Business reviews" should be stricken because they are "pure hearsay" and "would be inadmissible at trial." (Id.) The court disagrees.
The First Department has stated that "[i]n reviewing a motion pursuant to CPLR 3024 (b) the inquiry is whether the purportedly scandalous or prejudicial allegations are relevant to a cause of action." (Soumayah v Minnelli, 41 A.D.3d 390, 392 [1st Dept 2007].) Plaintiffs' amended complaint refers to newspaper articles as support for its allegations that the City defendants knew of the Runway defendants' alleged "illegal activities." (NYSCEF No. 50 at ¶¶ 42-52.) These references are thus relevant to plaintiffs' causes of action asserting that government defendants were purposeful participants in the Runway defendants' associated-in-fact enterprise. Similarly, this court declines to strike the Better Business Bureau reviews from plaintiffs' complaint, because those reviews serve a non-hearsay purpose-to prove that government defendants had been put on notice of Runway defendants' illegal activities towards its customers.
This court also declines to strike plaintiffs' allegations that refer to Runway defendants as a "monopoly." Defendants have not shown how this characterization is so inflammatory and irrelevant to warrant striking the allegation from plaintiffs' complaint. On the contrary, plaintiffs' references to Runway defendants' alleged monopolization of the highways are relevant to plaintiffs' RICO causes of action, as well as to the alleged conspiratorial association between government and Runway defendants.
Defendants also argue that other "inadmissible hearsay statements" should be stricken, but defendants do not specify to which statements they refer. This court does not have the information necessary to determine whether the statements are irrelevant to plaintiffs' causes of action and thus may be stricken. The request to strike is denied.
Finally, this court denies defendants' request for sanctions against plaintiffs' counsel. Although this court concludes that plaintiffs' RICO causes of action are meritless, this court is unpersuaded that plaintiffs' complaint as a whole is so without merit that plaintiffs' counsel should be sanctioned for filing it.
Accordingly, it is
ORDERED that plaintiffs' motion for default judgment under CPLR 3215 (mot seq 001) is denied; and it is further
ORDERED that the Runway defendants' cross-motion for sanctions (mot seq 001) is denied; and it is further
ORDERED that the branch of defendants' motion seeking dismissal under CPLR 3211 (a) (4) and (a) (5) (mot seq 002) is denied; and it is further
ORDERED that the branch of defendants' motion seeking dismissal under CPLR 3211 (a) (7) (mot seq 002) is granted only to the extent that plaintiffs' twelfth and thirteenth causes of action are dismissed, and otherwise denied; and it is further
ORDERED that the branch of defendants' motion seeking under CPLR 3024 (b) to strike allegations from the complaint (mot seq 002) is denied; and it is further
ORDERED that the branch of defendants' motion seeking sanctions against plaintiffs' counsel (mot seq 002) is denied; and it is further
ORDERED that defendant is directed to serve an answer to the complaint, limited to the remaining causes of action, within 20 days after service of a copy of this order with notice of its entry; and it is further
ORDERED that counsel are directed to appear before this court for a preliminary conference on July 14, 2023.