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denying motion to strike because it did “not appear beyond doubt that Plaintiff's allegations ... lack any factual basis”
Summary of this case from N.Y. Dist. Council of Carpenters Pension Fund v. FordeOpinion
No. 02 Civ. 7311 (LTS)(AJP)
March 30, 2004
MEMORANDUM OPINION AND ORDER
In this action arising out of the management of an offshore brokerage account, Plaintiff Donald Rampersad ("Rampersad") asserts claims for securities fraud under section 10(b) of the Securities and Exchange Act of 1934 ("Section 10(b)") and Rule 10b-5 promulgated thereunder, and for violation of the Racketeer Influenced Corrupt Organization Act ("RICO"). Plaintiff also asserts common law fraud, conversion, and breach of fiduciary duty claims. Plaintiff amended his original complaint following initial dispositive motion practice. Defendants Deutsche Bank Securities. Inc., formerly known as Deutsche Bank Alex.Brown Inc. ("Alex.Brown"), Richard DeBoe ("DeBoe"), and Langtry Trust Group ("Langtry") move for dismissal of the Amended Complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). Alex.Brown and DeBoe also seek, pursuant to Federal Rule of Civil Procedure 12(f), an order striking certain allegations in the Amended Complaint.
The Court has jurisdiction of Plaintiff's Section 10(b) and RICO claims pursuant to 2S U.S.C. § 1331. The Court has considered thoroughly all submissions in connection with the instant motions. For the following reasons, Defendants' motions are granted.
BACKGROUND
The following facts, which are alleged in the Amended Complaint (the "Complaint"), are taken as true for purposes of the motions to dismiss.
In October or early November 1998, Rampersad, a citizen of Trinidad and Tobago, telephoned Robert Parry ("Parry"), his cousin residing in the United States, about the possibility of investing approximately $500,000 (U.S. dollars) in the U.S. stock market. (Compl. ¶¶ 1, 10.) Parry contacted Steven Harrison ("Harrison"), an individual previously introduced to Rampersad by Parry, to discuss investment options for Rampersad. (Id. ¶¶ 8, 12.) Harrison suggested Rampersad contact Peter Brant ("Brant"), a convicted felon who managed Harrison's personal investments at Alex.Brown with DeBoe as broker. (Id. ¶¶ 12, 13.)
On November 8, 1998, Brant recommended that Rampersad invest his money offshore. (Id. ¶ 15.) Once in the offshore account, the money would be transferred to an account at Alex.Brown that would be managed and traded by Brant with DeBoe as broker. (Id. ¶ 16.) So as to avoid U.S. tax liability, Rampersad agreed to the structure of the transaction. (Id.) Rampersad and Brant also agreed that Brant would receive a management fee equal to 20% of any gains realized by the account under his management. (Id. ¶ 17.) In connection with this arrangement, Rampersad urged Brant to "mind the money safely," to which Brant replied that he would invest the funds only in "renowned" stocks. ( Id. ¶ 18.)
On December 7, 1998, Rampersad received from Langtry, the offshore entity, a letter containing wiring instructions. ( Id. ¶ 19.) Upon Brant's confirmation that the wiring instructions were legitimate, Rampersad wired $300,000 to Langtry, on December 16, 1998. (Id. ¶ 22.) The funds transfer report states that Rampersad was the "customer" with respect to the funds located in the account established with Langtry. (Id. ¶ 23.) In late December 1998 or early January 1999,* Langtry directed Lloyd's Bank to send the sum of approximately $300,000 to an account at Alex.Brown. (Id. ¶ 27.) This account was opened in Langtry's name; Brant was authorized to trade in this account. (Id. ¶ 26.)
In late December 1998 or early January 1999, Rampersad telephoned DeBoe requesting, among other things, confirmation that his account with Alex.Brown had been "performing well." (Id. ¶ 26.) DeBoe told him that the $300,000 had been received into an account at Alex.Brown and that the account would be established under the name "Langtry", though Rampersad would be the "owner." (Id.) Furthermore, DeBoe told Rampersad that Brant was going to trade the Langtry account, that Rampersad's account information was being sent to Brant and not Rampersad, that DeBoe would make him a copy of the account information, and that Brant was a "good client" of Alex.Brown. (Id.) Finally, Rampersad alleges that, based on this conversation with DeBoe, he wired the remaining $200,000 to Langtry. (Id. ¶ 29.)
Langtry, on January 15, 1999, transferred the $200,000 to the same Alex.Brown account, held in its name, that contained the original deposit. (Id. ¶¶ 32-33.) Rampersad did not wire money directly to Alex.Brown but rather sent money directly to Langtry, which then forwarded the funds to the Alex.Brown account in Langtry's name. ((Id., ¶¶ 26, 29, 32.)
In mid-January 1999, Rampersad alleges, he once again spoke to DeBoe, who continued receipt of the second set of funds. (Id. ¶ 34.) During this conversation, Rampersad further alleges, he asked DeBoe for certain forms in connection with avoiding U.S. tax liability and for copies of the monthly account statements. ( Id.) DeBoe directed Rampersad to ask Brant for the paperwork. (Id.)
Over the next year, the value of the Alex.Brown account began to drop precipitously. Account statements reveal that the account was on margin as early as May 1999. (Id. ¶ 37.) Also, as of July 1999, the account only held Global Telesystems Group stock. (Id. ¶ 39.) If Rampersad had known that his portfolio was being managed in this way, he would have objected. (Id.) Funds from the Alex.Brown account were transferred to Lloyds Bank at the instruction of Langtry, to an account not belonging to Rampersad. (Id. ¶¶ 35-38.) Rampersad alleges that DeBoe was aware that the wire transfers were without Rampersad's knowledge or consent. (Id. ¶¶ 35-38.)
In March 1999, Alex.Brown account statements reveal that it had a net account value of 5582, 434.29. (Id. ¶ 35.) Presumably due to the trading strategy and wire transfers discussed infra, the account began to dwindle on a monthly basis. The September 1999 account statements reveal that for the first time the account maintained a negative balance and as of January 2002 the account at Alex.Brown had a negative $851,338.82 balance. (Id. ¶¶ 34-51.)
The alleged wire transfers are as follows: March 19, 1999 $20,030.00; April 1999 $50,000; May 19, 1999 $15,000; and June 21, 1999 $15,000. (Id. ¶¶ 35-38.)
Rampersad asserts that DeBoe called him at least two times during 1999 seeking business from Rampersad's friends and/or family. (Id. ¶ 42.) During one of these conversations, Rampersad and DeBoe discussed the Alex.Brown account; the discussion, however, was limited to a request for the account statements and there was no discussion concerning the account's performance. (Id. ¶ 43.) Rampersad further alleges that he and Brant spoke occasionally throughout 1999, and Brant "continually informed" Rampersad that his investments were "doing well." (Id. 11 45.) Towards the end of 1999 Brant, suddenly and without warning, told Rampersad that the Alex.Brown account was negative by several hundred thousand dollars. (Id. 148.)
On August 14, 2000, Rampersad submitted his claims against Alex.Brown, DeBoe and Matthew Kolb (Alex.Brown's New York City branch manager) arising out of the account to arbitration before the New York Stock Exchange, Inc. ("NYSE"). (Id. 1| 52; Uniform Submission Agreement, Ex. A to DeBoe Not. of Mot.) Langtry was not a party to these proceedings. On March 7, 2002, the arbitration panel dismissed Rampersad's claim without prejudice. (Compl. ¶ 52.) On September 4, 2002, Rampersad commenced this action in New York Supreme Court, New York County. Alex.Brown and DeBoe removed the action to this Court and Defendants moved to dismiss the original complaint. Rampersad amended his complaint with Defendants' consent on January 23, 2003.
DISCUSSION
Motion to Strike
Defendants Alex.Brown and DeBoe seek to have Plaintiff's allegations concerning conversations between Plaintiff and DeBoe stricken pursuant to Federal Rule of Civil Procedure 12(0 on the ground that they are a sham and false. DeBoe also asserts that Plaintiff should be found judicially estopped from alleging that he had any conversations with DeBoe. DeBoe and Alex.Brown contend that such allegations contradict Plaintiff's pleadings in the NYSE arbitration proceeding. Neither Defendant proffers the NYSE pleadings, on the ground that NYSE arbitration pleadings arc "generally considered confidential." Instead, Defendants quote Plaintiff as having alleged in his Statement of Claim and Amended Statement of Claim that "`[Plaintiff] has never met or spoken with DeBoe'" and "`nobody from Alex.Brown ever met or even talked to [Plaintiff].'" (DeBoe Mem. in Supp. at 5; Alex.Brown Mem. in Supp. at 6-8.) Plaintiff does not dispute the accuracy of Defendants' citations, although he notes that he never swore to the accuracy of the facts in his arbitration demand. (Pl.'s Mem. in Opp. to DeBoe at 11 n. 6).
Rule 12(f) provides in pertinent part that a court "may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Rule 12(f) does not explicitly list sham or falsity as grounds for strike. In the case cited by Defendants in support of their motion to strike, however, the Federal Circuit did affirm as not an abuse of discretion a district court's striking of certain allegations in the plaintiff's second amended complaint as sham when they were manifestly inconsistent with allegations in the first amended complaint, notwithstanding the plaintiff's explanation of "eventual recollection." Bradley v. Chiron Corporation, 136 F.3d 1317, 1324-25 (Fed. Cir. 1998). Courts in this district have also recognized a district court's authority to strike allegations as false. See, for example, Weiss v. La Suisse, 131 F. Supp.2d 446, 450 (S.D.N.Y. 2001); Salzmann v. Prudential Securities, Inc., No. 91 Civ. 4253, 1994 WL 191855, *13 (S.D.N.Y. May 16, 1994). Nonetheless, "[a] pleading should be stricken only when it appears beyond peradventure that it is sham and false and that its allegations are devoid of factual basis." Murchinson v. Kirby, 27 F.R.D. 14, 19 (S.D.N.Y. 1961).
Defendants here have at best established that the Amended Complaint is inconsistent with Plaintiff's arbitral pleadings. Accordingly, it does not appear beyond doubt that Plaintiff's allegations concerning conversations with DeBoe lack any factual basis. The motions of Alex.Brown and DeBoe are therefore denied to the extent they seek to have those allegations stricken under Rule 12(f).
DeBoe's judicial estoppel argument is likewise unavailing. A party invoking judicial estoppel "must show that (1) the party against whom estoppel is asserted took an inconsistent position in a prior proceeding and (2) that position was adopted by the first tribunal in some manner, such as by rendering a favorable judgment." Mitchell v. Washingtonville Central School District, 190 F.3d 1, 6 (2d Cir. 1999) (internal citations omitted). DeBoe has not satisfied the second element. Although Plaintiff's allegations in the Complaint regarding conversations with DeBoe do appear inconsistent with the assertions in his arbitral pleadings recited above, the decision dismissing Plaintiff's claim does not articulate any reasons for the dismissal. DeBoe contends that the arbitrator must have accepted Plaintiff's allegation that he had never spoken with DeBoe or anyone else at Alex.Brown in order to grant DeBoe's motion to dismiss. The grounds proffered by DeBoe for dismissal-that Rampersad was not a customer of Alex.Brown, that his claim did not arise in connection with Alex.Brown's business, and that the dispute was not a proper for NYSE arbitration — however, did not require the arbitrator to accept Plaintiff's allegation that he had never spoken with DeBoe in order to find any of them a sufficient basis for dismissal, particularly the third ground. Rather, the arbitrator could have found that whatever contacts occurred did not give rise to the requisite legal relationship. In any event, DeBoe has not shown that the arbitrator adopted the allegation in question. Accordingly, DeBoe's motion is denied to the extent it seeks to cstop Plaintiff's from alleging that he had conversations with DeBoe.
Plaintiff's Securities Fraud Claims are Time-Barred
Plaintiff asserts claims for securities fraud under Section 10(b) premised on theories of unsuitability, churning and unauthorized trading. Defendants seek dismissal of Plaintiff's Section 10(b) claims on the grounds that they are time-barred.
In determining a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court is required to accept as true the factual assertions in the complaint. Charles W. V. Maul, 214 F.3d 350, 356 (2d Cir. 2000). A district court should grant such a motion to dismiss only where, viewing plaintiff's allegations in the light most favorable to him, "it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief." See Harris v. City of New York, 186 F.3d 243, 247 (2d Cir. 1990).
The parties agree that Plaintiff's Section 10(b) claims are subject to the limitations period established by the Sarbanes-Oxley Act of 2002, codified at 28 U.S.C.A. section 1658(b), which provides that a securities fraud claim "may be brought no later than the earlier of (1) 2 years after the discovery of the facts constituting the violation; or (2) 5 years after such violation." "A plaintiff in a federal securities case will be deemed to have discovered fraud for purposes of triggering the statute of limitations when a reasonable investor of ordinary intelligence would have discovered the existence of the fraud."Newman v. Warnaco. Group, Inc., 335 F.3d 187, 193 (2d Cir. 2003) (quoting Dodds v. Cigna Sec., Inc., 12 F.3d 346, 350 (2d Cir. 1993)). Furthermore, when "the facts needed for determination of when a reasonable investor of ordinary intelligence would have been aware of the existence of fraud can be gleaned from the complaint and . . . forms that are integral to the complaint, resolution of the issue on a motion to dismiss is appropriate." Dodds, 12 F.3d at 352 n. 3.
Plaintiff alleges that, in late 1999, Brant told him that his account was negative by several hundred thousand dollars. Because Plaintiff's fraud claims are premised on Defendants' having disregarded Plaintiff's conservative investment objectives and traded on margin without authorization, Plaintiff had actual notice of the alleged fraud when he learned of the account's negative balance — a condition that could not have arisen in the absence of unauthorized margin trading. Moreover, even if knowledge of the negative balance did not provide Plaintiff actual notice of the fraud, Plaintiff certainly knew he had a cause of action when he agreed to submit his fraud claims to arbitration. Cf. Friedman v. Wheat First Sec. Inc., 64 F. Supp.2d 338, 344 (S.D.N.Y. 1999) ("Plaintiffs were clearly aware that they had a cause of action, as evidenced by their decision to file an arbitration claim with the NASD[.]"). It is undisputed that Plaintiff agreed to submit his fraud claims to arbitration on August 14, 2000, more than two years prior to the September 2002 commencement of this action. See Uniform Submission Agreement, Ex. A to DeBoe Not. of Motion; Complaint annexed to Notice of Removal. Accordingly, Plaintiff's Section 10(b) fraud claims must be dismissed as time-barred.
Rampersad contends that because the action was originally filed in New York state court he should receive the benefit of tolling under New York law for the period during which the arbitration proceeding was pending. Section 204(b) of New York's Civil Practice Law and Rules ("C.P.L.R.") provides, in pertinent part, that:
Where it shall have been determined that a party is not obligated to submit a claim to arbitration, the time which elapsed between the demand for arbitration and the final determination that there is no obligation to arbitrate is not a part of the time within which an action upon such claim must be commenced.
N.Y.C.P.L.R. § 204(b) (McKinney 2003). Federal law, however, not New York state law, governs the availability of tolling in a Section 10(b) action. Thus, Section 204(b) is irrelevant to the question of whether tolling is available with respect to the Section 10(b) claim. See Friedman, 64 F. Supp.2d at 344. NYSE Rule 606(a), which Rampersad also invokes, does not alter this conclusion, because Rule 606(a) only applies "[w]here permitted by law," which, in the context of Section 10(b) claims, must mean permitted by federal law. Friedman, 64 F. Supp.2d at 343-44. Rampersad has not identified any federal tolling principle that would be applicable to the instant action, nor is the Court aware of any. Accordingly, Plaintiff's Section 10(b) claims are dismissed as time-barred.
The cases Plaintiff proffers in support of the application of section 204(b) do not involve Section 10(b) claims and thus are not to the contrary. See Joseph Francese, Inc. v. Enlarged City School District of Troy, 710 N.Y.S.2d 315 (2000) (contract dispute);Individual Securities. Ltd, v. Ross, No. No. 97-7953, 1998 WL 385835 (2d Cir. May 11 1998) (diversity action involving state law claims).
NYSE Rule 606(a) provides in pertinent part that, "Where permitted by law, the time limitation(s) which would otherwise run or accrue for the institution of legal proceedings, shall be tolled when a duly executed Submission Agreement is filed by the claimant(s)."
With respect to Langtry, Rampersad's attempt to bring his securities fraud claim within the limitation period by relying on his arbitration claim against Alex.Brown and DeBoe is unavailing for the further reason that Langtry was not a party to the arbitration proceeding. Thus, any tolling in connection with the arbitration proceedings, even if available, is inapplicable to Langtry. Rampersad attempts to circumvent this obstacle by invoking the "relation back" doctrine set forth in the Federal Rule of Civil Procedure Rule 15(c), arguing that his claim against Langtry, first asserted in Plaintiff's September 2002 complaint, should be deemed to have been asserted in the arbitral submissions. It is not readily apparent how Plaintiff's submissions in the arbitration proceeding, as opposed to his original complaint, may be used as the basis for invoking Rule 15(c). In fact, it is quite clear that Rule 15(c) applies only to an "amendment of a pleading." Bank of India v. Trendi Sportswear, Inc., No. 89 Civ. 5996, 2002 WL 1836754, at *3 (S.D.N.Y. 2002).
Even assuming Rule 15(c) applies, Rampersad fails to allege, as he must, that his decision not to name Langtry as a defendant in the arbitration was due to mistaken identity. "If the reason for not naming a new party is anything other than a mistake of identity, then the relation back doctrine is unavailable." Nordco. A.S. v. Ledes, No. 95 Civ. 7753, 1999 WL 1243883, at *3 (S.D.N.Y. 1999). Accordingly, Rampersad has failed to successfully invoke the "relation back" doctrine. Count III of the Amended Complaint is dismissed as time-barred. Plaintiff Fails to State a RICO Claim
Because the Court is dismissing Plaintiff's Section 10(b) claims as time-barred, it is not addressing Defendants' other arguments for dismissal.
Rampersad does not clearly identify which RICO provision serves as the basis for his cause of action. However, it appears from his papers in opposition to the instant motions that Rampersad is asserting his RICO cause of action under 18 U.S.C. § 1962(c). To state a civil RICO claim under section 1962(c), the plaintiff must allege injury resulting from "defendants' (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Azrielli v. Cohen Law Offices, 21 F.3d 512, 520 (2d Cir. 1994) (internal quotation marks omitted).
The Amended Complaint fails to state a RICO claim because Plaintiff has not alleged a pattern of racketeering activity. In order to establish a pattern, a plaintiff must demonstrate that the predicate acts of racketeering activity by a defendant are "related, and that they amount to or pose a threat of continued criminal activity." H.J. Inc. v. Northwestern Bell Tel Co., 492 U.S. 229, 239 (1989). There are two forms of continuity under RICO that may be shown in order to satisfy the "continued criminal activity" element of the cause of action, "closed-ended continuity" or "open-ended continuity." H.J. Inc., 492 U.S. at 239, 241.
"Closed-ended continuity is demonstrated by predicate acts that `amount to continued criminal activity' by a particular defendant." De Falco v. Bernas, 244 F.3d 286, 321 (2d Cir. 2001) (quoting H.J. Inc., 492 U.S. at 242). In order to establish closed-ended continuity, a plaintiff must prove "a series of related predicates extending over a substantial period of time. Predicate acts extending over a few weeks or months . . . do not satisfy this requirement."H.J. Inc., 492 U.S. at 242.
"Since the Supreme Court decided H.J. Inc., the Second Circuit has never held a period of less than two years to constitute a `substantial period of time'" for purposes of the closed-ended continuity test. DeFalco. 244 F.3d at 321. See also Cofacredit S.A. v. Windsor Plumbing Supply Co., 187 F.3d 229, 242 (finding allegations of activity over a period of 11/2 years insufficient to establish closed-ended continuity); GICC Capital Corp. v. Technology Finance Group. 67 F.3d 463, 466 (2d Cir. 1995) (period of less than one year insufficient to demonstrate closed-ended continuity).
Taken in the light most favorable to Rampersad, the predicate acts he alleges in the Amended Complaint extend from November 1998 through late 1999, when Brant told Plaintiff that his account had a negative balance. Plaintiff appears to concede that the Amended Complaint does not allege closed-ended continuity, but contends that with discovery he could make such allegations. (Pl's Mem. in Opp. to DeBoe Mot. at 24-25.) Plaintiff offers no suggestion, however, as to what discovery would alter the fact that he knew his account was depleted and negative by late 1999, and thus that the actions in question took place within a period of less than two years. In addition, Plaintiff alleges no other basis for concluding that Defendants' actions could support a finding of closed-ended continuity: as plead, only a handful of participants were involved in a single scheme to defraud a single plaintiff. See GICC Capital Corp., 67 F.3d at 467 (discussing non-dispositive factors to be weighed in determining existence of closed-ended continuity). Accordingly, Plaintiff's allegations are insufficient to meet the closed-ended continuity standard.
Nor are the facts alleged in the Amended Complaint sufficient to support a finding of open-ended continuity. In order to establish this type of continuity, a plaintiff must show that there was a threat of continuing criminal activity "extending indefinitely into the future."H.J., Inc., 492 U.S. at 242. This threat of continuing criminal activity must extend "beyond the period during which the predicate acts were performed." De Falco, 244 F.3d at 323 (quotingCofacredit, 187 F.3d at 242). In considering whether a complaint alleges open-ended continuity the court should consider the nature of the enterprise and the predicate acts alleged. See Cofacredit, 187 F.3d at 242.
A fraudulent scheme limited to one account is considered "inherently terminable" and does not support an inference of a threat of continuing criminal activity. See GICC Capital Corp., 67 F.3d at 466 (allegations of fraudulent scheme designed to deprive a single entity of its assets insufficient to suggest threat of continuity as it "defies logic to suggest that a threat of continued looting activity exists when, as plaintiff admits, there is nothing left to loot"); D.R.S. Trading Co. v. Fisher, No. 01 Civ. 8028, 2002 WL 1482764, at *4 (S.D.N.Y. 2002) ("When the fraudulent conduct alleged involves such a limited number of perpetrators, small number of victims, and limited goal, it cannot support a claim of open-ended or closed-ended continuity."); Price v. Gast, No. 98 Civ. 7769, 2000 WL 369381, at *9 (S.D.N.Y. April 11, 2000) ("`The Courts of this Circuit have repeatedly found that . . . short-lived, inherently terminable schemes with a few criminal acts and few victims do not show a threat of continuity sufficient to plead a RICO pattern.'"). Here, the alleged fraudulent scheme set forth in the Complaint is limited to one account. By Rampersad's own admission this account was fully depleted of all funds by September 1999. The alleged scheme therefore cannot give rise to an inference of a threat of future criminal activity.
The facts alleged by Plaintiff are inconsistent with both closed-and open-ended continuity, thus Plaintiff has not alleged a pattern of racketeering activity and it is clear that he can prove no facts in support of his RICO claim that would entitle him to relief. Accordingly, the Amended Complaint fails to state a claim under section 1962(c); Count V is dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6).
Dismissal with Prejudice
Plaintiff has had, taking into account his submissions in the NYSE arbitration, four opportunities to plead his claims, and he filed his Amended Complaint after briefing Defendants' motions to dismiss the original complaint. In light of the foregoing analysis and Plaintiffs' prior opportunity to address the legal insufficiencies of the federal claims asserted in this action, granting further leave to replead Plaintiffs' federal claims would be fufile. Accordingly, Counts III and V of the Complaint are dismissed with prejudice pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiffs Federal Claims against Defendant Peter Brant
Plaintiff also asserts his Section 10(b) and RICO claims against Defendant Peter Brant, who has not appeared in this action. Count V is dismissed with prejudice as against Brant for failure to state a claim for the reasons explained above. As to Count III, from the face of the Amended Complaint it appears that the Court's analysis of the timeliness of Plaintiff's Section 10(b) claim would apply to Brant as well. See Coakley v. Jaffe, 49 F. Supp.2d 615, 621 n. 1 (S.D.N.Y. 1999) (dismissing sua sponte claims against non-moving defendant who was "similarly situated to the [moving] defendants with respect to the claims dismissed"). See also Leonhard v. United States, 633 F.2d 599, 609 n. 1 1 (2d Cir. 1980) ("The district court has the power to dismiss a complaint sua sponte for failure to state a claim. There appears to be no reason why the same rule should not apply to statute of limitations grounds [where, as here] the facts supporting the statute of limitations defense are set forth in the papers plaintiff himself submitted."); Baker v. Cuomo, 58 F.3d 814, 819 (2d Cir. 1995), cert. denied sub nom. Pataki v. Baker, 516 U.S. 980 (1995), vacated in part on other grounds, 85 F.3d 919 (2d Cir. 1996) (en banc) ("[Sua sponte dismissal] is . . . appropriate if it appears from the face of the complaint that the action is barred, for example by expiration of the statute of limitations."). However, in light of Plaintiff's failure to seek a default judgment against Brant, Count III will be dismissed as against Brant without prejudice, for failure to prosecute.
Remand of Plaintiff's State Law Claims
Defendants removed this action on the basis of federal question jurisdiction. Diversity of the citizenship of the parties in this action is not asserted in any of the pleadings, in the Notice of Removal or in the Amended Complaint. Indeed, it appears that removal on the basis of diversity would not have been available to Defendants, because it is likely that either Alex.Brown or DeBoe is a citizen of New York for the purposes of diversity jurisdiction. See 28 U.S.C.A. § 1441(b) (West 1994). Accordingly, in the interests of comity and the conservation of judicial * resources the Court declines to exercise jurisdiction over Plaintiff's remaining state law claims, and remands them to state court pursuant to 28 U.S.C. § 1447(c). Cf Trask v. Kasenetz, 818 F. Supp. 39, 44-45 (E.D.N.Y. 1993) (remanding state claims after dismissing federal claim which served as sole basis for removal even though parties may have been diverse). See also Woolf v. Mary Kay. Inc., 176 F. Supp.2d 654 (N.D. Tex. 2001); Maher v. Moore College of Art and Design, No. 98 Civ. 2978, 1999 WL 88964 (E.D. Pa. Feb. 19, 1999).
CONCLUSION
For the foregoing reasons, Defendants' motions are granted. Count V of the Amended Complaint is dismissed with prejudice as against all Defendants. Count III is dismissed with prejudice as against Alex.Brown, DeBoe, and Langtry and without prejudice as against Peter Brant. Plaintiff's remaining claims are remanded to the New York Supreme Court, New York County. The Clerk of Court shall effectuate the remand and close this matter on the records of this Court.
SO ORDERED.