Opinion
99 Civ. 4999 (MBM)
May 4, 2000
EDWARD S. KANBAR, ESQ., New York, N Y for plaintiff
SAUL D. BRUH, ESQ., NATIV WINIARSKY, ESQ., Kucker Kraus Bruh New York, N Y for defendants
OPINION AND ORDER
This lawsuit is the latest of more than a dozen separate actions relating to a dispute between plaintiff and those among the defendants who are private persons and entities, over certain condominium apartments that plaintiff has occupied at premises known as the CitySpire Building, 150 West 56th Street, in Manhattan. It bears mention at the outset that plaintiff was represented in these lawsuits by her current attorney, Edward S. Kanbar, other than in the one case she brought pro se. Although this congeries of lawsuits is essentially a landlord/tenant dispute, and the overwhelming majority of the prior actions were brought in the state courts of New York, plaintiff's claims in this case are said to arise under the Racketeer Influenced and Corrupt Organizations Act of 1970 ("RICO"), and she alleges a federal question under that statute as the basis for this court's jurisdiction, although she does not specify which part of the statute she relies on; rather, she refers broadly to "18 U.S.C. 1961 et seq." (Cmplt. ¶ 1)
As set forth below, plaintiff brought two prior actions in this court, and two in the Bankruptcy Court for this District.
Defendants other than those that are public agencies have moved to dismiss, both for failure of the complaint to state a claim upon which relief can be granted, and because any claims it does state are barred byres judicata. They have moved also for costs and attorneys' fees pursuant to Rule 54, Fed.R.Civ.P.
For the reasons set forth below, the complaint must be dismissed both because it fails to state a claim upon which relief may be granted, and also because any claim it could state is barred by res judicata and/or collateral estoppel. Accordingly, defendants' motion is granted on both grounds and the complaint is dismissed. Defendants' motion for costs is granted, but their motion for attorneys' fees is denied because Rule 54, as its text makes plain, provides no independent basis for awarding such fees.
The complaint contains 150 numbered paragraphs spread over 30 pages, and includes numerous references to the prior litigations in which the parties have been involved, but its description of these litigations refers only tangentially to their actual course and outcome. Accordingly, I will describe below first plaintiff's version of events as set forth in the complaint, and then the record of the subject litigations to the extent relevant, so that it can be seen clearly what the nature is of plaintiff's claim, and how plaintiff's allegations already have been dealt with in the subject litigations.
I.
A. Parties and Outline of Claim
Plaintiff is identified in the complaint as a resident of the CitySpire Building and as one who has acted as a real estate broker with respect to certain apartments in that building. (Id. ¶ 3) Defendants include the law firm of Kucker Kraus Bruh ("KKB"), which represented parties adverse to plaintiff in the transactions and litigations that underlie this lawsuit, and 14 lawyers at that firm who are named as individual defendants (the "KKB defendants") Defendants include also two entities bearing the name High Return Properties, one based in Switzerland and the other in New York, that are alleged to have participated in certain of the underlying transactions and litigations relating to one of the apartments at issue, and two persons — Fred and Renata Beguin — who are alleged to be principals of the High Return entities (collectively, the "High Return defendants"). The remaining actual defendants are brothers, Soumi and Yuri Chuu (the "Chuu defendants"), who are alleged to have participated in the transactions and litigations relating to another apartment. Apart from these persons and entities, plaintiff has named as defendants also the New York State Department of Taxation and Finance and the Internal Revenue Service, which agencies she alleges have been defrauded of taxes by the other defendants. (e.g., id. ¶ 75) Plaintiff has included in her complaint the magnanimous offer that these defendant agencies "may at their option be recast as plaintiffs[,]" (Id. ¶ 147), although neither has taken up the offer. To the contrary, the Internal Revenue Service has secured a stipulation of dismissal with prejudice, and the New York State Department of Taxation and Finance has not responded to the complaint.
In broad outline, plaintiff's claims describe two series of transactions and litigations, each relating to a different apartment at the CitySpire Building. KKB and its attorneys are alleged to have been involved in both. In the first series, plaintiff claims that the High Return defendants bought an apartment in which plaintiff was living, and bought as well the former owner's claims for back rent, and then brought an unlawful series of lawsuits to evict her and attempt to collect back rent. The illegality of the High Return defendants' conduct is said to include the acquisition of the apartment and then its sale by High Return Switzerland, which allegedly was not authorized to do business in the United States, and the nonpayment of taxes by the High Return entities, as a result of which all their litigation against plaintiff is said to have been void ab initio. All of these activities allegedly were effected for the High Return defendants by KKB and its attorneys.
In the second series of transactions and litigations, plaintiff allegedly contracted to buy an apartment owned by defendant Soumi Chuu, and paid certain sums as a down payment. In addition, she allegedly leased the apartment for a year, and paid rent. Plaintiff alleges that the contract was then voided because it had been entered into by defendant Yuri Chuu without the authorization of his brother Soumi Chuu, and that the Chuu defendants together with KKB and some of its attorneys then mischaracterized certain of the payments from plaintiff to the Chuu defendants as part of the down payment for the apartment rather than as rent, with the result that those sums could be and were attached for the benefit of the High Return defendants so as to collect the judgments they had procured through their various alleged frauds. This course of conduct by the Chuu defendants allegedly was effected by KKB and its attorneys, who are also alleged to have been operating under a conflict of interest when they undertook representation of the Chuu defendants and to have violated the automatic stay under the Bankruptcy Code by proceeding with a hearing the day after plaintiff filed for protection under the bankruptcy laws.
The complaint presents these allegations in 11 separate sections, as set forth in further detail below.
B. The High Return Allegations
In the first section, entitled "The Origins of High Return and Its Relationship With Plaintiff," the complaint purports to describe a landlord/tenant dispute in 1996 between plaintiff and James Paris, the former owner of the subject apartment, and the sale of the apartment to High Return. According to the complaint, an action was then brought to evict plaintiff from the apartment. After she was evicted, a subsequent action was brought to collect use and occupancy, notwithstanding that plaintiff claims she paid maintenance on the apartment, and also that High Return Switzerland, the alleged owner of the apartment, was barred from transacting business or suing in New York. (Id. ¶¶ 13-25)
The second section, entitled "The Illegal Business Operations of High Return Switzerland in New York State," describes the incorporation of High Return New York in 1996 and its alleged failure to disclose business previously transacted illegally, with the result that its authority to do business, conferred under New York law, allegedly was void ab initio. (Id. ¶¶ 26-37)
In the third section of the complaint, plaintiff describes what the title of that section refers to as "The Criminal Fraud Involving the James Paris Claim." Plaintiff alleges that there was a lawsuit in which she was suing Paris for the return of certain personal property, and he was suing her for back rent. She alleges that the lawsuit was dormant, but that KKB arranged for the High Return defendants to buy Paris's claim for back rent. Once that claim was assigned, High Return Switzerland sued plaintiff for the back rent she allegedly owed Paris. Plaintiff claims KKB committed champerty in connection with the transfer of this claim, and that the action itself was invalid because the claim itself was false and because there was already a pending action by Paris asserting the same claim. (Id. ¶¶ 38-53)
Plaintiff alleges further, in a section entitled "The Claim For Judgment After the Claim Was Assigned," that High Return New York obtained a judgment against her in March 1998 in the amount of $70,221, on the basis of false statements that it was the owner of the apartment in question, while concealing that High Return Switzerland owned the apartment, and that that entity transferred title to Renata Beguin, who transferred it to a third party. The effect and intent of these transfers and this concealment allegedly was to evade federal and state taxes, and to defraud plaintiff in some unspecified way. (Id. ¶¶ 54-70)
Plaintiff's allegations of tax fraud continue into the next section, entitled "The Legal Disability of High Return to Proceed in Court," where she asserts that High Return New York filed an action in April 1999 to force an escrow agent to turn over funds apparently held for the benefit of plaintiff, although High Return New York was delinquent in its payment of taxes and fees and therefore barred from filing such an action. Further, it is alleged again that no taxes were paid on sale of the subject apartment, with the result that the state and federal taxing authorities were defrauded. (Id. ¶¶ 71-75)
The next three sections of the complaint accuse the High Return defendants, and KKB, of taking unlawful steps to collect a money judgment they obtained against plaintiff in the state courts of New York in 1998. It is alleged that in April 1999 they started a separate collection action that was unlawful because the High Return entities had not paid taxes and therefore were without power to resort to the courts ("The Legal Disability of High Return to Proceed in Court") (Id. ¶¶ 71-75) These defendants also allegedly levied on more than 10% of plaintiff's income, in violation of state law ("Kucker's Illegal Levy on Funds of Calka"). (Id. ¶¶ 76-78) Further, KKB allegedly filed a lawsuit charging plaintiff with a transfer of funds in fraud of creditors, and attached those funds, then did not proceed with that action but instead brought a separate action to compel those funds to be turned over, and then resumed the initial action while the second action was still pending, a course of conduct that plaintiff alleges was in violation of state law ("Kucker Brought a Duplicate Legal Action in an Illegal Attempt to Collect a Debt"). (Id. ¶¶ 79-86)
C. The Chuu Allegations
The complaint then focuses its allegations on KKB's activities with respect to the Chuu defendants during the period 1996-1998. It alleges that plaintiff contracted to buy an apartment at CitySpire owned by Soumi Chuu, and also to rent that apartment for a year. Plaintiff allegedly paid certain funds as a down payment, and other funds as rent. Soumi Chuu then allegedly voided the deal on the ground that his brother, Yuri Chuu, did not have a power of attorney to enter into it, and, represented by KKB, overstated the amount plaintiff had paid as a down payment on the purchase. KKB then acted for the benefit of the High Return defendants to attach the overstated amount allegedly paid as a down payment, whereas it could not have attached funds paid as rent. KKB also represented the Chuu defendants in Housing Court and allegedly made false claims of non-payment in an action brought to evict plaintiff from the Chuu apartment ("The Illegal Levy by High Return on Chuu Funds, Resulting In a Conflict of Interest and False Claims in Housing Court Action"). (Id. ¶¶ 87-109) The complaint alleges as well that KKB acted in excess of its authority in managing the claims of the High Return and Chuu defendants, that KKB owns an interest in the claims of High Return, that KKB has a conflict of interest in representing both sets of defendants, and that the alleged connection between the claims of the defendants was not known to plaintiff until June 1999 ("Kucker Is Involved in the Management and Ownership of the Claim of High Return and Chuu"). (Id. ¶¶ 110-117)
According to the complaint, in June 1999 Calka and the High Return defendants reached a settlement of their differences, but the settlement foundered when KKB insisted that the settlement agreement include a clause releasing attorneys in connection with the Chuu litigation as well, and Calka allegedly became aware for the first time that the litigations were related. When the settlement was not entered into, KKB then allegedly pressed for immediate trial of the Chuu matter at a time that plaintiff's attorney was not prepared ("The Settlement Agreement With High Return"). (Id. ¶¶ 118-132) Plaintiff then filed for bankruptcy court protection on June 23, and KKB then allegedly proceeded in violation of the automatic stay to obtain a judgment on claims brought by Soumi Chuu ("Violation of Bankruptcy Stay By Kucker and Chuu"). (Id. ¶¶ 133-140)
D. RICO Allegations
The final section of the complaint purports to fulfill the requirements of a RICO claim by alleging, in conclusory fashion, that defendants made otherwise unspecified mailings of copies of pleadings, correspondence and other writings in aid of their alleged scheme, and thereby committed mail fraud, and that they made unspecified telephone calls and sent unspecified faxes in aid of their alleged scheme, and thereby committed wire fraud. Plaintiff and federal and state taxing authorities allegedly suffered injury as a result. (Id. ¶¶ 141-149)
Paragraph 150 of the complaint contains a jury demand.
II.
A. The High Return Litigations
The actual course of the litigations to which plaintiff refers in her complaint appears to have begun in 1991, when High Return bought the apartment plaintiff was then occupying as a sub-tenant of James Paris, the former owner, and served her with a notice to vacate. Although the deed to the apartment was issued pursuant to a judgment which provided that the new owner, High Return, should obtain possession (Affidavit of Saul D. Bruh sworn to August 13, 1999 ("Bruh Aff.") Ex. E), plaintiff refused to vacate. When High Return in 1996 sought a writ to compel her to leave the apartment, she resisted on various grounds, including that High Return was a foreign corporation that was barred from maintaining the action. (Id. Ex. F) The writ was granted (Id. Ex. G), a result affirmed by the Appellate Division when it lifted all stays in November 1996. (Id. Ex. M) Calka then was evicted.
Thereafter, High Return sued plaintiff in state court to collect unpaid use and occupancy charges, some of which had accrued before High Return acquired the apartment and were the subject of an assignment by Paris to High Return, and the remainder of which had accrued thereafter. Plaintiff interposed various defenses and third-party claims relating to the use and occupancy claim that had been assigned by Paris to High Return (Id. Ex. P), and High Return elected to abandon the assigned claims rather than litigate issues going back to before it acquired the apartment, and so stipulated with plaintiff. (Id. Ex. R) High Return then sought judgment on its claim for use and occupancy during the period when it owned the apartment. In an opinion dated October 7, 1997, that relief was granted. (Id. Ex. T) In motion practice following that decision, plaintiff again asserted that High Return was not a proper party, and again that assertion was rejected. (Id. Ex. V)
Plaintiff pressed her assertions as to the legal incapacity of High Return, both in that it allegedly did not own the claim, and in that the Swiss High Return entity had transacted business unlawfully and therefore the New York entity allegedly lacked authority to do business (Id. Ex. X), and filed a cross-motion making the same allegations in the underlying action (Id. Ex. Y). In March 1998, the state trial court entered a judgment against plaintiff in the amount of $62,300, and stated that the matters raised in her cross-motion "either should have been raised at an earlier stage of this litigation, or would not be grounds for dismissal of the action." (Id. Ex. Z) Plaintiff appealed, but again sought by order to show cause in the trial court to assert that High Return was not a proper party. (Id. Ex. AB) The trial court refused to enter the order to show cause, and concluded that plaintiff was seeking to evade the money judgment. (Id. Ex. AC) In her appeal from the grant of summary judgment, plaintiff argued again that High Return was not a proper party and that the trial court had acted improperly in refusing to sign the order to show cause. The lower court decision was affirmed. (Id. Ex. AD)
In February 1998, plaintiff and her attorney commenced a lawsuit in this court, purportedly under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., in which they alleged yet again that High Return was not authorized to do business. (Id. Ex. AE) That complaint was dismissed in July 1998 as time-barred. (Id. Ex. AF)
September 1998 saw the commencement in state court of yet another lawsuit by plaintiff and her attorney, against the High Return defendants, making the same allegations against those defendants as are made against them here relating to High Return's alleged incapacity to conduct business or resort to the courts, and the participation of all the High Return defendants in bringing improper litigation and failing to disclose material facts to the court. (Id. Ex. AG) That complaint was dismissed on June 4, 1999 for failure to state a claim. (Id. Ex. AH)
B. The Chuu Litigations
Following plaintiff's eviction from the apartment owned by the High Return defendants, she took up residence in an apartment owned by Soumi Chuu in the CitySpire building. When Soumi Chuu sought to evict her from that apartment, she commenced an action in Supreme Court, New York County in April 1998 to stay any eviction proceeding while she pressed a newly filed action to compel Soumi Chuu to transfer the apartment to her pursuant to what she claimed was a sales agreement. (Kanbar Aff. Exs. AV, AW) She alleged that she had made payments toward the purchase and demanded, as alternative relief, that they be returned. (Bruh Aff. Ex. AW) In May 1998 the state court denied the injunctive relief, finding that any contract had lapsed, and that therefore there was no basis for a stay. (Kanbar Aff. Ex. AY) Accordingly, in November 1998, Soumi Chuu commenced a holdover proceeding in Civil Court, New York County, to obtain possession of the apartment. (Bruh Aff. Ex. BE) Plaintiff filed an answer with 12 affirmative defenses and three counterclaims. (Id. Ex. BF)
Plaintiff's action to compel transfer of the apartment or return of alleged part payments eventually would be dismissed, on summary judgment, in January 1999, the Court concluding that there never was a binding agreement. (Id. Ex. BC) Before that dismissal, plaintiff and her attorney, Kanbar, filed an action in this court against Yuri Chuu, the brother of Soumi Chuu, and against the attorneys who had represented Soumi Chuu, claiming, as they had in their February 1998 action against the High Return defendants, a violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., alleging that there was a valid sales contract to sell the Chuu apartment to plaintiff, that there had also been a rental agreement pursuant to which plaintiff had prepaid rent, and that Yuri Chuu and the defendant attorneys had asserted false claims and used other improper debt collection practices against her. (Bruh Aff. Ex. BA) That action was dismissed, with prejudice, by stipulation dated January 5, 1999. (Id. Ex. BB)
On March 15, 1999, Soumi Chuu prevailed in the holdover proceeding in Civil Court, and plaintiff's tenancy was terminated. In its opinion, the Court found "completely not credible [Calka's] testimony with regard to the subject of her occupancy of the apartment." (Id. Ex. BG, at p. 4) On March 31, plaintiff's motion to stay the warrant of eviction that would result from that determination was denied by the Appellate Term of the Supreme Court. (Id. Ex. BI)
Plaintiff continued to seek to stay the warrant. She returned to Civil Court, which set a June 1, 1999 hearing date. On that date, plaintiff filed pro se an involuntary bankruptcy petition against both Soumi and Yuri Chuu, which had the effect of staying the Civil Court proceeding. (Id. Exs. BJ, BK) That petition was dismissed when plaintiff failed to appear for a conference two weeks later, on June 16. (Id. Ex. BL)
With no stays apparently in effect, the Civil Court resumed consideration of the holdover proceeding to determine the value of use and occupancy due from plaintiff, and also to assess attorney fees. That hearing was held on June 24, 1999. (Id. Ex. BM) Unbeknownst to Chuu's counsel or to the Court, plaintiff had filed her own bankruptcy petition on June 23, the day before, this time represented by Kanbar. (Id. Ex. BO) (Even this petition was incomplete (Id. Ex. EP), and was not completed until July 28, 1999, with the apparent assistance of a lawyer other than Kanbar (Id. Ex. BQ).)
The record in the Civil Court on June 24 reflects that Kanbar notified that Court only by telephone that a bankruptcy stay was in effect, but that Court understandably was confused by the assertion, apparently believing that it related to the already dismissed involuntary petition plaintiff had filed against Yuri and Soumi Chuu:
The Court notes parenthetically that respondent's counsel [Kanbar] is not here and has placed at least two calls to this Court, one to this court room and the second to the chambers of this Judge, noting that there was a bankruptcy stay in effect.
This Court, however, has not received anything noting that there is a bankruptcy stay; indeed, the last thing this Court does have is bankruptcy Judge Gallot's [phonetic] order dated June 16th, which vacated any stays then in place pursuant to the respondent's involuntary petition there; and the further provisions of that order provided that in the event respondent sought further protection from the Bankruptcy Court for an involuntary bankruptcy, then there would be no automatic stay upon her filing.
(Id. Ex. BM, pp. 23-24) The Court then proceeded to render a judgment against plaintiff for use and occupancy in the amount of $135,853.41. (Id. Ex. BN)
III.
As noted, plaintiff does not specify which part of the federal statute she cites is relied on as the basis for her claims. See P. 1, supra. Generally, that statute provides a civil remedy for a plaintiff who can show injury as the result of a defendant's (1) conduct (2) of an enterprise in or affecting interstate or foreign commerce (3) through a pattern (4) of racketeering activity. See Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985). Section 1962 of Title 18 specifies four kinds of activities barred by the statute: investing the proceeds of a pattern of racketeering activity in an enterprise affecting commerce, 18 U.S.C. § 1962 (a), acquiring or maintaining an interest in or control of such an enterprise through such a pattern, 18 U.S.C. § 1962 (b), conducting the activities of such an enterprise through such a pattern, 18 U.S.C. § 1962 (c), or conspiring to commit any of those acts, 18 U.S.C. § 1962 (d).
Plaintiff's sprawling complaint does not appear to assert any investment of proceeds, or acquisition or maintenance of an interest in an enterprise. Rather, plaintiff appears to assert that defendants constitute an association in fact that conducted its activities through an alleged pattern that she claims constitutes racketeering activity, to her detriment, and conspired to do so. Establishing a pattern of racketeering activity requires a showing of actual or threatened continuity of criminal behavior, of which more later.
A plaintiff who would rely on claims of mail and wire fraud to establish a RICO pattern, as this plaintiff does, must meet the specificity requirements of Fed.R.Civ.P. 9(b), which provides that "the circumstances constituting fraud . . . shall be stated with particularity." Ouaknine v. MacFarlane, 897 F.2d 75, 79 (2d Cir. 1990) Even when read through a plaintiff-oriented prism, this complaint does not state a valid RICO claim because its allegations of mail and wire fraud are hopelessly general, do not specify what each defendant is alleged to have done or said, what communications were involved, how those communications were false, and how if at all plaintiff relied on them. Absent such allegations, the complaint does not allege mail or wire fraud, see id., and accordingly does not allege a RICO violation, the only basis for federal jurisdiction.
The complaint is insufficient also in its failure to allege a pattern of conduct to the extent required in order to sustain a RICO action. A pattern, within the meaning of the statute, is alleged if the facts would establish either "openended" or "closed-ended" continuity. See GICC Capital Corp. v. Technology Fin. Group, Inc., 67 F.3d 463, 466-69 (2d Cir. 1995). "Open-ended" continuity is simply the threat of ongoing criminal activity. Id. at 466. Here, there is no such threat because we are dealing simply with disputes over two particular apartments occupied by one plaintiff at different times in a particular building. There is no way for the allegedly improper conduct to continue.
Further, because the acts in question related simply to disputes about two apartments, and were all taken as part of litigation relating to those apartments, they constituted essentially a "unitary" act, United States v. Indelicato, 865 F.2d 1370, 1383 (2d Cir. 1989), and were "isolated" and "sporadic", Beauford v. Helmsley, 865 F.2d 1386, 1391 (2d Cir. 1989); therefore, they do not establish even the closed-ended continuity necessary to state a RICO claim. See GICC, 67 F.3d at 466.
For the above reasons, the complaint must be dismissed for failure to state a claim.
Based on the record of frivolous and obstructive litigation conducted by this plaintiff, both as plaintiff and as defendant, and by her lawyer Edward S. Kanbar, as described in the earlier sections of this opinion, it is apparent that if this case is dismissed for failure to state a claim, this plaintiff will seek leave to replead. However, adding to this complaint would no more improve its viability than adding to a brick would improve its aerodynamics. A brick will not fly; neither will this complaint. Accordingly, leave to amend will be denied.
IV.
A. Res Judicata
Under the doctrine of res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were, or could have been, raised in that action. See Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 298 (1981). Simply put, the doctrine states that once a final judgment has been entered on the merits of a case, that judgment will bar any subsequent litigation by the same parties or those in privity with them concerning "the transaction, or series of connected transactions, out of which the [first] action arose."Maharaj v. Bankamerica Corp., 128 F.3d 94, 97 (2d Cir. 1997) (internal quotation marks and citation omitted). For purposes of res judicata, what is important is not the legal theories upon which successive claims are based, but rather the facts upon which they are based. See Berlitz Sch. of Languages of Am., Inc. v. Everest House, 619 F.2d 211, 215 (2d Cir. 1980) A second claim therefore will be precluded if it requires the same evidence to support it and is based on facts that were at issue in the first action. See S.E.C. v. First Jersey Sec. Inc., 101 F.3d 1450, 1463 (2d Cir. 1996). Moreover, for purposes of res judicata, it is irrelevant whether a particular issue or claim was actually raised or decided; the key point is whether it could have been raised. See Federated Dep't Stores, 452 U.S. at 398; Clarke v. Frank, 960 F.2d 1146, 1150 (2d Cir. 1992)
By that standard, plaintiff's claims against the High Return and Chuu defendants are barred. Plaintiff is claiming here that those defendants improperly evicted her from apartments at CitySpire, and did her out of rental and other payments. She had an opportunity to litigate that claim and the issue of High Return's status and capacity to sue, and did so in state court. Her assertions and defenses were rejected. The Appellate Division affirmed — twice (Bruh Aff. Exs. M, AD). The same is true with respect to the Chuu defendants. She claimed in the state courts that she had a contract to buy the apartment at issue, that certain of her payments were mischaracterized as down payments rather than rent payments, and that she should not have been evicted. Again, her assertions and defenses were rejected. Further, she sued Yuri Chuu in this court for conduct arising out of the dispute over the Chuu apartment, and agreed to dismiss that case, with prejudice, on January 5, 1999. (Id. Ex. BR) Whether or not she asserted RICO claims in that case, she could have.
In plaintiff's litigations with both the High Return defendants and the Chuu defendants, she lost. Res judicata bars her from continuing to assert claims against them growing out of the same transactions that were the subject of her earlier unsuccessful lawsuits.
B. Collateral Estoppel
Principles of collateral estoppel require the same outcome as to the KKB defendants. Generally, under principles of collateral estoppel, once a federal court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of that issue in a federal suit on a different cause of action involving a party or its privy to the first case. See Montana v. United States, 440 U.S. 147, 153 (1979). The Supreme Court has recognized that both res judicata and collateral estoppel relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources and, by preventing inconsistent decisions, encourage reliance on adjudication. Id. at 153-54. The Court has expanded the reach of collateral estoppel in particular, finding the policies underlying it to apply in cases beyond those formerly governed by the common law on the subject. For example, the Court has eliminated the requirement of mutuality in applying collateral estoppel to bar relitigation of issues decided in earlier suits. See Blonder-Tongue Lab., Inc. v. University of Ill. Found., 402 U.S. 313, 345-49 (1971). Thus, the law permits a litigant who was not party or privy to a federal case to use collateral estoppel defensively in a new federal suit against the party who lost on the decided issue in the first case. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 328 (1979).
The same result obtains when the earlier case was brought in state court. The Full Faith and Credit Act, 28 U.S.C. § 1738 (1994), requires a federal court to give a state court's resolution of an issue the same preclusive effect it would receive in that state's court system. See 18 James Wm. Moore et al., Moore's Federal Practice § 133.30[1] (3d ed. 1999). Under New York law, relitigation of an issue is barred by collateral estoppel, whether or not the party invoking the estoppel would have been barred by a judgment adverse to that party. See B.R. DeWitt, Inc. v. Hall, 19 N.Y.2d 141, 147, 278 N.Y.S.2d 596, 601 ("[T]he `doctrine of mutuality [of estoppel]' is a dead letter"). Mutuality is irrelevant whether the estoppel is used offensively or defensively. See e.g., Read v. Sacco, 49 A.D.2d 471, 474, 375 N.Y.S.2d 371, 374 (2d Dep't 1975) ("The means to which the estoppel is put — whether as an offensive weapon or as a defensive shield — is not controlling.").
If the judgments in favor of the High Return and Chuu defendants bar plaintiff's claims against those defendants as a matter of res judicata, it follows that she is collaterally estopped to argue that the KKB defendants participated in a RICO violation by representing the parties who obtained those judgments.
V.
Defendants have moved for costs and attorneys' fees pursuant to Rule 54. Rule 54(d)(1) provides that "costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs [.]" Defendants are the prevailing parties, and accordingly they will recover costs.
However, the same Rule provides that a party applying for an award of attorneys' fees "must specify . . . the statute, rule, or other grounds entitling the moving party to the award [.]" The moving parties have cited only the factual grounds for seeking fees — the conduct of plaintiff and her attorney in bringing this action. However, they have cited no statute, rule or other legal grounds for their application. Based on the quoted language, which requires citation of other authority, Rule 54 is not itself authority for awarding fees. Accordingly, that branch of defendants' motion is denied.
* * *
For the above reasons, plaintiff's complaint is dismissed for failure to state a claim, and leave to amend is denied. Alternatively, based on principles of res judicata and collateral estoppel, summary judgment is granted and the complaint is dismissed. Costs, but not attorneys' fees, will be awarded to defendants.