Aliev v. Neriya Borukhov, Aron Borukhov, Individually & in His Capacity Borukhov & Assocs., P.C.

FARIZ ALIEV, Plaintiff, v. NERIYA BORUKHOV, ARON BORUKHOV, Individually and in his Capacity as Attorneyand Principal of the Law Firm of ARON B. BORUKHOV & ASSOCIATES, P.C.,ROSHEL MALAKOV, STELLA AKBASHEV, ARON B. BORUKHOV & ASSOCIATES, P.C.,SKYHIGH EQUITIES, LLC, 175-31 JAMAICA, LLC, 41-21 REALTY, INC.,VIRGIN CAPITAL, LLC, 31 SUMPTER, LLC,ROMAL EQUITIES, LLC, 84-19 KENT ST. REALTY LLC, Defendants.

15-CV-6113 (ERK) (JO)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

July 8, 2016

NOT FOR PUBLICATION

MEMORANDUM & ORDER

KORMAN, J.:

On October 26, 2015, plaintiff Fariz Aliev ("Aliev") filed a complaint principally seeking damages against Neriya Borukhov, his brother Aron Borukhov, and two other individuals, Stella Akbashev ("Akbashev"), and Roshel Malakov ("Malakov"), as well as against a number of related entities, including Aron Borukhov's eponymous law firm, Aron B. Borukhov & Associates, P.C. (together, "the Defendants"). The complaint asserted that the Defendants had violated the Racketeer Influenced and Corrupt Organizations statute by defrauding Aliev into investing in several real estate transactions over a multiyear period and then ultimately taking his funds for their own purposes without providing him anything in return. The complaint also alleged a number of state-law claims, including common-law fraud. Three sub-groups of the Defendants have each separately moved pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the complaint.

FACTS

Aliev, a resident of Queens, New York, met Aron and Neriya Borukhov in 2011 when they successfully brokered Aliev's purchase of a property in Queens. Am. Compl. ¶¶ 1, 19. Aron Borukhov, Neriya's brother, is an attorney licensed to practice in New York and the principal of Aron B. Borukhov & Associates, P.C. Id. ¶¶ 11, 104. After the first transaction, the Borukhovs offered Aliev the chance to make more real estate investments through them.¹ Id. ¶ 20.

I. 175-31 Jamaica Avenue Transaction.

On or around September 13, 2013, Aliev met with Neriya and Aron Borukhov at the latter's law offices. Id. ¶ 24. At that meeting, Aliev was offered the right to purchase a building at 175-31 Jamaica Avenue in Queens for $700,000. Id. ¶ 25. The Borukhovs purportedly directed Aliev to make out his payment to "Aron B. Borukhov, Attorney at Law," and informed him that the money would be deposited into Aron Borukhov's attorney trust account. Id. ¶ 26. Aliev believed that the money would be held in escrow until closing. Id. He paid with two certified checks, a $400,000 check issued on November 20, 2013, and a $300,000 check issued on December 2, 2013. Id. ¶¶ 27-28. On December 16, 2013, Aliev again met with the two Borukhovs, who advised him that the owner of the property had raised the price by $200,000. Id. ¶ 29. Aliev declined to pay the extra sum and requested that his money be returned. Id. ¶ 30. The Borukhovs then suggested that the money remain in escrow to be used instead to purchase a different property at 64-44 Dieterle Crescent in Queens, id. ¶ 31, which, as discussed below, they had previously brought to Aliev's attention. Aliev does not specifically allege whether he assented to this change in plans.

According to Aliev, a search of the property records shows that the Borukhovs had actually purchased the promissory note on the Jamaica Avenue property in September 2011 and had transferred it to a wholly owned entity called 41-21 Realty, LLC. Id. ¶ 35. They had also previously acquired the deed to the property from the homeowner and had transferred it to another wholly owned entity called Skyhigh Realty, LLC. Id. ¶ 36. On or about August 14, 2014, the Borukhovs allegedly transferred the deed from Skyhigh to the defendant Malakov² through an entity called Romal Equities, LLC. Id. ¶ 37. They did not record the deed until May 26, 2015. Id. ¶¶ 38-39. Also on or about August 14, 2014, Malakov allegedly transferred the deed to an entity called 175-31 Jamaica Ave LLC, owned by the Borukhovs, in exchange for $650,000. Id. ¶ 40. The Defendants did not record the deed reflecting this transfer until September 3, 2015, more than a year later. Id. ¶¶ 41-42. The Defendants purportedly recorded the two deeds by mail. Id. ¶ 49. On September 1, 2015, Neriya Borukhov applied for a permit "as owner of the property" to engage in construction at 175-31 Jamaica Avenue. Id. ¶ 44. The Jamaica Avenue property is the only one with which Aliev alleges the defendant Malakov had any involvement.

II. 64-44 Dieterle Crescent Transaction.

On or about November 6, 2012, almost a year prior to the Jamaica Avenue transaction, Aliev met with the Borukhovs at Aron Borukhov's law offices. Id. ¶ 56. The Borukhovs then informed Aliev about a property at 64-44 Dieterle Crescent. They suggested that the property would be available for between $800,000 and $850,000. Id. ¶ 57. According to Aliev, the Borukhovs advised him that time was of the essence because the property was facing foreclosure. Id. ¶ 58. Aliev expressed interest and was told that he "must deposit a sum of $200,000 with JPMorgan Chase as a show of good faith to the bank of his intent to close on the transaction." Id.¶ 59. JPMorgan was to serve as the escrow agent. Id. ¶ 60. Aliev alleges that, on November 23, 2012, he mailed JPMorgan a certified check in the amount of $200,000. Id. ¶¶ 61, 70.

Almost three years later, on or around June 9, 2015, Aron Borukhov met with Aliev and informed him that the funds for the closing of 64-44 Dieterle Crescent—presumably referring to some combination of the $700,000 Aliev had paid for the Jamaica Avenue property and the $200,000 paid to JPMorgan in 2012—were unavailable for closing, offering no explanation for the absence of the money. Id. ¶¶ 32-33. Shortly thereafter, on June 24, 2015, Aliev attended the closing for the property, where Neriya Borukhov informed him that the $200,000 paid in 2012 was his "finder's fee" and would not go toward the purchase price.³ Id. ¶ 64.

Aliev alleges—again based on his search of the property records—that, on November 28, 2012, JPMorgan had applied the $200,000 Aliev paid to an outstanding mortgage on another property, 84-19 Kent Street in Queens. Id. ¶¶ 65, 67. Also on November 28, 2012, defendant Stella Akbashev, Neriya Borukhov's wife, allegedly took ownership of the 84-19 Kent Street property through an entity called 84-19 Kent St Realty, LLC. Id. ¶¶ 68, 69. This transaction is the only one in which Aliev alleges Akbashev had any involvement.

III. 366 Bainbridge Street Transaction.

On or around May 25, 2013, Neriya and Aron Borukhov met with Aliev and informed him of the opportunity to purchase a property at 366 Bainbridge Street in Brooklyn. Id. ¶¶ 87-88. Aliev was told that, in order to purchase the property, he would have to pay $320,000 to an entity called Clearview Funding, which allegedly held the note and mortgage attached to the property. Id. ¶ 89. Aliev made the payment with two wires, the first for $250,000 on May 30, 2013, and thesecond for an additional $70,000 on May 31, 2013. Id. ¶ 90. Aliev alleges that he has not received the deed to the property, id. ¶ 91, and that, at some point, Aron and Neriya Borukhov purchased the note and mortgage through an entity called Virgin Capital, LLC, id. ¶ 92.

IV. 31 Sumpter Street Transaction.

On June 3, 2015, just days before Aliev discovered that the Borukhovs had allegedly taken the money he had paid for the Jamaica Avenue and Dieterle Crescent properties, Neriya Borukhov contacted Aliev via telephone to advise him of the opportunity to purchase a house located at 31 Sumpter Street in Brooklyn. Id. ¶ 73. That same day, Aliev received an email from Aron Borukhov that outlined the terms of a proposed partnership to purchase the Sumpter Street property. Id. ¶ 74. Aron Borukhov requested $92,500 as a down payment for the property, which was to be purchased for $925,000. Id. ¶ 75. The next day, Aliev met with Aron Borukhov, who told him that the money needed to be made available immediately. Id. ¶ 76. Aliev paid him $92,500, but never received any other information regarding the transaction. Id. ¶¶ 77, 79. Aliev alleges, from his review of the property records, that Neriya Borukhov purchased the property through an entity called 31 Sumpter, LLC on August 17, 2015 for $905,000. Id. ¶ 80.

V. 1016 Greene Avenue Transaction.

In May 2015, Neriya Borukhov purportedly informed Aliev of the opportunity to purchase a distressed property located at 1016 Greene Avenue in Brooklyn for $357,000. Id. ¶ 97. On May 4, 2015, Aliev executed a contract to purchase the property through an entity called 1016 Green LLC. Id. ¶ 100. On May 22, 2015, the title company recorded a deed showing 1016 Green LLC as the owner of the property, but failing to note that Aliev owned 1016 Green LLC. Id. ¶ 101. Having discovered the fraudulent scheme around this time,⁴ Aliev allegedly retained an attorneyand moved for an injunction against the Defendants "transferring the property or using said property as collateral for a mortgage." Id. ¶ 102. The injunction was purportedly granted on June 4, 2015. Id. ¶ 103. On June 18, 2015, the title company recorded a corrected deed. Id. ¶ 104.

ANALYSIS

I. Standard of Review.

To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In Iqbal, the Supreme Court advanced a two-pronged approach to considering a motion to dismiss. First, a court can "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679. The Court explained that, "[w]hile legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id.; see also id. at 678 ("Threadbare recitals of the elements of a...