Bayshore Capital Advisors, LLC v. Creative Wealth Media Fin. Corp.

667 F.Supp.3d 83

BAYSHORE CAPITAL ADVISORS, LLC, et al., Plaintiffs, v. CREATIVE WEALTH MEDIA FINANCE CORP., et al., Defendants.

No. 22-CV-1105 (KMK)

United States District Court, S.D. New York

Signed March 31, 2023

Seth D. DuCharme, Esq., David A. Shargel, Esq., Rachel B. Goldman, Esq., Bracewell LLP, New York, NY, Counsel for Plaintiffs.

Samuel J. Bazian, Esq., William R. Fried, Esq., Herrick Feinstein LLP, New York, NY, Counsel for Defendants Creative Wealth Media Finance Corp., BRON Creative Corp., BRON Creative USA Corp., and Jason Cloth.

Joshua Schiller, Esq., Boies Schiller Flexner LLP, New York, NY, Counsel for Defendants BRON Studios, Inc., BRON Studios USA, Inc., and Aaron L. Gilbert.

Mitchell Schuster, Esq., Eva M. Sullivan, Esq., Kevin A. Fritz, Esq., Meister Seelig & Fein PLLC, New York, NY, Counsel for Defendants Hudson Valley Wealth Management, Inc., Christopher Conover, and David K. Jonas.

OPINION & ORDER

KENNETH M. KARAS, United States District Judge:

Bayshore Capital Advisors, LLC, BCA Alternative Income Fund, LP, and Rocking T Ranch, LLLP, (together, "Plaintiffs") bring this Action against Creative Wealth Media Finance Corp. ("CWMF"), BRON Creative Corp., BRON Creative USA Corp., Jason Cloth (together, "Creative Defendants"), BRON Studios, Inc., BRON Studios USA, Inc., Aaron L. Gilbert (together, "BRON Defendants"), Hudson Valley Wealth Management, Inc., Christopher Conover, David K. Jonas, (together, "Hudson Defendants", altogether "Defendants"), and Does 1-21, alleging substantive violations of the Racketeer Influence and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), conspiracy to violate RICO, 18 U.S.C. § 1962(d), as well as state law claims for fraud, breach of contract, aiding and abetting fraud, breach of the covenant of good faith and fair dealing, unjust enrichment, and accounting. (See generally Am. Compl. ("AC") (Dkt. No. 54).) Before the Court are Creative Defendants, BRON Defendants, and Hudson Defendants' Motions To Dismiss the Amended Complaint (the "Motions") pursuant to Federal Rule of Civil Procedure 12(b)(2) and 12(b)(6). (See Dkt. Nos. 69, 72, 76). For the reasons stated herein, the Motions are granted in part and denied in part.

I. Background

A. Allegations and Materials Appropriately Considered

As a threshold matter, the Court must determine whether it may consider (1) the Needle contracts, the Lionsgate contracts, or the Nightingale contracts attached to Creative Defendants' Motion, BRON Defendants' Motion, and Plaintiffs' Opposition, (see Dkt. Nos. 74, 78, 83); (2) the "Project Evaluation Process", BRON Studios' "Active Productions" presentation, a letter dated July 8, 2020 from Ryan McWaters on behalf of DeRoyce Ltd., a letter dated December 8, 2021, from William R. Fried to Hon. Cathy Seibel in Case No. 21-CV-8259, a letter dated December 8, 2021, from Joshua I. Schiller to Hon. Cathy Seibel in Case No. 21-CV-8259, a letter dated January 20, 2022, from Kevin Fritz to Hon. Cathy Seibel in Case No. 21-CV-8259, or Hudson's announcements, dated November 6, 2018 and September 24, 2018, concerning production partnerships for The Front Runner and A Simple Favor, attached to Plaintiffs' Opposition, (see Dkt No. 83); or (3) the Library Purchase Term Sheets and litigation documents, attached to Hudson's Motion to Dismiss, (see Dkt. No. 71) at this stage of the litigation.

1. Applicable Law

Generally, "[w]hen considering a motion to dismiss, the Court's review is confined to the pleadings themselves," because "[t]o go beyond the allegations in the [c]omplaint would convert the Rule 12(b)(6) motion to dismiss into one for summary judgment pursuant to [Rule] 56." Thomas v. Westchester Cnty. Health Care Corp., 232 F. Supp. 2d 273, 275 (S.D.N.Y. 2002) (citation omitted). However, "the Court's consideration of documents attached to, or incorporated by reference in the [c]omplaint, and matters of which judicial notice may be taken, would not convert the motion to dismiss into one for summary judgment." Id. (citations omitted); see also Bellin v. Zucker, 6 F.4th 463, 473 (2d Cir. 2021) (explaining that "when ruling on Rule 12(b)(6) motions to dismiss," courts may "consider the complaint in its entirety ..., documents incorporated into the complaint by reference, and matters of which a court may take judicial notice") (quotation marks omitted); Hu v. City of New York, 927 F.3d 81, 88 (2d Cir. 2019) ("In deciding a Rule 12(b)(6) motion, the court may consider 'only the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the pleadings, and matters of which judicial notice may be taken.'") (alteration omitted) (quoting Samuels v. Air Transp. Loc. 504, 992 F.2d 12, 15 (2d Cir. 1993)). Under the Federal Rules of Evidence, a court may take judicial notice of a fact outside of the pleadings provided that the fact "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b).

2. Application

"Generally, a court may incorporate documents referenced where (1) [the] plaintiff relies on the materials in framing the complaint, (2) the complaint clearly and substantially references the documents, and (3) the document's authenticity or accuracy is undisputed." Stewart v. Riviana Foods Inc., No. 16-CV-6157, 2017 WL 4045952, at *6 (S.D.N.Y. Sept. 11, 2017) (emphasis omitted) (collecting cases); see also Dunkelberger v. Dunkelberger, No. 14-CV-3877, 2015 WL 5730605, at *5 (S.D.N.Y. Sept. 30, 2015) ("To be incorporated by reference, the complaint must make a clear, definite, and substantial reference to the documents, and to be integral to a complaint, the plaintiff must have (1) actual notice of the extraneous information and (2) relied upon the documents in framing the complaint." (alterations omitted) (quoting Bill Diodato Photography LLC v. Avon Prods., Inc., No. 12-CV-847, 2012 WL 4335164, at *3 (S.D.N.Y. Sept. 21, 2012))).

The crux of Plaintiffs' claim that the Hudson Defendants were part of the alleged Enterprise is their allegation that CWMF loaned $18 million to Hudson, which had lost money investing in various films and that CWMF and Hudson agreed that the loan would be repaid out of commissions. (See generally AC.) Accordingly, the Court can consider the Library Purchase Term Sheets which lay out the agreement between Hudson and CWMF which are incorporated by reference in the Amended Complaint. The Court may also consider the letters dated December 8, 2021, from William R. Fried to Hon. Cathy Seibel in Case No. 21-CV-8259, dated December 8, 2021, from Joshua I. Schiller to Hon. Cathy Seibel in Case No. 21-CV-8259, and dated January 20, 2022, from Kevin Fritz to Hon. Cathy Seibel in Case No. 21-CV-8259 which detail the same agreement. Similarly, the contracts referenced by Plaintiffs throughout the Amended Complaint, (AC ¶¶ 104, 138, 142, 145), are also incorporated by reference and may be considered by this Court. The "Project Evaluation Process," BRON Studios' "active productions" presentation, and the letter dated July 8, 2020 from Ryan McWaters on behalf of DeRoyce Ltd. are all referenced in the Amended Complaint as well and are therefore incorporated by reference. (Id. ¶¶ 61, 78, 193-94.) However, Hudson's announcements, dated November 6, 2018 and September 24, 2018, concerning production partnerships for The Front Runner and A Simple Favor were not referenced or relied upon in the Amended Complaint and are therefore not incorporated by reference.

"[C]ourts routinely take judicial notice of documents filed in other courts ... to establish the fact of such litigation and related filings." Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir. 1991); see also Casey v. Odwalla, Inc., 338 F. Supp. 3d 284, 294 (S.D.N.Y. 2018) ("[C]ourts may take judicial notice of public documents and matters of public record."); O'Neal v. East Hampton Town, No. 16-CV-579, 2017 WL 4174788, *1 n.2. (E.D.N.Y. Aug. 28, 2017) ("Judicial notice may be taken of the state court documentation submitted by defendants.") (collecting cases), adopted sub nom. O'Neal v. Spota, 2017 WL 4162307 (E.D.N.Y. Sept. 19, 2017). However, "in taking judicial notice of such public records, the Court does so only to establish the fact of such litigation, not for the truth of the matters asserted in that proceeding." Hutchins v. Solomon, No. 16-CV-10029, 2018 WL 4757970, at *7 (S.D.N.Y. Sept. 29, 2018) (quotation marks and citations omitted); see also Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007) ("If the court takes judicial notice, it does so in order to determine what statements [a document] contained—but again not for the truth of the matters asserted.") (quotation marks and emphases omitted). Accordingly, this Court takes judicial notice of the cases supplied by Hudson Defendants.

B. Factual Background

1. Parties

Bayshore Capital Advisors, LLC ("BCA") is a limited liability company organized under the laws of Florida, with its principal place of business located in Tampa, Florida. (AC ¶ 10.) BCA is a registered investment advisor that provides clients with access to a variety of investment opportunities, and also makes direct investments through special purpose entities such as BCA Alternative Income Fund, LP ("BAIF"). (Id.) BCA's members are individuals who are citizens of the State of Florida. (Id. ¶ 11.) BAIF is a limited partnership organized under the laws of Delaware, with its principal place of business located in Tampa, Florida. (Id. ¶ 12.) BAIF is an investment fund managed by BCA. (Id.) BAIF's general partner is BCA Alternative Income Fund GP, LLC, whose sole member is BCA, and is a citizen of Florida. (Id. ¶ 13.) BAIF's limited partners are citizens of Florida, South Carolina, Oregon, Tennessee, Texas, and the U.S. Virgin Islands. (Id.) Plaintiffs refer to BCA and BAIF together as "Bayshore." (Id. ¶ 14.)

Rocking T Ranch, LLLP ("RTR") is a limited liability limited partnership organized under the...