Carroll v. U.S. Equities Corp.

DECISION AND ORDER

THOMAS J. McAVOY, Senior United States District Judge

I. INTRODUCTION

Presently before the Court are Defendants U.S. Equities Corp., Linda Strumpf, and Hal Siegel's (“Defendants”) motion for reconsideration of a portion of the Court's November 30, 2020 Decision and Order (“Order”), see Dkt. #s 56 (Def. Mot.), 59 (Def. Reply), and Plaintiff Robert Carroll's (“Plaintiff”) opposition and cross-motion for reconsideration of a portion of that Order. See Dkt. # 58. The Court presumes familiarity with the Order, including the Court's recitation of the Rule 12(b)(6) standard addressed to motions to dismiss pro se complaints. See, e.g., Order at 2-4.

II. STANDARD OF REVIEW

When a party files a motion for reconsideration, "[t]he standard for granting such a motion is strict, and reconsideration will generally be denied unless the moving party can

point to controlling decisions or data that the court overlooked-matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp., 70 F.3d 255, 257 (2d Cir. 1995). The Northern District of New York "recognizes only three possible grounds upon which a motion for reconsideration may be granted: (1) an intervening change in controlling law, (2) the availability of new evidence not previously available, or (3) the need to correct clear error of law to prevent manifest injustice." U.S. v. Li, 2006 WL 2375475, at *1 (N.D.N.Y. 2006).

III. DISCUSSION

a. Defendants' Motion

Defendants' motion for reconsideration is addressed to that much of the Order that denied Defendants' motion to dismiss Plaintiff's claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). See Dkt. 56-6. First, Defendants argue that the Court erred in sua sponte reexamining its decision in its September 24, 2019 Decision and Order (“Prior Order”) pertaining to whether Plaintiff had alleged sufficient predicate racketeering acts. In the Prior Order, the Court dismissed with leave to replead Plaintiff's RICO claims because they appeared to rely only upon the allegedly fraudulent litigation activities in the debt collection action against Plaintiff in Kingston City Court (“Kingston City Court action”), which did not amount to sufficient predicate racketeering acts. See Prior Ord. at pp. 25-26. In the Order, however, the Court reexamined whether this proposition applied to the facts alleged in the Amended Complaint, and determined that it did not. The Court found that Plaintiff had alleged facts plausibly supporting the conclusion that his RICO claims were predicated upon conduct from a large-scale fraud scheme involving the

Defendants which included conduct beyond the allegedly fraudulent litigation activities in the Kingston City Court action. See Ord. at 21-30. Defendants argue that reconsideration of the Prior Order was improper because the allegations in the Amended Complaint were not materially different from those in the Complaint, there was no intervening change in the law, and “the Order never so much as uses the word ‘error' when referencing the

Court's earlier determination.” Defendants' arguments in this regard are without merit.

As Judge Sannes recently indicated:

Under Federal Rule of Civil Procedure 54, “any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.” Fed.R.Civ.P. 54(b). “A district court ... possesses the inherent authority to sua sponte reconsider its own interlocutory orders before they become final.” Chartis Seguros Mexico, S.A. de C.V. v. HLI Rail Rigging, LLC, No. 11-cv-3238, 2015 WL 545565, at *2, 2015 U.S. Dist. LEXIS 15909, at *7 (S.D.N.Y. Feb. 9, 2015). “Sua sponte reconsideration is appropriate where there is a need to correct a clear error or prevent manifest injustice, there is an intervening change in the applicable law, or new evidence is available.” Id. (quoting Benavidez v. Piramides Mayas Inc., No. 09-cv-9574, 2013 WL 2357527, at *3, 2013 U.S. Dist. LEXIS, at *7-8 (S.D.N.Y. May 24, 2013)). “Whether such revision is appropriate in any given case is within the sound discretion of the trial judge.” Acha v. Beame, 570 F.2d 57, 63 (2d Cir. 1978).

Utica Mut. Ins. Co. v. Munich Reinsurance Am., Inc., 381 F.Supp.3d 185, 209, n. 36 (N.D.N.Y. 2019), aff'd, 7 F.4th 50 (2d Cir. 2021). Here, the Court exercised its discretion and sua sponte reconsidered that much of the Prior Order addressed to whether Plaintiff had pled facts plausibly establishing sufficient racketeering predicate acts. The Court finds that its decision to do so was proper. Whether or not the Amended Complaint contained allegations materially different from the Complaint, and whether or not there was any intervening change of law, the Court had the inherent authority, prior to a final

order, to sua sponte reassess whether its prior legal determination applied to the allegations in the Amended Complaint even if those allegations are materially the same as in the Complaint. See Utica Mut. Ins. Co., supra. This is so even if the Court did not specifically say that its prior determination was in error. Moreover, as evident by the Order, the Court found that its prior determination could not continue to apply. Defendants' motion for reconsideration in this regard is denied.

Next, Defendants argue that the Court erred in considering Plaintiff's allegations of having been the victim in a large-scale fraud scheme because “Plaintiff . . . simply assumes without evidence that there were ‘thousands' of other cases like his own.” Dkt, 56-6, at 3 (emphasis in original). This argument is without merit.

The allegations in the Amended Complaint can reasonably be read as asserting that Defendants Strumpf (an attorney and part owner of U.S. Equities) and Siegel (Strumpf's husband and part owner of U.S. Equities) concocted a scheme that allowed Defendant U.S. Equities to win uncontested default judgments by hiring process serving companies that regularly engaged in "sewer service." One such process serving company was Serves You Right, Inc. ("SYR") that was owned by Defendant Warshall. Plaintiff alleges that he was the victim of this scheme in the Kingston City Court. To show that the scheme existed, the Amended Complaint points to a July 21, 2010 New York state court Consent Order and Judgment that permanently enjoined Warshall and SYR from having any interest in any business involved in the service of legal process, required SYR to permanently cease any and all business activities and dissolve, required Warshall to surrender any license he had obtained as a process server, and required Warshall to pay a fine of $50, 000. The Amended Complaint also points out that because Strumpf had

used SYR's services during the period covered by the state-court lawsuit, she entered into an "Assurance of Discontinuance" ("AOD") agreement with the New York State Attorney General. The AOD purportedly indicated that on a "persistent and repeated basis" during the relevant period, SYR had prepared false affidavits of service, that Strumpf had used SYR's services on approximately 4, 020 occasions, and that Strumpf had obtained default judgments based on those false affidavits. Although the Amended Complaint acknowledges that the AOD did not indicate that Strumpf was aware that SYR's affidavits were false, it also alleges that in light of the fact that judgments had been obtained using false affidavits, Strumpf agreed to cooperate in identifying defendants...