Fiorillo v. Winiker

85 F.Supp.3d 565

Nicholas FIORILLO, as Trustee of the Fiorillo Family Revocable Trust and 18 Penn Avenue Realty Trust, Plaintiff

v.Mark WINIKER, Felicio Lana d/b/a Northeast Properties, Canal Marketplace Development, LLC, and the 426 Main Street Realty, LLC, Defendants.

Civil Action No. 14–40080–TSH.

United States District Court, D. Massachusetts.

Signed Feb. 12, 2015.

Israel M. Sanchez Milford, NH, for Plaintiff.

Russell S. Chernin Worcester, MA, for Defendants.

ORDER AND MEMORANDUM OF DECISION ON DEFENDANT FELICIO LANA'S FIRST AND SECOND MOTIONS TO DISMISS (Docket Nos. 47 & 73)

HILLMAN, District Judge.

Plaintiff Nicholas Fiorillo (“Plaintiff” or “Fiorillo”), as trustee of the Fiorillo Family Revocable Trust and the 18 Penn Avenue Realty Trust (“Fiorillo Trusts”), asserts that defendants conspired to embezzle, extort, convert, and launder money, property, and monthly property rents belonging to the Fiorillo Trusts. On September 2, 2014, Defendant Felicio Lana filed a motion to dismiss for failure to state a claim (Docket No. 47) (“First Motion to Dismiss”). In opposition to that motion, Plaintiff's counsel Nathaniel Pitnof moved for leave to file a second amended complaint (Docket No. 48). Mr. Pitnof withdrew his appearance in this action on November 24, 2014. On December 15, 2014 the Court held a hearing on the First Motion to Dismiss and Mr. Israel Sanchez appeared as counsel for Plaintiff. Without ruling on Defendant Lana's First Motion to Dismiss, the Court granted Plaintiff's motion for leave to amend (Docket No. 64). Plaintiff—now represented by Mr. Sanchez—filed the Second Amended Complaint on January 14, 2015 (Docket No. 68). In response, Defendant Lana filed a second motion to dismiss for failure to state a claim (Docket No. 73) (“Second Motion to Dismiss”). Because the Second Amended Complaint is now the operative complaint, the First Motion to Dismiss (Docket No. 47) is denied as moot. For the reasons that follow, Defendant Lana's Second Motion to Dismiss (Docket No. 73) is granted in part and denied in part.

Background

Plaintiff's Second Amended Complaint alleges an elaborate scheme by which multiple individuals conspired to deprive Plaintiff of his investments and contractual rights in various real estate properties beginning in 2011. Nine of the complaint's thirteen counts are brought against Defendant Lana: tortious interference with contractual or advantageous business relations (Count I); violation of RICO Act (Count II), RICO conspiracy (Count III), common law fraud (Count V), intentional interference with contracts (Count VII), violations of M.G.L. c. 93A (Count IX), conversion (Count X), defamation (Count XII) and civil conspiracy (Count XIII). The allegations relevant to Lana, accepted as true for purposes of this motion to dismiss, are briefly recounted here.

In January 2011, Plaintiff entered into a partnership agreement with Kevin Curtis involving investments in real estate and property management for various properties located in and around Worcester, Massachusetts. The agreement provided that Plaintiff would find and negotiate the purchase of new real estate and development projects, and that Curtis would manage the properties by performing duties such as collecting rents, hiring and firing employees and subcontractors, paying operating expenses, and maintaining and renovating the properties. Presumably unbeknownst to Plaintiff, Curtis was a member of an enterprise that existed “for the purpose of extorting money and property from the plaintiffs through various real estate scams.” Pl.'s Second Am. Compl. ¶ 11. The enterprise in turn hired or contracted with Defendant Lana, doing business as Northeast Properties, to collect rents at a property belonging to the Fiorillo–Curtis partnership located at 426 Main Street in Worcester. Id. at ¶ 39.

The complaint is replete with generalized allegations of wrongdoing, asserting that that the enterprise, including Defendant Lana, conspired to embezzle, extort, and launder monies from Plaintiff.¹ However, the complaint does provide some factual support for the counts against Lana. First, the complaint alleges that in his capacity as manager of the 426 Main Street property, and in conjunction with Curtis and the other defendants, Lana misappropriated rents and equipment belonging to the Fiorillo–Curtis partnership. Paragraphs 58, 61, 66, and 67 are representative of those allegations:

58. Despite Fiorillo's efforts, Curtis and the defendants failed to uphold there [sic] respective obligations, including maintaining the property; and Winiker and Boudreau allowed Curtis and Lana to misappropriate hundreds of thousands in collected rents for their own benefit.

61. Lana has converted at least $48,000 dollars in rent from 426 Main Street since his so called management started and has made no attempt to pay the outstanding taxes, bills and debt payments.

66. To carry out their scheme, Curtis and defendants Boudreau, Winker and Lana hired a third party management company, Northeast Properties, with its principal Felicio Lana as the manager. Lana, in addition to having at one time outstanding debts consisting of $500,000 in back taxes and fines to the City of Worcester owes millions of dollars to national lenders, and he has defaulted on more than $1,800,000 in loans secured by his personal guaranty.

67. Lana, who is under financial pressure, has two bankruptcies and has conspired with Curtis and Winiker to desolve [sic] Fiorillo's interest in the property by claiming the property is owned by Lana as he continued to collect rent and not service the debt or the expenses of the property.

Next, the complaint asserts that Lana misrepresented to local banks that he owned the 426 Main Street property in order to refinance the property for his personal benefit:

67. Lana has also misrepresented to regional and local lenders, Dennis Coy, Warren Gombergh, and Central One Bank that he was 100% owner of 426 Main Street and has attempted for months to cash-out and refinance upwards of $500,000 for his own benefit without plaintiffs knowledge or consent.

The complaint also alleges that Curtis and Lana threatened to publish to the Worcester business community that Plaintiff was a drug dealer if Plaintiff proceeded with this lawsuit.See Pl.'s Second Am. Compl. ¶ 111(c). These three actions constitute the entirety of the factual allegations against Defendant Lana, and he moves to dismiss the complaint for failure to state a claim.

Discussion

Standard of Review

To survive a 12(b)(6) motion to dismiss, a complaint must evince the requisite factual detail to establish a plausible claim that “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In other words, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 679, 129 S.Ct. 1937. In evaluating a motion to dismiss, the court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Langadinos v. American Airlines, Inc., 199 F.3d 68, 68 (1st Cir.2000). The court may consider “only facts and documents that are part of or incorporated into the complaint.” Trans–Spec Truck Serv., Inc. v. Caterpillar, Inc., 524 F.3d 315, 321 (1st Cir.2008).

Dismissal is appropriate if the plaintiff's well-pleaded facts do not “possess enough heft to show that plaintiff is entitled to relief.” Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 84 (1st Cir.2008) (internal quotations and original alterations omitted). Although detailed factual allegations are not necessary to survive a motion to dismiss, the standard “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “The relevant inquiry focuses on the reasonableness of the inference of liability that the plaintiff is asking the court to draw from the facts alleged in the complaint.” Ocasio–Hernandez v. Fortuno–Burset, 640 F.3d 1, 13 (1st Cir.2011).

For claims alleging fraud, Rule 9(b) imposes a heightened pleading standard, requiring a party to “state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). “This standard means that a complaint must specify the time, place, and content of an alleged false representation.” U.S. ex rel. Gagne v. City of Worcester, 565 F.3d 40, 45 (1st Cir.2009) (internal quotations omitted); see also Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 29 (1st Cir.2004) (observing that claims for fraud typically must “specify the who, what, where, and when of the allegedly false or fraudulent representation”).

Count I: Tortious Interference with Contractual and Business Relations

Count I of Plaintiff's complaint asserts that Lana and other defendants intentionally interfered with Plaintiff's contractual and advantageous business relations.² The claim essentially blends two distinct torts—interference with contracts and interference with business relations—into one, but the analysis for purposes of this motion to dismiss is the same. Under Massachusetts law, a claim for intentional interference with contractual relations requires a plaintiff to show that: “(1) he had a contract with a third party; (2) the defendant knowingly interfered with that contract; (3) the defendant's interference, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant's actions.” Harrison v. NetCentric Corp., 433 Mass. 465, 476, 744 N.E.2d 622 (2001).³

The complaint alleges that Plaintiff entered into a partnership agreement with a third party, Kevin Curtis, see Pl.'s Second Am. Compl. ¶ 13, and that Defendant Lana was “intimately aware” of the arrangement between Plaintiff and Curtis. Id. at ¶ 26. It further...