Babb v. Capitalsource, Inc.

U.S. Court of Appeals for the Second Circuit
Babb v. Capitalsource, Inc., 588 F. App'x 66 (2d Cir. 2015)

Babb v. Capitalsource, Inc.

Opinion

SUMMARY ORDER

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment entered on February 10, 2014, is REVERSED in part and AFFIRMED in part.

Plaintiffs appeal from the dismissal of their Second Amended Complaint (“SAC”) *68 for lack of jurisdiction under the so-called Rooker-Feldman doctrine, see District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983); Rooker v. Fid. Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923); see also Fed.R.Civ.P. 12(b)(1), and the alternative dismissal of their claims under the Racketeering Influenced and Corrupt Organizations Act (“RICO”), Pub.L. No. 91-452, tit. IX, 84 Stat. 922, 941-48 (1970) (codified as amended at 18 U.S.C. §§ 1961-1968), for failure to state a claim, see Fed.R.Civ.P. 12(b)(6). Plaintiffs contend both that these decisions were incorrect and that dismissal should not have been ordered without ’ allowing them to amend their complaint. See Fed.R.Civ.P. 15(a)(2). We assume the parties’ familiarity with the facts and the record of prior proceedings, which we reference only as necessary to explain our decision to reverse the district court’s jurisdictional holding and to affirm the judgment on the merits.

1. Rooker-Feldman

On de novo review of the district court’s application of Rooker-Feldman, see Hoblock v. Albany Cnty. Bd. of Elections, 422 F.3d 77, 83 (2d Cir. 2005), we identify error in light of our most recent controlling precedent, see Vossbrinck v. Accredited Home Lenders, Inc., 773 F.3d 423, No. 12-3647-cv, 2014 WL 6863669 (2d Cir. Dec.8, 2014). Vossbrinck makes clear that plaintiffs’ suit is not barred by Rooker-Feld-man because the SAC seeks damages for injuries suffered as a result of defendants’ alleged fraud and does not attempt to reverse or undo a state court judgment. See id. at *3. We therefore reverse the district court’s holding that it lacked jurisdiction.

2. Failure To State a RICO Claim

‘We review de novo dismissal of a complaint for failure to state a claim upon which relief can be granted, accepting all factual allegations in the complaint as true, and drawing all reasonable inferences in the plaintiffs favor.” Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 113 (2d Cir. 2013) (internal quotation marks omitted).

To state a RICO claim predicated on mail or wire fraud, a complaint must “specify the statements it claims were false or misleading, give particulars as to the respect in which plaintiffs contend the statements were fraudulent, state when and where the statements were made, and identify those responsible for the statements.” Moore v. PaineWebber, Inc., 189 F.3d 165, 173 (2d Cir. 1999); see also Fed. R.Civ.P. 9(b). “The plaintiffs must also identify the purpose of the mailing [or wire communication] within the defendant’s fraudulent scheme.” Moore v. Paine-Webber, Inc., 189 F.3d at 173 (internal quotation marks omitted). “In addition, the plaintiffs must allege facts that give rise to a strong inference of fraudulent intent.” Id. (internal quotation marks omitted).

Here, the SAC fails to plead the purportedly fraudulent statements with any particularity, fails to identify the purposes of the mailings or wire communications within the fraudulent scheme, and fails to allege facts that might support a finding of fraudulent intent. Accordingly, we conclude that the district court was correct that the SAC’s RICO claims must be dismissed pursuant to Fed.R.Civ.P. 12(b)(6).

3.Leave To Amend

No different conclusion is warranted because plaintiffs were denied leave to amend their complaint, a decision we review only for abuse of discretion. See Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008). Because plaintiffs were *69 alerted to the deficiencies in their complaint at a pre-motion conference before filing the SAC, and because the district court was clear at that conference that it would not allow plaintiffs any more amendments after the SAC, the denial of another attempt to amend was not an abuse of discretion. See id. at 191-92.

We have considered plaintiffs’ remaining arguments and conclude that they are without merit. We therefore REVERSE the district court’s jurisdictional holding but, on the merits, AFFIRM the judgment of dismissal.

Reference

Full Case Name
Lee BABB, Charles Ferris, Consuelo Ferris, Martin Hogan, Janice Hogan, John Lopes, James McGough, Priscilla McGough, Mark Perry, Lisa Perry, Rebecca Ralston, Jonathan Thurrott, Nancy Troske, Ingrid Weber, Matthew Zocaro, John Anctil, Gisele Barbosa, Christine Bernat, George Branch, Gary Crofoot, Paul Demers, Julio Grillo, Mary Jones, Karl Jorgensen, Oksana Jorgensen, Donald Kadlec, Sandra Lapidez, Francis Pariseau, Dorothy Carpenter-Reid, Michael Ryan, Benita Schriefer, William Schriefer, Michael Silver, Flavio Terzis, Kelly Williams, Plaintiffs-Appellants, v. CAPITALSOURCE, INC., Citigroup, Inc., CitiMortgage, Inc., Countrywide Home Loans, Inc., Cross Country Mortgage, First Franklin Investment & Loan, Flagstar Bank, FSB, Gmac Mortgage, Merrill Lynch, Money Warehouse, PNC Financial Services, Cincinnati Federal Savings and Loan, Homeward Residential, JP Morgan Chase & Co., Ocwen Financial Corporation, PHH Mortgage, Provident Funding Group, Inc., Wilber Ross & Co., L.L.C., Chase Home Finance, LLC, Citibank, N.A., Deutsche Bank National Trust Co., Deutsche Bank Trust Co., First Franklin Loan Services, the PNC Financial Services Group, Inc., Aurora Loan Services, LLC, Bank of America, N.A., Deutsche Bank, AG, Mortgageit, Inc., U.S. Bank, N.A., Wells Fargo, N.A., Defendants-Appellees, Fremont Investment and Loan Corp., Signature Group Holdings, Inc., Ally Financial, Inc., Defendants
Cited By
15 cases
Status
Unpublished