Opinion
23 Civ. 850 (AT) (GWG)
10-10-2023
FERMIN ALDABE, Plaintiff, v. SULLLIVAN & CROMWELL LLP, JAMES L. BROMLEY, and FABIO WEINBERG-CROCCO, Defendants.
REPORT & RECOMMENDATION
GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE
Pro se plaintiff Fermin Aldabe has brought suit against defendants Sullivan & Cromwell, LLP (“Sullivan & Cromwell”), James L. Bromley, and Fabio Weinberg-Crocco based on the defendants' representation of an entity called “Atlantic International Bank” (“AIB”). See Notice of Removal, filed Feb. 1, 2023 (Docket # 1) (“Not. of Removal”); Complaint, annexed as Exhibit 2 to Not. of Removal (Docket # 1-3), at 4-19 (“Orig. Compl.”); Complaint, filed Mar. 14, 2023 (Docket # 27) (“SAC”). Defendants now move to dismiss the complaint under Fed.R.Civ.P. 12(b)(6). For the reasons stated below, the motion should be granted.
Notice of Defendants' Motion to Dismiss, filed Apr. 4, 2023 (Docket # 28) (“Mot.”); Defendants' Memorandum of Law, filed Apr. 4, 2023 (Docket # 29) (“Def. Mem.”); Declaration of Matthew J. Porpora, filed Apr. 4, 2023 (Docket # 30) (“Porpora Decl.”); Plaintiff's Memorandum in Opposition, filed May 4, 2023 (Docket # 33) (“Opp.”); Defendants' Reply Memorandum of Law, filed May 25, 2023 (Docket # 34) (“Reply Br.”). Defendants also refer to Fed.R.Civ.P. 12(b)(1) based on the effort to dismiss the complaint on “international comity” grounds. As explained below, we do not rely on this ground or many of the other grounds raised by defendants.
I. BACKGROUND
A. Facts Alleged in the SAC
The following factual allegations taken from the complaint are assumed to be true for the purposes of this motion to dismiss. See Stadnick v. Vivint Solar, Inc., 861 F.3d 31, 35 (2d Cir. 2017).
Aldabe traded on a carbon emissions market through an account with AIB that was opened in the name of Palma Efuus Ltd (“Palma”). See SAC ¶¶ 6-7. Palma was a depositor at AIB, id. ¶ 6, that agreed to act as Aldabe's broker on the carbon emissions market, id. ¶ 7, and has purportedly “assigned to plaintiff the right to sue defendants for damages sustained by the conversion of monies held by it on his behalf at” AIB. Id. ¶ 1.
Aldabe “sold approximately $94,000 worth of carbon emission credits whose proceeds were deposited into Palma's account.” Id. ¶ 7. AIB was in litigation with the “FTC” (presumably the Federal Trade Commission), and because of this litigation, the central bank of Belize put AIB into “liquidation” on May 13, 2019 and assigned AIB a “liquidator.” Id. ¶ 8. AIB and the liquidator hired defendants Bromley and Weinberg-Crocco “to advise them on the liquidation in Florida of AIB's assets located in the US.” See id. ¶ 11; see also ¶ 14.
In addition to suing Bromley and Weinberg-Crocco, Aldabe is also suing their employer, defendant Sullivan & Cromwell, for acts that Bromley and Weinberg-Crocco did “within the scope of their employment[,] which included advising and acting for” AIB and the liquidator. Id. at 6 n.2.
The day after Belize put AIB into liquidation, Bromley and Weinberg-Crocco directed the liquidator to file a court document including a copy of a Belizean law that “imposes on AIB and the liquidator a statutory duty owed to depositors, and beneficiaries including Palma and plaintiff to pay them fully before paying unsecured depositors like the FTC.” Id. ¶ 9. About a week later, the defendants directed AIB and the liquidator to write AIB's depositors via email that the liquidator's duties “include . . . receiving and determining claims filed by depositors and other creditors; . . . [and] distribution of funds according to the priorities provided for by law.” Id. ¶ 10.
At some unstated date, defendants “designed and planned [a] legal strategy” to use the money depositors held in AIB to settle AIB's litigation with the FTC and recommended this as AIB's “best option to settle the litigation with the FTC.” Id. ¶ 14. Ultimately, AIB and the liquidator took $13,000,000 of depositors' assets to pay the FTC. Id. ¶¶ 14-15. Because of this payment to the FTC, plaintiff lost $22,834.75 he was owed from the Palma account. Id. ¶ 17. The loss of this money and resulting impact on Aldabe's relationship with his family caused him “severe emotional distress” and physical harm, including “premature aging, thickening of the heart walls, high blood pressure, sleeping disorder, irate spells, [and] sweating of palms.” Id.
B. Procedural History
Aldabe filed this suit originally in the Supreme Court of the State of New York for New York County on September 25, 2022, and made various tort claims against the defendants relating to fraudulent misrepresentation. See Orig. Compl.
A month later, on October 25, 2022, the United States Bankruptcy Court for the Southern District of Florida issued an order resolving, inter alia, an application for a “Pre-Filing Screening Injunction Against Mr. Ferman Aldabe.” See Order Approving Foreign Representative's Final Report and Granting Motion for Entry of an Order (I) Issuing a Pre-filing Screening Injunction Against Mr. Fermin Aldabe, (II) Closing Chapter 15 Case, and (III) Granting Related Relief, dated October 25, 2022, annexed as Exhibit 1 to Porpora Decl. (Docket # 30-1) (“Florida Injunction”), at 1. The Florida Injunction prohibits plaintiff from “filing any . . . claim . . . relating to . . . the Belizean Liquidation Proceeding” against “present, former and future . . . attorneys” of AIB “in any court . . . without first obtaining leave from” the Bankruptcy Court. Id. at 3.
On January 13, 2023, Aldabe amended his complaint to add a claim that defendants aided and abetted the FTC in breaching the FTC's duty to plaintiff, a claim that the defendants aided AIB in various federal and Belizean statutory violations, and various other claims arising under federal statutes or state tort claims. See First Amended Complaint, annexed as Exhibit 3 to Not. of Removal (Docket # 1-4).
On February 1, 2023, the defendants removed the case to federal court pursuant to 28 U.S.C. §§ 1331, 1367, 1441, and 1446. See Not. of Removal.
On March 14, 2023, Aldabe filed the SAC, which omitted the federal claims in this case and instead seeks to make claims against defendants based on (1) conversion and (2) intentional infliction of emotional distress. See SAC at 10-12. The newest complaint also purports to contain a separate “Count 3” for punitive damages. Id. at 12.
Defendants have now filed the instant motion to dismiss the Second Amended Complaint.
III. SUPPLEMENTAL JURISDICTION
Before addressing the defendants' argument, we address the issue of subject matter jurisdiction. Defendants removed this action at a time it contained federal claims and thus invoked federal question subject matter jurisdiction under 28 U.S.C. § 1331 to do so. See Not. of Removal ¶ 1. They also invoked supplemental jurisdiction over Aldabe's state law claims under 28 U.S.C. § 1367. See id. While neither party has raised the issue, we conclude that we have subject matter jurisdiction over this action under § 1367 notwithstanding plaintiff's withdrawal of the federal claims in the SAC. Section 1367 provides that a district court “may decline to exercise supplemental jurisdiction” if “the district court has dismissed all claims over which it has original jurisdiction,” The Supreme Court has held that in exercising its discretion under section 1367, a court may consider “the values of judicial economy, convenience, fairness, and comity in order to decide whether to exercise” supplemental jurisdiction. Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 349-50 (1988). It is true that “in the usual case in which all federal-law claims are eliminated before trial,” those factors “will point toward declining to exercise jurisdiction over the remaining state-law claims.” Id. at 350 n.7. However, where those considerations are not present (or lessened) and considerations of fairness are implicated, courts have opted to continue exercising jurisdiction. See, e.g., Harris v. Leon, 2023 WL 2051171, at *8 (S.D.N.Y. Feb. 16, 2023) (retaining jurisdiction over state claims after dismissing related federal claims because of efforts already undertaken by the parties and “the legal issues are relatively straightforward”); Phillips v. Delaney, 2020 WL 5898972, at *5 (S.D.N.Y. Oct. 2, 2020) (“[E]ven though Plaintiffs have withdrawn all federal claims, the Court may properly exercise its discretion to maintain subject-matter jurisdiction since removal was proper.”); Koul v. Strong Mem'l Hosp., 282 F.Supp.3d 569, 570-71 (W.D.N.Y. 2017) (retaining supplemental jurisdiction over a state law claim where declining to do so “would involve significant duplication of efforts not only by the attorneys but by a state court judge to whom the matter would be assigned,” the remaining claim “does not appear to be a novel or unsettled state law issue,” and “[t]his Court has already developed knowledge about the case and the respective positions of the parties.”). Indeed, “when a defendant removes a case to federal court based on the presence of a federal claim, an amendment eliminating the original basis for federal jurisdiction generally does not defeat jurisdiction.” Rockwell Int'l Corp. v. United States, 549 U.S. 457, 474 n.6 (2007). Given the claims through the various iterations of Aldabe's complaint all arise from the same facts, the lack of novelty in the remaining questions of state law, and considerations of fairness in light of the resources expended by the parties in litigating the case, it is appropriate to continue to exercise supplemental jurisdiction rather than send the parties back to state court to duplicate their efforts.
II. LEGAL STANDARD
Defendants have invoked Fed.R.Civ.P. 12(b)(1) as a basis to dismiss the complaint on grounds of “international comity” or forum non conveniens. See Def. Mem. at 24-29. Because we recommend dismissal on the merits, we do not address international comity or elucidate the legal standard under Rule 12(b)(1).
A party may move to dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) where the opposing party's pleading “fail[s] to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). While a court must accept as true all of the allegations contained in a complaint, that principle does not apply to legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (“[A] plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”) (citation and punctuation omitted). In other words, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice,” Iqbal, 556 U.S. at 678, and thus a court's first task is to disregard any conclusory statements in a complaint, id. at 679.
Next, a court must determine if a complaint contains “sufficient factual matter” which, if “accepted as true,” states a claim that is “plausible on its face.” Id. at 678 (citation and internal quotation marks omitted); accord Port Dock & Stone Corp. v. Oldcastle Ne., Inc., 507 F.3d 117, 121 (2d Cir. 2007) (“[A] complaint must allege facts that are not merely consistent with the conclusion that the defendant violated the law, but which actively and plausibly suggest that conclusion.”). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (citations and internal quotation marks omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct,” a complaint is insufficient under Fed.R.Civ.P. 8(a) because it has merely “alleged” but not “‘show[n]' - ‘that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).
B. Pro Se Litigants
“A document filed pro se is to be liberally construed, and a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citations and internal quotation marks omitted); accord McPherson v. Coombe, 174 F.3d 276, 280 (2d Cir.1999) (A pro se party's pleadings should be construed liberally and interpreted “to raise the strongest arguments that they suggest[.]”) (quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir.1994)). “However, that a party proceeds pro se ‘does not exempt [the] party from compliance with relevant rules of procedural and substantive law.'” DeLeon v. Dunaway, 2022 WL 3902734, at *1 (S.D.N.Y. Aug. 30, 2022) (quoting Traguth v. Zuck, 710 F.2d 90, 95 (2d Cir. 1983)).
III. DISCUSSION
Defendants argue the case should be dismissed because the complaint in part violates the Florida Injunction, see Def. Mem. at 2-3; fails to state a claim on the merits, see id. at 3-4; and should be dismissed based on “international comity” or forum non conveniens, see id. at 4, 24-29. Defendants have strong arguments in each of these areas that would justify dismissal of the complaint. We do not address all these arguments, however, because it is sufficient to rely on only a subset to adjudicate defendants' motion as described below.
Before addressing the substance of the motion, we note that “[a]t the motion to dismiss stage, the Court's review is limited to the facts as pleaded by the plaintiff, documents appended to or referred to in the complaint, and to matters of which judicial notice may be taken.” Hesse v. Godiva Chocolatier, Inc., 463 F.Supp.3d 453, 462 (S.D.N.Y. 2020) (citation and punctuation omitted). Here, the defendants motion includes materials outside the four corners of the complaint - specifically, a declaration that attached various court documents, including a copy of the Florida Injunction and records from other proceedings germane to their motion. See Porpora Decl. A court is permitted to take “judicial notice on a motion to dismiss of filings in state or federal court.” Contrera v. Langer, 290 F.Supp.3d 269, 278 n.5 (S.D.N.Y. 2018) (citation omitted); accord Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir. 1991) (“[C]ourts routinely take judicial notice of documents filed in other courts, [ ] not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings.”); Zherka v. Garland, 593 F.Supp.3d 73, 75 n.3 (S.D.N.Y. 2022) (it is “permissible on a Rule 12(b)(6) motion” to take “judicial notice of court documents”). Obviously, a court may only take judicial notice of a document “[w]hen there is no dispute as to [its] authenticity.” Oneida Indian Nation v. New York, 691 F.2d 1070, 1086 (2d Cir. 1982). In this case, Court issued an order stating that if plaintiff disputed the authenticity of any exhibit attached to the declaration, plaintiff was required to attach a sworn statement to his opposition to the motion to dismiss so stating and giving the basis for a claim of inauthenticity. See Order, filed Apr. 6, 2023 (Docket # 32) (“Apr. 6 Order”). Aldabe filed his opposition without any such statement. See Opp. Thus, all documents submitted by defendants are deemed authentic and we take judicial notice of their existence.
Plaintiff asserts as a ground for opposing the motion that defendants failed to comply with the notice requirement contained in Local Civil Rule 12.1. See Opp. at 7. Assuming arguendo that Local Rule 12.1 applies to matters as to which a party seeks the Court to take judicial notice, “[a] district court has broad discretion to determine whether to overlook a party's failure to comply with local court rules.” Holtz v. Rockefeller & Co., 258 F.3d 62, 73 (2d Cir. 2001). Here, the purpose of the rule is satisfied inasmuch as the Court's Order gave plaintiff the opportunity to dispute the authenticity of the documents. See Apr. 6 Order.
A. Conversion
1. Effect of Florida Injunction
While the Florida Injunction was issued after Aldabe filed this action in New York State court, the injunction not only prohibits the filing of any new “proceeding,” “suit,” or “complaint,” it also prohibits the filing of any new “claim” without obtaining leave of the Bankruptcy Court. See Florida Injunction at 3. The conversion claim was not included in the original complaint, see Orig. Compl., and thus represents an entirely new “claim” that comes within the language of Florida Injunction.
We reject plaintiff's arguments attacking the validity of the Florida Injunction. See Opp. at 7-12. As the defendants note, see Reply Br. at 4. n.2, the power of a federal bankruptcy court to issue such injunctions is routinely recognized and such orders are routinely upheld. See Simon v. Bank of Am., 2021 WL 148650, at *7 (E.D.N.Y. Jan. 15, 2021); Matter of Carroll, 850 F.3d 811, 815-16 (5th Cir. 2017); In re Hunt, 2020 WL 5535426, at *3 (C.D. Cal. Sept. 14, 2020); Yan v. Fu, 2014 WL 4949528, at *1 (N.D. Cal. Sept. 30, 2014), aff'd, 649 Fed.Appx. 359 (9th Cir. 2016).
In any event, principles of res judicata “appl[y] with full force” when a party attempts to litigate “matters decided by the bankruptcy courts” in a subsequent federal district court action. EDP Med. Computer Sys., Inc. v. United States, 480 F.3d 621, 624 (2d Cir. 2007). Any effort to alter the effect of the Florida Injunction was required to be pursued in the Southern District of Florida. The conversion claim thus must be dismissed based on the Florida Injunction.
2. Merits of Conversion Claim
Even if the Florida Injunction did not bar the conversion claim, it would fail on the merits. “It is well settled that an action will lie for the conversion of money where there is a specific, identifiable fund and an obligation to return or otherwise treat in a particular manner the specific fund in question.” Mfrs. Hanover Trust Co. v. Chem. Bank, 160 A.D.2d 113, 124 (1st Dep't 1990). Under New York law there are two elements to a claim of conversion: “(1) plaintiff's possessory right or interest in the property and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's rights.” Colavito v. N.Y. Organ Donor Network, Inc., 8 N.Y.3d 43, 50 (2006) (citations omitted). “A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession.” Id. at 49-50 (citation omitted); see also Kirschner v. Bennett, 648 F.Supp.2d 525, 540 (S.D.N.Y. 2009) (articulating the elements of a New York conversion claim to survive a Rule 12(b)(6) motion).
We apply New York law because both sides have cited to New York case law in their briefs. See, e.g., Krumme v. WestPoint Stevens Inc., 238 F.3d 133, 138 (2d Cir. 2000) (“The parties' briefs assume that New York law controls, and such implied consent is sufficient to establish choice of law.” (citation and punctuation omitted)). In any event, the elements for conversion and aiding and abetting a conversion appear to be the same in the only other states that have any connection to the allegations in the complaint: Florida and Maryland. See Utah Power Sys., LLC v. Big Dog II, LLC, 352 So.3d 504, 508 (Fla. Dist. Ct. App. 2022) (quoting W. Yellow Pine Co. v. Stephens, 80 Fla. 298 (1920)) (articulating elements of conversion in Florida); Logan v. Morgan, Lewis & Bockius LLP, 350 So.3d 404, 410, 410 n.3 (Fla. Dist. Ct. App. 2022) (articulating elements of aiding and abetting conversion in Florida and noting the recognition of such a claim under Florida law); Darcars Motors of Silver Spring, Inc. v. Borzym, 379 Md. 249, 261 (2004) (noting elements of conversion in Maryland); Alleco Inc. v. Harry & Jeanette Weinberg Found., Inc., 340 Md. 176, 199 (1995) (recognizing “tort liability for aiders and abettors”).
Here, the Complaint alleges that AIB and its liquidator transferred depositor money to the FTC. See SAC ¶ 15. There is no allegation that the defendants here exercised “dominion” over the property, which is the basic requisite for a conversion claim. Colavito, 8 N.Y.3d at 50; see also Artalyan, Inc. v. Kitridge Realty Co., 52 A.D.3d 405, 406 (1st Dep't 2008) (“The record is devoid of evidence that [defendants] had control and dominion over plaintiffs' property; thus, they cannot be liable for conversion.”); City of Syracuse v. Loomis Armored US, LLC, 900 F.Supp.2d 274, 302 (N.D.N.Y. 2012) (granting a motion to dismiss a conversion claim where “Plaintiff fails to allege that Defendant ever had possession of the allegedly converted funds.”). Thus, the defendants cannot be held liable for conversion.
In opposing the defendant's motion to dismiss, Aldabe asserts that the claim that is identified as one of “conversion” in the operative complaint, see SAC at 10, is in reality a claim of “aiding and abetting conversion.” Opp. at 14-16. But even if we were to allow Aldabe to amend his complaint yet again to assert such a claim, it would still fail. To prove that a defendant aided and abetted a conversion, a plaintiff must show “the existence of a primary violation, actual knowledge of the violation on the part of the aider and abettor, and substantial assistance.” Kirschner, 648 F.Supp.2d at 533; accord Lerner v. Fleet Bank, N.A., 459 F.3d 273, 292 (2d Cir.2006); Amusement Indus., Inc. v. Midland Ave. Assocs., LLC, 820 F.Supp.2d 510, 535 (S.D.N.Y. 2011). A defendant provides substantial assistance if the defendant “affirmatively assists, helps conceal, or by virtue of failing to act when required to do so enables [the underlying act] to proceed.” Silvercreek Mgmt., Inc. v. Citigroup, Inc., 248 F.Supp.3d 428, 443 (S.D.N.Y. 2017) (citation omitted); accord UniCredito Italiano SpA v. JPMorgan Chase Bank, 288 F.Supp.2d 485, 502 (S.D.N.Y. 2003).
Defendants argue that the complaint does not plausibly allege that they aided and abetted conversion because, among other things, the complaint does not plausibly allege any underlying wrong amounting to a conversion took place and does not allege in any event that the defendants provided any substantial assistance to a conversion. See Def. Mem. at 15-20; Reply Br. at 5-8. To support their argument, defendants point to orders and documents in several judicial proceedings related to the present case some of which are referenced, directly or indirectly, in the operative complaint. See generally Porpora Decl. As already discussed, we will take judicial notice of such court documents, “not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings.” Kramer, 937 F.2d at 774.
On October 31, 2018, the FTC filed a complaint alleging that various individual and corporate defendants, including AIB, perpetrated “a large-scale land sales scam in the Central American country of Belize.” See In re Sanctuary Belize Litig., 482 F.Supp.3d 373, 385, 387 (D. Md. 2020). At the time of filing, the FTC sought an asset freeze, which the court granted. Id. at 385. AIB's liquidator later filed a petition under Chapter 15 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Florida (the “Bankruptcy Court”) dated April 29, 2019, to recognize a “[f]oreign main proceeding” - that is, the Belizean liquidation of AIB. See Exhibit 2, annexed to Porpora Decl. (Docket # 30-2), at 1-3. In a September 19, 2019 Order, the Bankruptcy Court granted recognition of the “foreign main proceeding” and waived an automatic stay on the FTC to enforce a stipulated order the FTC was entering into with AIB in the District of Maryland. See Exhibit 4, annexed to Porpora Decl. (Docket # 30-4), at 3-4. AIB then reached a settlement with the FTC, reflected in a Stipulated Order for Permanent Injunction and Monetary Judgment against AIB that the U.S. District Court for the District of Maryland signed on September 25, 2019. See In re Sanctuary Belize Litig., 482 F.Supp.3d at 387 n.9.
Aldabe's conversion claim rests on his contention that the payment required by the court-ordered settlement somehow effectuated a conversion and that the defendants are liable because the defendants gave legal advice to AIB. See SAC ¶¶ 14-15; Opp. at 13-15. Specifically, the SAC alleges that AIB “converted $13,000,000 of depositors assets located in the U.S. when they payed [sic] the FTC before paying depositors in breach of [Belizean law] and which caused depositors to received [sic] less than 70 cents on the dollar.” SAC ¶ 15.
In a hearing held in 2020 before the Bankruptcy Court with both individual defendants present representing AIB and the liquidator, Aldabe sought to challenge various aspects of the liquidation in Belize, the Chapter 15 proceeding in the Bankruptcy Court, and the settlement with the FTC in the District of Maryland. See Exhibit 10, annexed to Porpora Decl. (Docket # 30-10), at 53-54. The Bankruptcy Court refused to vacate the District Court of Maryland's approval of the settlement, id. at 62, and noted, among other things, that Aldabe had been aware of the FTC proceeding and the settlement and did not bring an appropriate challenge there, see id. at 61.
Notwithstanding the subsequent challenge in the Bankruptcy Court, the fact remains that plaintiff has not alleged any “primary violation” - that is, a conversion, by anyone - and thus there can be no aiding and abetting claim. Kirschner, 648 F.Supp.2d at 533. As noted, “[a] conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession.” Colavito, 8 N.Y.3d at 49-50 (emphasis added and citation omitted). The complaint fails to show a host of things necessary to state a conversion claim, but most obviously, it fails to allege that the act of conversion - the payment to the FTC of a settlement - was “without authority.” Id. Here, the payment was made pursuant to a court-approved settlement order. See In re Sanctuary Belize Litig., 482 F.Supp.3d at 387 n.9. Thus, plaintiff has failed to show that AIB acted “without authority” in making that payment. Without a showing of conversion, there can be no showing of aiding and abetting conversion.
B. Intentional Infliction of Emotional Distress
Aldabe asserts a claim of intentional infliction of emotional distress (“IIED”). See SAC at 11-12. Under New York law, “the elements of a claim for intentional infliction of emotional distress are (i) extreme and outrageous conduct, (ii) an intent to cause-or disregard of a substantial probability of causing-severe emotional distress, (iii) a causal connection between the conduct and the injury, and (iv) the resultant severe emotional distress.” Lau v. S & M Enters., 72 A.D.3d 497, 498 (1st Dep't 2010); accord Conboy v. AT & T Corp., 241 F.3d 242, 258 (2d Cir.2001) (quoting Stuto v. Fleishman, 164 F.3d 820, 827 (2d Cir.1999)). This standard is “rigorous” and “difficult to satisfy.” Howell v. N.Y. Post Co., 81 N.Y.2d 115, 122 (1993) (citation omitted). “New York courts have been extremely reluctant to find extreme and outrageous conduct.” In re Sears Holdings Corp., 2021 WL 1192112, at *4 (S.D.N.Y. Mar. 30, 2021) (collecting cases), affd, 2023 WL 3938982 (2d Cir. June 12, 2023).
The complaint here alleges that the defendants “knew or should have known that depositors' accounts could have third party beneficiaries like plaintiff and that the conversion would affect depositors' and their beneficiaries' financial situation who could struggle to meet his family's financial obligations and which carried the high probability of causing pecuniary harm, physical harm and emotional distress.” SAC. ¶ 24. The specific conduct complained of is that the defendants gave legal advice to clients regarding the settlement of the claim by the FTC. SAC ¶ 14.
Aldabe has failed to state a claim for intentional infliction of emotional distress because, among other things, he has not alleged that defendants' conduct was extreme and outrageous. See Chanko v. Am. Broad. Companies Inc., 27 N.Y.3d 46, 56 (2016) (defining extreme and outrageous conduct as where it “has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community”) (quoting Howell, 81 N.Y.2d at 122); Medcalf v. Walsh, 938 F.Supp.2d 478, 489 (S.D.N.Y. 2013) (failure to state a claim for intentional infliction of emotional distress where complaint “does not recite facts that give rise to the plausible inference that the defendants intended to cause, or disregarded the substantial probability of causing, severe emotional distress”). New York courts have placed “extraordinary barriers . . . to recovery under an IIED theory,” which is viewed as a claim “of last resort.” Turley v. ISG Lackawanna, Inc., 774 F.3d 140, 158 (2d Cir. 2014) (citations omitted). Obviously, giving advice to clients about the payment of a settlement to a governmental authority does not fall into this category.
Aldabe argues that the existence of this element of the claim must be placed entirely in the hands of a jury. See Opp. at 29. But the New York Court of Appeals has described “the outrageousness element” of intentional infliction of emotional distress as “the element most susceptible to a determination as a matter of law.” Chanko, 27 N.Y.3d at 57.
The complaint also fails because there are no non-conclusory allegations showing that defendants' “inten[ded] to cause-or disregard[ed] . . . a substantial probability of causing- severe emotional distress.” Lau, 72 A.D.3d at 498. Again, all that is alleged is that attorneys advised their clients regarding a settlement. The lack of intent is even more obvious because plaintiff had no relationship to AIB but, as he puts it, was purportedly the “third party beneficiar[y]” of the actual account holder. SAC ¶ 24.
C. Punitive Damages
The operative complaint lists “Punitive Damages” as “Count 3,” see SAC at 12-14, and defendants made arguments against the appropriateness of punitive damages in their motion to dismiss, see Def. Mem. at 23-24. As we have previously observed, “there is ‘no independent cause of action for punitive damages under New York law.'” Okyere v. Palisades Collection, LLC, 961 F.Supp.2d 522, 536 (S.D.N.Y. 2013) (quoting Innovative Networks, Inc. v. Satellite Airlines Ticketing Ctrs., Inc., 871 F.Supp. 709, 731-32 (S.D.N.Y.1995)). Because plaintiff cannot make a claim for punitive damages, and “[a] motion to dismiss is addressed to a ‘claim'-not to a form of damages,” see id. (quoting Amusement Indus., Inc. v. Stern, 693 F.Supp.2d 301, 318 n.5 (S.D.N.Y.2010)), it is not necessary to separately address this claim inasmuch as all other claims should be dismissed.
* * *
Because Aldabe was previously granted leave to amend following the remand of this case to federal court, see Order, dated Mar. 14, 2023 (Docket # 25), because he has already had his claims heard regarding his complaints about the FTC payment in the Bankruptcy Court in the Southern District of Florida, because he is under an order not file further claims or any other litigation regarding these matters, and because the failings of the complaint cannot be cured through additional pleading, leave to amend should not again be granted. See generally Roache v. Fischer, 2019 WL 6827296, at *5 n.12 (N.D.N.Y. Dec. 13, 2019) (“an opportunity to amend is not required where the plaintiff has already been afforded the opportunity to amend”); Gallop v. Cheney, 642 F.3d 364, 369 (2d Cir. 2011) (proper to dismiss claim with prejudice “in the absence of any indication that [plaintiff] could-or would-provide additional allegations that might lead to a different result”).
Conclusion
For the above reasons, the motion to dismiss (Docket # 28) should be granted and the complaint dismissed.
PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See also Fed.R.Civ.P. 6(a), (b), (d). A party may respond to any objections within 14 days after being served. Any objections and responses shall be filed with the Clerk of the Court. Any request for an extension of time to file objections or responses must be directed to Judge Torres. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).