DeRaffele v. Williams and Williams

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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JOHN DERAFFELE,

Plaintiff,

OPINION & ORDER

-against-

21-CV-06033 (PMH)

WILLIAMS AND WILLIAMS, AUCTION

NETWORK, JENNIFER BENNETT, JOHN

HEILIGER, and WILLIAMS AND WILLIAMS

MARKETING SERVICES, INC.,

Defendants.

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PHILIP M. HALPERN, United States District Judge:

John DeRaffele (“Plaintiff”), proceeding pro se, brings two claims for relief against

Williams and Williams, Auction Network, Jennifer Bennett (“Bennett”), John Heiliger

(“Heiliger”), and Williams and Williams Marketing Services, Inc. (collectively, “Defendants”).

(Doc. 36, “AC”). Plaintiff alleges that Defendants failed to disclose information concerning an

easement on a property on which Plaintiff was the successful bidder at an auction, and that when

Plaintiff refused to honor his bid, Defendants threatened Plaintiff with litigation and banned him

from participating in future auctions. (See generally AC). Plaintiff seeks damages in the amount

of $100,000 on his first claim for relief sounding in fraud; $250,000 on his second claim for relief

for violation of the Sherman Act; $1,000,000 in punitive damages; and a reversal of the ban. (Id.

at 13).1

Defendants, in accordance with the briefing schedule set by the Court, moved under

Federal Rule of Civil Procedure 12(b)(6) to dismiss the Amended Complaint. (Doc. 51; Doc. 52,

1 Citations correspond to the pagination generated by ECF.

“Def. Br.”). Plaintiff opposed by affidavit (Doc. 53, “Pl. Aff.”) and Defendants did not file any

reply.

For the reasons set forth below, Defendants’ motion to dismiss is GRANTED.

BACKGROUND

Plaintiff is a realtor and investor who has purchased properties for over thirty years through

both the conventional and auction process. (AC at 12; Pl. Aff. at 2). Plaintiff has been a client of

Williams and Williams, an auction company, for approximately fifteen to twenty years. (AC at

12). Joseph Pogostin, Plaintiff’s partner, has also been a client of Williams and Williams for over

fifteen years, successfully bidding on and purchasing properties through their auctions. (Id. at 13).

On June 24, 2021, Plaintiff was the successful bidder at $175,000 in a Williams and

Williams auction on a property located at State Highway 28 in Exeter, NY. (Id. at 8). The property

brochure stated that “there might be an easement” on the property. (Id. at 4). Following the auction

and while visiting the property in Exeter, either Plaintiff or Mr. Pogostin learned from the owner

of a local cider mill that the property was in fact subject to an easement. (Id. at 4-5; Pl. Aff. at 3).

Plaintiff contacted Heiliger, a broker representing Williams and Williams, inquiring as to his

knowledge of the potential easement. (AC at 5). Heiliger stated that he was not aware of any

easement existing on this property. (Id.). Plaintiff thereafter ordered a title search and survey,

whereby it was revealed that 59 of the 71 acres of the property were subject to an easement by the

Department of Agriculture for the next 34 years. (Id.; Pl. Aff. at 3, 6).

On June 28, 2021, Plaintiff proposed an alternative bid of $25,000 for the 12 usable acres

of the property during a conference call with Bennett. (AC at 5-6). On June 30, 2021, Plaintiff

received a series of emails from Bennett, who then revealed she was an attorney for Williams and

Williams, stating that Plaintiff would be in default if he did not sign the contract, make a down

payment, and be willing to close, and that he would be banned from future auctions with

Defendants. (Id. at 8). Plaintiff refused to sign the contract and Defendants then banned Plaintiff

and Mr. Pogostin from future auctions. (Id. at 8-9, Pl. Aff. at 4-5).

STANDARD OF REVIEW

A Rule 12(b)(6) motion enables a court to dismiss a complaint for “failure to state a claim

upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss, a

complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face “when the plaintiff pleads

factual content that allows the court to draw the reasonable inference that the defendant is liable

for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “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.” Id. (quoting Twombly, 550 U.S. at 556). The factual allegations pled “must

be enough to raise a right to relief above the speculative level . . . .” Twombly, 550 U.S. at 555.

“When there are well-ple[d] factual allegations, a court should assume their veracity and

then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679.

Thus, the Court must “take all well-ple[d] factual allegations as true, and all reasonable inferences

are drawn and viewed in a light most favorable to the plaintiff[].” Leeds v. Meltz, 85 F.3d 51, 53

(2d Cir. 1996). The presumption of truth, however, “‘is inapplicable to legal conclusions,’ and

‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.’” Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Iqbal, 556

U.S. at 678 (alteration in original)). Therefore, a plaintiff must provide “more than labels and

conclusions” to show entitlement to relief. Twombly, 550 U.S. at 555.

A complaint submitted by a pro se plaintiff, “however inartfully ple[d], must be held to

less stringent standards than formal pleadings drafted by lawyers . . . .” Estelle v. Gamble, 429

U.S. 97, 106 (1976) (internal quotation marks omitted). Because pro se plaintiffs “‘are often

unfamiliar with the formalities of pleading requirements,’ courts must ‘apply a more flexible

standard in determining the sufficiency of a pro se [complaint] than they would in reviewing a

pleading submitted by counsel.’” Smith v. U.S. Dep’t of Just., 218 F. Supp. 2d 357, 361 (W.D.N.Y.

2002) (quoting Platsky v. Cent. Intell. Agency, 953 F.2d 26, 28 (2d Cir. 1991)).

However, while “[p]ro se complaints are held to less stringent standards than those drafted

by lawyers, even following Twombly and Iqbal,” dismissal is “appropriate where a plaintiff has

clearly failed to meet minimum pleading requirements.” Thomas v. Westchester Cty., No. 12-CV-

06718, 2013 WL 3357171, at *2 (S.D.N.Y. July 3, 2013) (internal citations omitted); see also

Chavis v. Chappius, 618 F.3d 162, 170 (2d Cir. 2010) (“Even in a pro se case . . . although a court

must accept as true all of the allegations contained in a complaint, that tenet is inapplicable to legal

conclusions, and threadbare recitals of the elements of a cause of action, supported by mere

conclusory statements, do not suffice.” (internal quotation marks omitted)). Therefore, while the

Court must “draw the most favorable inferences that [a plaintiff’s] complaint supports, [it] cannot

invent factual allegations that [a plaintiff] has not pled.” Chappius, 618 F.3d at 170. The Court

does, however, have a duty to interpret “the pleadings of a pro se plaintiff liberally and interpret

them ‘to raise the strongest arguments that they suggest.’” McPherson v. Coombe, 174 F.3d 276,

280 (2d Cir. 1999) (quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994)).

ANALYSIS

I. First Claim for Relief

Plaintiff’s first claim for relief alleges a violation of the “Federal Fraud Statute 18 US Code

47” and purports to quote from “18 US[C] 1374.” (AC at 9). Defendants point out that although

the cited statute does not exist, based upon the quoted excerpt in the pleading, Plaintiff is arguably

asserting a claim under 18 U.S.C. §§ 1341 or 1343. (Def. Br. at 9-10). To the extent Plaintiff

intended to plead a violation of 18 U.S.C. §§ 1341 or 1343, the claim fails as a matter of law as

these criminal statutes do not create a private right of action. Cracolici v. Saunders, No. 18-CV-

03807, 2019 WL 1862470, at *2 (S.D.N.Y. Apr. 25, 2019).

Giving Plaintiff all the solicitude the law permits for pro se litigants, Shibeshi v. City of

N.Y., 475 F. App’x 807, 808 (2d Cir. 2012), although a mail or wire fraud offense is not

independently actionable, it may constitute a predicate act under the Racketeer Influenced and

Corrupt Organizations Act (“RICO”). See 18 U.S.C. § 1961(1) (defining “racketeering activity”

to include offenses indictable under 18 U.S.C. §§ 1341 or 1343). Any such RICO claim fails,

however, as the alleged scheme occurred over a period of one week, involved a single victim, and

concerned an isolated real estate venture which has been terminated. See e.g. Bernstein v. Misk,

948 F. Supp. 228, 238 (E.D.N.Y. 1997) (no civil RICO claim based upon alleged acts of mail and

wire fraud committed in connection with an isolated real estate venture which had been

terminated); Mathon v. Marine Midland Bank, N.A., 875 F. Supp. 986, 998-99 (E.D.N.Y. 1995)

(no civil RICO claim based upon single real estate transaction involving one alleged victim, a

limited goal, and criminal conduct which lasted approximately fifteen months); Cont’l Realty

Corp. v. J.C. Penney Co., 729 F. Supp. 1452, 1453, 1455 (S.D.N.Y. 1990) (no civil RICO claim

based upon “a real estate transaction gone sour” involving one victim, one group of perpetrators,

and a single goal occurring over more than a year). In short, a garden-variety fraud claim does not

fit within the standard of civil RICO.

Thus, continuing to examine this claim with the special solicitude required for pro se

litigants, Plaintiff’s first claim for relief is more properly considered as a common law claim for

fraud. However, even when interpreted liberally to raise the strongest arguments that it suggests,

McPherson, 174 F.3d at 280, the Amended Complaint fails to state a claim for relief that is

plausible on its face.

“Under New York law, to state a claim for fraud a plaintiff must demonstrate: (1) a

misrepresentation or omission of material fact; (2) which the defendant knew to be false; (3) which

the defendant made with the intention of inducing reliance; (4) upon which the plaintiff reasonably

relied; and (5) which caused injury to the plaintiff.” Wynn v. AC Rochester, 273 F.3d 153, 156 (2d

Cir. 2001) (citing Lama Holding Co. v. Smith Barney, 668 N.E.2d 1370, 1373 (N.Y. 1996)).

It is well settled that “New York adheres to the doctrine of caveat emptor and imposes no

duty on the seller or the seller’s agent to disclose any information concerning the premises when

the parties deal at arm’s length, unless there is some conduct on the part of the seller or the seller’s

agent which constitutes active concealment.” Schottland v. Brown Harris Stevens Brooklyn, LLC,

968 N.Y.S.2d 90, 92 (N.Y. App. Div. 2013). A seller may have a duty to disclose information

concerning the property if “some conduct (i.e., more than mere silence) on the part of the seller

rises to the level of ‘active concealment.’” Daly v. Kochanowicz, 884 N.Y.S.2d 144, 153 (N.Y.

App. Div. 2009) (quoting Jablonski v. Rapalje, 788 N.Y.S.2d 158, 160 (N.Y. App. Div. 2005));

see also Slavin v. Hamm, 621 N.Y.S.2d 393, 395 (N.Y. App. Div. 1994); Stambovsky v. Ackley,

572 N.Y.S.2d 672, 675 (N.Y. App. Div. 1991). “Mere silence on the part of the seller, without

some affirmative act of deception, is not actionable as fraud.” Schottland, 968 N.Y.S.2d at 92

(quoting Perez-Faringer v. Heilman, 944 N.Y.S.2d 170, 172 (N.Y. App. Div. 2012).“Where the

facts represented are not matters peculiarly within the party’s knowledge, and the other party has

the means available to him of knowing, by the exercise of ordinary intelligence, the truth or the

real quality of the subject of the representation, he must make use of those means, or he will not

be heard to complain that he was induced to enter into the transaction by misrepresentations.” Id.

Plaintiff alleges that the property brochure provided to bidders stated that “there might be

an easement” on the property. (AC at 4). There was, therefore, no misrepresentation or omission

in that regard. With respect to Plaintiff’s allegation that Heiliger’s statement to Plaintiff that he

was unaware of the existence of an easement constituted a fraud, this statement was made after

Plaintiff had already won the auction. (Id. at 5). Thus, Heiliger could not have had the requisite

intent to induce Plaintiff’s reliance on his statement in connection with the bidding, nor could

Plaintiff have relied on his statement when bidding on the property. Finally, the easement was

recorded and a matter of public record which was ultimately confirmed through a title search and

survey. (Id.). Plaintiff simply did not investigate the possibility of the existence of an easement

until after he participated in and won the auction. (Id. at 4-5). Thus, as a matter of law, Defendants

did not actively conceal the easement from Plaintiff and Plaintiff was not “thwarted [in his] efforts

to fulfill his responsibilities fixed by the doctrine of caveat emptor.” Schottland, 968 N.Y.S.2d at

92. Accordingly, Plaintiff’s first claim for relief is dismissed.

II. Second Claim for Relief

Plaintiff’s second claim for relief alleges a violation of the Sherman Act, 15 U.S.C. §§ 1,

2. Plaintiff “cannot sue directly under the Sherman Act, 15 U.S.C. § 1, because ‘Section 1 of the

Sherman Act does not itself provide a private right of action.’” Bey v. Roc Nation, LLC, No. 21-

CV-03314, 2021 WL 3115134, at *3 (S.D.N.Y. July 21, 2021) (quoting In re Publ’n Paper

Antitrust Litig., 690 F.3d 51, 62 (2d Cir. 2012)). The Court therefore construes Plaintiff’s second

claim for relief instead as “invoking the private-right-of-action provisions of the Clayton Act,”

which authorize private suits by “any person who shall be injured in his business or property by

reason of anything forbidden in the antitrust laws.” Id. (citing Greene v. Conn. Bd. of Accountancy,

No. 00-CV-00599, 2001 WL 286855, at *2 (D. Conn. Mar. 20, 2001)); 15 U.S.C. § 15.

Plaintiff alleges that the ban imposed by Defendants constitutes a restraint on trade because

it prevents him from future participation in Defendants’ auctions. (AC at 11). To state a Clayton

Act claim for a Section 1 violation of the Sherman Act, “a plaintiff must allege ‘a combination or

some form of concerted action between at least two legally distinct economic entities’ that

‘constituted an unreasonable restraint of trade either per se or under the rule of reason.’” Primetime

24 Joint Venture v. Nat'l Broad., Co., 219 F.3d 92, 103 (2d Cir. 2000) (quoting Capital Imaging

Assocs. v. Mohawk Valley Med. Assocs., 996 F.2d 537, 542 (2d Cir. 1993)). A plaintiff must

establish, for a Section 2 violation, “(1) [a defendant’s] possession of monopoly power in the

relevant market; and (2) [its] willful acquisition or maintenance of that power, as distinguished

from growth or development as a consequence of a superior product, business acumen, or historic

accident.” PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 105 (2d Cir. 2002) (quoting United

States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966)).

Defendants argue that Plaintiff’s claim fails because his allegations do not support

monopolization or other antitrust violations. Rather, Plaintiff’s complaint is that Defendants told

him they would no longer allow him to participate in their auctions because he defaulted on a

previous transaction with them. (Def. Br. at 14). The Court agrees that Plaintiff cannot plausibly

state an antitrust claim. Plaintiff does not allege that Defendants conspired with other members of

the auction industry to block Plaintiff from all auction opportunities. (Id. at 14-15). Indeed, he

alleges that Defendants, the auction company and its own representatives, conspired with each

other to ban Plaintiff from their future auctions—and not from auctions of any other auction

company. (AC at 4, 6, 11-12). There are no allegations of concerted action between two legally

distinct economic entities, nor of any agreement between anyone in restraint of trade. There are no

allegations of monopolization of the auction market, or that defendants can control prices or

exclude competition. Moreover, dismissal is appropriate where, like here, “there is an obvious

alternative explanation” to alleged conspiratorial conduct. Cenedella v. Metro. Museum of Art, 348

F. Supp. 3d 346, 358 (S.D.N.Y. 2018). Defendants simply do not want to continue to do business

with a bidder who has failed and refused to honor his bid on more than one occasion. Plaintiff has

not alleged facts illustrating that Defendants’ conduct resulted from a conspiracy as opposed to

this obvious alternative explanation for the ban from Defendants’ future auctions. Accordingly,

Plaintiff’s assertions against Defendants do not give rise to a plausible claim under the Clayton

Act.

CONCLUSION

For the foregoing reasons, Defendants’ motion to dismiss pursuant to Rule 12(b)(6) is

GRANTED. While “[d]istrict courts should frequently provide leave to amend before dismissing

a pro se complaint . . . leave to amend is not necessary when it would be futile.” Reed v. Friedman

Mgt. Corp., 541 F. App’x 40, 41 (2d Cir. 2013) (citing Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d

Cir. 2000)). Here, Plaintiff has already amended his complaint once and any further amendment

would be futile. Accordingly, Plaintiff’s Amended Complaint is dismissed with prejudice.

The Clerk of Court is respectfully directed to: (i) terminate the motion sequence pending

at Doc. 51; (ii) mail a copy of this Opinion & Order to Plaintiff; and (iii) close this case.

SO ORDERED:

Dated: White Plains, New York

February 16, 2023 (Voy

Philip M. Halpern

United States District Judge

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