Case 2:12-cv-01810-CCC-JBC Document 34 Filed 04/27/17 Page 1 of 25 PageID: 346
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`NOT FOR PUBLICATION
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
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`RJR MECHANICAL, INC.,
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`Civil Action No.: 12-cv-1810
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`Plaintiff,
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`.
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`KAREN VASSALLO, et a!.,
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`Defendants.
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`CECCHI, District Judge.
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`I.
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`INTRODUCTION
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`OPINION
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`This matter comes before the Court on the motion (ECF No. 21) of Plaintiff RJR
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`Mechanical, Inc. (“Plaintiff’) for summary judgment on all nine of the affirmative defenses
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`pleaded in the Answer (ECF No. 6, hereinafter, “Ans.”), or alternatively to strike those defenses,
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`as well as the cross-motion (ECF No. 25) of Defendants Karen Vassallo (“Karen”), Harry Vassallo
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`(“Harry”), and Coastal $un Metals, Inc. (“C$M,” together, “Defendants”) for judgment on the
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`pleadings or alternatively summary judgment. The Court has considered the submissions made in
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`support of and in opposition to the instant motions. The motions are decided without oral argument
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`pursuant to Fed. R. Civ. P. 78(b).’ For the reasons set forth below, Defendants’ motion is
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`DENIED, and Plaintiff’s motion is GRANTED in part and DENIED in part.
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`The Court considers any new arguments not presented by the parties to be waived. $
`Brenner v. Local 514, United Bhd. of Carpenters & Joiners of Am., 927 f.2d 1283, 1298 (3d Cir.
`1991) (“It is well established that failure to raise an issue in the district court constitutes a waiver
`of the argument.”).
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`II.
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`BACKGROUND
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`The parties have submitted briefs, statements of material fact pursuant to Local Rule 56.1,
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`declarations, and exhibits, reflecting the following factual background. Because certain aspects of
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`the instant motions involve evaluating the sufficiency of the pleadings, where relevant, the Court
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`will also discuss the contents of the (operative) Amended Complaint (ECF No. 5, hereinafter,
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`“Compi.”) and the Answer.
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`A.
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`Factual Background
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`Plaintiff is a New York corporation that operates as a heating, ventilation, and air
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`conditioning contractor.
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`(ECF No. 2 1-1, hereinafter “Pl.’s 56.1,” ¶J 1-2). Plaintiffs president is
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`Roy Leibowitz (“Leibowitz”). Defendants Harry and Karen Vassallo are a married couple residing
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`in New Jersey.
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`(P1. ‘s 56.1 ¶ 3; Compl. ¶ 8; Ans. ¶ 8). Defendant CSM is a New Jersey corporation,
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`of which Harry is a shareholder. (Pl.’s 56.1 ¶ 4). Plaintiff claims both Harry and Karen controlled
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`CSM, while Defendants contend Harry was the sole shareholder, and Karen was never a
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`shareholder, director, officer, or employee of CSM.
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`(Pl.’s 56.1 ¶ 4; ECF No. 25-2, hereinafter
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`“Defs.’ 56.1,” ¶J 4, 31). During the relevant time period, Harry worked for Coastal Sheet Metal
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`Corp. (“Coastal”), a sheet metal contractor (not to be confused with CSM), although the parties
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`disagree about whether Harry was “officially” the president of Coastal.
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`(P1. ‘s 56.1 ¶J 5-6; Defs.’
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`56.1 ¶J 5-6).
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`According to the Amended Complaint, Harry and Karen secretly formed CSM, which has
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`the same initials as Coastal Sheet Metal, as part of a plan to steal Coastal’s receivables by directing
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`some of Coastal’s customers to make checks payable to “C$M,” then depositing these checks into
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`CSM’s bank account. (Compl. ¶ 13). Harry and Karen allegedly covered up the diversion of these
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`checks by intercepting Coastal’s mail and omitting transactions from Coastal’s records. (4J.
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`Harry and Karen allegedly used the money in the CSM bank account for their own personal use,
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`including the purchase of property. (Id.).
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`Defendants allegedly used this plan to divert money Plaintiff tried to pay to Coastal. At
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`issue in this case are three checks totaling $112,812.50: two that Plaintiff made payable to “CSM”
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`on February 12 and 27, 2001, and one that Plaintiffmade payable to “Coastal Sheet Metal” in July
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`2001. (P1.’s 56.1 ¶J 9, 11-21; Defs.’ 56.1 ¶J 9, 11-21). Plaintiff contends it intended these checks
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`as payment for work Coastal performed as Plaintiffs subcontractor on a construction project at
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`the State University of New York Health Sciences Center (“the Project”), located in Brooklyn,
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`New York.
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`(Pl.’s 56.1 ¶ 11-16). According to Plaintiff, Harry instructed Roy Leibowitz—
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`Plaintiffs president—to make the two February checks payable to “CSM,” and deposited all three
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`checks in CSM’s bank account.
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`(Id. ¶J 9, 17, 20). Allegedly, Leibowitz agreed to give Harry
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`these checks because Harry “misrepresented to [Plaintiff] that he was the owner of Coastal and/or
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`that he had the authority to direct the maimer in which [Plaintiff] should make payments to
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`Coastal,” and that Harry was collecting payment for the work Coastal did on the Project. (Compl.
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`¶ 3 7-40). Plaintiff claims Leibowitz did not know CSM was a company separate from Coastal or
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`that Harry was using it to divert Coastal’s receivables. (Pl.’s 56.1 ¶ 10).
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`In 2004, Coastal sued Plaintiff in Supreme Court, New York County.
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`(Pl.’s 56.1 ¶ 22).
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`Coastal alleged Plaintiff had failed to pay the outstanding $397,818.74 it owed for Coastal’s
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`subcontracting work on the Project.
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`(Certification of John R. Altieri, ECF No. 25-3, hereinafter
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`“Altieri Cert.,” Ex. C). On January 30, 2009, a jury in that action awarded Coastal $185,681.12
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`on a verdict sheet indicating the award was “for the work [Coastal] performed pursuant to the
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`terms of the contract between the plaintiff Coastal and the defendant RJR (‘contract work’), and
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`the additional work authorized by defendant RJR (‘extra work’)[.]”
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`(Altieri Cert. Ex. D).
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`Judgment in this amount plus $92,914.83 in interest was entered against Plaintiff on April 22,
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`2009.
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`(Deci. of Roy Leibowitz in Supp. of Pl.’s Mot. for $umm. J., ECF No. 21-3, hereinafter
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`“Leibowitz Deci.,” Ex. D). Plaintiff contends it would not have had to pay as large a verdict had
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`Coastal received the checks Defendants allegedly diverted.
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`(P1.’s 56.1 ¶J 26-27; Compi. ¶ 24).
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`Relevant to the defenses at issue in the present motions, Defendants contend Leibowitz
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`was “involved with the diversion of the three checks.” (Harry Vassallo Certification, ECF No. 25-
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`6, hereinafter “Vassallo Cert.” ¶ 23). According to Harry Vassallo, Leibowitz agreed to make the
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`three checks payable to CSM even though Leibowitz knew Plaintiff owed no money to CSM.
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`(Id.
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`¶J 7-8). Defendants identifi a discrepancy between Leibowitz’s records and those of Plaintiffs
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`employee, Larry Karpman (“Karpman”): Leibowitz’s list of checks paid to Coastal includes the
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`three checks at issue, while Karpman’s does not.2 (Id. ¶ 20). On the other hand, Harry Vassallo
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`also indicates he told Leibowitz the three checks would be credited to Plaintiffs account with
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`Coastal (id. ¶ 8), and asserts that the three checks were in fact credited to that account, “so
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`[Plaintiff] never lost money due to the checks.” (Id. ¶J 8, 23).
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`Harry also claims CSM paid several checks to Leibowitz totaling $10,000 beginning in
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`April and May of 2001, possibly (it is unclear from Defendants’ submissions) in connection with
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`negotiating a reduction of $50,000 in the contract price owed to Coastal for its work on the Project.
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`(Vassallo Cert. ¶ 22). Defendants also submit an excerpt of Leibowitz’s testimony from the trial
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`between Coastal and Plaintiff, in which Leibowitz testified he received three to four checks for
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`doing Coastal’s paperwork on evenings and weekends, but could not remember whether the checks
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`came from CSM as opposed to Coastal.
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`(Altieri Decl. Ex. M.). This trial testimony indicates
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`2 According to Defendants’ 56.1 statement, it is the other way around: Leibowitz’s list
`omits the three checks while Karpman’s list includes them. (Defs.’ 56.1 ¶ 39 (citing Vassallo
`Cert. ¶ 20)).
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`Leibowitz exercised his Fifth Amendment right not to testify when asked at a previous deposition
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`(1) whether he ever received money from CSM, and (2) whether he had received “anything of
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`value from Mr. Vassallo as a result of moneys paid by [Plaintiff] to [CSM] on [the Project].” (Id.).
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`Finally, Defendants point to the testimony of a Coastal employee at the trial between
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`Coastal and Plaintiff, wherein the employee testified Leibowitz told him one of Coastal’s invoices
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`was “overstated; that Harry and himself— he, in turn, allowed Coastal to bill more than what we’re
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`entitled to bill. In other words, it’s like an exaggerated bill[.]” (Altieri Cert. Ex. I).
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`B.
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`Procedural History
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`Plaintiff commenced this action on March 23, 2012 (ECF No. 1), and filed the Amended
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`Complaint on July 5, 2012. (ECF No. 5). In the Amended Complaint, Plaintiffbrings four claims,
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`apparently asserting each against all three defendants: unjust enrichment (Count One), tortious
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`interference with contract (Count Two), fraud (Count Three), and civil violation of the federal
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`Racketeer Influenced and Corrupt Organizations Act (“civil RICO”) (Count Four). (jçij.
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`Defendants answered on July 18, 2012.
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`(ECF No. 6). The answer lists nine “Separate
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`Defenses” that appear to be affirmative defenses:
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`1. Failure to state a claim upon which relief can be granted (First Defense);
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`2. Statute of limitations (Second Defense);
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`3. “Lack of Jurisdiction” (Third Defense);
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`4. Unclean hands (Fourth Defense);
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`5.
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`“The answering party was not guilty of any negligence, wrongdoing or breach of duty as
`claimed” (Fifth Defense);
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`6. Contributory or comparative negligence pursuant to N.J.S.A. 2A:15-5.1,
`Defense);
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`çq (Sixth
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`7.
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`“Lack of privity between the parties” (Seventh Defense);
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`2. The “Entire Controversy Doctrine” (Eighth Defense); and
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`9. Res judicata (Ninth Defense).
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`(Ans. 5-7).
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`On May 30, 2014, Plaintiffmoved for summary judgment on all nine affirmative defenses,
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`or alternatively to strike them from the Answer.
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`(ECF No. 21-2, hereinafter “Pl.’s Br.,” at 4-5).
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`Defendants opposed the motion and cross-moved for judgment on the pleadings or alternatively
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`summary judgment as to all claims, relying solely on statute of limitations grounds. (ECF No. 25-
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`1, hereinafter “Defs.’ Br.,” at 6-8 (“[D]efendants do not here need to challenge Plaintiffs four
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`alleged claims in a dispositive fashion. .
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`. and have chosen not to move affirmatively for dismissal
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`based upon the separate defenses except for the statute of limitations defense.”)). Plaintiff opposed
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`the cross-motion and replied in support of its original motion on July 14, 2014.
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`(ECF No. 26,
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`hereinafter “Pl.’s Reply Br.”). On December 16, 2014, the Court administratively terminated the
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`motions pending the outcome of mediation, before reinstating them on May 4, 2015.
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`(ECF Nos.
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`28, 29). The parties have also submitted supplemental briefs regarding choice of state law. (ECF
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`No. 31, hereinafter, “Pl.’s Supp. Br.”; ECF No. 33, hereinafter, “Defs.’ $upp. Br.”).
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`III.
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`LEGAL STANDARDS
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`A.
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`Failure to State a Claim
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`The legal standard for a motion for judgment on the pleadings is the same as for a motion
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`to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Caprio v. Healthcare Revenue
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`Recovery Grp., LLC, 709 F.3d 142, 146-47 (3d Cir. 2013). Thus, under either standard, to survive,
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`a complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that
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`is plausible on its face.” Ashcrofi v. Igbal, 556 U.s. 662 (2009) (quoting Bell Atl. Corp. v.
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`Twombly, 550 U.S. 544, 570 (2007)). In evaluating whether a complaint states a claim, the Court
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`must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable
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`inferences in favor of the non-moving party. See Phillips v. Cty. of Allegheny, 515 F.3d 224, 234
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`(3d Cir. 200$). “Factual allegations must be enough to raise a right to relief above the speculative
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`level.” Twombly, 550 U.S. at 555. “A pleading that offers labels and conclusions will not do.
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`Nor does a complaint suffice if it
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`tenders naked assertion[s] devoid of further
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`factual
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`enhancement.” Igbal, 556 U.S. at 67$ (internal citations omitted). However, “the tenet that a court
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`must accept as true all of the allegations contained in a complaint is inapplicable to legal
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`conclusions. Threadbare recitals of the elements of a cause of action, supported by mere
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`conclusory statements, do not suffice.” Id. Thus, when reviewing complaints for failure to state
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`a claim, district courts should engage in a two-part analysis: “First, the factual and legal elements
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`of a claim should be separated. .
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`.
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`. Second, a District Court must then determine whether the
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`facts alleged in the complaint are sufficient to show that the plaintiff has a ‘plausible claim for
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`relief.” See Fowler v. UPMC Shadyside, 578 F.3d 203, 2 10-11 (3d Cir. 2009) (citations omitted).
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`Because statute of limitations is an affirmative defense, a claim may be dismissed for
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`failure to state a claim on statute of limitations grounds only if it is apparent on the face of the
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`complaint that the claim is time-barred. Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014).
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`B.
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`Summary Judgment
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`Summary judgment is appropriate if the “depositions, documents, electronically stored
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`information, affidavits or declarations, stipulations.. . admissions, interrogatory answers, or other
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`materials” demonstrate that there is no genuine issue as to any material fact, and, construing all
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`facts and inferences in a light most favorable to the non-moving party, “the moving party is entitled
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`to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); Pollock v.
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`Am. Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3d Cir. 1986).
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`The moving party has the initial burden of proving the absence of a genuine issue of
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`material fact. 5ee Celotex, 477 U.S. at 323. Once the moving party meets this burden, the non-
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`moving party has the burden of identifying specific facts to show that, to the contrary, a genuine
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`issue of material fact exists for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
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`U.S. 574, 586-87 (1986).
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`In order to meet its burden, the nonmoving party must “go beyond the
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`pleadings and by [its] own affidavits, or by the ‘depositions, answers to interrogatories, and
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`admissions on file,’ designate ‘specific facts showing that there is a genuine issue for trial.”
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`Celotex, 477 U.S. at 324; see also Luian v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990) (stating
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`that “[t]he object of [Rule 56(e)] is not to replace conclusory allegations of the complaint. .
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`. with
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`conclusory allegations of an affidavit”); Big Apple BMW. Inc. v. BMW of N. Am., Inc., 974 F.2d
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`1358, 1363 (3d Cir. 1992) (“To raise a genuine issue of material fact,” the opponent must “exceed
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`the ‘mere scintilla’ threshold .
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`.
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`. .“).
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`An issue is “genuine” if it is supported by evidence such that a reasonable jury could return
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`a verdict in the nonmoving party’s favor. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248
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`(1986). A fact is “material” if, under the governing substantive law, a dispute about the fact might
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`affect the outcome of the suit. Id.
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`In considering a motion for summary judgment, a district court
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`may not make credibility determinations or engage in any weighing of the evidence; instead, the
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`non-moving party’s evidence “is to be believed and all justifiable inferences are to be drawn in his
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`favor.” Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477
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`U.S. at 255).
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`C.
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`Motion to Strike
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`Federal Rule of Civil Procedure 12(1) states:
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`(f) Motion to Strike. The court may strike from a pleading an
`insufficient defense or any redundant material,
`impertinent, or
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`scandalous matter. The court may act:
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`(1) on its own; or
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`(2) on motion made by a party either before responding to
`the pleading or, if a response is not allowed, within 21 days
`afier being served with the pleading.
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`Fed. R. Civ. P. 12(0.
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`“As a general matter, motions to strike under Rule 12(1) are highly disfavored.” FTC v.
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`Hope Now Modifications, LLC, 2011 WL 883202, at *1 (D.N.J. Mar. 10, 2011). “The successful
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`motion to strike is granted to ‘save time and expense’ by clearing away pleadings ‘which will not
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`have any possible bearing on the outcome of the litigation.” Id. (citing Garlanger v. Verbeke, 223
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`F. $upp. 2d 596, 609 (D.NJ. 2002)). Additionally, “even where the challenged material is
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`redundant, immaterial, impertinent, or scandalous, a motion to strike should not be granted unless
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`the presence of the surplusage will prejudice the adverse party.”
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`(citing Symbol Techs.. Inc. v.
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`Aruba Networks, Inc., 609 F. $upp. 2d 353, 359 (D. Del. 2009)).
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`IV.
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`DISCUSSION
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`A.
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`Defendants’ Cross-Motion
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`If Defendants are correct that all claims in the Amended Complaint are time-barred, this
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`case ends. Therefore, the Court will decide Defendants’ cross-motion first.
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`1.
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`State Law Claims
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`With the exception of the civil RICO claim, plaintiffs claims arise from state law. Plaintiff
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`contends New Jersey law applies (Pl.’s $upp. Br. at 6), while Defendants contend New York law
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`applies (Defs.’ Supp. Br. at 2-4).
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`“[A] federal court sitting in diversity must apply the forum state’s choice of law rules.”
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`Snyder v. Famam Cos., 792 F. $upp. 2d 712, 717 (D.N.J. 2011) (citing Klaxon Co. v. $tentor Elec.
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`Mfg. Co., 313 U.S. 487, 496 (1941)). UnderNew Jersey choice of law rules, “[t]he first step is to
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`determine whether an actual conflict of law exists, for if no conflict exists, the law of the forum
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`state applies.” Id. Thus, the Court will determine whether any of the state law claims would be
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`barred under New York’s statute of limitations but not New Jersey’s, or vice-versa.
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`Tort law in both New York and New Jersey recognizes that a claim does not accrue, and
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`therefore the statute of limitations does not begin to run, before a plaintiff has suffered damages.
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`See Kronos, Inc. v. AVX Corp., 81 N.Y.2d 90, 94 (1993) (“[A]s a general proposition, a tort cause
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`of action cannot accrue until an injury is sustained.”); P.T. & L Constr. Co. v. Madigan & Hyland,
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`Inc., 245 N.J. Super. 201, 207 (App. Div. 1991) (“A cause of action grounded in tort accrues, not
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`when the tortious act occurs, but when the consequential injury or the damage occurs.” (citing
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`Diamond v. N.J. Bell Tel. Co., 51 N.J. 594, 596 (1968))).
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`Plaintiff argues, persuasively, that it did not suffer an injury from Defendants’ alleged
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`actions until April 22, 2009, when judgment was entered against Plaintiff ordering it to pay
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`Coastal.
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`(Pl.’s Br. at 6-7). Nobody disputes that Plaintiff received the benefit of Coastal’s
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`subcontracting work back in 2001, despite the alleged fact that Harry Vassallo and CSM had
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`diverted three checks owed to Coastal toward the CSM account. Nor do Defendants identify any
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`other injury Plaintiff suffered before the judgment was entered. Thus, under both New York and
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`New Jersey law, Plaintiffs tort claims accrued, at the earliest, on April 22, 2009.
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`Defendants’ extensive arguments about the inapplicability of the “discovery rule” are
`misplaced. The Court does not rely on the discovery rule to determine this accrual date.
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`Defendants also argue the tort claims accrued before the jury verdict was entered because
`“a claim accrues at the ‘moment of the wrong.” (Defs.’ Supp. Br. at 8 (citing Amland Properties
`Corp. v. Aluminum Co. of Am., 808 F. Supp. 1187, 1190 (D.N.J. 1992); Michaels v. State of N.J.,
`955 F. Supp. 315, 326 (D.N.J. 1996); IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d
`132, 140-41 (2009)). But the cases Defendants cite explain that the “moment of the wrong” means
`when all elements of a cause of action are present. Michaels, 955 F. Supp. at 326; Amland, 808
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`The statute of limitations for unjust enrichment is six years both in New York, Coombs v.
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`Jervier, 74 A.D.3d 724, 724 (N.Y. App. Div. 1st Dep’t 2010), and New Jersey, Rubinsky v. Zayat,
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`Civ. No. 2:14-01540(WJM), 2015 WL 3517629, at *3 (D.N.J. June 4, 2015) (citing N.J.S.A. §
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`2A: 14-1). Although ordinarily, unjust enrichment is a quasi-contract claim rather than a tort,
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`Georgia Malone & Co. v. Rieder, 19 N.Y.3d 511, 516 (2012); Castro v. NYT Television, 370 N.J.
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`Super. 282, 299 (App. Div. 2004), as discussed below, see infra Section IV.B.1.a, Plaintiff has
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`actually asserted a tort claim under the banner of unjust enrichment. Therefore, the Court treats
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`this claim as a tort claim for the purposes of determining when the cause of action accrued. çç
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`çg, Blystra v. fiber Tech Grp., Inc., 407 F. Supp. 2d 636, 645 n.1 1 (D.N.J. 2005) (declining to
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`apply the “last rendition of services” test to a purported unjust enrichment claim that was actually
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`a tort claim).
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`The statute of limitations for tortious interference is three years in New York, Amaranth
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`LLC v. J.P. Morgan Chase & Co., 71 A.D.3d 40, 48 (N.Y. App. Div. 1st Dep’t 2009); Mannix
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`Indus. v. Antonucci, 191 A.D.2d 482, 483 (N.Y. App. Div. 2d Dep’t 1993) (citing N.Y. C.P.LR.
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`§ 214(4)), and six years in New Jersey. Fraser v. Bovino, 317 N.J. Super. 23, 34 (App. Div. 1998)
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`(citing N.J.S.A. § 2A:14-1).
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`The statute of limitations for fraud in New York is “the greater of six years from the date
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`the cause of action accrued or two years from the time the plaintiff. .
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`. discovered the fraud, or
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`could with reasonable diligence have discovered it.” N.Y. C.P.L.R. § 213(8). In New Jersey, it is
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`six years. Curtiss-Wright Corp. v. Rodney Hunt Co., 1 F. Supp. 3d 277, 284 (D.N.J. 2014) (citing
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`N.J.S.A. § 2A:14-1, 14-2).
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`F. Supp. at 1190; IDT Corp., 12 N.Y.3d at 140. Thus, these cases are not contrary to the
`proposition that, in tort, a cause of action does not start to run until a plaintiff suffers damages.
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`Plaintiff filed this lawsuit on March 23, 2012, less than three years after the causes of action
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`in tort accrued on April 22, 2009. Therefore, Counts One, Two, and Three are all timely.
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`2.
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`RICO Claim (Count Four)
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`RICO claims have a four-year statute of limitations that runs from the time a plaintiff (1)
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`suffers an injury; and (2) knows or should know of the source of the injury. Prudential Ins. Co. of
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`Am. v. United States Gypsum Co., 359 F.3d 226 (3d Cir. 2004). Plaintiff did not suffer an injury
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`until April 22, 2009, and filed this action less than four years later. Thus, Count Four is timely.
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`For these reasons, Defendants have both failed to show that the Amended Complaint is
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`time-barred on its face under Rule 12(c), and failed to submit evidence that summary judgment is
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`warranted on statute of limitations grounds. Therefore, Defendants’ motion is denied.
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`B.
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`Plaintiffs Motion
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`Plaintiff moves for summary judgment on, or alternatively to strike, all nine of the
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`affirmative defenses asserted in the Answer.
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`As an initial matter, the Court declines to strike any of the defenses from the pleadings
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`because Plaintiff has not shown how the continued presence of any defense “may cause prejudice
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`to one of the parties[.]” Burke v. Weight Watchers Int’l, Inc., 983 F. Supp. 2d 478, 484 (D.N.J.
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`2013). Moreover, they will not “confuse the issues in the case,” see id., because in deciding this
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`motion, the Court will grant summary judgment on the non-meritorious defenses and leave in place
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`potentially meritorious ones, eliminating confusion on which defenses remain.
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`The Court discusses the summary judgment motion with respect to each defense in turn.
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`1.
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`Failure to State a Claim Upon Which Relief Can Be Granted (First
`Defense)
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`Plaintiff contends there is no material issue as to whether the Amended Complaint states a
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`claim upon which relief can be granted. Thus, the Court must evaluate whether Plaintiff has
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`sufficiently pleaded claims for unjust enrichment, tortious interference with contract, fraud, and
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`civil RICO.4 For each claim, the Court will grant summary judgment on this defense if the
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`Amended Complaint states a claim, and deny summary judgment if it does not. However, because
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`Defendants have not moved to dismiss any of Plaintiff’s claims for failure to state a claim (except
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`with respect to statute of limitations, discussed above), the denial of summary judgment on the
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`defense of failure to state a claim will not result in that claim being dismissed.
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`To be clear, for each of the claims the Court has indicated state a claim, and thus granted
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`summary judgment as to the First Defense, Plaintiff will still need to present “a legally sufficient
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`evidentiary basis” on each of these claims at trial to survive a motion under Fed. R. Civ. P. 50(a).
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`a.
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`Unjust Enrichment (Count One)
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`The Amended Complaint does not state a claim for unjust enrichment against any
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`Defendant under either New Jersey or New York law.
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`“[U]njust enrichment law[] do[es] not vary in any substantive manner from state to state.”
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`Snyder v. Farnam Cos., 792 F. Supp. 2d 712, 723 (D.N.J. 2011) (collecting cases). In New Jersey,
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`a plaintiff must show “(1) at plaintiff’s expense (2) defendant received [a] benefit (3) under
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`circumstances that would make it unjust for defendant to retain [the] benefit without paying for
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`it.” Id. (internal quotation omitted). Similarly, in New York, a plaintiff must show “(1) the other
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`party was enriched, (2) at [plaintiffs] expense, and (3) that it is against equity and good conscience
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`to permit the other party to retain what is sought to be recovered[.]” Georgia Malone & Co., 19
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`N.Y.3d at 516 (internal quotation omitted).
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`Defendants argue that Plaintiffs motion for summary judgment on this defense is moot
`because Defendants filed the Rule 12(c) motion discussed above. (Defs.’ Br. at 16). It is not. The
`Rule 12(c) motion was based solely on statute of limitations grounds. The defense of failure to
`state a claim upon which relief can be granted is preserved through trial, regardless of whether it
`is asserted in motion practice prior to trial. See Fed. R. Civ. P. 12(g)(2), (h)(2).
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`Typically, unjust enrichment is a quasi-contractual remedy to prevent one party from
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`unjustly benefiting at the other’s expense, despite the lack of a formal, enforceable contract. See
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`Georgia Malone & Co., 19 N.Y.3d at 516; Corsello v. Verizon New York, Inc., 1$ N.Y.3d 777,
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`790 (2012) (“Typical cases are those in which the defendant, though guilty of no wrongdoing, has
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`received money to which he or she is not entitled[.]”); Castro, 370 N.J. Super. 282, 299. That is
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`not this case. Plaintiff did not, for example, fail to receive payment for services rendered to
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`Defendants, or fail to receive services from Defendants for payment rendered.
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`Indeed, Coastal
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`apparently performed the work covered by the subcontract despite not receiving the checks Harry
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`Vassallo allegedly diverted to the CSM account.
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`Instead, what Plaintiff purports to bring as an unjust enrichment claim is actually a tort: the
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`Amended Complaint alleges that “[a]s a result of the wrongful and illegal actions of the
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`Defendants,” that is, the diversion of the checks without Plaintiff’s knowledge, “the Defendants
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`received a benefit from the Plaintiff in the form of monies that did not belong to the Defendants.”
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`(Compi. ¶ 26). But under New York law, “unjust enrichment is not a catchall cause of action to
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`be used when others fail[,]” and is “not available where it simply duplicates, or replaces, a
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`conventional .
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`.
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`. tort claim[.]” Corsello, 18 N.Y.3d at 790. Likewise, New Jersey law “does not
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`recognize unjust enrichment as an independent tort cause of action”; rather, in tort law, avoiding
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`this type of “unjust enrichment” is merely “a justification for other torts such as fraud or
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`conversion.” Castro, 370 N.J. Super at 299.
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`Therefore, summary judgment on the First Defense—failure to state a claim—is not
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`warranted as to Count One.
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`b.
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`Tortious Interference with Contract (Count Two)
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`In New Jersey, tortious interference with contract occurs when a defendant “intentionally
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`and improperly interferes with the performance of a contract. .
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`. between [plaintiff] and a third
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`person by inducing or otherwise causing the third person not to perform the contract.. . [causing]
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`pecuniary loss [] to the [plaintiff] from the failure of the third person to perform the contract.”
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`Nostrame v. Santiago, 213 N.J. 109, 122 (2013) (quoting Restatement (Second) of Torts § 766).
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`In New York, “[t]ortious interference with contract requires the existence of a valid contract
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`between the plaintiff and a third party, defendant’s knowledge of that contract, defendant’s
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`intentional procurement of the third-party’s breach of the contract without justification, actual
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`breach of the contract, and damages resulting therefrom[.]” Lama Holding Co. v. Smith Barney,
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`28 N.Y.2d 413, 424 (1996).
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`Plaintiff does not state a claim for tortious interference, because it does not allege any
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`Defendant caused a third party to breach a contract. Rather, Plaintiff claims Defendants caused
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`Plaintiffto breach its contract with Coastal by paying CSM instead of Coastal. This is not tortious
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`interference under either New Jersey or New York law.
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`Accordingly, summary judgment on the FirstDefense is not warranted as to Count Two.
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`c.
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`Fraud (Count Three)
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`In New Jersey, fraud requires “(1) a material misrepresentation of a presently existing or
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`past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other
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`person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages.”
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`Allstate New Jersey Ins. Co. v. Lajara, 222 N.J. 129, 147 (2015) (internal quotation omitted).
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`Similarly, in New York, fraud requires “a misrepresentation or a material omission of fact which
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`was false and known to be false by defendant, made for the purpose of inducing the other party to
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`rely upon it, justifiable reliance of the other party on the misrepresentation or material omission,
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`and injury.” Lama Holding Co., 88 N.Y.2d at 421.
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`Rule 9(b) requires “all averments of fraud or mistake” to “be stated with particularity.”
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`Fed. R. Civ. P. 9(b). To comply with Rule 9(b), the circumstances surrounding the alleged fraud
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`must be sufficiently pleaded to put the defendant on notice of the “precise misconduct with which
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`[it is] charged.” Lum v. Bank of Am., 361 F.3d 217, 223 (3d Cir. 2004), abrogated in part on other
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`grounds by Twombly, 550 U.S. at 557. A plaintiff can meet this requirement by specifying “the
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`who, what, when, where, and how: the first paragraph of any newspaper story.” See Advanta
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`Corp. Sec. Litig., 180 F.3d 525, 534 (3d Cir. 1999) abrogated on other grounds by Tellabs, Inc. v.
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`Makor Issues & Rights, Ltd., 551 U.S. 308 (2007) (quotation omitted). A plaintiff can either
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`identify “the date, place or time of the fraud,” or may use “alternative means of injecting precision
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`and some measure of substantiation into their allegations of fraud.” Id. (citations omitted). A
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`plaintiff must allege “who made a misrepresentation to whom and the general content of the
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`misrepresentation.” [ç (citations omitted).
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`Accepting the Amended Complaint as true, Harry Vassallo told or led Plaintiff to believe
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`Harry was the owner pf Coastal and was collecting money Plaintiff owed to Coastal, for the
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`purpose of inducing Plaintiff to give him two checks made out to CSM and a third made out to
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`Coastal. Relying on Harry’s representations, Plaintiffpaid Harry the checks, and suffered damages
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`when, in 2009, it had to pay Coastal again as part of the jury verdict. This is sufficient to plead a
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`claim of fraud with specificity under either New Jersey or New York law.
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`However, there ar