21

- 847 Petroff Amshen LLP v. Alfa Rehab PT PC



## UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT



# SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT ’ S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “ SUMMARY ORDER ” ). A PARTY CIT ING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, 1 held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of 2 New York, on the 1 7 t h da y of F e b r u a r y , two thousand twenty

- two

. 3 4 PRESENT: 5 MICHAEL H. PARK , 6 BETH ROBINSON , 7 Circuit Judges , 8 JED S. RAKOFF, * 9 District Judge

. 10

_____________________________________ 11 12 PETROFF AMSHEN LLP, 13 14 Plaintiff

- Appellant , 15 16

v. 21

- 847 17 18 ALFA REHAB PT PC, BRUNSWICK BANK & 19 TRUST COMPANY, JAMES CHENG, CHUNG 20 KWONG YAU, CAI FENG TAN, THE 21 SAMANTHA LEE FAMILY TRUST, 22 ADVANCED REHAB CARE PT PC, 23 JOSEPHINE BELLONI, ANNAROSE 24 ROTONDI TRUST, AGYAL PHYSICAL 25 THERAPY PLLC, WEI JI LI, ASSEM 26 PHYSICAL THERAP Y PC, AMRO 27 MAHMOUD SHOKRY BARAKAT, WISDOM 28 PHYSICAL THERAPY PC, HATEM E. 29 ABOUHASSAN, KISHORE KANDURI, AKA 30 KISHORE K. KANDURI, RADWA PT PC, 31

* Judge Jed S. Rakoff, of the United States District Court for the Southern District of New York, sitting by designation.2 MOHAMED M. ELMANDOUH, MD, 1 ULTIMATE CARE CHIROPRACTIC PC, 2 GRAIG GRANOVSKY, GRAIG GRANOVSKY 3 CHIROPRACTIC PC, THIRD AVENU E 4 CHIROPRACTIC CARE PC, NATHANIEL 5 MAZZA, THERAKINEMATICE PT PC, 6 LEGASPI MADELINE, PHYSIO SOLUTIONS 7 PT PC, REHAB CONCEPTS PT PC, 8 SIGNIFICANT CARE PT PC, SAYED F. 9 SAYED, NBC HEALTH PHYSICAL 10 THERAPY PC, NATHANIEL BREX ROA 11 CAYETUNA, LITE CARE REHAB PT PC, 12 ISLA M BEKHET, EXTENSIVE CARE PT PC, 13 ANNA MEYERZON, MMA PHYSICAL 14 THERAPY PT PC, MAZED ABDEL MAGID, 15 MD, JMP REHAB CARE PT, HARKIRTAN 16 SINGH, DALBIR KAUR, HOWARD 17 KESSLER, MD, FIRST HAND PHYSICAL 18 THERAPY PC, ABDELHAMID ABOURYA, 19 AKA ABDELHAMID MAHMOUD ABOURYA, 20 EYE O N WELL

- BEING ACUPUNCTURE PC, 21 OATES DEVAN, CORE BASICS PC, KHALED 22 NASR, COMMUNITY WELLNESS 23 PHARMACY INC., RAKMIN ILYABAYEV, 24 COMFORT TOUCH PT PC, FERRIN 25 MANUEL, CANARSIE WELLNESS 26 PHARMACY INC., BODY ACUPUNCTURE 27 CARE PC, OKSANA PODHAYETSKA, 28 BRIGHT STAR REHAB PT PC, MOHAMED Y 29 EL SAIDY, BL HEALTHY LIFE 30 ACUPUNCTURE PC, ZENON 31 KURKAREWICZ, BRONX CHIROPRACTIC 32 REHABILITATION, P.C., SEAN DIAMOND, 33 D.C., BEST TOUCH PT PC, MOTAZ M. 34 EBEIDO, VITAL MERIDIAN 35 ACUPUNCTURE PC, LUDMILA 36 BOBCHYNSKA, MD, MEDS4DAYS 37 PHARMACY INC., B RITTNEY COLEMAN, 38 PHYSICAL THERAPY REHAB PC, 39 ACUPUNCTURE HEALTHCARE PLAZA I 40 PC, LAW OFFICES OF DOMINICK W. 41 LAVELLE PC, DOMINICK LAVELLE, AKA 42 DOMINICK W. LAVELLE, ELSANAA PT PC, 43 MAHMOUD ELSANAA, ZHONG SU, LIBING 44 SU, MANHATTAN'S HANDS OF HOPE PT 45 PC, JOHN DOE #1

- 10, JEREMY JAMES 463 SCHIES, BARAKAT PT PC, DANIMARK 1 PHYSICAL THERAPY PC, CAMBRIDGE 2 CLARENDON FINANCIAL SERVICES LLC, 3 4 Defendants

- Appellees

. † 5

____________________________________ 6 7 F OR PLAINTIFF

- APPELLANT: D ANIEL G INZBURG , The Ginzburg Law 8 Firm, P.C., Old Bridge, NJ (Steven Amshen, 9 Petroff Amshen LLP, Brooklyn, NY, on the 10 brief ). 11 12 F OR DEFENDANT S

- APPELLEE S : D ONALD J AY P OLS , Belis & Pols, LLP, 13 Brooklyn, NY. 14 15 W ESLEY M EAD , The Mead Law Firm, P.C., 16 Astoria, NY. 17 18 L LOYD M. E ISENBERG , Eisenberg & Carton, 19 Uniondale, NY. 20 21 G ALINA F ELDSHEROVA , K opelevich & 22 Feldsherova, P.C., Brooklyn, NY. 23 24 Appeal from a judgment of the United States District Court for the Eastern District of New 25

York ( Brodie

, J

. ). 26

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND 27

DECREED that the judgment of the district court is AFFIRMED

. 28

Petroff Amshen LLP (“Petroff Amshen”), a law firm based in Brooklyn, alleges that dozens 29

of chiropractors, physical therapists, and acupuncturists engaged in a tax evasion scheme 30

implicating the firm. As alleged, individual Defendants , acting through corporate entities 31

(“practices”) under their control, wrote over 120 checks worth at least $600,000 made out to 32

Petroff Amshen as the payee , often with memos of “legal fees” or “legal services.” But Petroff 33

Amshen never performed any legal services for Defendants and had no knowledge of the checks. 34

† The Clerk is respectfully directed to amend the caption accordingly.4 Rather, Defendants forged Petroff Amshen’s endorsement on the checks and c reated fake W

- 9 1

forms, purportedly issued by Petroff Amshen, to write off the transactions as business expenses. 2

With the help of Cambridge Clarendon Financial Services, LLC (“Cambridge Clarendon”), a 3

check casher in New Jersey, and Brunswick Bank & Trust Company (“Brunswick Bank”), a 4

nearby bank, Defendants then cashed the checks for themselves , converting pretax money in their 5

corporate accounts into post

- tax assets. Cambridge Clarendon, “[u]pon information and belief .

. . 6

was aware of the scheme,” “re ceived re mun eration and compensation for its role,” and neglected 7

to verify the (false) employer identification number on the W

- 9 or to call Petroff Amshen for 8

verification . Compl. ¶¶ 7

– 9. The number of checks written by each firm varies from one to 9

nine teen checks . The Complaint appends copies of checks allegedly written by Defendant firms, 10

and many of the checks bear a stamp from Cambridge Clarendon. 11

Petroff Amshen sued each practice and the individual Defendants affiliated with it , a long 12

with Cambridge Clarendon and Brunswick Bank, in the United States District Court for the Eastern 13

District of New York. Against each set of Defendants affiliated with a given practice

, Plaintiff 14

brought a claim under the Racketeer Influenced and Corru pt Organizations Act ( “ RICO ” ), a claim 15

for common

- law fraud, and a claim for unjust enrichment. Plaintiff also requested declaratory 16

relief to the effect that Petroff Amshen itself was not involved in Defendants’ scheme. As to the 17

RICO claim, Plaintiff a lleged that each corporate Defendant was a RICO “enterprise,” but also 18

alleged that “[t]he criminal enterprise was comprised of all of the Defendants,” corporate and 19

individual, acting as a single organization. Compl. ¶ 11. For each corporate Defendant, all 20

affiliated individuals are alleged to have “knowingly conducted and/or participated, d irectly or 21

indirectly

, ” in its conduct “through a pattern of racketeering activity” involving violations of 18 22

U.S.C. § § 1341 (mail fraud), 1343 (wire fraud), and 1956 (money laundering). E.g.
, Compl. ¶ 138. 235 As for damages, Petroff Amshen alleges injury to the firm’s reputation via the use of its name in a 1

fraudulent scheme. The firm also alleges that it will face tax penalties of an unspecified nature. 2

The district court dismissed all RICO counts for failure to state a claim and declined to 3

exercise s upplemental jurisdiction over Petroff Amshen’s state

- law claims. Petroff Amshen 4

appealed, arguing that it has plausibly alleged RICO claim s and that, in the alternative, it should 5

be granted leave to amend. 1 We r eview a motion to dismiss for failure to state a claim de novo

. 6

Darby v. Greenman , 14 F.4th 124, 127 (2d Cir. 2021). We review d enial of leave to amend for 7

abuse of discretion. ATSI Commc’ns, Inc. v. Shaar Fund, Ltd. , 493 F.3d 87, 108 (2d Cir. 2007). 8

We assume the parties’ familiarity with th e underlying facts, procedural history, and issues on 9

appeal. 10

First, we agree with the district court that Petroff Amshen failed to state plausible RICO 11

claim s . RICO provides a cause of action to parties who are “injured in [their] business or property 12

by reason of a violation of [18 U.S.C. § 1962]

. ” 18 U.S.C. § 1964(c). To satisfy that requirement, 13

a RICO plaintiff must show that the defendants’ violation was the “proximate cause” of the injury. 14

D’Addario v. D’Addario , 901 F.3d 80, 96 (2d Ci r. 2018). “[P]roximate cause requires . . . some 15

direct relation between the injury asserted and the injurious conduct alleged, and excludes . . . those 16

links that are too remote, purely contingent, or indirect.” Id. (quoting Ideal Steel Supply Corp. v. 17

Anza , 652 F.3d 310 , 323 (2d Cir. 2011)). Plaintiff’ s sole factual allegations in the Complaint 18

relating to damages are: 19

130. Upon information and belief, Petroff Amshen will face, as proximate cause of 20 the Defendants’ criminal action, significant tax pena lties, in an amount to be 21 determined in the future and during discovery, unless the Court grants the relief 22 sought herein. 23

1 Petroff Amshen does not appeal the district court’s dismissal of its state

- law clai ms.6 131. Upon information and belief, Petroff Amshen will suffer substantial injury to 1 its reputation as a result of the Defendants’ cond uct in which the name, business 2 reputation and identity of Petroff Amshen was used to conduct a fraudulent scheme. 3
Compl. ¶¶ 130

– 131. On appeal, Plaintiff abandons its theory of damages based on tax penalties 4

and presses only its theory based on reputatio nal damage. Plaintiff contends that it plausibly 5

alleged monetary loss resulting from harm to its reputation and that these damages are not “general 6

or speculative” because the Complaint assert s that Petroff Amshen “ will suffer substantial injury 7

to its r eputation.” Compl. ¶ 131 (emphasis added). But th at assertion

, a mere recitation of an 8

element of a RICO claim

, is a legal conclusion, not a factual allegation , so it is not entitled to a 9

presumption of truth

. See Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) . But even if we presumed 10

it to be true, the risk of lost profits in the future is insufficient to establish standing under the RICO 11

statute

. S ee Denney v. Deutsche Bank AG , 443 F.3d 253, 266 (2d Cir. 2006) (“RICO standing is 12

a more rigorous matter than standing under Article III. A RICO plaintiff only has standing. . . 13

when his or her actual loss [has] become[] clear and definite.” (cleaned up)); Kimm v. Chang Hoon 14

Lee & Champ, Inc. , 196 F. App’x 14, 16 (2d Cir. 2006) (“[T]he generalized reputation al harms 15

alleged, including the risk of future lost business commissions, are too speculative to constitute an 16

injury to business or property.”). Petroff Amshen thus fail ed to state plausible claim s for relief 17

under RICO. 18

Second, we decline to vacate the district court’s judgment to allow Petroff Amshen to 19

amend its complaint

. Plaintiff concedes that it never move d to replead below. We have previously 20

characterized as “frivolous” “ t he contention that the D istrict C ourt abused its discretion in not 21

permi tting an amendment that was never requested.” Williams v. Citigroup Inc. , 659 F.3d 208, 22

212 (2d Cir. 2011) (cleaned up )

. Vacatur of the judgment on appeal would thus be inappropriate. 23

In any event, the submission of a new complaint would likely be futile

. Among other 247 deficiencies

, Petroff Amshen has made no showing that any lost business, even if concretely 1

alleged, would be a proximate result of Defendants’ alleged scheme. See D’Addario , 901 F.3d at 2

96. The connection from Defendants’ conduct to Petroff Amshen’s reputational harm to 3

consequential damages in the form of lost business is too attenuated to satisfy the proximate cause 4

requirement. See Hemi Grp., LLC v. City of New York , 559 U.S. 1, 10 (2010) (in defining 5

proximate cause for RICO pur poses, explaining that the “general tendency” is “not to go beyond 6

the first step” of the causal chain (quoting Holmes v. Sec. Inv. Protection Corp. , 503 U.S. 258, 7

271

– 72 (1992)); In re Am. Exp. Co. S’holder Litig. , 39 F.3d 395, 400 (2d Cir. 1994) (denying 8

RICO standing to those who are “neither the target of the racketeering enterprise nor the 9

competitor s nor the customer s of the racketeer” ( citation omitted )). Petroff Amshen also conceded 10

at argument that it would allege no new racketeering activity by D efendants. Given that concession 11

and the tenuous nature of Petroff Amshen ’s asserted chain of causation , we cannot conclude that 12

the district court abused its discretion in declining a request for leave to amend that Petroff Amshen 13

never made. 2 14

We have considered the remainder of Petroff Amshen’s arguments and find them to be 15

without merit. For the foregoing reasons, we affirm the judgment of the district court

. 16

FOR THE COURT: 17 Catherine O ’ Hagan Wolfe, Cler k of Court 18

2 For the first time on reply, Petroff Amshen argues that its complaint should have been dismissed without prejudice, rather than with prejudice , if the only proper ground for dismissal was statutory standing

. We ordinarily do not consider arguments first raised in a reply brief. See JP Morgan Chase Bank v. Altos Hornos de Mexico, S.A. de C.V. , 412 F.3d 418, 428 (2d Cir. 2005). We decline to do so here, in part for the reasons above

— namely, that Petroff Ams hen has made no showing that any new complaint would state a plausible claim for relief.