UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

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RITCHIE CAPITAL MANAGEMENT, L.L.C., 

RITCHIE RISK-LINKED STRATEGIES TRADING 

(IRELAND), LIMITED, RITCHIE RISK-LINKED 

STRATEGIES TRADING (IRELAND) II, 

LIMITED, WALKERS SPV LIMITED, as 

trustee for Ritchie Risk-Linked Life 

Strategies Trust I and Ritchie Life 

Strategies Master Trust, and RITCHIE 

RISK-LINKED STRATEGIES TRADING, LTD., 

Plaintiffs, 

-vCOVENTRY FIRST LLC, THE COVENTRY GROUP, 

INC., MONTGOMERY CAPITAL, INC., LST I 

LLC, ALAN BUERGER, CONSTANCE BUERGER, 

REID S. BUERGER, ANTONIO MUNIZ, ALEX 

SELDIN, NEAL JACOBS, EILEEN SHOVLIN, 

and JIM DODARO, 

Defendants. 

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07 Civ. 3494 (DLC) 

OPINION & ORDER

Appearances: 

For Plaintiffs: 

Lawrence S. Robbins 

Gary A. Orseck 

Daniel R. Walfish 

Rachel S. Li Wai Suen 

Robbins, Russell, Englert, Orseck & Untereiner LLP 

1801 K Street, N.W., Suite 411 

Washington, DC 20006 

Thomas P. Puccio 

Law Offices of Thomas P. Puccio 

230 Park Avenue 

New York, New York 10169 

For Defendants: 

Katherine G. Lindsey 

Dane H. Butswinkas 

Robert M. Cary 

Case 1:07-cv-03494-DLC Document 75 Filed 02/29/2008 Page 1 of 17
David A. Forkner 

Kenneth J. Brown 

Williams & Connolly, LLP 

725 Twelfth Street, N.W. 

Washington, D.C. 20005 

DENISE COTE, District Judge: 

 By Opinion dated July 17, 2007, defendants’ motion to 

dismiss plaintiffs’ complaint was granted as to all counts. See

Ritchie Capital Mgmt., L.L.C. v. Coventry First LLC, No. 07 Civ. 

3494, 2007 WL 2044656 (DLC) (S.D.N.Y. July 17, 2007) (the “July 

2007 Opinion”). This Court sua sponte granted plaintiffs leave 

to amend as to their RICO claims under 18 U.S.C. §§ 1962(c) and 

(d). Plaintiffs submitted a proposed second amended complaint 

(“SAC”), and defendants now move to dismiss the repleaded RICO 

claims.1 This Opinion addresses plaintiffs’ August 24, 2007 

motion for reconsideration of the July 2007 Opinion as well as 

defendants’ September 21, 2007 motion to dismiss the RICO claims 

contained in the proposed SAC. For the following reasons, 

plaintiffs’ motion for reconsideration is denied and defendants’ 

motion to dismiss is granted. 

BACKGROUND 

 As described in the July 2007 Opinion, this action arises 

out of a contract dispute between two sophisticated players in 

 

1

 Plaintiffs were also granted leave to replead their breach 

of contract claim, which they did in the SAC. In light of the 

instant partial motion to dismiss, defendants have not yet 

answered that claim. Discovery is proceeding, however, on the 

breach of contract claim. 

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the life settlements industry, a secondary market for life 

insurance policies. The July 2007 Opinion is incorporated by 

reference. The four corporate defendants, to which the 

plaintiffs refer collectively as “Coventry,” created, and remain 

leaders in the industry. In the course of its business, 

Coventry purchases life insurance policies and either holds 

them, paying the applicable premiums and eventually collecting 

the death benefits, or sells them to third parties. 

In brief, one or more of the plaintiffs contributed the 

bulk of the financing that was used to purchase life insurance 

policies based on an analysis conducted by the defendants. 

After the policies were transferred to certain of the 

plaintiffs, two of the plaintiffs provided the money to pay the 

monthly premiums on the policies, and the defendants arranged 

for those payments to be sent to the issuing life insurance 

companies. The parties executed two agreements that included 

warranties made by the defendants concerning, inter alia, the 

lawfulness of their acquisition of the insurance policies from 

the policyholders. 

Both the original complaint and the proposed SAC turn on 

allegations that the defendants defrauded the insureds whose 

policies they purchased by bribing brokers not to act on higher 

bids for the policies placed by Coventry’s competitors. The 

gravamen of each of the complaints is that the defendants 

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concealed their fraudulent conduct from the plaintiffs, and also 

repeatedly misrepresented an investigation of the fraud being 

conducted by the Attorney General of the State of New York 

(“Attorney General”). Plaintiffs allege that defendants 

repeatedly represented that Coventry was not engaged in 

precisely the conduct targeted by the Attorney General’s 

investigation, and that the plaintiffs first learned of 

defendants’ scheme when the Attorney General sued Coventry in 

October 2006. 

Plaintiffs’ theory of damages is that the value of the 

policies purchased by Ritchie Risk-Linked Strategies Trading 

(Ireland), Limited (“Ritchie I”) and Ritchie Risk-Linked 

Strategies Trading (Ireland) II, Limited (“Ritchie II”) 

diminished substantially due to the Attorney General’s action 

against defendants. Specifically, plaintiffs contend that 

disclosure of the Attorney General’s action led Moody’s rating 

service to withdraw its rating on several of the policies 

purchased by plaintiffs, thereby interfering with the resale 

value of those policies. As a consequence, not only were 

Ritchie I and II harmed, but also the plaintiffs that own or are 

beneficially interested in Ritchie I and II were harmed. 

The original complaint, filed on May 7, 2007, contained 

seven causes of action: three RICO claims pleaded against all of 

the defendants; a fraud claim and a fraudulent inducement claim 

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pleaded against Coventry, and certain individual defendants; and 

breach of fiduciary duty and breach of contract claims pleaded 

against Coventry. Defendants moved to dismiss the original 

complaint and the July 2007 Opinion granted their motion. 

Plaintiffs were granted leave to replead the RICO claims brought 

under Sections 1962(c) and (d) because, on the basis of the 

original complaint, it was “impossible to assess whether the 

complaint states a claim without having a more definite 

statement of the claim. As currently formulated, these two 

claims fail to give the defendants fair notice.” July 2007 

Opinion, at *10. The July 2007 Opinion also ruled that the 

original complaint had not adequately pleaded personal 

jurisdiction for the RICO claims, but granted plaintiffs leave 

to replead the issue. 

On August 24, 2007, plaintiffs filed a motion for 

reconsideration of the July 2007 Opinion, and also sought leave 

to file the proposed SAC, which repleaded certain claims 

pursuant to the directive contained in the July 2007 Opinion.2 

 

2

 On August 1, 2007, plaintiffs filed an Amended Complaint 

which, pursuant to the July 2007 Opinion, repleaded only the 

breach of contract and RICO claims, and made additional 

allegations concerning personal jurisdiction. At an August 10 

conference, plaintiffs explained that they intended to seek 

reconsideration of the July 2007 Opinion, and were consequently 

given leave to propose repleaded versions of their fraud, 

fraudulent inducement, and fiduciary duty claims. On August 24, 

plaintiffs submitted their proposed SAC along with an amended 

motion for reconsideration, which addressed the basis for their 

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Defendants moved on September 21 to dismiss RICO counts I and II 

of the SAC, which are the claims repleaded under §§ 1962(c) and 

(d). 

DISCUSSION 

I. Plaintiffs’ Motion to Reconsider the July 17 Opinion 

The standard for a motion for reconsideration is strict, 

and “reconsideration will generally be denied unless the moving 

party can point to controlling decisions or data that the court 

overlooked -- matters, in other words, that might reasonably be 

expected to alter the conclusion reached by the court.” Shrader 

v. CSX Trans., Inc., 70 F.3d 255, 257 (2d Cir. 1995). 

Reconsideration “should not be granted where the moving party 

seeks solely to relitigate an issue already decided,” nor may 

the moving party “advance new facts, issues or arguments not 

previously presented to the Court.” Shamis v. Ambassador 

Factors Corp., 187 F.R.D. 148, 151 (S.D.N.Y. 1999). The 

decision to grant or deny the motion is within the sound 

discretion of the district court. See Devlin v. Transp. Commc’n 

Int’l Union, 175 F.3d 121, 132 (2d Cir. 1999). 

In their motion for reconsideration the plaintiffs seek 

reinstatement of their claims for breach of fiduciary duty, 

fraud, and fraudulent inducement, acknowledging that the 

 

repleaded fraud, fraudulent inducement, and fiduciary duty 

claims. Plaintiffs’ discussion of these claims would only be 

relevant if the motion for reconsideration were granted. 

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allegations in their original complaint “could have been more 

clearly drawn.” Their proposed SAC includes repleaded versions 

of these claims, but the motion for reconsideration must be 

addressed to the submissions before the Court at the time the 

July 2007 Opinion was issued. That includes the pleading to 

which the motion to dismiss was addressed and the arguments made 

and authorities cited by the plaintiffs in opposition to that 

motion. That customary standard is particularly appropriate 

here because the plaintiffs never asked for leave to amend in 

connection with the underlying motion practice, and the Court 

sua sponte gave them permission to replead only two RICO claims 

and the breach of contract claim. As the Second Circuit has 

recognized, plaintiffs are generally “not entitled to an 

advisory opinion from the Court informing them of the 

deficiencies in the complaint and then an opportunity to cure 

those deficiencies.” Bellikoff v. Eaton Vance Corp., 481 F.3d 

110, 118 (2d Cir. 2007). Bearing this in mind, the motion must 

be denied. 

The discussion that follows addresses the plaintiffs’ 

principal arguments made in support of reconsideration. The 

remaining arguments for reconsideration have been considered and 

rejected. Even if the allegations in the proposed SAC were 

considered, however, plaintiffs have not shown that leave to 

amend is warranted. Specifically, plaintiffs have failed to 

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show that the proposed amendments would survive a motion to 

dismiss because they have not “provide[d] the grounds upon which 

[their] claim rests through factual allegations sufficient to 

raise a right to relief above the speculative level.” ATSI 

Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 

2007) (citation omitted). See Hayden v. County of Nassau, 180 

F.3d 42, 53-54 (2d Cir. 1999) (“[W]here the plaintiff is unable 

to demonstrate that he would be able to amend his complaint in a 

manner that would survive dismissal, opportunity to replead is 

rightfully denied.”). 

A. Breach of Fiduciary Duty Claim 

 Plaintiffs’ breach of fiduciary duty claim was dismissed 

principally because the pleadings reflected an arms length 

commercial transaction between the parties. July 2007 Opinion, 

at *6. The motion for reconsideration does not identify any 

error in the analysis in the July 2007 Opinion or identify any 

argument or authority that the Court overlooked in rendering 

that Opinion. The motion for reconsideration relies instead on 

allegations in the proposed SAC and citations to additional 

authority. As a consequence, it may be swiftly rejected. 

B. Fraud and Fraudulent Inducement Claims 

 Plaintiffs’ fraud claim was dismissed principally because 

it rested on the subjects covered in the representations and 

warranties contained in the parties’ agreements and therefore 

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was not a misrepresentation collateral or extraneous to the 

contract. July 2007 Opinion, at *7. Relying largely on the 

Second Circuit Court of Appeals’ decision in Merrill Lynch & Co. 

v. Allegheny Energy, Inc., 500 F.3d 171 (2d Cir. 2007),3 which 

was issued after the July 2007 Opinion, the plaintiffs contend 

that the representations that underlie their fraud claims were 

statements of present fact -- about the life insurance policies, 

the defendants’ business practices, and the non-existence of any 

legal action -- and as such are the proper basis for a fraud 

claim. 

 In their original opposition to the motion to dismiss the 

fraud and fraudulent inducement claims, the plaintiffs pointed 

to two sets of misrepresentations: representations made in the 

draft and executed contracts, as described at paragraphs 34 to 

37 of the original complaint, and statements in telephone calls 

on June 26 and 27, 2006,4 as described at paragraphs 50 to 51 of 

the original complaint. The plaintiffs argued that, as a matter 

 

3

 The Merrill Lynch decision was issued after the plaintiffs 

moved for reconsideration. In their reply, the plaintiffs 

argued that the decision strongly supported the reinstatement of 

the fraud and fraudulent inducement claims. The defendants were 

given an opportunity to submit a sur-reply addressed to the 

plaintiffs’ contentions regarding the impact of the Merrill 

Lynch decision on the motion. 

4

 Paragraphs 50 and 51 recite that Coventry did not “fully 

and accurately” describe a subpoena it had received from the 

Attorney General and did not disclose that it was engaged in the 

conduct targeted by the subpoena although it implied that it had 

not engaged in such conduct. 

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of law, a misrepresentation of an intention to perform under a 

contract can constitute a claim of fraud, but that in any event, 

the statements at issue in the draft and executed agreements 

misrepresented “existing, external facts.” As for the 

agreements’ integration clauses, the plaintiffs argued that 

those clauses did not bar signatories from making a claim for 

fraudulent inducement based on the representations made in the 

contracts.5 According to the plaintiffs, the integration clauses 

only disclaimed responsibility for statements and warranties 

other than those set forth in the contracts themselves. The 

plaintiffs’ opposition brief did not directly address the legal 

issues related to the June 26 and 27 conversations. 

 In support of reconsideration, plaintiffs concede that a 

misrepresentation of an intention to perform under a contract 

cannot convert a contract claim into a fraud claim. They 

continue to argue, however, that defendants misrepresented 

“existing, external facts” in their draft and executed 

agreements with the plaintiffs and that Merrill Lynch teaches 

that such misrepresentations, even when they are embodied in 

contractual warranties, may support a claim for fraudulent 

 

5

 Plaintiffs’ recognition of the import of merger clauses is 

entirely consistent with well-established principles of 

reliance. For instance, the Court of Appeals recently affirmed 

dismissal of a securities fraud claim based on pre-contractual 

misrepresentations where the plaintiff, a sophisticated 

investor, had executed an integrated agreement. See ATSI 

Commc’ns, 493 F.3d at 87. 

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inducement. The plaintiffs acknowledge that the July 2007 

Opinion did not have to reach the right of the non-signatory 

plaintiffs to bring the fraudulent inducement and fraud claims 

“because of the way Plaintiffs drafted the original Complaint.” 

As for the post-contractual misrepresentations and omissions in 

the June 26 and 27 telephone calls, plaintiffs argue for the 

first time that “post-contractual misrepresentations about a 

subject covered by the contract are actionable in fraud.” 

 In Merrill Lynch, an energy company that acquired a 

commodities trading business from Merrill Lynch questioned the 

accuracy of financial information about the trading business 

that Merrill Lynch had provided in advance of the acquisition. 

Merrill Lynch, 500 F.3d at 175-76. The purchase agreement 

contained several warranties, including that the supplied 

financial data was true and complete and contained no material 

inaccuracies, and that the information which Merrill Lynch had 

provided included all information known to Merrill Lynch which 

in its judgment was “appropriate” for evaluation of the trading 

business. Id. at 177. The district court dismissed the fraud 

and fraudulent inducement claims brought by the energy company 

on several grounds, including the fact that they were 

duplicative of the energy company’s breach of warranty claim. 

The Court of Appeals reversed, distinguishing between “a 

misrepresentation of a present fact,” which may give rise to a 

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separate cause of action for fraudulent inducement, and a 

promissory statement of “what will be done in the future,” which 

only gives rise to a breach of contract cause of action. Id. at 

184. Because the financial information provided to the energy 

company involved “misstatement and omissions of present facts, 

not contractual promises regarding prospective performance”, it 

was collateral to the contract and therefore could be brought as 

a fraudulent inducement claim. Id. That the misrepresentation 

could also constitute of breach of the contractual warranties 

“d[id] not alter” that result. Id. 

 The original complaint does not describe at paragraphs 34 

to 37 any misrepresentation of a present fact that was 

collateral or extraneous to the contract and which induced the 

plaintiffs to enter the contract. Those paragraphs of the 

original complaint simply describe passages in the draft 

contracts which were incorporated into the final contracts. 

Passages in drafts of an agreement that is later executed are 

neither extraneous nor collateral to the executed contract, and 

Merrill Lynch does not begin to suggest otherwise. It is 

unnecessary to reach the plaintiffs’ new arguments about the 

post-contractual July 25 and 26 conversations since they are 

beyond the scope of a motion for reconsideration. Accordingly, 

the motion for reconsideration is denied. 

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II. Defendants’ Motion to Dismiss the SAC RICO Counts 

 Defendants move to dismiss the SAC’s two RICO counts on 

five grounds: (1) lack of personal jurisdiction over the 

individual defendants; (2) plaintiffs’ lack of standing to 

assert RICO claims; (3) plaintiffs’ failure to allege a pattern 

of two or more predicate acts; (4) the corporate defendants are 

not “persons” within the meaning of the RICO statute; and (5) 

plaintiffs’ failure to state a claim under 18 U.S.C. § 1962(d). 

Because defendants’ motion to dismiss must be granted due to 

plaintiffs’ lack of standing to assert RICO claims, it is 

unnecessary to reach the merits of the defendants’ remaining 

grounds for dismissal. 

 When considering a motion to dismiss, a court must “accept 

as true all factual statements alleged in the complaint and draw 

all reasonable inferences in favor of the non-moving party.” 

McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 

2007) (citation omitted). It may “dismiss a complaint only if 

it is clear that no relief could be granted under any set of 

facts that could be proved consistent with the allegations” set 

forth therein. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 

(2002) (citation omitted). “To survive dismissal, the plaintiff 

must provide the grounds upon which his claim rests through 

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factual allegations sufficient to raise a right to relief above 

the speculative level.” ATSI Commc’ns, 493 F.3d at 98. 

“A RICO plaintiff only has standing if, and can only 

recover to the extent that, he has been injured in his business 

or property by the conduct constituting the RICO violation, and 

only when his or her actual loss becomes clear and definite.” 

Denney v. Deutsche Bank AG, 443 F.3d 253, 266 (2d Cir. 2006) 

(citation omitted). “[T]o have standing under RICO, the 

plaintiff must allege that the defendant’s violations were a 

proximate cause of the plaintiff's injury, i.e., that there was 

a direct relationship between the plaintiff's injury and the 

defendant’s injurious conduct.” First Nationwide Bank v. Gelt 

Funding Corp., 27 F.3d 763, 769 (2d Cir. 1994) (citation 

omitted). Where the RICO violation is premised on predicate 

acts that sound in fraud, proximate cause entails both 

“transaction and loss causation.” Id. The defendants’ 

misrepresentations must be shown to be “the reason the 

transaction turned out to be a losing one,” and where there is 

an “intervening direct cause of a plaintiff’s injury, that same 

injury cannot be said to have occurred by reason of the 

defendant’s actions.” Id. Defendants claim that plaintiffs 

have failed to allege both causation and damages. 

 Plaintiffs’ theory of the case is that the defendants’ 

fraud on the life insurance policyholders led to an 

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investigation by the Attorney General, and, in turn, the public 

disclosure of that investigation caused Moody’s Investor 

Services to withdraw a preliminary securitization rating for 

certain policies purchased by plaintiffs, thereby decreasing the 

salability and value of the policies. This is too attenuated a 

causal connection to confer RICO standing on the plaintiffs. 

Essentially, plaintiffs plead two sets of predicate acts: (1) 

those oriented towards the policyholders who sold their policies 

to Coventry, which consist mainly of fraudulent bid-rigging 

practices, and (2) those oriented towards plaintiffs themselves, 

which consist of transmission to the plaintiffs of the parties’ 

agreements and (mis)information about the nature of the Attorney 

General’s investigation. 

The first set of predicate acts only indirectly caused any 

alleged injury to plaintiffs and therefore does not confer RICO 

standing on them. Moody’s removal of its preliminary 

securitization rating on policies purchased by plaintiffs was 

not “reasonably foreseeable or anticipated as a natural 

consequence” of defendants’ misrepresentations to policyholders. 

Lerner v. Fleet Bank, N.A., 318 F.3d 113, 123 (2d Cir. 2003) 

(citation omitted). 

The predicate acts oriented toward the plaintiffs 

themselves did not give rise to any injury. Plaintiffs’ 

contention that they were harmed by the decrease in the 

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policies’ salability, which came as a result of Moody’s 

withdrawing its rating has nothing to do with the alleged 

predicate acts of wire and mail fraud visited upon plaintiffs by 

defendants, which uniformly concern transmission to the 

plaintiffs of the contracts between the parties and information 

about the Attorney General’s investigation. Any 

misrepresentations to plaintiffs were not “a substantial factor 

in the sequence of responsible causation” of plaintiffs’ alleged 

injury. Id. (citation omitted). Even if the alleged 

misrepresentations had never been made to the plaintiffs, the 

policies would still have lost value once the Attorney General’s 

investigation became public. 

Further, plaintiffs were injured by disclosure of the 

scheme described in the predicate acts, and not the acts 

themselves. As the Second Circuit has recognized, such an 

injury is not the “necessary result” of the predicate acts, and 

therefore does not give rise to RICO standing. In re Am. 

Express Co. Shareholder Litig., 39 F.3d 395, 400 (2d Cir. 1994) 

(citation omitted). Plaintiffs contend that In re Am. Express

is inapposite because it holds “merely that third parties who 

suffer indirect and incidental injury as a result of violations 

targeted at others lack standing.” While this reading of the 

case oversimplifies its teaching, even it does not support 

plaintiffs’ argument. The injury to plaintiffs as a result of 

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