Court Opinion

ID: 6226756
Source: CourtListenerOpinion
Date Created: 2022-02-17 16:00:27.00223+00
Date Added: 2024-06-11T08:57:40.852503
License: Public Domain

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 CITING TO A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1                 At a stated term of the United States Court of Appeals for the Second Circuit,
 2   held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
 3   New York, on the 17th day of February, two thousand twenty-two.
 4
 5   PRESENT:
 6               MICHAEL H. PARK,
 7               BETH ROBINSON,
 8                     Circuit Judges,
 9               JED S. RAKOFF, *
10                     District Judge.
11   _____________________________________
12
13   PETROFF AMSHEN LLP,
14
15                  Plaintiff-Appellant,
16
17                    v.                                                              21-847
18
19   ALFA REHAB PT PC, BRUNSWICK BANK &
20   TRUST COMPANY, JAMES CHENG, CHUNG
21   KWONG YAU, CAI FENG TAN, THE
22   SAMANTHA LEE FAMILY TRUST,
23   ADVANCED REHAB CARE PT PC,
24   JOSEPHINE BELLONI, ANNAROSE
25   ROTONDI TRUST, AGYAL PHYSICAL
26   THERAPY PLLC, WEI JI LI, ASSEM
27   PHYSICAL THERAPY PC, AMRO
28   MAHMOUD SHOKRY BARAKAT, WISDOM
29   PHYSICAL THERAPY PC, HATEM E.
30   ABOUHASSAN, KISHORE KANDURI, AKA
31   KISHORE K. KANDURI, RADWA PT PC,

             *
                Judge Jed S. Rakoff, of the United States District Court for the Southern District of New York,
     sitting by designation.
 1   MOHAMED M. ELMANDOUH, MD,
 2   ULTIMATE CARE CHIROPRACTIC PC,
 3   GRAIG GRANOVSKY, GRAIG GRANOVSKY
 4   CHIROPRACTIC PC, THIRD AVENUE
 5   CHIROPRACTIC CARE PC, NATHANIEL
 6   MAZZA, THERAKINEMATICE PT PC,
 7   LEGASPI MADELINE, PHYSIO SOLUTIONS
 8   PT PC, REHAB CONCEPTS PT PC,
 9   SIGNIFICANT CARE PT PC, SAYED F.
10   SAYED, NBC HEALTH PHYSICAL
11   THERAPY PC, NATHANIEL BREX ROA
12   CAYETUNA, LITE CARE REHAB PT PC,
13   ISLAM BEKHET, EXTENSIVE CARE PT PC,
14   ANNA MEYERZON, MMA PHYSICAL
15   THERAPY PT PC, MAZED ABDEL MAGID,
16   MD, JMP REHAB CARE PT, HARKIRTAN
17   SINGH, DALBIR KAUR, HOWARD
18   KESSLER, MD, FIRST HAND PHYSICAL
19   THERAPY PC, ABDELHAMID ABOURYA,
20   AKA ABDELHAMID MAHMOUD ABOURYA,
21   EYE ON WELL-BEING ACUPUNCTURE PC,
22   OATES DEVAN, CORE BASICS PC, KHALED
23   NASR, COMMUNITY WELLNESS
24   PHARMACY INC., RAKMIN ILYABAYEV,
25   COMFORT TOUCH PT PC, FERRIN
26   MANUEL, CANARSIE WELLNESS
27   PHARMACY INC., BODY ACUPUNCTURE
28   CARE PC, OKSANA PODHAYETSKA,
29   BRIGHT STAR REHAB PT PC, MOHAMED Y
30   EL SAIDY, BL HEALTHY LIFE
31   ACUPUNCTURE PC, ZENON
32   KURKAREWICZ, BRONX CHIROPRACTIC
33   REHABILITATION, P.C., SEAN DIAMOND,
34   D.C., BEST TOUCH PT PC, MOTAZ M.
35   EBEIDO, VITAL MERIDIAN
36   ACUPUNCTURE PC, LUDMILA
37   BOBCHYNSKA, MD, MEDS4DAYS
38   PHARMACY INC., BRITTNEY COLEMAN,
39   PHYSICAL THERAPY REHAB PC,
40   ACUPUNCTURE HEALTHCARE PLAZA I
41   PC, LAW OFFICES OF DOMINICK W.
42   LAVELLE PC, DOMINICK LAVELLE, AKA
43   DOMINICK W. LAVELLE, ELSANAA PT PC,
44   MAHMOUD ELSANAA, ZHONG SU, LIBING
45   SU, MANHATTAN'S HANDS OF HOPE PT
46   PC, JOHN DOE #1-10, JEREMY JAMES

                                     2
 1   SCHIES, BARAKAT PT PC, DANIMARK
 2   PHYSICAL THERAPY PC, CAMBRIDGE
 3   CLARENDON FINANCIAL SERVICES LLC,
 4
 5              Defendants-Appellees. †
 6   ____________________________________
 7
 8   FOR PLAINTIFF-APPELLANT:                                  DANIEL GINZBURG, The Ginzburg Law
 9                                                             Firm, P.C., Old Bridge, NJ (Steven Amshen,
10                                                             Petroff Amshen LLP, Brooklyn, NY, on the
11                                                             brief).
12
13   FOR DEFENDANTS-APPELLEES:                                 DONALD JAY POLS, Belis & Pols, LLP,
14                                                             Brooklyn, NY.
15
16                                                             WESLEY MEAD, The Mead Law Firm, P.C.,
17                                                             Astoria, NY.
18
19                                                             LLOYD M. EISENBERG, Eisenberg & Carton,
20                                                             Uniondale, NY.
21
22                                                             GALINA FELDSHEROVA, Kopelevich &
23                                                             Feldsherova, P.C., Brooklyn, NY.
24
25          Appeal from a judgment of the United States District Court for the Eastern District of New

26   York (Brodie, J.).

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

28   DECREED that the judgment of the district court is AFFIRMED.

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

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

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

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

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

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

            †
                The Clerk is respectfully directed to amend the caption accordingly.

                                                          3
 1   Rather, Defendants forged Petroff Amshen’s endorsement on the checks and created fake W-9

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

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

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

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

 6   corporate accounts into post-tax assets. Cambridge Clarendon, “[u]pon information and belief . . .

 7   was aware of the scheme,” “received remuneration and compensation for its role,” and neglected

 8   to verify the (false) employer identification number on the W-9 or to call Petroff Amshen for

 9   verification. Compl. ¶¶ 7–9. The number of checks written by each firm varies from one to

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

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

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

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

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

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

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

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

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

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

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

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

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

23   U.S.C. §§ 1341 (mail fraud), 1343 (wire fraud), and 1956 (money laundering). E.g., Compl. ¶ 138.

                                                     4
 1   As for damages, Petroff Amshen alleges injury to the firm’s reputation via the use of its name in a

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

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

 4   exercise supplemental jurisdiction over Petroff Amshen’s state-law claims. Petroff Amshen

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

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

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

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

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

10   appeal.

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

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

13   by reason of a violation of [18 U.S.C. § 1962].” 18 U.S.C. § 1964(c). To satisfy that requirement,

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

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

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

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

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

19   relating to damages are:

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

               1
                   Petroff Amshen does not appeal the district court’s dismissal of its state-law claims.

                                                              5
 1           131. Upon information and belief, Petroff Amshen will suffer substantial injury to
 2           its reputation as a result of the Defendants’ conduct in which the name, business
 3           reputation and identity of Petroff Amshen was used to conduct a fraudulent scheme.
 4   Compl. ¶¶ 130–131. On appeal, Plaintiff abandons its theory of damages based on tax penalties

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

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

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

 8   to its reputation.” Compl. ¶ 131 (emphasis added). But that assertion, a mere recitation of an

 9   element of a RICO claim, is a legal conclusion, not a factual allegation, so it is not entitled to a

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

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

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

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

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

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

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

17   injury to business or property.”). Petroff Amshen thus failed to state plausible claims for relief

18   under RICO.

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

20   amend its complaint. Plaintiff concedes that it never moved to replead below. We have previously

21   characterized as “frivolous” “the contention that the District Court abused its discretion in not

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

23   212 (2d Cir. 2011) (cleaned up). Vacatur of the judgment on appeal would thus be inappropriate.

24           In any event, the submission of a new complaint would likely be futile. Among other

                                                         6
 1   deficiencies, Petroff Amshen has made no showing that any lost business, even if concretely

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

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

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

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

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

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

 8   271–72 (1992)); In re Am. Exp. Co. S’holder Litig., 39 F.3d 395, 400 (2d Cir. 1994) (denying

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

10   competitors nor the customers of the racketeer” (citation omitted)). Petroff Amshen also conceded

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

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

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

14   never made. 2

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

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

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

             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 Amshen has made no showing that any new complaint would state
     a plausible claim for relief.

                                                           7