Opinion
150040/2010.
Decided June 16, 2011.
Steven Gary Storch, Bonnie A. Tucker, Storch Amini Muneus, P.C.; and Robert R. Viducich of the Law Office of Robert R. Viducich, Plaintiffs.
Yoav M. Griver of Zeichner Ellman Krause LLP; and Oliver S. Haker, Scott D. Thompson, Brett D. Jaffe, Mark S. Cohen, Alexis G. Stone, Cohen Gresser LLP, Defendants.
Defendants Geoffrey Raynor, R2 Investments, LDC, Nineteen Eighty-Nine, LLC, Amalgamated Gadget, LP, Sceptor Holdings, Inc., Q. Funding, LP, Acme Widget, LP and Brandon Teague move to dismiss the complaint made by Plaintiffs Carl C. Icahn, Icahn Enterprises, LP, Icahn Enterprises Finance Corp. and Icahn Enterprises Holdings, LP. For the reasons set forth below, Defendants' motion to dismiss is granted.
Plaintiffs request leave to amend their complaint. For the reasons set forth below, Plaintiffs' request is denied.
PROCEDURAL HISTORY
On February 16, 2010, Plaintiffs Carl C. Icahn ("Icahn"), Icahn Enterprises, LP ("Enterprises"), Icahn Enterprises Finance Corp. ("Finance") and Icahn Enterprises Holdings, LP ("Holdings") (collectively, "Plaintiffs") filed a complaint against Geoffrey Raynor ("Raynor"), R2 Investments, LDC ("R2"), Nineteen Eighty-Nine, LLC ("1989"), Amalgamated Gadget, LP ("Amalgamated"), Sceptor Holdings, Inc. ("Sceptor"), Q. Funding, LP ("Q Funding"), Acme Widget, LP ("Acme") and Brandon Teague ("Teague") (collectively, "Defendants"). For reference, Defendants Finance, Holdings and Enterprises are collectively referred to as "IEP." Plaintiffs alleged four causes of action against Defendants: 1) tortious interference with contract; 2) libel per se and injurious falsehood; 3) abuse of process; and 4) prima facie tort. Complaint, ¶¶ 62-79.
On April 23, 2010, Defendants moved to dismiss the complaint. Defendants filed a memorandum of law ("Defendants' Memo") and an Affirmation by Oliver S. Haker in support ("Defendants' Affirm."). On July 29, 2010, Plaintiffs filed a memorandum of law ("Plaintiffs' Opp. Memo") and an affirmation by Bonnie Tucker in opposition ("Plaintiffs' Opp. Affirm."). On September 22, 2010, Defendants replied in further support of their motion ("Defendants' Reply").
Oral argument was held on December 14, 2010, and the motion was fully submitted on December 23, 2010.
FACTUAL BACKGROUND
1. Related Lawsuits
Plaintiffs and Defendants are involved in three other lawsuits against one another, all before this court. 1989 filed the first lawsuit in April 2007 (the "2007 Lawsuit") against Icahn, Chelonian Subsidiary LLC ("Chelonian"), Icahn Associates Corp. ("Associates") and Icahn Co., Inc. ("I C"), Index Number 601265/2007. 1989 filed the second lawsuit in February 2008 (the "2008 Lawsuit") on behalf of itself and nominal defendant 1879 Hall, LLC ("1879 Hall") against Icahn, Chelonian, Associates, I C, Thornwood Associates Limited Partnership ("Thornwood") and John Does 1-10, Index Number 600424/2008. 1989 filed the third lawsuit in January 2010 (the "January 2010 Lawsuit") against Enterprises, Finance, Chelonian and Icahn, Index Number 600056/2010. The 2007 Lawsuit and the 2008 Lawsuit are both currently on appeal for a denial of summary judgement. The January 2010 Lawsuit currently has a pending a motion to reargue an order partially granting and partially denying a motion to dismiss.
The January 2010 Lawsuit is pertinent to this action.
2. General Background
In 2001, Defendant Raynor and Plaintiff Icahn formed a partnership to acquire debt securities issued by Federal Mogul Corporation ("FMO"), a company which was in bankruptcy at the time. Complaint, ¶¶ 27, 30. Raynor, Raynor-affiliated 1989, Icahn and Icahn-affiliated Chelonian formed 1879 Hall to buy FMO bonds and related debt. Id., ¶ 31. FMO emerged from bankruptcy in December 2007. Id., ¶ 32. FMO's court-approved Plan of Reorganization granted an Icahn affiliate a stock option for FMO. Id., ¶ 32. Raynor, 1989 and various other Raynor-affiliated entities have contested that they were wrongfully denied the opportunity to participate in this option to purchase FMO stock. Id.
Plaintiffs in the instant case retained Jefferies Co., Inc. ("Jefferies") to underwrite a bond offering from the Defendants. Id., ¶ 36. On December 30, 2009, Defendants announced the bond offering to the market and also announced that Jefferies would begin a "road show" to sell the bonds on January 4, 2011. Id., ¶ 40.
On January 11, 2010, 1989 filed the January 2010 Lawsuit and also filed a form 13D with the Securities and Exchange Commission ("form 13D"). Id., ¶ 52. The January 2010 Lawsuit asserts claims for declaratory judgment for the right to buy six million FMO shares, imposition of a constructive trust on the FMO shares and breach of contract against Icahn, Enterprises, Finance and Chelonian. See Complaint of January 2010 Lawsuit, filed January 11, 2010 ("January 2010 Lawsuit Complaint"). The simultaneously filed form 13D attaches the complaint from the January 2010 Lawsuit and informs the Securities and Exchange Commission of the issues raised in that suit. Plaintiffs Opp. Affirm., Ex. 12. 1989 filed both the January 2010 Lawsuit and the form 13D upon belief that Plaintiffs' bond offering put 1989's rights to FMO stock in jeopardy. January 2010 Lawsuit Complaint; Defendants' Affirm., Ex. 12.
Plaintiffs allege that the timing of the filing of the January 2010 Lawsuit and the form 13D lowered the demand for the bonds that Plaintiffs were offering and negatively affected Plaintiffs revenue from the bond sale. Id., ¶¶ 52-60. Plaintiffs filed this lawsuit in response to the January 2010 Lawsuit and the form 13D.
STANDARD OF LAW
Motion to Dismiss under CPLR 3211
"On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction. . . . We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory." Leon v. Martinez, 84 NY2d 83, 87-88 (1994); see also Yan Ping Xu v. New York City Dep't of Health , 77 AD3d 40 , 43 (1st Dep't 2010). "It is well settled that bare legal conclusions and factual claims, which are either inherently incredible or flatly contradicted by documentary evidence . . . are not presumed to be true on a motion to dismiss for legal insufficiency, and that when the moving party offers matter extrinsic to the pleadings, the court need not assume the truthfulness of the pleaded allegations, but rather is required to determine whether the opposing party actually has a cause of action or defense, not whether he has properly stated one." O'Donnell, Fox Gartner, P.C. v. R-2000 Corp, 198 AD2d 154, 154 (1st Dep't 1993) (internal citations and quotations omitted); see also JFK Holding Co., LLC v. City of New York , 68 AD3d 477 , 477 (1st Dep't 2009). When "legal conclusions and factual allegations are flatly contradicted by documentary evidence, they are not presumed to be true or accorded every favorable inference." Biondi v. Beekman Hill House Apartment Corp., 257 AD2d 76, 81 (1st Dep't 1999).
ANALYSIS
Defendants move to dismiss all causes of action against them: tortious interference with contract, libel per se and injurious falsehood, abuse of process and prima facie tort.
1. Defendants' Motion to Dismiss Plaintiffs' Claim for Tortious Interferencewith Contract
Defendants' motion to dismiss Plaintiffs' first claim for tortious interference with contract is granted.
Plaintiffs base their tortious interference with contract claim upon Defendants' filing of the January 2010 Lawsuit and the form 13D. Complaint, ¶ 65. Defendants argue that the Noerr-Pennington doctrine bars Plaintiffs' tortious interference claim. Defendants' Memo, pp. 12-14.
The Noerr-Pennington doctrine is named for two U.S. Supreme Court cases: Eastern Railroad Presidents Conference v. Noerr Motor Freight, 365 U.S. 127 (1961) and United Mine Workers v. Pennington, 381 U.S. 657, 659 (1965). The Noerr-Pennington doctrine holds that parties may not be subjected to liability for petitioning the government or a governmental agency, such as by filing litigation. I.G. Second Generation Partners v. Duane Reade , 17 AD3d 206 , 208 (1st Dep't 2005); Concourse Nursing Home v. Engelstein, 278 AD2d 35, 35 (1st Dep't 2000). In other words, the Noerr-Pennington doctrine grants a party immunity for seeking governmental redress or otherwise engaging a governmental agency. I.G. Second Generation Partners v. Duane Reade, 17 AD3d at 208; Concourse Nursing Home v. Engelstein, 278 AD2d at 35. However, there is a "sham" exception to the Noerr-Pennington doctrine that:
applies in situations in which persons use the governmental process — as opposed to the outcome of that process — as an anticompetitive weapon. The sham exception to the Noerr-Pennington doctrine has an objective and subjective element. The objective element requires that the defendant's conduct must be objectively baseless with no reasonable expectation of success. The subjective element requires that the defendant act, not with the intent of influencing governmental action, but rather with the intent to interfere directly with the business relationships of a competitor. If the objective element is not satisfied, the court is precluded from examining the subjective motivation for the conduct, and the sham exception is not applicable.
Singh v. Sukhram , 56 AD3d 187 , 192 (2nd Dep't 2008) (internal citations and quotations omitted).
The Noerr-Pennington doctrine bars Plaintiffs' claim for tortious interference with contract based on the January 2010 Lawsuit. This court denied a motion to dismiss in the January 2010 Lawsuit. This court has thus not found the claims in the January 2010 Lawsuit to be objectively baseless the court will therefore not here find those same claims to be a sham or without a bases. See Singh v. Sukhram, 56 AD3d at 192. The Noerr-Pennington doctrine therefore protects the January 2010 Lawsuit from forming the basis of Plaintiffs' current claim for tortious interference with contract. I.G. Second Generation Partners v. Duane Reade, 17 AD3d at 208.
The Noerr-Pennington doctrine also bars Plaintiffs' claim for tortious interference with contract based upon the form 13D. Defendants' form 13D is a petition of the Securities and Exchange Commission, a government agency. A petition of a government agency is immune from liability for tortious interference with contract by the Noerr-Pennington doctrine. Concourse Nursing Home v. Engelstein, 278 AD2d at 35 (petition of Department of Housing, a governmental agency, immune from tortious interference with contract suits under the Noerr-Pennington doctrine). Because Defendants' form 13D is a petition of a governmental agency, Defendants' form 13D is immune from suit under the Noerr-Pennington doctrine. Id.
Therefore, because the Noerr-Pennington doctrine bars Plaintiffs' claim for tortious interference with contract based upon the filing of the January 2010 Lawsuit and the form 13D, Defendants' motion to dismiss Plaintiffs' claim for tortious interference with contract is granted.
2. Defendants' Motion to Dismiss Plaintiffs' Claim for Injurious Falsehood
Defendants' motion to dismiss Plaintiffs' second claim for injurious falsehood is granted.
Plaintiffs argue that statements made by Defendants about Plaintiffs in the January 2010 Lawsuit and the form 13D are libel per se and amount to injurious falsehood. Complaint, ¶¶ 68-73. Defendants argue that statements that they made in the January 2010 Lawsuit and in the form 13D are immune from a suit for libel per se and injurious falsehood based on an absolute privilege. Defendants' Memo, pp. 18-20.
New York law grants an absolute privilege to any written or spoken statement made in the course of legal or judicial proceedings if that statement is pertinent to the litigation. Lacher v. Engel , 33 AD3d 10 , 12-14 (1st Dep't 2006); Finkelstein v. Bodek, 131 AD2d 337, 338 (1st Dep't 1987). "An absolute privilege affords a speaker or writer immunity from liability for an otherwise defamatory statement to which the privilege applies, regardless of the motive with which the statement was made." Sexter Warmflash, P.C. v. Margrabe , 38 AD3d 163 , 170 (1st Dep't 2007) (internal citations and quotations omitted). To defeat a grant of absolute privilege, a party must show that a statement is both irrelevant to the litigation at hand and also "so outrageously out of context as to permit one to conclude, from the mere fact that the statement was uttered, that it was motivated by no other desire than to defame." Id. at 173 (internal citations and quotations omitted).
Without examining whether Defendants' statements are defamatory, Defendants' statements in the January 2010 Lawsuit are granted an absolute privilege absent a showing or allegation that such statements were irrelevant or out of context. Finkelstein v. Bodek, 131 AD2d at 338, Lacher v. Engel, 33 AD3d at 12-14, Sexter Warmflash, P.C. v. Margrabe, 38 AD3d at 170. Plaintiffs never allege or show that any of the statements made in the January 2010 Lawsuit were irrelevant or out of context to the suit. Plaintiffs have thus not shown an exception to the grant of absolute privilege. See Sexter Warmflash, P.C. v. Margrabe, 38 AD3d at 170. Because no exception is alleged or shown to the absolute privilege, Defendants' statements in the January 2010 Lawsuit are immune from Plaintiffs' claim for libel per se and injurious falsehood. Finkelstein v. Bodek, 131 AD2d at 338, Lacher v. Engel, 33 AD3d at 12-14, Sexter Warmflash, P.C. v. Margrabe, 38 AD3d at 170.
In addition, Defendants' statements made in the form 13D are also immune from libel per se and injurious falsehood. Parties are immune from suits for "the publication of a fair and true report of any judicial proceeding, legislative proceeding or other official proceeding, or for any heading of the report which is a fair and true headnote of the statement published." NY Civil Rights Law § 74. Moreover, absolute privilege applies even in quasi-judicial hearings and administrative hearings, and the privilege "attaches not only to the hearing stage, but to every step of the proceeding even if it is preliminary and/or investigatory, and irrespective of whether formal charges are ever presented." Cicconi v. McGinn, Smith Co. , 27 AD3d 59 , 62 (1st Dep't 2005). The Securities and Exchange Commission is considered a quasi-judicial body and thus the privilege is applied to statements made in the form 13D. Cooke v. Laidlaw Adams Peck, 126 AD2d 453, 455 (1st Dep't 1987).
Defendants' statements in the form 13D consist of two parts. First, the 13D contains a true report of a judicial proceeding and therefore Defendants are immune from liability based thereon. Defendants' Affirm., Ex. 12; NY Civil Rights Law § 74. Second, the form 13D includes statements made by Defendants. Defendants' Affirm., Ex. 12. Defendants' statements are also granted absolute privilege as statements made to the quasi-judicial Securities and Exchange Commission. Cicconi v. McGinn, Smith Co., 27 AD3d at 62; Cooke v. Laidlaw Adams Peck, 126 AD2d at 455. Plaintiffs do not allege that Defendants' statements on the form 13D were irrelevant or out of context, allegations necessary to plead an exception to the grant of absolute privilege. Finkelstein v. Bodek, 131 AD2d at 338, Lacher v. Engel, 33 AD3d at 12-14, Sexter Warmflash, P.C. v. Margrabe, 38 AD3d at 170. In addition, even if the statements on the 13D form were not granted absolute privilege, Defendants' statements report the allegations in the January 2010 Lawsuit, and are thus immune from liability. Defendants' Affirm., Ex. 12; NY Civil Rights Law § 74. Thus, Defendants' are immune from liability for all statements made as part of the form 13D.
Therefore, because Defendants' are immune from liability for statements made in the January 2010 Lawsuit and the form 13D, Defendants' motion to dismiss Plaintiffs' second claim for libel per se and injurious falsehood is granted.
3. Defendants' Motion to Dismiss Plaintiffs' Claim for Abuse of Process
Defendants' motion to dismiss Plaintiffs' third claim for abuse of process is granted.
Plaintiffs argue that Defendants' conduct in filing the January 2010 Lawsuit constitutes abuse of process. Complaint, ¶¶ 74-76. Defendants argue that Plaintiffs' contentions fail to state a claim. Defendants Memo, pp. 21-22.
To state a claim for abuse of process, a party must allege: 1) regularly issued process, either civil or criminal; 2) an intent to do harm without excuse or justification; and 3) use of the process in a perverted manner to obtain a collateral objective. Curiano v. Suozzi, 63 NY2d 113, 116 (1984); Casa de Meadows Inc. v. Zaman , 76 AD3d 917, 921 (1st Dep't 2010) (citing Curiano v. Suozzi, 63 NY2d at 116). "[T]he institution of a civil action by summons and complaint is not legally considered process capable of being abused." Curiano v. Suozzi, 63 NY2d at 116; see also Krause Krause v. Gelman, 167 AD2d 299, 300 (1st Dep't 1990) (citing Curiano v. Suozzi, 63 NY2d at 116).
Plaintiffs do not allege the third prong of the test for abuse of process. Plaintiffs do not allege any actions by Defendants in regards to the January 2010 Lawsuit beyond the actually filing of that suit's complaint. Complaint, ¶¶ 74-76. Plaintiffs merely state conclusory language that Defendants used "process in a perverted manner to obtain a collateral objective." Complaint, ¶ 75. A cause of action for abuse of process cannot be maintained solely on the basis of the filing of a complaint. Curiano v. Suozzi, 63 NY2d at 116; Krause Krause v. Gelman, 167 AD2d at 300. Because Plaintiffs have not alleged the requisite prongs for a cause of action for abuse of process, Defendants' motion to dismiss Plaintiffs' third cause of action is granted.
4. Defendants' Motion to Dismiss Plaintiffs' Claim for Prima Facie Tort
Finally, Defendants' motion to dismiss Plaintiffs' fourth and final claim for prima facie tort is granted.
Plaintiffs allege that Defendants' conduct in filing the January 2010 Law suit and the form 13D constitutes a prima facie tort. Complaint, ¶¶ 77-79. Defendants contend in opposition that Plaintiffs' suit is barred by New York law. Defendants' Memo, pp. 22-23.
"New York courts have consistently refused to allow retaliatory lawsuits based on prima facie tort predicated on the malicious institution of a prior civil action." Curiano v. Suozzi, 63 NY2d at 118; see also Hirschmann v. Hassapoyannes , 11 Misc 3d 265 , 274 (NY Supreme Court NY County 2005) (quoting Curiano v. Suozzi, 63 NY2d at 118 and dismissing a claim for prima facie tort based on prior litigation).
Plaintiffs base their allegation for prima facie tort upon the January 2010 Lawsuit and the form 13D. Complaint, ¶¶ 77-79. However, Plaintiffs cannot maintain a claim for prima facie tort based upon the January 2010 Lawsuit under New York law. Curiano v. Suozzi, 63 NY2d at 118 (affirming dismissal of prima facie tort based "predicated on the malicious institution of a prior civil action"); Hirschmann v. Hassapoyannes, 11 Misc 3d at 274 (quoting Curiano v. Suozzi, 63 NY2d at 118 and dismissing prima facie tort claim based upon previous civil action).
In addition, the Noerr-Pennington doctrine bars Plaintiffs from maintaining a claim for prima facie tort based upon the form 13D. Concourse Nursing Home v. Engelstein, 278 AD2d 35, 35 (1st Dep't 2000) (claim for prima facie tort dismissed because the petitioning of a governmental agency is immune from suit). Because Plaintiffs cannot maintain a claim for prima facie tort for the January 2010 Lawsuit and the form 13D, Defendants' motion to dismiss Plaintiffs' claim for prima facie tort is granted.
5. Plaintiffs Request for Leave to Amend
Plaintiffs request leave to amend their complaint under CPLR § 3025 (b). Plaintiffs' request is denied.
The party seeking amendment "need not establish the merit of its proposed new allegations, but must simply show that the proffered amendment is not palpably insufficient or clearly devoid of merit." Perrotti v. Becker, Glynn, Melamed Muffly LLP , 82 AD3d 495 , 498 (1st Dep't 2011).
Three of Plaintiffs' claims are barred by immunity doctrines that bar the claims regardless of how Plaintiffs plead them. Supra. As a result, any amendments to these claims would be palpably insufficient. Perrotti v. Becker, Glynn, Melamed Muffly LLP, 82 AD3d at 498. Only Plaintiffs' abuse of process claim is not barred by an immunity doctrine. Supra. However, Plaintiffs fail to allege a single instance where Defendants perverted the judicial process. Curiano v. Suozzi, 63 NY2d at 116; Casa de Meadows Inc. v. Zaman, 76 AD3d at 921. Nothing in Plaintiffs' papers indicate any actions by Defendants beyond filing the suit are the basis for their abuse of process claim. Filing a summons and complaint is not abuse of process. Curiano v. Suozzi, 63 NY2d at 116; Krause Krause v. Gelman, 167 AD2d at 300. Therefore, Plaintiffs' motion for leave to amend is denied.
Accordingly, it is
ORDERED that Defendants Geoffrey Raynor, R2 Investments, LDC, Nineteen Eighty-Nine, LLC, Amalgamated Gadget, LP, Sceptor Holdings, Inc., Q. Funding, LP, Acme Widget, LP and Brandon Teague's motion to dismiss the complaint made by Plaintiffs Carl C. Icahn, Icahn Enterprises, LP, Icahn Enterprises Finance Corp. and Icahn Enterprises Holdings, LP is GRANTED and the complaint is DISMISSED; and it is further
ORDERED that Plaintiffs Carl C. Icahn, Icahn Enterprises, LP, Icahn Enterprises Finance Corp. and Icahn Enterprises Holdings, LP's request for leave to amend the complaint is DENIED; and it is further
ORDERED that the Clerk, upon service of a copy of this order with notice of entry, is directed to enter judgment dismissing the action, with prejudice and with costs and disbursements to the defendants as taxed by the Clerk.