Opinion
Civil Action 22 Civ. 7089 (JHR) (SLC)
06-06-2023
JINGLE KIDS USA, LLC, JINGLE KIDS PRODUCTION LLC, JINGLE KIDS IP LLC, ORWO STUDIOS, LLC, and PVS STUDIOS, LLC, Plaintiffs and Counterclaim Defendants, v. IN COLOUR CAPITAL, INC., Defendant, Counterclaim Plaintiff, and Third-Party Plaintiff, v. JAKE SEAL, Third-Party Defendant.
HONORABLE JENNIFER H. REARDEN, United States District Judge.
REPORT AND RECOMMENDATION
SARAH L. CAVE, United States Magistrate Judge.
I. INTRODUCTION
On August 19, 2022, Plaintiffs Jingle Kids USA, LLC; Jingle Kids Production LLC; Jingle Kids IP LLC; Orwo Studios LLC; and PVS Studios LLC (collectively, “Plaintiffs”) filed a complaint seeking a declaratory judgment that Defendant In Colour Capital Inc. (“In Colour”) had charged an unlawfully high rate of interest on a 2021 loan. (ECF No. 1 (the “Complaint”)). Plaintiffs now move for leave to file a First Amended Complaint (the “Proposed FAC” (ECF Nos. 48-1; 49-1)). (ECF Nos. 48; 49 (the “Motion”)). The Proposed FAC seeks to: (i) add as defendants Carey Kurtin and Matthew Kurtin (together, the “Kurtins,” and, with In Colour, “Defendants”); and (ii) assert new claims under the Racketeer Influenced and Corrupt Organizations Act, 42 U.S.C. §§ 1961, et seq. (“RICO”), and for “unlawful debt” under New York state law. (ECF No. 48-1 ¶¶ 13-28). In Colour opposes the Motion. (ECF No. 52 (the “Opposition”)). For the reasons set forth below, the Court respectfully recommends that the Motion be DENIED.
II. BACKGROUND
The allegations in the Proposed FAC are presumed true for purposes of the Motion. See Fin. Guar. Ins. Co. v. Putnam Advisory Co., 783 F.3d 395, 398 (2d Cir. 2015); Nkansah v. United States, No. 18 Civ. 10230 (PAC) (SLC), 2021 WL 5910647, at *2 n.1 (S.D.N.Y. Aug. 30, 2021), adopted by, 2021 WL 5493214 (S.D.N.Y. Nov. 23, 2021).
On May 7, 2021, Plaintiffs and In Colour entered into a Credit and Security Agreement, pursuant to which In Colour provided to Plaintiffs “a loan in the principal amount of $500,000” (the “Loan”) to finance a television series entitled “Jingle Kids.” (ECF Nos. 48-1 ¶ 13; 49-1 at 68). Matthew Kurtin, as “Authorized Signatory” for In Colour, signed the Agreement; Carey Kurtin did not, and neither of the Kurtins were listed as parties to the Agreement. (ECF No. 49-1 at 13). The Agreement provided that the Loan would mature on June 10, 2021 (the “Maturity Date”), at which time Plaintiffs would be obligated to repay the Loan in full, plus a “Repayment Premium” equal to 10% of the Loan. (Id. at 6-8; see ECF No. 48-1 ¶ 15). Plaintiffs were to make all payments on the Loan to “JP Morgan Chase, Manhattan, New York, NY, for wire to the Royal Bank of Canada.” (ECF No. 48-1 ¶ 23; see ECF No. 49-1 at 15-16). If Plaintiffs failed to “unconditionally, indefeasibly, and irrevocably pa[y] in full” by the Maturity Date, interest would be assessed on the Loan at a rate of 2.5% and the Repayment Premium would accumulate for each week of nonpayment, in addition to “other costs, fees, charges and other amounts payable hereunder from time to time.” (ECF No. 49-1 at 6-8).
The Agreement contains a forum selection clause, which provides that “[e]ach Credit Party irrevocably and unconditionally submits, for itself and its assets, to the non-exclusive jurisdiction of any New York state or United States Federal Court located in the Southern District of New York . . . in any action or proceeding arising out of or relating to this Agreement ....” (ECF No. 49-1 at 11 (the “Forum Selection Clause”); see ECF No. 48 at 3; ECF No. 48-1 ¶¶ 7, 20, 25). The Agreement also contains a New York choice of law clause. (ECF No. 49-1 at 11).
In July 2021-a month after the Maturity Date-Plaintiffs partially repaid the Loan in the amount of $200,000 (the “Partial Repayment”). (ECF No. 48-1 ¶ 16). On November 10, 2022, In Colour sent a letter to Plaintiffs demanding payment of $1,635,398.86, which (after deducting the Partial Repayment) consisted of: (i) the $500,000 advance; (ii) the $975,000 Repayment Premium; (iii) $143,862.52 in interest; (iv) $211,564.20 in legal fees; and (v) $4,972.14 in interest on the legal fees. (Id. ¶ 16). Plaintiffs do not allege that they have made any further payments on the Loan. (See id.)
B. Procedural Background
On August 19, 2022, Plaintiffs filed the Complaint, invoking the Court's jurisdiction based on the parties' diversity of citizenship. (ECF No. 1 ¶ 7; see ECF No. 8 at 6). The Complaint asserted that the interest payments Plaintiffs owed In Colour under the Agreement constituted usury under New York Penal Law § 190.40 (ECF No. 1 ¶ 11), sought a declaration that the Loan was usurious, and sought an “accounting of any principal payment and/or interest [that] is due.” (Id. at 4).
On October 31, 2022, In Colour filed an Answer, which asserted against Plaintiffs counterclaims for breach of contract and fraudulent inducement (the “Counterclaims”) and third party claims against Jake Seal (“Mr. Seal”) (the “Third-Party Claims”). (ECF No. 8). On January 13, 2023, Plaintiffs filed an Answer to the Counterclaims and answered the Third-Party Claims on behalf of Mr. Seal. (ECF No. 45). In the same document, Plaintiffs, on behalf of Mr. Seal, asserted counterclaims against In Colour (the “Seal Counterclaims”) and asserted claims against the Kurtins (the “Seal Third-Party Claims”). (ECF No. 45).
The Court notes that Plaintiffs' counsel has not entered an appearance on behalf of Mr. Seal, nor has Mr. Seal otherwise appeared. In Color challenges the propriety of Plaintiffs' filings on Mr. Seal's behalf. (ECF No. 47 at 11).
On February 3, 2023, In Colour moved to dismiss the Seal Counterclaims and Seal Third-Party Claims on the grounds that (1) Mr. Seal lacks standing to bring these claims because he is not a party to the Agreement, (2) Plaintiffs failed to obtain prior leave to amend under Federal Rule of Civil Procedure 15(a)(2), and (3) the Seal Counterclaims and Seal Third-Party Claims fail to state a claim on which relief could be granted. (ECF No. 46 at 11-16 (the “MTD”)).
C. The Motion
On February 6, 2023, Plaintiffs filed the Motion and Proposed FAC seeking leave to add the Kurtins as Defendants and assert new claims. (ECF Nos. 48; 48-1).
First, Plaintiffs allege that the Kurtins are “believed to be residents of Toronto, Canada”; are “officers, employees, and/or associated with [In] Colour []”; and have “operated, managed and controlled [In] Colour [] and/or acted in enterprise with [In] Colour.” (ECF No. 48-1 ¶ 7; see id. ¶ 25). Plaintiffs allege, “upon information and belief,” that “[In] Colour [] is operated by the Kurtins as an enterprise for the collection of unlawful debt within the meaning of RICO . . . with a common purpose of carrying out a criminal usury loan collection business in dealing with Plaintiffs, as well as others.” (Id. ¶ 20). Plaintiffs assert that the Court has personal jurisdiction over the Kurtins because they “purposely directed their activity and consummated their collection in New York intentionally [sic] availing themselves of the privilege of conducting interstate and foreign commerce for transacting their business and tortious acts in New York.” (Id. ¶ 1). Plaintiffs also appear to invoke the Forum Selection Clause in the Agreement. (See ECF No. 48 at 3). Plaintiffs thus appear to be asserting that the Kurtins are subject to personal jurisdiction because (1) the Kurtins are associated with In Colour, (2) the Agreement required the Loan payments to be made to a bank in New York, and (3) Matthew Kurtin signed the Agreement containing the Forum Selection Clause. (See ECF No. 48).
Second, the Proposed FAC asserts claims under RICO §§ 1962(b) (the “Interest in Enterprise” claim), 1962(c) (the “Unlawful Debt” claim), and 1962(d) (the “Conspiracy Claim,” with the Interest in Enterprise and Unlawful Debt Claims, the “RICO Claims”)). (ECF No. 48-1). Accompanying the Motion is the declaration of Paul Sigelman-purportedly counsel for Mr. Seal, although he has not entered an appearance-who states that Plaintiffs did not assert the RICO Claims in the Complaint because he had “scrambled to review the matter with New York local counsel [] to draft a complaint to be immediately filed and served,” and, by an “oversight,” failed to identify the potentially viability of RICO claims. (ECF No. 48 at 5-6). Plaintiffs assert that leave to add the RICO Claims is warranted because they have not acted in bad faith and there is no prejudice given the early stage of the litigation. (Id. at 3-4).
Third, the Proposed FAC expands on the usury theory, which Plaintiffs asserted in the Complaint (ECF No. 1 ¶ 10), by characterizing the Loan as an “unlawful debt” and “criminal usury” in violation of New York General Obligations Law §§ 5-501, 5-511, and 5-521 and New York Penal Law § 190.40. (ECF No. 48-1 ¶¶ 13-18 (the “Usury Claim”)). Plaintiffs appear to seek to amend the Usury Claim to describe In Colour's alleged violation of New York's criminal usury statute. (Id.)
On March 22, 2023, In Colour filed the Opposition. (ECF No. 52). In Colour argues that leave to amend should be denied as futile because the Kurtins are not subject to personal jurisdiction in New York, and because the claims in the Proposed FAC would not survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). (Id. at 15-25).
Plaintiffs did not file a reply in further support of their Motion.
III. DISCUSSION
A. Legal Standard for Motion to Amend
A court “should freely give leave” to amend a pleading “when justice so requires.” Fed.R.Civ.P. 15(a)(2).The Rule encourages courts to determine claims “on the merits” rather than disposing of claims or defenses based on “mere technicalities.” Monahan v. N.Y.C. Dep't of Corr., 214 F.3d 275, 283 (2d Cir. 2000). The Second Circuit has explained that “district courts should not deny leave [to amend] unless there is a substantial reason to do so, such as excessive delay, prejudice to the opposing party, or futility.” Friedl v. City of New York, 210 F.3d 79, 87 (2d Cir. 2000); see also McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007) (“A district court has discretion to deny leave for good reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party.”). Courts in this District have held that denial of a motion to amend is appropriate where “(1) the movant is guilty of undue delay, (2) the movant has acted in bad faith, (3) the amendment would be futile, or (4) the amendment would prejudice the opposing party.” Procter & Gamble Co. v. Hello Prods., LLC, No. 14 Civ. 649 (VM) (RLE), 2015 WL 2408523, at *1 (S.D.N.Y. May 20, 2015); see Williams v. Citigroup Inc., 659 F.3d 208, 213-14 (2d Cir. 2011) (per curiam) (reiterating Supreme Court precedent explaining proper grounds for denying motion to amend as “undue delay, bad faith or dilatory motive on the part of the movant, . . . undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment”). “Consistent with the liberal principles underlying Rule 15(a)(2), the party opposing the amendment has the burden of establishing that leave to amend would be unduly prejudicial or futile.” Pilkington N. Am., Inc v. Mitsui Sumitomo Ins. Co. of Am., No. 18 Civ. 8152 (JFK), 2021 WL 4991422, at *5 (S.D.N.Y. Oct. 27, 2021).
Plaintiffs filed the Motion before the deadline for amendment of pleadings (see ECF No. 43), and therefore, the Rule 15(a) standard, rather than the Rule 16(b) standard, applies. See Soroof Trading Dev. Co. v. GE Microgen, Inc., 283 F.R.D. 142, 147 (S.D.N.Y. 2012) (explaining that, where motion to amend “is timely filed, only Rule 15's liberal standard governs”).
Internal citations and quotation marks are omitted from case citations unless otherwise indicated.
An amendment is futile “if the proposed claim could not withstand a motion to dismiss pursuant to [Rule] 12(b)(6).” Lucente v. Int'l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002); see Griffith-Fenton v. Coldwell Banker Mortg., No. 13 Civ. 7449 (VB), 2014 WL 6642715, at *1 (S.D.N.Y. Oct. 17, 2014). An amendment is also futile if the proposed claims could not withstand dismissal under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. See Aero AG Holdings, LLC v. Huggoes Fashion LLC, No. 21 Civ. 9499 (VEC) (SLC), 2022 WL 4463896, at *4 (S.D.N.Y. Sept. 26, 2022) (“Aero AG Holdings II”) (denying motion to amend where the Court lacked personal jurisdiction over proposed new defendants), adopting, Aero AG Holdings, LLC v. Huggoes Fashion LLC, No. 21 Civ 9499 (VEC) (SLC), 2022 WL 6244439 (S.D.N.Y. July 5, 2022) (“Aero AG Holdings I”); Oppedisano v. Zur, No. 20 Civ. 5395 (VB), 2022 WL 4134436, at *2 (S.D.N.Y. Sept. 12, 2022) (denying motion to amend to add new defendant over which court lacked personal jurisdiction); Beverly Hills Teddy Bear Co. v. Best Brands Consumer Prods., Inc., No. 19 Civ. 3766 (GHW), 2021 WL 2534000, at *4 (S.D.N.Y. June 21, 2021) (collecting cases and denying motion to amend because “the proposed pleading would add a claim against a party over which the court lacks personal jurisdiction”).
B. Application
As set forth above, in the Proposed FAC, Plaintiffs seek to: (1) add the Kurtins as Defendants; (2) add the RICO Claims; and (3) expand the Usury Claim. (ECF No. 48-1). The Court first assesses whether it may exercise personal jurisdiction over the Kurtins, who are non-New York domiciliaries (see § III.B.1.b, infra), before turning to whether Plaintiffs have plausibly alleged RICO Claims or a Usury Claim such that amendment would not be futile. (See §§ III.B.2-3, infra).
1. Personal jurisdiction over the Kurtins
a. Legal standard
“On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, [the] [p]laintiff has the burden of demonstrating personal jurisdiction.” RV Skincare Brands LLC v. Digby Invs. Ltd., 394 F.Supp.3d 376, 380 (S.D.N.Y. 2019) (citing Troma Ent., Inc. v. Centennial Pictures Inc., 729 F.3d 215, 217 (2d Cir. 2013)). When a defendant challenges personal jurisdiction on the pleadings and before discovery, “‘the plaintiff need show only a prima facie case.'” King Cnty., Wash. v. IKB Deutsche Industriebank, AG, 769 F.Supp.2d 309, 313 (S.D.N.Y. 2011) (quoting Volkwagenwerk Aktiengesellschaft v. Beech Aircraft Corp., 751 F.2d 117, 120 (2d Cir. 1984)). “A plaintiff must carry [t]his burden with respect to each defendant individually.” Berdeaux v. OneCoin Ltd., 561 F.Supp.3d 379, 396 (S.D.N.Y. 2021). On a motion to amend, the Court must “construe the pleadings and affidavits in plaintiff's favor at this early state.” PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997) (citing CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986)); see also Distefano v. Carozzi Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001); A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993). “[C]onclusory non-fact-specific jurisdictional allegations,” however, or a “legal conclusion couched as a factual allegation” will not establish a prima facie showing of jurisdiction. See Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 185 (2d Cir. 1998); King Cnty., 769 F.Supp.2d at 313.
“Personal jurisdiction may be either general or specific.” Al-Ahmed v. Twitter, Inc., 553 F.Supp.3d 118, 124 (S.D.N.Y. 2021) (citing Brown v. Lockheed Martin Corp., 814 F.3d 619, 624 (2d Cir. 2016)). “General, or ‘all-purpose,' jurisdiction allows a court to adjudicate any cause of action against the defendant, regardless of where it arose.” Al-Ahmed, 553 F.Supp.3d at 124-25. Specific jurisdiction is limited to causes of action that “arise[] out of the defendant's activities in a state.” Id. at 125; see also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984).
Federal courts employ “[a] two-step analysis” to determine whether the court may exercise personal jurisdiction over a non-domiciliary defendant. RV Skincare Brands, 394 F.Supp.3d at 380 (quoting Eades v. Kennedy, PC L. Offs., 799 F.3d 161, 168 (2d Cir. 2015)). “The first step is to determine whether a defendant's actions come within the reach of” the law of the state in which the Court sits, here, “New York State's long-arm statute, N.Y. C.P.L.R. § 302(a).” RV Skincare Brands, 394 F.Supp.3d at 380-81 (citing Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22 (2d Cir. 2004)); see Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163-64 (2d Cir. 2010) (looking first to long-arm statute of New York, “the forum state”); accord Al-Ahmed, 553 F.Supp.3d at 124. If state law requirements are met, “the second step is to determine whether exercising personal jurisdiction comports with the Due Process Clause.” RV Skincare Brands, 394 F.Supp.3d at 381.
Under New York's long-arm statute, a court may exercise personal jurisdiction over a non-domiciliary who, in person or through an agent: (1) “transacts any business within the state or contracts anywhere to supply goods or services in the state”; (2) “commits a tortious act within the state”; (3) “commits a tortious act without the state causing injury to person or property within the state . . . if he [or she] (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce”; or (4) “owns, uses or possesses any real property situated within the state.” N.Y. C.P.L.R. § 302(a).
Under § 302(a)(1), a non-domiciliary is subject to specific personal jurisdiction in New York if he or she “transacts any business within the state or contracts anywhere to supply goods or services in the state.” N.Y. C.P.L.R. § 302(a)(1). For the Court to exercise personal jurisdiction under this provision, “the defendant must have transacted business within the state, and the claim asserted must arise from that business activity.” Aero AG Holdings II, 2022 WL 4463896, at *4 (quoting Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 732 F.3d 161, 168 (2d Cir. 2013)). “The sufficiency of a defendant's contact with the forum is measured by ‘the totality of the defendant's activities within the forum.'” RV Skincare Brands, 394 F.Supp.3d at 381 (quoting Best Van Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir. 2007)). “A showing that a party is transacting business requires only a minimal quantity of activity, provided that it is of the right nature and quality.” Chanel, Inc. v. Doubinine, No. 04 Civ. 4099 (CPS), 2008 WL 4449631, at *2 (E.D.N.Y. Oct. 2, 2008) (citing Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 28 (2d Cir. 1996)).
“Notably, Section 302(a)(1) is a single-act statute,” i.e., “proof of one purposeful transaction in New York is sufficient to trigger Section 302(a)(1), as long as there is a ‘substantial relationship between the transaction and the claim asserted.'” RV Skincare Brands, 394 F.Supp.3d at 381 (quoting Chloe, 616 F.3d at 170) (collecting cases); see JDM Import Co. Inc. v. Shree Ramkrishna Exps. Pvt., Ltd., No. 20 Civ. 8759 (VEC), 2021 WL 5450237, at *4 (“‘Section 302(a)(1) is a single act statute, which means that proof of one transaction in New York is sufficient to invoke jurisdiction.'”) (quoting High St. Capital Partners, LLC v. ICC Holdings, LLC, No. 18 Civ. 652592 (JMC), 2019 WL 2106093, at *2 (N.Y. Sup. Ct. May 14, 2019); see Deutsche Bank Sec., Inc. v. Mont. Bd. of Invs., 7 N.Y.3d 65, 71 (2006) (explaining that “proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted”).
“Parties may consent to personal jurisdiction by executing an enforceable forum-selection clause.” HSM Holdings, LLC v. Mantu I.M. Mobile Ltd., No. 20 Civ. 967 (LJL), 2021 WL 918556, at *6 (S.D.N.Y. Mar. 10, 2021) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14 (1985); see D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 103 (2d Cir. 2006) (“Parties can consent to personal jurisdiction through forum-selection clauses in contractual agreements.”). “Where an agreement contains a valid and enforceable forum selection clause . . . it is not necessary to analyze jurisdiction under New York's long-arm statute or federal constitutional requirements of due process” as to the parties bound by that agreement. Exp.-Imp. Bank of U.S. v. Hi-Films S.A. de C.V., No. 09 Civ. 3573 (PGG), 2010 WL 3743826, at *4 (S.D.N.Y. Sept. 24, 2010). Consenting to “[a]n enforceable forum selection clause amounts to consent to personal jurisdiction.” Farrell Lines Inc. v. Columbus Cello-Poly Corp., 32 F.Supp.2d 118, 127 (S.D.N.Y. 1997).
b. Application
Plaintiffs do not explain in the Motion the basis on which the Court may exercise personal jurisdiction over the Kurtins, nor have they responded to In Colour's arguments as to why personal jurisdiction is absent.The Court interprets the Motion and Proposed FAC as asserting that the Kurtins-residents of Toronto, Canada (ECF No. 48-1 ¶ 7)-are subject to specific personal jurisdiction in New York based on their association with In Colour, whether as “officers, employees, and/or associates,” or as “own[ers] and operat[ors].” (ECF No. 48 at 2-3). Plaintiffs appear to be arguing that, because In Colour transacts business in New York and is subject to personal jurisdiction in New York-by accepting payments on the Loan to a New York bank-the Kurtins are also subject to personal jurisdiction in New York. (Id. at 1-3). In the alternative, by attaching to the Proposed FAC the Agreement, which Matthew Kurtin signed, Plaintiffs also appear to invoke the Forum Selection Clause. (ECF No. 49-1). The Court analyzes first whether the Forum Selection Clause provides a basis for personal jurisdiction over Matthew Kurtin, and second whether the Kurtins transacted sufficient business in New York under N.Y. C.P.L.R. § 302(a)(1).
Plaintiffs' failure to respond to In Colour's arguments in the Opposition is arguably a concession that personal jurisdiction over the Kurtins is lacking. See Geller v. Hochul, No. 20 Civ. 4653 (ER), 2021 WL 4392521, at *16 (S.D.N.Y. Sept. 24, 2021) (deeming plaintiffs' failure to address one of defendants' arguments constituted a waiver); accord Cole v. Blackwell Fuller Music Publ'g, LLC, No. 16 Civ. 7014 (VSB), 2018 WL 4680989, at *7 (S.D.N.Y. Sept. 28, 2018). For completeness, the Court nevertheless analyzes whether personal jurisdiction over the Kurtins exists.
The Court does not perceive any basis on which to exercise general personal jurisdiction over the Kurtins because, inter alia, Plaintiffs have not established that the Kurtins are domiciled in New York or that they consented to the Court's jurisdiction. See Daimler AG v. Bauman, 571 U.S. 117, 137 (“[f]or an individual, the paradigm forum for the exercise of general jurisdiction is the individual's domicile”); Reich v. Lopez, 38 F.Supp.3d 436, 457 (“[f]or general jurisdiction over an individual to comport with due process, Defendants must be domiciled in New York, served in New York, or have otherwise consented to the Court's jurisdiction”). The Court explains below that the Forum Selection Clause does not manifest such consent. (See § III.B.1.b.i, infra).
i. The Forum Selection Clause (Matthew Kurtin)
Although Matthew Kurtin signed the Agreement containing the Forum Selection Clause, he is not personally a party to the Agreement, which is “between” Plaintiffs and In Colour; Matthew Kurtin is not listed as a party and signed the Agreement as “Authorized Signatory” for In Colour. (See ECF Nos. 48-1; 49-1 at 3, 13). Courts in this District have held that, under certain circumstances, non-parties who are “closely related” to parties to a forum selection clause can be bound by the clause and subject to personal jurisdiction under § 302(a)(1). See HSM Holdings, 2021 WL 918556, at *8 (collecting cases). Under the four-part framework the Second Circuit has endorsed, a forum selection clause is enforceable if it (1) was reasonably communicated, (2) is mandatory, and (3) covers the claims and parties in the action. See Phillips v. Audio Active Ltd., 494 F.3d 378, 383 (2d Cir. 2007). If these three elements are met, the clause is presumptively enforceable, which the party challenging the clause can rebut by establishing that (4) the enforcement of the clause would be unreasonable or unjust. Id.; see HSM Holdings, 2021 WL 918556, at *6. As to a person who did not sign the agreement containing the forum selection clause in their individual capacity, the clause is not binding unless they “intended to bind themselves personally to any of its terms, including the forum selection clause.” Id. at *9. This is true as to an individual who signed the agreement on behalf of a corporate entity if “[t]here is no reflection in the body of the Agreement that the [] individual[] signed in anything other than a corporate capacity and no allegation in the Complaint that [he] w[as] asked to do or did sign in [his] individual capacit[y].” Id.; see Beskrone v. Berlin, No. 21 Civ. 4803 (PAE), 2023 WL 2023413, at *14 (S.D.N.Y. Feb. 15, 2023) (“having [failed to] identif[y] any connection between defendants and New York other than provisions in contracts to which defendants are not parties, compelling them to defend this suit in this forum rests on ‘too thin a reed' to sustain the exercise of personal jurisdiction.”).
Plaintiffs do not allege that, in signing the Agreement as “Authorized Signatory” for In Colour, Matthew Kurtin intended to bind himself personally to any of its terms, including the Forum Selection Clause. The parties to the Agreement were Plaintiffs and In Colour, not Matthew Kurtin. (ECF No. 49-1 at 3). There is no indication elsewhere in the Agreement that Matthew Kurtin signed the Agreement in anything other than a corporate capacity, nor is there any allegation in the Proposed FAC that he was asked to or did sign in his individual capacity. See HSM Holdings, 2021 WL 918556, at *9 (noting that the agreement did not indicate that individuals “signed in anything other than a corporate capacity”); see also Bonnant v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 467 Fed.Appx. 4, 8, 10 (2d Cir. 2012) (explaining that, “[f]or a corporate representative to be personally bound by a contract, the officer must sign both in a representative and in an individual capacity,” and in making this determination, “it is not sufficient to look only at the signature line in isolation ... [w]hat is written on the signature line must be understood in light of the entire agreement.”); Schwartz v. Sensei, LLC, No. 17 Civ. 4124 (SN), 2020 WL 5817010, at *11 (S.D.N.Y. Sept. 30, 2020) (explaining that “New York law requires ‘clear and explicit evidence' of such intention to bind an individual to a contract signed on a corporation's behalf.”). Accordingly, the Forum Selection Clause does not provide a basis to exercise personal jurisdiction over Matthew Kurtin.
The Court does not conceive of any argument that the Forum Selection Clause could bind Carey Kurtin, who did not sign and was not a party to the Agreement. (ECF No. 49-1 at 3, 18).
ii. Transacting business under § 302(a)(1) (Both Kurtins)
Plaintiffs do not argue, nor can the Court perceive any basis, for exercising personal jurisdiction over the Kurtins under either § 302(a)(2), which requires a tortious act in New York, or § 302(a)(3), which requires a tortious act outside of New York by a defendant who derives substantial revenue from sales of products in New York. See, e.g., Davey v. PK Benelux B.V., No. 20 Civ. 5726 (VB), 2022 WL 1289341, at *4 (S.D.N.Y. Apr. 29, 2022) (finding that “conclusory allegation that defendant ‘derives substantial revenue from its sales of its subject products in the U.S. and in New York' is insufficient for the Court to exercise personal jurisdiction over Defendant” under § 302(a)(3)); Snowbridge Advisors LLC v. Eso Cap. Partners UK, LLP, 589 F.Supp.3d 401, 415 (S.D.N.Y. 2022) (finding that conclusory allegation that individuals “'regularly conduct' business in New York,” which “does not specify further or otherwise allege that they derive substantial revenues from interstate or international commerce” insufficient to establish personal jurisdiction under N.Y. C.P.L.R. § 302(a)(3)).
The only allegation in the Proposed FAC that could be read to suggest that the Kurtins transacted business in New York sufficient to establish specific personal jurisdiction under § 302(a)(1) is the assertion that “Defendants caused collection on account of the loan, directing, and obtaining [Plaintiffs'] payment of $200,000 to be made at ‘JP Morgan Chase, Manhattan,' from there by wire to the Royal Bank of Canada, and then to [In] Colour Capital in Toronto.” (Id. ¶ 10). As an initial matter, this allegation against Defendants collectively is insufficient to establish a basis for personal jurisdiction over either Matthew Kurtin or Carey Kurtin individually. See Berdeaux, 561 F.Supp.3d at 396 (explaining that group pleading without distinction between defendants is a “plainly impermissible” means “to satisfy [the] burden to establish a prima facie case of personal jurisdiction against each Defendant as to each claim asserted”); HSM Holdings, 2021 WL 918556, at *15 (holding that, by “relying only on group pleadings, in which it conflates multiple parties and fails to provide specific allegations, Plaintiff neglects its burden of establishing personal jurisdiction over each defendant”).
In any event, a wire transfer that “passed through a correspondent bank account in New York is insufficient as a matter of law to confer jurisdiction under Section 302(a)(1),” Berdeaux, 561 F.Supp.3d at 402, unless “the defendant's use of the correspondent bank account was purposeful.” Licci, 732 F.3d at 168. Plaintiffs have not plausibly alleged that the Kurtins directed or intended that Loan payments pass through the New York bank account. Indeed, the Proposed FAC does not even allege that the Kurtins knew the New York bank account existed. (See generally ECF No. 48-1). Accordingly, absent allegations that the Kurtins “directed the funds to be deposited or controlled the route of the plaintiffs' funds through the correspondent account,” Berdeaux, 561 F.Supp.3d at 403, the fact that the Loan payments passed from Plaintiffs to In Colour through a bank in New York does not establish that the Kurtins transacted business in New York under § 302(a)(1).
Finally, although it is true that “if a corporation has sufficient in-state contacts to fall subject to personal jurisdiction, then a corporate officer who has played a part in the [corporate] activities that gave rise to the action is likewise subject to jurisdiction, to the extent due process permits[,]” the bare allegations of the Proposed FAC do not establish that either of the Kurtins participated in In Colour's alleged wrongdoing in New York. Henao v. Parts Auth., LLC, 557 F.Supp.3d 490, 497 (S.D.N.Y. 2021); see Aero AG Holdings I, 2022 WL 6244439, at *11 (finding that personal jurisdiction over individual defendant was lacking because conclusory allegations failed to show his participation in allegedly infringing activities in New York).
Accordingly, because Plaintiffs do not plausibly allege a basis on which the Court may exercise personal jurisdiction over the Kurtins under § 302(a), the Court respectfully recommends that leave to add the Kurtins as Defendants be DENIED.
2. RICO Claims
The Proposed FAC asserts RICO Claims for Interest in Enterprise, Unlawful Debt, and Conspiracy. (ECF No. 48-1 ¶¶ 19-28). In Colour argues that the RICO Claims would not be able to withstand a motion to dismiss because Plaintiffs lack standing and the Proposed FAC otherwise fails to plausibly allege a RICO claim. (ECF No. 52 at 19-25).
a. Standing
In Colour argues that leave to amend to add the RICO Claims should be denied because Plaintiffs have not alleged an injury to their business or property and thus lack RICO standing. (ECF No. 52 at 19-20).
i. Legal standard
“RICO grants standing to pursue a civil damages remedy to ‘any person injured in his business or property by reason of a violation of 18 U.S.C. § 1962.'” Com. Cleaning Servs. v. Colin Serv. Sys., 271 F.3d 374, 380 (2d Cir. 2001) (quoting 18 U.S.C. § 1964(c)). To demonstrate RICO standing, a plaintiff must plausibly allege “(1) a violation of section 1962; (2) injury to business or property; and (3) causation of the injury by the violation.” Motorola Credit Corp. v. Uzan, 322 F.3d 130, 135 (2d Cir. 2003).
As relevant here, to plausibly allege a RICO injury, “conclusory allegations of injury to pecuniary interest” will not suffice; rather, a plaintiff must allege a “concrete financial loss.” Beter v. Murdoch, No. 17 Civ. 10247 (GBD), 2018 WL 3323162, at *5 (S.D.N.Y. June 22, 2018), aff'd, 771 Fed.Appx. 62 (2d Cir. 2019) (summary order).
ii. Application
In Colour argues that Plaintiffs lack standing because their alleged injuries consist only of “non-particularized bare conclusions.” (ECF No. 52 at 20). The Court disagrees. The Proposed FAC alleges that In Colour extended the Loan to Plaintiffs under unlawful terms and seeks to collect from Plaintiffs an amount that exceeds the Loan by over $1,000,000. (ECF No. 48-1 ¶ 16 and passim). These allegations are sufficiently concrete to establish an injury for standing purposes. See, e.g., Lateral Recovery LLC v. Queen Funding, LLC, No. 21 Civ. 9607 (LGS), 2022 WL 2829913, at *7 (S.D.N.Y. July 20, 2022) (holding that “[w]hat amounted to allegedly fraudulent or usurious interest payments represent concrete injury and damage sufficient to establish standing”); Frydman v. Verschleiser, 172 F.Supp.3d 653, 672 (S.D.N.Y. 2016) (holding that RICO standing is satisfied based on “allegations that the defendants' alleged acts caused personal harm to the plaintiffs”); Sterling Interiors Grp. v. Haworth, Inc., No. 94 Civ. 9216 (CSH), 1996 WL 537482, at *5 (S.D.N.Y. Sept. 19, 1996) (holding that plaintiff has standing to sue under RICO based on “alleged financial injury proximately caused by [defendant's] predicate acts”); see also Trustees of the Plumbers and Pipefitters Nat'l Pension Fund v. Transworld Mech., 886 F.Supp. 1134, 1146 (S.D.N.Y. 1995) (holding that “[t]his is not an instance in which the RICO injury is mere conjecture .... Rather, plaintiffs have alleged a non-speculative loss”).
The cases on which In Colour relies are distinguishable. (See ECF No. 52 at 20). For example, in Obanya v. Select Portfolio Servicing, Inc., the pro se plaintiff failed to articulate how the predicate mail and wire fraud caused a “particularized injury” and therefore lacked standing to assert RICO claims. No. 14 Civ. 5255 (NGG) (LB), 2015 WL 5793603, at *6 (S.D.N.Y. Aug. 28, 2015), adopted by, 2015 WL 5793603, at *1-2 (S.D.N.Y. Sept. 30, 2015). Similarly, in Miller v. Carpinello, the pro se plaintiff lacked standing because he did not allege “any pecuniary or other clear and definite loss,” and instead his “principal claim [wa]s that he suffered physical and emotional injuries.” No. 06 Civ. 12940 (LAP, 2007 WL 4207282, at *6 (S.D.N.Y. Nov. 20, 2007). Here, in contrast to Obanya and Miller, the Proposed FAC alleges a particularized financial injury-Plaintiffs owe In Colour over $1 million more than the amount of the Loan-that stems directly from the alleged usurious Loan. (ECF No. 48-1 ¶ 16). This is sufficient to confer RICO standing at the pleadings stage.
Accordingly, the Court finds that Plaintiffs have alleged an injury sufficient to confer standing to assert the RICO Claims.
b. Interest in Enterprise Claim
i. Legal standard
RICO § 1962(b) provides that “[i]t shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.” To state a claim under Section 1962(b), a plaintiff must allege that: “(1) the defendants acquired or maintained an interest in the alleged enterprise through a pattern of racketeering activity; and (2) that the plaintiff suffered injury as a result of the acquisition of the enterprise.” Espire ADS LLC v. Tapp Influencers Corp., No. 21 Civ. 10623 (JGK), 2023 WL 1968025, at *13 (S.D.N.Y. Feb. 13, 2023). The injury alleged must be “caused by the acquisition or maintenance of control of the enterprise, and not by the predicate racketeering acts of that enterprise.” Id.
A RICO “enterprise” cannot consist “merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.” Cruz v. FX DirectDealer, LLC, 720 F.3d 115, 121 (2d Cir. 2013). Rather, under RICO, “the defendant and the enterprise referred to must be distinct.” See Espire, 2023 WL 1968025, at *12 (citing Riverwoods Chappaqua Corp v. Marine Midland Bank, N.A., 30 F.3d 339, 344 (2d Cir. 1994)).
ii. Application
The Court finds that Plaintiffs have failed to plausibly allege the existence of a distinct “enterprise” sufficient to undergird the Interest in Enterprise Claim. The Proposed FAC alleges only that In Colour unlawfully loaned Plaintiffs money, together with conclusory allegations that the Kurtins participated in the unlawful conduct. (ECF No. 48-1 ¶¶ 7, 27). Even if the Proposed FAC had plausibly pled the personal involvement of the Kurtins in the Loan, such allegations are insufficient to allege a RICO enterprise. See Cruz v. FXDirect Dealer, LLC, 720 F.3d 115, 121 (2d Cir. 2013) (recognizing longstanding “reject[ion of] the idea that a RICO enterprise may consist merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.”); accord Riverwoods, 30 F.3d at 344; Sunwealth Global HK Ltd. V. Pinder Int'l, Inc., No. 20 Civ. 1436 (ER), 2022 WL 1145245, at *8 (S.D.N.Y. Mar. 23, 2021). Plaintiffs' conclusory allegations of the existence of an enterprise are insufficient to allege a RICO enterprise under Section 1962(b). See Neiman Marcus Grp., Inc. v. Dispatch Transp. Corp., No. 09 Civ. 6861 (NRB), 2011 WL 1142922, at *8 (S.D.N.Y. Mar. 17, 2011).
The Interest in Enterprise Claim is also deficient on the alternative ground that Plaintiffs do not allege (1) a pattern of racketeering activity, or (2) an injury suffered resulting from the alleged acquisition or maintenance of control of the enterprise that is distinct from the predicate acts of the alleged enterprise. See Westchester Cnty. Indep. Party v. Astorino, 137 F.Supp.3d 586, 616 (S.D.N.Y. 2015). The Proposed FAC alleges a single predicate act-a usurious Loan- which does not plausibly support a “pattern” of racketeering activity. See GICC Cap. Corp. v. Tech. Fin. Grp., 67 F.3d 463, 465 (2d Cir. 1995) (explaining that a “pattern of racketeering activity” requires “at least two predicate acts” that “are related” and “amount to, or pose a threat of, continuing criminal activity”); Astorino, 137 F.Supp.3d at 616 (collecting cases and granting motion to dismiss § 1962(b) claim for failure to allege “pattern” of RICO activity); see also Liang v. Home Reno Concepts, LLC, 803 Fed.Appx. 444, 447 (2d Cir. 2020) (summary order) (affirming grant of motion to dismiss because “a single, allegedly fraudulent act [] cannot form the basis for a civil RICO claim.”). Further, Plaintiffs do not allege an injury stemming from the alleged enterprise that is separate and distinct from the alleged financial injury caused by the Loan itself, the sole predicate act. See Espire, 2023 WL 1968025, at *14 (holding that “[b]y failing to allege how they were injured by an acquisition or maintenance of control of an enterprise, rather than by the continued activities of the original enterprise, the [] plaintiffs have not plausibly alleged a violation of Section 1962(b)”).
Accordingly, the Court finds that Plaintiffs have not plausibly alleged an Interest in Enterprise Claim.
c. Unlawful Debt Claim
i. Legal standard
RICO § 1962(c) provides that “[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). Where, as here, a plaintiff bases its RICO claim on the collection of an unlawful debt, they “must allege that (1) the debt was unenforceable in whole or in part because of state or federal laws relating to usury, (2) the debt was incurred in connection with the business of lending money . . . at a usurious rate, and (3) the usurious rate was at least twice the enforceable rate.” Darkpulse, Inc. v. Firstfire Glob. Opportunities Fund, LLC, No. 21 Civ. 11222 (ER), 2023 WL 199196, at *12 (S.D.N.Y. Jan. 16, 2023) (quoting Dae Hyuk Kwon v. Santander Consumer USA, 742 Fed.Appx. 537, 539 (2d Cir. 2018) (summary order)). Section 1962(c) requires “that the loan have been incurred in connection with ‘the business of' making usurious loans” and excludes from the definition of unlawful debt the “occasional usurious transactions by one not in the business of loan sharking.” Wade Park Land Holdings, LLC v. Kalikow, 589 F.Supp.3d 335, 376 (S.D.N.Y. 2022) (quoting Durante Bros. & Sons v. Flushing Nat'l Bank, 755 F.2d 239, 250 (2d Cir. 1985)).
ii. Application
Plaintiffs' failure to allege a distinct “enterprise” (see § III.B.2.b.ii, supra) is also fatal to the Unlawful Debt Claim. See Espire, 2013 WL 1968025, at *12 (dismissing § 1962(c) claim for failure to allege that defendants operated as RICO enterprise). In addition, Plaintiffs allege only in a conclusory fashion that In Colour “perfect[ed] a criminal and civil loan sharking collection,” but give no other examples of loans In Colour has made, let alone loans at an excessive rate of interest. (ECF No. 48-1 ¶¶ 21, 23; see id. ¶ 24 (describing In Colour as a “loan shark lender”)). Even if the Loan to Plaintiff were usurious, Plaintiffs' single conclusory assertion does not plausibly allege that In Colour is in the business of making usurious loans. See Espire, 2023 WL 1968025, at *14 n.11 (dismissing unlawful debt claim because the “Complaint does not plead any facts alleging that the debt was incurred in connection with the business of lending money”); accord Kalikow, 589 F.Supp.3d at 377.
Accordingly, the Court finds that Plaintiffs have not plausibly alleged an Unlawful Debt Claim.
The Proposed FAC devotes a single paragraph to the Conspiracy Claim under §1962(d) (ECF No. 481 ¶ 248), and Plaintiffs do not mention this claim in the Motion (ECF No. 48). They have thus arguably abandoned the Conspiracy Claim as well. (See n.5, supra).
i. Legal standard
A conspiracy claim under RICO § 1962(d) requires “specific[]” allegations that the defendants had “an agreement to commit predicate acts.” Edmar Fin. Co., LLC v. Currenex, Inc., No. 21 Civ. 6598 (LAK), 2023 WL 3570017, at *16 (S.D.N.Y. May 18, 2023). Courts in this District routinely dismiss RICO conspiracy claims that contain only “conclusory, boilerplate allegations as to the existence of the relevant agreement.” Paul Hobbs Imps. Inc. v. Verity Wines LLC, No. 21 Civ. 10597 (JPC), 2023 WL 374120, at *13 (S.D.N.Y. Jan. 24, 2023). Allegations of a conspiracy “must set forth specific facts tending to show that each of the defendants entered into an agreement to conduct the affairs of a particular, identified enterprise through a pattern of racketeering activity - not simply that each defendant committed two or more acts that would qualify as predicate acts, without regard to whether those acts were committed in furtherance of the activity of the enterprise.” Edmar, 2023 WL 3570017, at *16.
“If a complaint fails to state a substantive RICO claim, it also does not state a claim for RICO conspiracy.” Lateral, 2022 WL 2829913, at *2; see Zamora v. Fit Int'l Grp. Corp., 834 Fed.Appx. 622, 626 (2d Cir. 2020) (summary order) (holding that “Plaintiffs' failure to state a claim for a substantive RICO violation is fatal to their RICO conspiracy claim”); D. Penguin Bros. v. City Nat'l Bank, 587 Fed.Appx. 663, 669 (2d Cir. 2014) (summary order) (same).
ii. Application
The Court finds that Plaintiffs have also failed to state a Conspiracy Claim. First, because the Proposed FAC does not plausibly allege a substantive RICO violation, Plaintiffs cannot state a RICO Conspiracy Claim. See Lateral, 2022 WL 2829913, at *2. Second, and similarly, the Proposed FAC does not allege an agreement by two or more Defendants to commit a predicate act under RICO. See Edmar, 2023 WL 3570017, at *16. Third, Plaintiffs' single conclusory allegation that, “[b]y reason of violation of 18 U.S.C. § (b) or (d), Defendants committed to conspire to violate the provisions of § 1962 (c)” (ECF No. 48-1 ¶ 28), fails to provide the specificity necessary to state a RICO conspiracy claim. See Hobbs, 2023 WL 374120, at *13. Fourth, In Colour cannot conspire with its own agents, the Kurtins. See Kriss v. Bayrock Grp. LLC, No. 10 Civ. 3959 (LGS) (DCF), 2016 WL 7046816, at *19 (S.D.N.Y. Dec. 2, 2016) (dismissing RICO conspiracy claims because “[t]he intracorporate agency doctrine holds that a corporation cannot conspire with its agents”); accord Skylon Corp. v. Guilford Mills, Inc., No. 93 Civ. 5581 (LAP), 1997 WL 88894, at *7 (S.D.N.Y. Mar. 3, 1997). The Proposed FAC therefore fails to state a Conspiracy Claim. * * *
Accordingly, the Court finds that Plaintiffs have not plausibly alleged any of the three RICO Claims, and therefore, respectfully recommends that leave to amend to add these claims be DENIED as futile.
3. Usury Claim
The Usury Claim in the Proposed FAC contends that the terms of the Agreement and Loan were usurious and violated N.Y. Penal Law § 190.40. (ECF No. 48-1 ¶¶ 13-18; see ECF No. 1 ¶ 11). Under New York law, however, a corporation may assert criminal usury as a defense, not as a claim for affirmative relief. See Colonial Funding Network, Inc. v. Epazz, Inc., 252 F.Supp.3d 274, 279 (S.D.N.Y. 2017); Scantek Med. Inc. v. Sabella, 582 F.Supp.2d 472, 474 (S.D.N.Y. 2008) (collecting cases); see also Madden v. Midland Funding, LLC, 237 F.Supp.3d 130, 147 (S.D.N.Y. 2017) (granting summary judgment on usury claims under N.Y. Gen. Oblig. Law § 5-501 and N.Y. Penal Law § 190.40 because neither provides a right of action). Because New York does not recognize a separate claim for usury, the Court also respectfully recommends that leave to amend the Usury Claim be DENIED as futile.
IV. CONCLUSION
For the reasons stated above, because Plaintiffs' proposed amendments would be futile, the Court respectfully recommends that the Motion be DENIED in its entirety.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Rearden.
FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).