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LI v. Gelormino

United States District Court, D. Connecticut

May 2, 2019

DANPING LI, MELISSA LIU, and LANCE LIU, Plaintiffs,
v.
TRACY GELORMINO and SHEILA KACZMARCYK Defendants.

          MEMORANDUM OF DECISION

          Michael P. Shea, U.S.D.J.

         Plaintiffs Danping Li, Melissa Liu, and Lance Liu bring this action against Tracy Gelormino and Sheila Kaczmarcyk alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq., misappropriation of trade secrets in violation of the Defend Trade Secrets Act, 18 U.S.C. § 1836, common law breach of contract and misrepresentation, and violations of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a et seq.[1] The Defendants move to dismiss the complaint under Fed.R.Civ.P. 12(b)(1) and (b)(6). For the reasons explained below, the Plaintiffs have failed to allege facts sufficient to state claims for violations of RICO or the Defend Trade Secrets Act and I decline to exercise supplemental jurisdiction over the Plaintiffs' remaining state-law claims. Accordingly, the motion to dismiss is GRANTED.

         I. Factual Allegations

         The following facts are taken from the Plaintiffs' second amended complaint (ECF No. 27) and are treated as true for the purposes of the motion to dismiss:

         Defendant Tracy Gelormino owned a used car dealership, A-1 Auto Sale, LLC (“A-1 Auto”) (Second Amended Compl., ECF No. 27 at 1 ¶ 1.) In November of 2015, the Plaintiffs met with Gelormino to discuss the possibility of Melissa Liu's purchasing 50% of A-1 Auto with a loan from Plaintiff Danping Li and assistance from Plaintiff Lance Liu. (Id. at 2 ¶ 2-3.)[2]Gelormino explained that the dealership sold “about 40 vehicles” per month with gross profits of $2, 000 per vehicle. (Id. ¶ 5.) He promised the Plaintiffs that Melissa Liu would earn “a lot of money” if she invested in the business. (Id. ¶ 6.) The Plaintiffs ultimately declined to invest because Gelormino demanded that Melissa Liu's payment be made to his wife instead of the dealership's account and because Gelormino made Melissa Liu feel “uneasy.” (Id. at 3 ¶ 8.)

         Over the next two years, Gelormino intermittently contacted Lance Liu and made claims about the profitability of A-1 Auto. (Id. ¶ 11.) He told Lance Liu that he had partnered with a “wealthy businessman from India” who “made a lot of money . . . over a two year period” by investing in the dealership. (Id. ¶ 10-14.) He explained that, despite the business's profitability, he needed to “get out [of] A-1 Auto because he developed a drone for the FBI with a[] purchase order of close to one billion dollars.” (Id. ¶ 15.) “By the end of 2017, ” Gelormino approached Lance Liu about purchasing the assets of A-1 Auto. (Id. ¶ 16.) Gelormino told Lance Liu that A-1 Auto owned 29 cars, five of which had mechanical issues. (Id. at 4 ¶ 21.) Gelormino represented that he would help the Plaintiffs hire employees and obtain a dealer license “within a couple of months” using his connections at the Department of Motor Vehicles and “at the East Windsor Township.” (Id. ¶ 19.) He also agreed to serve as a consultant for the successor to A-1 Auto until the successor obtained its own dealer license and tax ID number. (Id. ¶ 22.)

         Melissa Liu agreed to purchase all of A-1 Auto's assets, including its inventory, equipment, and trade name, for $97, 000. (Id. at 5 ¶ 29.) The timeline in the Second Amended Complaint is unclear. Although the Plaintiffs assert that Gelormino approached them about the asset sale “[b]y the end of 2017, ” (Id. at 3 ¶ 16), they later allege that Melissa Liu entered the purchase agreement on January 25, 2017. (Id. at 5 ¶ 29.) Melissa Liu intended to form a new dealership called Windsor Auto. (Id.) She agreed that Windsor Auto would take over A-1 Auto's lease with its landlord, Chris Vitti, for $4, 000 per month. (Id. at 5 ¶ 30-31.) Lance Liu negotiated the asset purchase agreement as Melissa Liu's “agent and guarantor.” (Id. ¶ 27.) Danping Li loaned money to A-1 Auto so that the dealership could operate until the asset transfer took place. (Id. ¶ 28.) Lance Liu acted as Danping Li's “agent” in executing the loan. (Id.) Danping Li and Melissa Liu agreed “to pay Plaintiff Lance Liu a portion of their net profits if there [were] any.” (Id. at 2 ¶ 4.) Lance Liu agreed to “pay a portion of any loss” that Danping Li or Melissa Liu suffered “if they were to be defrauded” by Gelormino. (Id. at 4 ¶ 24.)

         Gelormino misrepresented the price that A-1 Auto paid for its lease. While Gelormino claimed that A-1 Auto paid $4, 000 per month, its lease with Chris Vitti was actually for $3, 500 per month. (Id. at 5 ¶ 31.) Melissa Liu agreed that Windsor Auto would pay $4, 000 based on the misrepresentation, and Gelormino “used the extra $500/month as payback to the landlord for the money Defendant Gelormino stole from Chris Vitti.” (Id. ¶ 32.)

         Gelormino failed to help Windsor Auto to obtain a dealer license. (Id. at 5 ¶ 38.) The Plaintiffs could not obtain a license for Windsor Auto because the town of East Windsor lost records relating to the dealership's address, and the town building inspector indicated that it would need to re-build the structures on the property. (Id. at 5 ¶ 38.) Chris Vitti suggested that Gelormino should approach Melissa Liu about taking over A-1 Auto while Windsor Auto's application for a dealer's license was on hold. (Id. at 6 ¶ 40.) At Vitti's behest, Gelormino offered to add Melissa Liu as a co-owner of A-1 Auto so that she could operate the dealership without obtaining a new dealer license from East Windsor. (Id. ¶ 40-42.) Gelormino promised that he would eventually remove himself as a co-owner and member of A-1 Auto and that he would assist the dealership with car registrations “free of charge” until Melissa Liu became the sole member of A-1 Auto. (Id. ¶ 42-43.) He also promised that he would be responsible “for all tax liabilities incurred before plaintiff Melissa Liu obtained her own tax ID for A-1 Auto[, ] which she did in mid-August, 2017, ” and that he would “hold Plaintiffs harmless on past taxes of A-1 Auto.” (Id. ¶ 43, 45.) The Plaintiffs agreed. (Id. ¶ 41.) Gelormino failed to pay sales tax for August 2017. (Id. ¶ 46.)

         In February of 2017, Gelormino began “embezzling money from A-1 Auto to start his joint business venture with Defendant [Sheila] Kaczmarcyk.” (Id. ¶ 47.) Gelormino and Kaczmarcyk formed Aerial Platform, LLC on April 14, 2017. (Id. ¶ 48.) Gelormino used an office at A-1 Auto to operate the new business without paying rent and listed A-1 Auto's address as the address for Aerial Platform. (Id. ¶ 44, 49.)

         In June of 2017, Gelormino stole a check from the mailbox of A-1 Auto and deposited it into his or Kaczmarcyk's account. (Id. at 7 ¶ 50.) He stole a second check from A-1 Auto's mailbox in July of 2017 and again deposited it into his or Kaczmarcyk's account. (Id. ¶ 51.) The Plaintiffs allege that Gelormino “took money repeatedly from A-1 Auto Assets for his personal use and for . . . use by Defendant Sethi and/or Defendant Kaczmarcyk, ” (id. ¶ 54), but they do not provide any specific examples apart from the two stolen checks. Gelormino threatened to ruin the business and the Plaintiffs' reputations if they asked for their money back. (Id. ¶ 55.)

         At some point “[p]rior to April 14, 2018, ” Gelormino “offered a cash reward to a former employee of A-1 Auto to steal trade secrets from Plaintiff Lance Liu and from A-1 Auto so that he [could] bring both Plaintiff Lance Liu and A-1 Auto down.” (Id. at 7 ¶ 60.) Rather than assist Gelormino, the former employee disclosed the offer to Lance Liu. (Id. ¶ 62-63.) He called Gelormino and discussed the plan on a speaker phone in Lance Liu's presence. (Id.) The Plaintiffs do not explain what trade secrets Gelormino sought to steal, nor do they allege facts showing that Gelormino was successful in his plan.

         The Plaintiffs allege, without elaboration, that Kaczmarcyk “worked behind the scene[s] and is also the brain and main beneficiary of Defendant Gelormino's actions.” (Id. ¶ 68.)

         Melissa Liu “lost her money from the A-1 Assets she purchased from Defendant Gelormino.” (Id. at 7 ¶ 58). Danping Li allegedly lost “loan money” that she provided to A-1 Auto. (Id. ¶ 57). Lance Liu “lost compensation” from A-1 Auto and had to pay part of Melissa Liu and Danping Li's losses. (Id. at 8 ¶ 66.)

         II. Legal Standard

         Under Rule 12(b)(6), the Court must determine whether the plaintiff has alleged “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court accepts the complaint's factual allegations as true, Id. at 572, and “draw[s] all reasonable inferences in favor of the non-moving party.” Vietnam Ass `n for Victims of Agent Orange v. Dow Chem. Co., 517 F.3d 104, 115 (2d Cir. 2008). “However, the tenet that a court must accept a complaint's allegations as true is inapplicable to ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.'” Gonzales v. Eagle Leasing Co., No. 3:13-CV-1565 JCH, 2014 WL 4794536, at *2 (D. Conn. Sept. 25, 2014) (citing Iqbal, 556 U.S. at 678). Thus, “[w]hen a complaint is based solely on wholly conclusory allegations and provides no factual support for such claims, it is appropriate to grant [a] defendant[‘]s motion to dismiss.” Scott v. Town of Monroe, 306 F.Supp.2d 191, 198 (D. Conn. 2004).

         III. Discussion

         The second amended complaint includes five counts: (1) violations of RICO; (2) breach of contract; (3) violations of the Connecticut Unfair Trade Practice Act; (4) misrepresentation; and (5) violations of the Defend Trade Secrets Act of 2016. The Plaintiffs assert that this Court has subject matter jurisdiction under 28 U.S.C. § 1331 because their complaint “aris[es] under the Constitution, laws, or treaties of the United States.”[3] I find that the Plaintiffs have not stated a claim for relief under RICO or the Defend Trade Secrets Act, and I decline to exercise supplemental jurisdiction over their remaining state law claims.

         A. The Plaintiffs Are Not Entitled to Special Consideration as Pro Se Litigants

         On March 29, 2019, I took judicial notice of the public bar admission records of the states of New York and New Jersey, which indicate that Lance Liu graduated from the University of Connecticut School of Law in 1999 and is an attorney licensed to practice law in those states. (See ECF No. 69). All three Plaintiffs have co-signed the filings relevant to the Defendants' motions to dismiss, including the second amended complaint (ECF No. 27 at 12), memoranda in opposition to the motions to dismiss (ECF Nos. 37 at 1, 64 at 3, 49 at 1), and their RICO Case Statement required by the Court's standing order (ECF No. 38 at 9). The only email address provided by the plaintiffs-and the one to which all court notices are sent-is that of Lance Liu. (See Consent to Electronic Notice, ECF No. 2.) Accordingly, I ordered the Plaintiffs to show cause why all filings co-signed by Lance Liu should not be treated as having been filed by an attorney. (ECF No. 69.) I specifically required that any response “include separate statements by each Plaintiff, under oath, describing the extent to which Mr. Liu participated in preparing the documents that all three Plaintiffs co-signed and filed.” (Id.)

         The Plaintiffs did not file separate statements in response to the order. Instead, they jointly filed (and co-signed) an unsworn response arguing that the Second Circuit case cited in the order to show cause did not apply in this case. (See ECF No. 71 at 1 (distinguishing Harbulak v. Suffolk City, 654 F.2d 194, 198 (2d Cir. 1981).) While Lance Liu “has been a patent attorney since 1999, ” they explain, he “is not admitted to practice law in the State of Connecticut and does not/cannot represent any clients before ...


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