United States District Court, D. Connecticut
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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