Goney v. SuttonPark Capital LLC

Background

The Second Circuit had remanded the case for reconsideration of whether the plaintiffs should receive permission to amend their complaint. On July 20, 2022, the court held oral argument on the plaintiffs’ motion for leave to amend and the defendants’ motions to strike allegedly scandalous allegations and to seal the proposed First Amended Complaint.

RICO claims

The court held that the proposed complaint did not plausibly allege a claim under the Racketeer Influenced and Corrupt Organizations Act, commonly called RICO. The plaintiffs had not alleged an enterprise legally separate from the people or entities accused of conducting its affairs. The court also held that the Goneys had not plausibly alleged an injury directly caused by SuttonPark. Their claimed injury resulted from their choice to assume responsibility for caring for Lyndsy and Trevin, rather than from a legal obligation, and they were not the direct victims of the alleged unlawful conduct. The court characterized their harm as dependent on the harm allegedly suffered by Lyndsy. It found that these defects could not be cured by additional allegations.

Claims on behalf of Trevin

The court held that the proposed complaint did not plausibly allege negligence, gross negligence, or false imprisonment claims on Trevin’s behalf against SuttonPark. Lyndsy had signed a power of attorney authorizing Ronald Goney to bring claims for Trevin, but the court held that Lyndsy could transfer only legal rights she still possessed. According to the opinion, Lyndsy had given up her claims against SuttonPark through agreements exchanging her annuity for present cash value. A Florida circuit court approved those agreements in 2016 after finding that the net amount payable was fair, just, and reasonable.

The court concluded that Trevin could not undo those agreements through negligence or gross-negligence claims and could not bring claims for injuries suffered by his mother. It also held that Trevin could not plausibly state a false-imprisonment claim because he was at all times with his mother. The court found that further amendment would be futile.

Claims against Stone

The court held that the proposed complaint did not plausibly allege legal-malpractice claims or breaches of the duties of loyalty or care against Stone. First, Stone’s retainer agreement limited his work to legal advice, guidance, and recommendations, and stated that litigation would require a later agreement. Therefore, the plaintiffs could not base a claim on Stone’s failure to sue SuttonPark or his failure to initiate a lawsuit in Florida against Sierra Lakes.

Second, the court found that professional acquaintances and prior dealings did not plausibly establish a conflict of interest, and that the plaintiffs had not plausibly alleged collusion. Third, the court held that the plaintiffs could not base a claim on Stone’s alleged wrongful retention of $7,000 in settlement-related costs because the retainer agreement expressly allowed costs to be deducted. The court again found that further amendment would be futile.

Ruling

The court held that the plaintiffs failed to plausibly state a claim for relief against any defendant and denied the plaintiffs’ motion for leave to amend. The defendants’ motions to strike scandalous allegations and to seal the proposed First Amended Complaint were academic and were denied without prejudice. The Clerk of Court was directed to terminate all open motions and grant judgment to the defendants, dismissing the complaint against them with costs.