Class Action Claim Asserting The Defendant Ran a Pyramid Scheme*
In this class action
claim the plaintiffs assert the defendant owes them damages for
defrauding them out of money, and defrauding them out of a product they
were supposed to receive from the defendant.
The plaintiff in this class action claim is Alf
Amore et al. The defendants are Tony Cone et al.
This class action arises out of the alleged breach
of home distributorship agreements between the defendant/third-party
plaintiff Tony Cone and the individual plaintiff class members who
allege that they were fraudulently convinced to buy home delivery
routes for the delivery of TV Time.
According to the plaintiffs, the defendant Tony
Cone engaged in a pyramid scheme to defraud the plaintiff, used
the funds received from them for his own benefit and had no money or
expertise to publish and distribute the magazine.
The class action claim alleges six causes of
action. The first cause of action seeks recovery of monies paid for
non-existent distributorship routes.
The second cause asserts a punitive damages claim
predicated on the defendants' malicious and wanton conduct.
The third cause claims treble damages for
violation of the General Business Law including deceptive business
practices and false advertising.
The fourth, fifth and sixth causes allege breach
of contract, unjust enrichment and conversion of plaintiffs' monies.
Approximately three years after the class action
claim was filed, a third party action was commenced by Tony Cone saying
that the third-party defendants engaged in a campaign to concoct and
disseminate false accusations that he was a "crook", "fraud" and "scam
artistm," and that this ruined his business.
Before the court is a motion to dismiss by
third-party defendants County of Nassau et al. The County of Nassau is
asserting that the first action for indemnification fails to state a
cause of action and that the claims in the second through sixth causes
may not be properly asserted (as they are not related to the issue of
whether the defendant third-party plaintiff is liable to plaintiffs in
the main action).
Other reasons to dismiss include the fact that
newly asserted direct class action claims are barred by the applicable
statute of limitations, and that a prior action similar to this one is
pending in the US District Court.
The court said that after service of his answer "a
defendant may proceed against a person not a party who is or may be
liable to the defendant for all or part of the plaintiff's claim
against that defendant."
Before a defendant can sue a third party, they
must show that the person is or may be liable for all or part of the
plaintiffs' claim. It is not enough that the two claims arise out of
the same set of facts; the liability of the third-party defendant must
be conditioned upon the liability of the defendant/third-party to the
plaintiff in the main action.
In considering whether Tony Cone can sue the
defendants the following issue must be addressed: whether the injuries
alleged by the class action claim were the result of the defendants'
alleged defamatory statements to distributors and vendors accusing Cone
and his business of fraud and passing a bad check. The answer is no.
Since Cone's liability in the main action is based
on its own alleged wrongdoing with the class members, a claim for
indemnification against the moving third-party defendants alleging
defamation, etc. cannot be sustained.
The critical requirement of a valid third-party
claim for contribution is that the breach of duty by the contributing
party had a part in causing the injury for which contribution is sought.
In the second through sixth causes of action of
the complaint, defendant/third-party plaintiff Cone alleges that the
movers negligently conducted an investigation of him and his publishing
business and knowingly maligned his reputation with false statements.
Where the two actions at issue are sufficiently
similar, and the relief sought is the same or substantially the same,
dismissal is warranted.
An already judged matter bars litigation of a
claim that was either raised or could have been raised in a prior
action provided that the party to be barred had a full and fair
opportunity to litigate the claim and the disposition was on the merits.
The claims which defendant/third-party plaintiff
Cone seeks to assert against Nassau County et al are barred on the
grounds of being a matter already judged.
Nassau County defendants' motion to dismiss the
third-party Cone´s complaint is granted.
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*This
case example is for educational purposes only. It is based on actual
events although names have been changed to protect those involved.
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