Gondal Asset Mgt. v New York Stock Exch.

[*1] Gondal Asset Mgt. v New York Stock Exch. 2004 NY Slip Op 51954(U) [22 Misc 3d 1108(A)] Decided on November 5, 2004 Supreme Court, New York County Edmead, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 5, 2004
Supreme Court, New York County

Gondal Asset Management and Rizwan Gondal, Plaintiffs,

against

New York Stock Exchange, CHARLES SCHWAB & CO., INC., LINCOLN SQUARE LEGAL SERVICES, FORDHAM UNIVERSITY, SONY MUSIC ENTERTAINMENT, INC., ELITE LIMOUSINE PLUS INC., VIP PLUS, INC., KAREN KUPERSMITH, FRANK SULLIVAN, RICHARD GOLDSTEIN, PATRICK O'NEILL, GARRETT WYNNE, MARCELLA SILVERMAN, PAMELA CHEPIGA, MENG CHIANG, CHRISTINE LAZARO, BRADLEY DYER, VERA KAGAN, SAMUEL MOORE, KATIE COOPERMAN, CLAUDINE CARACCIOLO, DYLAN MURPHY, JAMES COHEN, CHERYL BADER, ELIZABETH COOPER, ROMAINE GARDNER, BRIAN GLICK, LEAH HILL, ELIZABETH MARSECA, MICHAEL MARTIN, ANN MOYNIHAN, MARTHA RAYNER, BETH SCHWARTZ, GEMMA SOLIMENE, IAN WEINSTEIN, LYN KENNEDY SLATER, MICHELLE ANTHONY, SHAFQUAT CHAUDHRY, SHAHEEN QURESHI, SAJID J. QURESHI, MOHAMMAD IRFAN SADIQ, MOHAMMAD NAROOR, Defendants.



112119/2004

Carol R. Edmead, J.

Plaintiffs Gondal Asset Management, Inc. ("Gondal Asset") and Rizwan Gondal ("Gondal") (collectively "plaintiffs") move by Order to Show Cause on their complaint seeking damages under the Donnelly Act [FN1], New York Common Law (defamation), New York City Human Rights Law [FN2], 42 USCA §§ 1986 [FN3] and 1985 (2)[FN4] and (3)[FN5], 18 USCA §§ 241 [FN6], 242 [FN7], 1512 [FN8], 1512 (b)(3)[FN9], and 1503 [FN10], [*2]New York Penal Law §§ 105-105.15 [FN11], 135.60 [FN12], 135.65 [FN13], New York Penal Law Articles 110 [FN14], [*3]115 [FN15], and 460 [FN16], CPLR §§ 1353 [FN17], 1354 [FN18] for enterprise corruption, and under the Hate Crime Act of 2000 [FN19]. Plaintiffs Order to Show Cause seeks an order (1) breaking up the New York Stock Exchange, Inc. (the "NYSE") such that the Regulatory Part of the NYSE is a totally separate entity; (2) awarding for costs and attorneys' fees; (3) staying the previous decision(s) of the Court (Diamond, J.) (see infra pages 7, 14), and (4) enjoining defendants from any retaliatory proceeding against plaintiffs.[FN20] By separate motion, plaintiffs also demand a jury trial and seek discovery of, inter alia, certain tax returns, credit reports, and prior history of lawsuits and arbitrations.

PROCEDURAL HISTORY

The Underlying Arbitration

In 2002, defendants Mohammad Naroor and Shaheen A. Qureshi (the "arbitration claimants") sought arbitration before the NYSE against plaintiffs and defendant Charles Schwab, Inc. ("Schwab"), alleging market losses as a result of plaintiffs' improper management of their accounts at Schwab, and Schwab's inadequate supervision of plaintiffs.[FN21] After hearings were held on September 24, 25, and 26, 2003, the arbitrators, defendants Frank Sullivan, Richard Goldstein, and Patrick O'Neill (the "arbitrators") issued an award against plaintiffs for $45,529. The arbitration panel dismissed the claims against Schwab.

Special Proceeding by Arbitration Claimants

On or about February 2, 2004, the arbitration claimants, by defendants Gardner and Silverman, of Counsel to Lincoln Square Legal Services and Fordham Law School, sought to confirm the award as to plaintiffs, and to vacate the award as to Schwab (the "Initial Petition"). Vacatur of the award against Schwab was based upon the alleged misconduct of the arbitrators, [*4]including the taking of unsworn factual testimony from Schwab's attorneys about Schwab's investor program and relationship with plaintiffs after both parties rested, permitting Schwab's attorney to state facts during closing arguments, and denying the arbitration claimants the opportunity to cross-examine said attorneys.

In a reply, dated February 12, 2004, plaintiffs asserted that the petition was premature. Plaintiffs also pointed out they had recently filed a petition to vacate the award (see discussion infra at page 7), in which they argued that (1) the NYSE lacked jurisdiction; (2) the arbitrators exceeded their authority; (3) proper procedures were not followed; (4) plaintiffs did not participate in the arbitration;[FN22] (5) plaintiffs were not permitted to call any witnesses or introduce evidence to clarify their position; (6) their Constitutional Due Process, Fifth Amendment, and Sixth Amendment rights were violated; (7) the award was against public policy and violates the Sherman Act, the Clayton Act, and Donnelly Act; (8) the arbitrators were biased; and (9) plaintiffs never agreed to arbitration.

On the same grounds, plaintiffs also cross-moved to vacate the award. In their brief in support of the cross-motion, plaintiffs added the following facts:

After the events of September 11, 2001, the arbitration claimants demanded the return of their investment. When plaintiffs advised them of the losses in their account, they threatened to destroy plaintiffs' business. Subsequently, defendants Silverman and Pamela Chapega, attorneys from Fordham Law School, demanded that plaintiffs return the arbitration claimants' money. As demonstrated by correspondence between the attorneys from Fordham Law School and the NYSE and Schwab, such parties conspired to remove plaintiffs as investment advisor. During March and April 2002, plaintiffs received calls from Schwab, indicating that plaintiffs' authorization over their accounts would no longer be recognized, and that Schwab was terminating their relationship. This unilateral termination of plaintiffs as investment advisor from all accounts plaintiffs introduced to Schwab was the result of a conspiracy between Fordham Law School attorneys, Schwab, and the NYSE to remove Gondal as investment advisor of the subject accounts, and constituted a violation of the Donnelly Act. It was also alleged that the Donnelly Act rendered the arbitration agreement null and void.

Plaintiffs also claimed that the attorneys for the arbitration claimants sent letters to the NYSE to circumvent the proper procedure of establishing jurisdiction over the plaintiffs, and that the failure to exchange such correspondence with plaintiffs demonstrated fraud on behalf of the NYSE, Lincoln Square Legal Services of Fordham Law School, and Schwab.

Then, by later seeking a default judgment against him, which is unavailable in such proceeding, the Lincoln Square Legal Services attorneys coerced plaintiffs to participate in the arbitration. Plaintiffs appeared at the arbitration hearing under duress, and in violation of their Fifth and Sixth Amendment rights. When he refused to appear at the hearings, the arbitration coordinator (defendant Kupersmith), and counsel for Schwab telephoned Gondal even when they knew that "Gondal had representation" and threatened that the judgment would be presented to the Attorney General's Office, which would in turn, "yank" plaintiffs' registration as investment advisor. Further, plaintiffs were forced to testify as witnesses for the arbitration claimants against their objection, and under the misleading advice from the chairman of the panel that plaintiffs were "protected." [*5]Moreover, there was no evidence introduced against plaintiffs to demonstrate negligence or reckless behavior on their part in handling the claimants' accounts.

Furthermore, at the end of the hearings, plaintiffs' "attorney asked for extra time to file a brief" which was denied, in violation of 9 USCA § 10 (a)(3).

Plaintiffs also asserted that Lincoln Square Legal Services filed false complaints with the Attorney General's Office to prevent Gondal from registering as an investment advisor, collaborated with Schwab in removing him as investment advisor from all accounts he introduced to Schwab, and deprived him of his livelihood. The NYSE was implicated as co-conspirator as a result of its wilful violation of procedure by accepting the arbitration claim without having a court rule upon the issue of arbitrability of the controversy, suppressing correspondence, coercing plaintiffs to participate in the arbitration, ignoring and declining to hear evidence, and disregarding the rules applicable to joint claims.

Court Order on Petition by Arbitration Claimants

The Court (Diamond, J.) found that the arguments made by the arbitration claimants in support of vacatur of the award as to Schwab lacked merit, and denied that portion of the claimants' petition.

As to plaintiffs' cross motion to vacate the award as to them, the Court found that they failed to offer any evidence in support of the "conclusory" assertion that the NYSE, Schwab, and attorneys from Fordham Law School were in "cahorts" [sic] to fix the outcome. The Court also rejected plaintiffs' claims that they objected to the proceedings and did not participate in the process, finding such claims "demonstrably untrue." Further, the Court determined that plaintiffs' remaining arguments failed to invoke any of the grounds to vacate the award. The Court also rejected plaintiffs' separate application to enjoin counsel for the arbitration claimants from representing them in the proceeding on the ground of professional misconduct under 22 NYCRR 603.17, which precludes combining two or more claims on behalf of separate clients. The Court held that such rule "plainly" did not apply to claims which have been joined in arbitration proceedings, and that plaintiffs "failed to even raise this objection" to the arbitration panel.

As such, the Court granted the branch of the arbitration claimants' petition to confirm the award as to plaintiffs, and denied plaintiffs' motion to vacate and enjoin representation.

Special Proceeding by Plaintiffs

At or about the same time the arbitration claimants filed their petition, plaintiffs filed a separate petition against the NYSE, the arbitrators, and defendant Kupersmith to vacate the award on the grounds that the NYSE lacked jurisdiction, the arbitrators acted arbitrarily, capriciously, and maliciously, and exceeded their powers, and that the award violates public policy. Plaintiffs' petition contained allegations similar to those asserted in their February 12, 2004 Reply and cross motion noted above.[FN23]

For the contention that the NYSE lacked jurisdiction, plaintiffs relied upon a letter from the NYSE to Lincoln Square Legal Services, dated December 20, 2002, indicating that "As per our conversation" plaintiffs "are not subject to jurisdiction. Rizwan Gondal is not a registered representative and Gondal Asset Management is not a member of the exchange." Thus, it was [*6]argued, there was a valid question of the arbitrability of this controversy.

For the proposition that there was no valid agreement by plaintiffs to arbitrate, plaintiffs contended that the contract between plaintiffs and Schwab which contained the arbitration clause was in fact terminated by Schwab long before the arbitration claim was filed. Schwab unilaterally removed plaintiffs as the investment advisor from all the accounts introduced by plaintiffs to Schwab when Lincoln Square Legal Services and the NYSE sent correspondence to Schwab concerning plaintiffs. In keeping such correspondence away from plaintiffs, NYSE obstructed justice, and violated their Constitutional Due Process, and Fifth and Sixth Amendment rights. Plaintiffs also contended that Schwab, along with Lincoln Square Legal Services and the NYSE, violated the Sherman Act, the Clayton Act, and the Donnelly Act and that such statutes superceded any and all arbitration agreements. And, since plaintiffs already filed a complaint against Schwab on such grounds, plaintiffs could not be compelled to arbitrate.

Plaintiffs also claimed that in order to avoid subjecting their frivolous claims to a court of law, the arbitration claimants conspired with the NYSE and called upon favors from the arbitration coordinators and counsel for the NYSE to obtain the award against plaintiffs.

Furthermore, plaintiffs argued that Gondal Asset was a small business competing with Schwab and NYSE members for investment advisory business from the same general population. Thus, the award eliminated a competitor in violation of the Sherman Act, the Clayton Act, and the Donnelly Act.

In response, the NYSE, arbitrators, and Kupersmith cross moved to dismiss the petition, on the grounds that (1) service on them was improper; (2) the petition named the wrong parties; and (3) they were immune from suit. In opposing the cross-motion, plaintiffs indicated that they filed a motion to amend the petition to add the appropriate parties. In addition to arguments previously made, plaintiffs also argued that (1) the NYSE and arbitrators are not entitled to arbitral immunity and (2) plaintiffs were not served with a proper Notice of Intent to Arbitrate. The NYSE, Kupersmith, and the arbitrators submitted a reply in further support of dismissal of plaintiffs' petition, reiterating the points made in their cross motion to dismiss the petition.

Motion for Default Judgment

In connection with plaintiffs' petition, but before its return date, plaintiffs filed a motion for a default judgment. As proof of the conspiracy to remove plaintiffs as investment advisor, plaintiffs submitted a letter, dated July 15, 2002, from defendant Meng Chiang ("Chiang") of Fordham Law School to Wynne at Schwab. Therein, Chiang refers to a letter on behalf of Naroor to the New York State Attorney General (the "Attorney General"), opposing Gondal's registration as an investment advisor. Plaintiffs also cited to a letter from Chiang to Wynne of Schwab, wherein she states that ". . . .you informed us that Schwab removed Gondal as an investment advisor shortly subsequent to conversations you have had with this office." As further proof of the prejudicial and fraudulent nature of the arbitration, plaintiff argued that they were denied the opportunity to confirm the qualifications of the interpreter used for translation on the third day of the arbitration, and that the interpreter misinterpreted one of the arbitration claimant's testimony. Plaintiffs also added that Naroor had a sizable income, and that he received settlements in a number of legal proceedings. It was further noted that Qureshi was a habitual litigant, and not a "homemaker" as alleged, but the Chief Executive Officer of defendant VIP Plus Services, Inc., a management company with hundreds of thousands of dollars in revenue. Plaintiffs also asserted that as evidenced by the hearings, Qureshi [*7]understood and spoke English, despite her claim that she understood nothing.

The NYSE, arbitrators and Kupersmith opposed the default motion as frivolous, arguing that they served their cross-motion to dismiss plaintiffs' petition before their opposition papers were due.

Plaintiffs then obtained an adjournment of the default motion, during which time, plaintiffs filed an ex parte motion for leave to serve an amended verified petition.

Plaintiffs' Amended Verified Petition

Plaintiffs' amended verified petition to vacate the arbitration award sought to add defendants Naroor, Qureshi, Lincoln Square Legal Services, Fordham University, and Schwab to the Petition, and contained the following allegations in addition to those alleged in the main petition and responses:

As further proof of the conspiracy to wrongfully eliminate plaintiffs as investment advisor, plaintiffs submit a letter addressed to Gondal Asset, which, according to plaintiffs, is "a client of Gondal Asset Management, Inc. and Rizwan Gondal." This letter advised plaintiffs' clients that Schwab "received instructions to remove the Investment Manager designation and all authorizations that your Investment Manager holds on your brokerage account." Plaintiffs also pointed out that Schwab advised plaintiffs' clients that "materials previously forwarded to your Investment Manager will now be sent directly to you . . . ," and that "Schwab is committed to continuing our relationship with you. . . ." Such letters were sent to all of the clients Gondal introduced to Schwab, in violation of the Donnelly Act.

As proof of Fordham Law School's attorneys' "vendetta" against plaintiffs, plaintiffs cited to letters from Chiang to Wynne of Schwab, indicating that the attorneys from Fordham Law School filed a complaint to oppose plaintiffs' registration as an investment advisor.

Furthermore, in support of plaintiffs' claim that no valid agreement to arbitrate existed, plaintiffs alleged that the oral confirmation of Schwab regarding an arbitration clause referred to by Lincoln Square Legal Services could not create a binding agreement to arbitrate. Such correspondence between these entities, which were not shared with plaintiffs, constituted a wilful suppression of correspondence in violation of CPLR §7502 (a), as well as fraud, misconduct and obstruction of justice.

Plaintiffs also claimed that the defendants therein conspired to coerce plaintiffs into participating in the arbitration by seeking a default judgment against plaintiffs, which is unavailable under the arbitration rules.[FN24] Plaintiffs also claimed that during a telephone call from defendant Kupersmith, Gondal advised her of his defenses, to which she replied that "this is just arbitration." When Wynne called Gondal, Gondal was told that his failure to appear at the arbitration would result in a default judgment, which would then be used to "yank" his registration as an investment advisor. These acts demonstrate that plaintiffs' appearance at the arbitration was coerced, and in violation of plaintiffs' Fifth and Sixth Amendments rights.

Also, the arbitrators disregarded the fact that the claimants' losses occurred just before and after the incident on September 11, 2001. [*8]

Plaintiffs were not permitted to call in any witnesses to clarify their position, were denied extra time to file a brief, and not permitted to cross-examine Schwab's attorneys. It was also claimed that unbeknownst to plaintiffs, the arbitrators improperly accepted submissions from Schwab and the arbitration claimants after the hearings concluded.

Plaintiffs also argued that the award should also be vacated on public policy grounds since the conspirators tried to eliminate plaintiffs from the investment advisory business and that the entire procedure violated the Donnelly Act, Sherman Act, and Clayton Act. When there was no basis for the Attorney General to decline plaintiffs' registration, Lincoln Square Legal Services of Fordham Law School conspired with Schwab to have them removed as investment advisor from all accounts plaintiffs introduced to Schwab; the NYSE became co-conspirators when they violated arbitration procedures and accepted the arbitration claim without a court determining arbitrability, suppressed correspondence from plaintiffs, coerced plaintiffs to appear at the arbitration, disregarded the evidence, refused to hear plaintiffs' evidence, and ignored false statements of claimants.

Further, the arbitrators disregarded the rule applicable to joint claims. Here, plaintiffs argued that claimants' claim was a misjoinder as they did not arise out of the same transaction and occurrence.

Plaintiffs also asserted that the award falsely stated six sessions, instead of five, thereby constituting a false statement. And, a prehearing conference was held between the claimants and Schwab organized by the NYSE, for which plaintiffs were not given notice. At this hearing, Schwab and the claimants paid a fee under demand of the NYSE arbitration panel and NYSE arbitration department, in violation of procedure.

By holding plaintiffs responsible for violating NYSE rules, the NYSE and arbitrators exceeded their powers in violation of CPLR 7511(b)(1)(iii).

Plaintiffs also contended that the arbitration hearing was prejudicial, because, inter alia, (1) Gondal was denied the opportunity to object during opening statements; (2) Gondal was not permitted to call any witnesses on his behalf during the hearing, or introduce evidence in response to post-hearing correspondence the NYSE arbitration panel accepted from Schwab and Lincoln Square Legal Services;[FN25] and (3) the arbitration panel never informed Gondal of his rights in the arbitration process even though they knew they lacked jurisdiction over Gondal.[FN26]

In opposition, the NYSE, Kupersmith, and the arbitrators, inter alia, referred to their cross-motion to dismiss.

Court Order on Petition by Plaintiffs

The Court found the previous Order resolving the petition by the arbitration claimants "dispositive," and noted that the only arguments not raised by plaintiffs in the previous proceeding were those related to the alleged lack of jurisdiction and public policy. After finding that such arguments were unsupported by any evidence, and were not among the specified, exclusive grounds [*9]for vacatur under CPLR 7511, the Court denied plaintiffs' motion to vacate the award as without merit. As such, the Court denied the cross-motion by NYSE, Kupersmith, and the arbitrators, as well as the motions brought by petitioners, as moot.

Plaintiffs' instant Order to Show Cause ensued.[FN27]

Instant Order to Show Cause with Complaint

The complaint alleges the following:

In September and October 1998, Schwab informed plaintiffs of programs, such as "Schwab AdvisorSource " for Independent Investment Advisors, which would give Gondal an opportunity to expand his business and save him and his clients money by having Schwab as the custodian and broker of record for all of Gondal's client accounts. Relying on Schwab's promise that Gondal would be part of Schwab AdvisorSource and other Schwab programs, Gondal was induced to sign the Investment Manager Service Agreement (the "Service Agreement"). At the time Gondal signed the Service Agreement, Schwab represented that his clients would pay a low commission charge per trade and that Gondal would only be charged a $300 per quarter fee after the first year if the assets under Schwab's custody remained less than $300 million. Relying on the fiduciary responsibility undertaken by Schwab, Gondal executed the Service Agreement and advised his clients to move their assets to Schwab. During 1999 and 2000, and after receiving high pressure sales calls from Schwab, Gondal transferred most of his clients' separate accounts to Schwab. Schwab, however, failed to assist Gondal in expanding his business, in that Schwab denied Gondal's request to be made part of Schwab AdvisorSource and referral programs. Gondal did not know that Schwab intended to breach its fiduciary duty by excluding him from programs available to other investors on account of his religion and national origin. Such discrimination "took its toll" because Gondal had to use all of his own resources to maintain and expand his business.

Schwab began charging Gondal the quarterly fee, while simultaneously charging separate commissions per trade and earning margin interest from their clients. Subsequently, Schwab, through telephone calls and letters, began threatening Gondal to move more accounts to Schwab or face paying a higher fee for custody of his clients' assets or termination of the Service Agreement. In January 2000, Schwab raised the quarterly fee without prior notice. Gondal paid the fee in the face of Schwab's threat that his failure to do so would result in his removal as investment advisor from all of the accounts Gondal introduced to Schwab, and in order to avoid negative outlook from his clients resulting from another change of brokers. At the end of the first quarter of 2000, the market dropped, but Schwab continued to pressure Gondal to place more accounts with Schwab or else Schwab would cut off his business. Gondal was reluctant to do so since Gondal had not received any of the benefits of joining Schwab as promised. Through 2001, the market continued to drop, as did his clients' assets under management at Schwab.

By allowing a third party, such as Gondal, to gather clients and their assets and open accounts with Schwab, Schwab positioned itself to terminate the third party, i.e., Gondal, as investment advisor and take over the clients' accounts. In support, Gondal again refers to the May 1, 2002 letter from Schwab to their clients indicating that plaintiffs were removed as investment advisors on the [*10]account.[FN28]

Plaintiffs therefore allege that at the time Gondal signed the Service Agreement, he did not know that (1) Schwab was fraudulently inducing him into signing the Agreement to get Gondal to put his client accounts at Schwab and that Schwab had no intention of letting Gondal use any of the Schwab Programs that would have helped him grow his business; and (2) Schwab intended to defraud Gondal and take over Gondal's business by intentionally removing him as the investment advisor from the accounts that Gondal introduced to Schwab.

Schwab's efforts to take over Gondal's clients' accounts was done with the assistance of defendants, the "Attorneys at Lincoln Square Legal Services of Fordham Law School." After one of Gondal's clients, defendant Naroor, filed a false and solicited complaint against Gondal, Schwab, the attorneys at Lincoln Square Legal Services of Fordham Law, and employees of the NYSE conspired to injure his reputation and tortiously interfere with Gondal's business relationships in violation of the Donnelly Act.

Gondal was introduced to Naroor in May or June 2001 by defendant Mohammad Irfan Sadiq ("Sadiq"). Naroor opened an account with Schwab through Gondal with full knowledge of all the risks involved. Sadiq also introduced defendants Shaheen Qureshi ("Mrs. Qureshi") and Sajid Qureshi ("Mr. Qureshi") (Mr. Sadiq's brother) to Gondal. The Qureshis also opened an account at Schwab through Gondal in Mrs. Qureshi's name.

After the attacks on September 11, 2001, the market dropped further. When defendants Mr. Naroor and Mrs. Qureshi demanded their money back, Gondal advised them of their right to sue in Court.

Yet, Gondal did not know that Mr. Sadiq was planning to defraud Gondal by planning to sue him for lost money. Gondal contends that Mrs. Sadiq signed a separate investment management agreement from the one that was already built into the Schwab Account Agreement with Gondal containing a "hold harmless" clause; however, the Sadiqs opened a separate account in his sister-in-law, Mrs. Qureshi's name, who stalled when Gondal asked Mrs. Qureshi to sign the same separate investment management agreement that Mrs. Sadiq had signed. Gondal did not know that the Sadiqs and the Qureshis were professional litigants with a history of obtaining settlements from large corporations.[FN29] The Sadiqs and Qureshis obtained help from the named defendant lawyers to sue him, and the Qureshis were unduly influenced to push their claims by defendant Michelle Anthony ( Anthony") of Sony BMG Music Entertainment ("Sony Music") (who employs Mr. Sadiq and Mr. Qureshi and lives at the same building where Mr. Naroor works), and defendant Shafqat Chaudhry of Elite Limosine, (who is in the same business as and had regular contact with the Qureshis). Defendant Anthony also had contacts at Fordham Law, and may also be a friend of defendant Karen Kupersmith ("Kupersmith") of the NYSE who was also instrumental in colluding with Schwab to bring Mrs. Qureshi and Naroor's arbitration claim. Defendant Kupersmith and the [*11]NYSE allegedly suppressed documents [FN30] and obstructed justice and fraudulently brought Gondal under the jurisdiction of NYSE.

In February 2002, defendants Silverman and Pamela Chepiga ("Chepiga"), attorneys from Fordham Law, demanded money on behalf of Naroor and threatened to destroy Gondal and his business. Silverman and Chepiga, along with defendants (legal interns), Chiang, Christine Lazaro ("Lazaro"), Bradley Dyer, Vera Kagan, Samuel Moore, Cooperman, Caracciolo, and Dylan Murphy, at Fordham Law, under the guidance of James Cohen, Cheryl Bader, Elizabeth Cooper, Gardner, Brian Glick, Leah Hill, Elizabeth Marseca, Michael Martin, Ann Moynihan, Martha Rayner, Beth Schwartz, Gemma Solimene, Ian Weinstein, and Lyn Kennedy Slater, contacted Gondal and pressured him to settle with Naroor and Mrs. Qureshi. After meeting with the attorneys at Lincoln Square Legal Services in April 2002, Schwab notified Gondal that it was terminating their relationship and removing him as investment advisor from Naroor's and Mrs. Qureshi's accounts, as well as all the other accounts Gondal introduced to Schwab.

Relying on the May 1, 2002 letter, plaintiffs allege an additional claim of breach of Schwab's fiduciary duty to Gondal, in that Schwab had taken over for itself Gondal's trade secret, to wit: Gondal's client list.

In June 2002, defendants Lazaro and Chiang wrote letters on behalf of Naroor opposing Gondal's registration application to the Attorney General, in violation of Gondal's Federal and State Constitutional right to conduct a lawful business. Gondal disputes the allegations in this letter, arguing that Naroor was an educated investor, with sizable assets as indicated in his bank account statement, who acknowledged the risks involved. Gondal also asserts the legality of conducting business as an unregistered investment advisor, and claims that the letter's statement that Gondal is not competent to be an investment advisor based on one single incident, is defamatory per se. Gondal also submits a complaint drafted by defendant Silverman, dated June 28, 2002, to the Attorney General's Office containing false accusations against Gondal. Gondal also re-submits the July 15, 2002 letter from defendant Chiang to Schwab.

Attorneys from Fordham Law attempted to pressure Gondal to reach a settlement, and then sent another letter, dated October 11, 2002, to the Attorney General's Office, this time on behalf of Mrs. Qureshi. The letter again claimed the incompetence of Gondal as an investment advisor. By joining the claims of both Naroor and Mrs. Qureshi, who at the arbitration hearing denied having met each other prior to the arbitration, Lincoln Square Legal Services attorneys violated the ABA Rules and McKinney's New York Rules of Court § 603.17's proscription against combining or grouping claims for joint settlement on behalf of separate clients.

When Gondal refused to settle, the Lincoln Square Legal Services attorneys then conspired with the NYSE and the attorneys at Schwab to bring Gondal to arbitration. " . . . Shafqat Chaudhry of Elite limosine [was] aware of this conspiracy and if [] not involved directly [he] used [his] influence indirectly to advance the case against Gondal," in violation of 42 USCA § 1986.

The NYSE and defendant Kupersmith also conspired to deprive Gondal of his statutory rights, and to defraud and malign Gondal. [*12]

Plaintiffs allege that the NYSE initially declined, in writing, to bring Gondal to arbitration, due to the lack of jurisdiction over Gondal and Gondal Asset Management, since Gondal was not a registered representative and Gondal Asset Management was not a member of the NYSE. The Lincoln Square Legal Services attorneys responded by letter, which was not served upon Gondal, setting forth the basis of jurisdiction over Gondal and Gondal Asset. When the arbitration coordinator refused to take the case, defendant Anthony at Sony Music, Schwab (a member of the NYSE), and Fordham Law had the arbitration coordinator replaced with defendant Kupersmith. Defendant Kupersmith then sent the claim statement to Gondal without giving Gondal the statutorily required notice that he could challenge the arbitrability of the dispute. Gondal objected to the entire arbitration by not participating in the process, which is demonstrated by Lincoln Square Legal Services' letter complaining of Gondal's unresponsiveness to its document request.

By later seeking a default judgment against him, which is unavailable in an arbitration, the Lincoln Square Legal Services attorneys coerced Gondal to participate in the arbitration over his objection. Gondal appeared at the arbitration hearing against his will, under duress, and in violation of his Fifth Amendment rights. Gondal also claims that when he refused to appear at the hearings, defendant Kupersmith and counsel for Schwab telephoned Gondal even when they knew that "Gondal had representation," thus violating the "no-contact rule." During a telephone call from defendant Kupersmith, Gondal advised her of his defenses, to which she replied that his failure to appear at the arbitration would result in a default judgment, which would then be used to "yank" his registration as an investment advisor. In violation of CPLR 7502 (a)'s requirement of a special proceeding, the attorneys at Lincoln Square Legal Services wrote letters to the NYSE when Gondal refused to submit to arbitration. The NYSE coordinators suppressed information from Gondal and granted the arbitration request of Naroor and Mrs. Qureshi's attorneys and Schwab in violation of Gondal's right to object to the arbitration.

Furthermore, Gondal alleges that at the arbitration hearings held on September 24, 25 and 26 of 2003, Naroor and Mrs. Qureshi and their attorneys made false accusations and defamed Gondal and that testimony demonstrated that Naroor was able to read the Schwab account application. Gondal also asserts that the arbitration revealed that Mrs. Qureshi speaks and reads English very well, and points out that her testimony that she never met with Gondal undermines her claim that he promised to triple her money, especially since she expressly admits that it was her husband who told her what Gondal said regarding her money and not Gondal himself.

According to Gondal, defendant Caracciolo's false statements at different points of her arguments at the arbitration hearing constituted defamation per se and slander.[FN31] Further, defendant Caracciolo's request that the arbitrators bar Gondal from the investment industry, while contending that Schwab is a "long standing institution in the industry, a member of the [NYSE], [and] a member [*13]of the NASD for many years" demonstrates her discrimination against him on the basis of his religion and national origin.

In support of plaintiffs' claim that the underlying arbitration was fraudulently solicited by the attorneys from Lincoln Square Legal Services, plaintiffs point out, inter alia, that Mrs. Qureshi and Naroor admitted at the arbitration hearing that despite their claims in their pleadings, they did not have any personal knowledge of any other Pakistani immigrants who lost money invested with Gondal. Also, Naroor's testimony established that defendant Silverman fraudulently gave Naroor wrong explanations of the term "margin," so as to fuel his anger against Gondal.

Plaintiffs also contend that the arbitration hearing was prejudicial, because (1) the panel's chairman misrepresented to Gondal that he was "protected;" (2) Gondal was not permitted to object during opening statements, call any witnesses on his behalf during the hearing, or introduce evidence in response to post-hearing correspondence the NYSE arbitration panel accepted from Schwab and Lincoln Square Legal Services;[FN32] (3) that a pre-hearing conference was conducted between Schwab and the arbitration claimants in Gondal's absence and without notice to Gondal; and (4) the arbitration panel never informed Gondal of his rights in the arbitration process even though they knew they lacked jurisdiction over Gondal.

Further, since six arbitration sessions were held, the assertion in the arbitration award that only five sessions were held constitutes a willful misrepresentation. And, defendants' conspiracy allegedly continued when they sought to confirm and modify the award. Plaintiffs point out that in the petition to modify the award, claimants and their attorneys admit that the arbitrators were guilty of misconduct and were biased in favor of Schwab, thereby inadvertently admitting that they discriminated against Gondal when they did not allow Schwab's attorneys to be cross-examined.

Plaintiffs argue that the NYSE, Fordham Law, Lincoln Square Legal Services, and other individually named defendants cannot hide behind their not-for-profit status, because they intentionally and maliciously, and with gross negligence, used the powers of their offices and positions to deprive Gondal of his due process rights, conspired to injure his person and reputation, and violated various sections of the disciplinary rules and various federal statutes.[FN33] Plaintiffs also assert that the absolute privilege afforded to statements in pleadings, and the qualified privilege attached to defamatory statements between an attorney and client are unavailable to the defendants due to their intentional malicious acts and conspiracy.

Nor is the doctrine of arbitral immunity granted to arbitrators for functions integrally related to a "contractually agreed upon arbitration proceeding" available to the NYSE and arbitrators because they conspired to defame Gondal and violate the Donnelly Act and Statute of Frauds, and Gondal never "contractually agreed" to arbitration. Further, Gondal's presence and participation at the hearing is not a waiver of the right to question the jurisdiction of the arbitrator as he did not know, until the arbitrator rendered a decision, that the arbitrator determined issues outside of his or her jurisdiction. According to Gondal, it is "not inconceivable" that the arbitration was an act of [*14]revenge by defendants for the destruction of World Trade Center and losses flowing therefrom, and constitutes a hate crime under the Hate Crimes Act of 2000. The doctrine of arbitral immunity does not apply to such behavior.

As a consequence of defendants' actions, the control, distribution and sale of investment advisory and management services in New York City and the State of New York is likely to cause defendants to become the complete and absolute dominating factors in the distribution of same. Plaintiffs also claim that defendants' acts constitute violations of Penal Law §105.15.

Plaintiffs also contend that even though the contract provides for arbitration of disputes arising thereunder, the instant complaint for discrimination, violation of the Donnelly Act, breach of reasonable care, and tortious conduct claims are not subject to arbitration.

Opposition and Order to Show Cause to Dismiss Complaint

Defendants NYSE, Kupersmith, arbitrators, Sony Music, and Anthony (the "NYSE defendants") oppose plaintiffs' application as an impermissible hybrid of a normal litigation and summary proceeding, in the form of a summary judgment in lieu of complaint. It is also argued that the complaint should be dismissed on grounds of res judicata, collateral estoppel, waiver, and immunity, and plaintiffs should be precluded from making any further filings or motions in any way related to the matters discussed in the complaint. Further, an award for sanctions should be issued against plaintiffs.

The NYSE defendants contend that Gondal Asset cannot pursue this action because it has not appeared by an attorney as required of a corporation. Further, the arbitral awards have preclusive effect on this litigation. In this regard, it is argued that the factual basis for plaintiffs' instant claims were raised during the arbitration, and that all of plaintiffs' claims regarding the conduct of the arbitration were or should have been raised during the arbitration or during the prior motions to confirm or vacate the award. Plaintiffs waived their claim of lack of jurisdiction, since they participated in the arbitration with counsel, and failed to assert such claim.

In any event, the NYSE, Kupersmith, and the arbitrators are subject to absolute immunity from claims for damages in connection with the conduct of arbitrations, including claims that they arbitrated claims against parties not subject to their jurisdiction. And, assuming the veracity of plaintiffs' allegations, statements by counsel made during litigation are absolutely privileged, and cannot be the basis for defamation, libel, slander, or prima facie tort claims.

Moreover, plaintiffs failed to plead their claims properly, in that no private right of action exists under NY Penal Law Article 110 or the Federal Criminal statutes cited. Plaintiffs' claims, including a claim under "New York Common Law," also fail to satisfy pleading requirements. The pleadings are also insufficient to state claims against Sony Music and Anthony, as well as for attorneys' fees where there is no applicable statute or contractual provision and where plaintiffs are pro se litigants, and punitive damages.

In support of an award for injunctive relief and sanctions, the NYSE defendants contend that plaintiffs participated in discovery, and then at the arbitration hearings with two attorneys.Plaintiffs' frivolous filings, improper motion practice, and disproportionate damage claims demonstrate the need for injunctive relief against future frivolous filings by plaintiffs. Otherwise, the NYSE defendants will suffer irreparable injury in the form of lost time expended in dealing with plaintiffs' frivolous acts, not compensatory by a monetary award, which plaintiffs could not satisfy nonetheless. As no litigant has a right to file frivolous motions, and defendants have a right to be [*15]free from frivolous behavior, the balance of the equities favor injunctive relief.

Finally, sanctions are warranted since this is the sixth time in approximately eight months that various defendants have had to expend time and money to respond to plaintiffs' baseless accusations. And, based on the frivolous nature of plaintiffs' filings, the Court should award defendants their attorney fees and costs on this motion.

With respect to plaintiffs' motion to compel discovery, the NYSE defendants oppose such relief on the grounds that (1) plaintiffs' service was improper, untimely, and defective, and (2) plaintiffs failed to establish their entitlement to disclosure, which was automatically stayed upon service of defendants' motion to dismiss. In regard to the latter, it is argued that plaintiffs' proffered reason, that such information is necessary to prove their case, is no different from the interests of plaintiffs in every case, and thus insufficient to overcome the automatic stay.

Defendants Naroor, Shaheen Qureshi, Sajid J. Qureshi, and VIP Plus Services, Inc. ("Naroor and Qureshi") also oppose plaintiffs' Order to Show Cause, oppose plaintiffs' request for disclosure, and join in the application by the NYSE defendants.[FN34] Naroor and Qureshi add that service upon them was improper, in that when Mr. Qureshi declined to sign or accept the package, the unidentified woman attempting to serve it left with the package. It is also argued that contrary to plaintiffs' affidavit of service, no attempt was made to serve Naroor at the address listed. Instead, when the process server inquired of the doorman in Naroor's building as to Naroor's whereabouts, the process server left with a large envelope when he informed her that Naroor was not there. Naroor denies receiving any legal papers as alleged in the affidavit of service, but states that he received plaintiffs' legal papers by mail on August 30, 2004, in violation of the Court's Order (Diamond, J.) that service be effected by in-person delivery.

Naroor and Qureshi also assert that the complaint fails to set forth any facts as to how or why they set out to ruin plaintiffs' business. Naroor specifically claims that prior to September 11, 2001, he requested that plaintiffs stop trading, but plaintiffs refused to stop. Instead, plaintiffs instructed Naroor not to discuss his investments with anyone other than plaintiffs and directed Naroor to stop opening his accounts statements from plaintiffs. It is also argued that the retainer agreement between a client and his or her counsel cannot be the basis of evidence of a conspiracy. It is also contended that Teperman & Teperman did not represent Naroor in his arbitration case against plaintiffs or in any other manner, and the mere fact that Naroor's brother is employed by such law firm is not evidence of Naroor's involvement in a conspiracy, especially when he has no relationship with that law firm.

In addition, the fact that the Qureshis were involved in prior actions related to two car accidents hardly renders them professional litigants as plaintiffs allege. And, except for the caption, plaintiffs' papers contain no references to the Qureshis' family owned business, VIP Plus, Inc., which was not even a party to the arbitration.

Defendant Fordham University adopts the arguments set forth by the NYSE defendants, and seeks dismissal of the complaint as asserted against it on additional grounds: (1) defendant Lincoln Square Legal Services is a separately incorporated legal service clinic of Fordham Law, which [*16]operates pursuant to a duly approved practice order; (2) Lincoln Square Legal Services is not the "alter ego" of Fordham University, and (3) there is no allegation in the complaint against Fordham University itself as an independent entity.

Defendant Mohammad Irfan Sadiq also moves to dismiss the complaint as asserted against him on the grounds that he was not properly served, the complaint fails to state a cause of action against him, and for the reasons set forth by the NYSE defendants. Mr. Sadiq claims that he never had an account with plaintiffs or sued plaintiffs, and that his wife signed an indemnity agreement holding plaintiffs harmless. Thus, plaintiffs' claim that he planned to defraud plaintiffs by planning to sue in case he lost his investment is baseless. Also, plaintiffs' claim that he was "instrumental" in the filing of the arbitration claim cannot arise simply from the fact that the Qureshis declined to sign the indemnity agreement similar to the one signed by his wife. And, Sadiq points out that he and his wife were not parties to the arbitration. Therefore, the fraud, conspiracy and extortion claims are without merit.

Lincoln Square Legal Services, James Cohen, Silverman, Ian Weinstein, Samuel Moore, Caracciolo, Vera Kagan, Dylan Murphy, Bradley Dyer, and Katie Cooperman (collectively the "Lincoln Square defendants") also move to dismiss the complaint on the grounds of collateral estoppel and res judicata. The Lincoln Square defendants add that the effort and time devoted to defending plaintiffs' frivolous conduct detracts from the primary mission of Lincoln Square Legal Services to teach law students and provide counsel to indigent individuals.

Further, Lincoln Square Legal Services is a not-for-profit corporation, and entitled to immunity under NPL 720-a. Weinstein and Cohen are also entitled to immunity because they are uncompensated officers of the not-for-profit corporation.

As to defendants Schwab and Garrett Wynne ("Wynne") (collectively the "Schwab defendants"), they cross move to compel arbitration pursuant to the arbitration clause in the Service Agreement, since plaintiffs' instant claims are for improper termination and conspiracy related to plaintiffs' relationship to their clients. The Schwab defendants also seek a stay of plaintiffs' claims until the arbitration is complete.

The Schwab defendants also contend that the Order to Show Cause is procedurally improper; even though personal service was ordered, plaintiffs served the complaint by certified mail on August 27, 2004. Thus, Wynne's time to Answer was September 27, 2004, after the return date of plaintiffs' Order to Show Cause.

Defendants Shafquat Chaudhry ("Chaudhry") and Elite Limousine Plus, Inc. ("Elite Limousine") also move to dismiss the complaint pursuant to CPLR 3211 (a)(7) for failing to state a cause of action against them. It is argued that, inter alia, the claims against Chaudhry and Elite Limousine for tortious interference with contract, disseminating injurious falsehoods, intentional infliction of emotional distress and conspiracy are inadequately stated. Plaintiffs oppose the motion, arguing that the complaint alleges sufficient facts to support such claims against said defendants. In reply, Chaudhry and Elite Limousine cites to further deficiencies of the complaint.

Plaintiffs' Reply and Opposition to Dismissal

In reply, Gondal seeks leave of court to represent himself and Gondal Asset pursuant to the permissive joinder doctrine, as the facts related to the two plaintiffs are the same and the effect of the order and judgment could be identical.

Plaintiffs contend that defendants' arguments lack merit. Regarding the sufficiency of the [*17]pleadings, plaintiffs argue that since they are pro se litigants, the Court must read their papers liberally and interpret them to raise the strongest arguments that they suggest. Furthermore, plaintiffs may assert multiple causes of action based upon the same set of facts, even where such causes of action are contradictory. And, the causes of action have been pleaded even if their names are not mentioned or mentioned incorrectly, or are not separately stated and numbered.The New York Stock Exchange defendants as well as Naroor and Qureshi perpetuated a fraud upon Gondal in and outside of the arbitration and intentionally violated Gondal's civil rights.

As to Qureshi and Naroor, such defendants were served pursuant to CPLR 301(1) and 308(2) by delivery of legal papers in a sealed envelope marked personal and confidential at the place of business and residence. When Mr. Qureshi recognized the person who was serving such papers, he refused to sign the acknowledgment. The Qureshis also refused to accept the packages sent on three separate occasions via US Postal Service certified mail. As to Mr. Naroor, he was not available on August 28, 2004, and did not accept the package on August 29, 2004. Subsequently, service was attempted by certified mail, return receipt requested. Further, Penal Law 580 and GBL §340 et seq. may be plead together, since Penal Law 580 applies to a conspiracy to commit a crime or an agreement to commit an act injurious to trade or commerce and GBL §340 relates to subsequent contracts made in carrying out such conspiracy or act injurious to trade or commerce. Plaintiffs also deny the allegations by Naroor and Qureshi, and allege facts to discredit Mr. Qureshi.[FN35]

In opposition to Sadiq's motion, plaintiffs argue that by living in New York City and working at Sony, the New York long-arm statute confers personal jurisdiction over him, who "transacts any business within the State." Further, Sadiq was properly served with legal process under CPLR 208(2); the pleadings were delivered to Sadiq's home in an envelope marked personal and confidential, where his wife accepted the package and by subsequent mailing to his home. In any event, since Sadiq's attorney appears on Sadiq's behalf, the issue of service of process is moot. Plaintiffs also claim that Sadiq is also essential to proving the conspiracy against Gondal since Sadiq is the person who threatened Gondal's life if Sadiq's sister-in-law, Mrs. Qureshi, and friend Naroor were not made whole. Sadiq also "took money" from Gondal without repayment of same, and spread defamatory statements about Gondal at a mosque they attend. Plaintiffs further argue that the complaint sufficiently alleges that Sadiq negligently failed to inform Gondal and law enforcement authorities about the conspiracy to deprive Gondal of his civil rights. Plaintiffs also claim that Mr. Sadiq introduced the Qureshis and Naroor to Lincoln Square Legal Services, conspired with them to file a baseless arbitration claim and ruin his reputation, and used the influence of his employer, defendant Anthony of Sony, to further the false claims of the arbitration claimants in violation of 18 USC §§ 1503 and 1512's proscription against the obstruction of justice.

As to Lincoln Square Legal Services, Fordham University, and all other individually named defendants, their names appeared on all or almost all of the communication that originated from Lincoln Square Legal Services. As such, these defendants should not be permitted to perpetuate a fraud on the public by setting up a dummy corporation like Lincoln Square Legal Services, commit malpractice during the course of a client representation, with impunity.

In further support, plaintiffs submit a letter from Lincoln Square Legal Services, dated [*18]February 20, 2002, dissolving any trading authority Gondal had on Naroor's account with Schwab.

As to the Schwab defendants, plaintiffs claim that they have properly served such defendants pursuant to CPLR 311 (a)(1) and 308(4). Since such defendants acknowledged receipt and have moved to compel arbitration, the issue of service as to them is moot. Furthermore, under the Federal Arbitration Act, an arbitration clause is unenforceable to the claims for violation of Federal and New York State Antitrust laws and fraud, which should be tried in a judicial forum. However, since the Federal Arbitration Act does not displace New York State law, plaintiffs' Donnelly Act claim is a valid defense to the arbitration clause in the Service Agreement. Here, the Service Agreement is one of adhesion, and was used as an instrument through which NYSE (and NASD) control the entry points into the securities market and effect revenge upon parties who threaten them as competitors. The defendants, under the color of the arbitration clause, intentionally violated Antitrust laws and defrauded plaintiffs. Under the circumstances, in an arbitration proceeding, plaintiffs will forfeit their statutory rights and be at the mercy of arbitrators who will rubber stamp the wishes of the NYSE with impunity.

Also, since this dispute arises under the Securities Act of 1933, it is barred from arbitration, and that submitting this case to arbitration is unconscionable and unreasonable under the circumstances. The Court should also find that there is a built in bias against Gondal, and permanently stay any arbitration. Further, the intent of the arbitration clause is not to relitigate the same dispute in the same forum, but instead, to end the arbitral process when an award is rendered, and any new controversy is intended to be adjudicated in a different forum, to wit: a court. Thus, the allegations based upon the same facts already litigated in an arbitration forum cannot be subjected to the same forum again. In any event, by failing to file a motion to compel arbitration when they sought confirmation of the award, the Schwab defendants have waived their right to arbitrate. The Schwab defendants, in reply, contend that arbitration provisions in brokerage agreements do not represent unconscionable contracts of adhesion. Also, plaintiffs failed to argue or establish that the Service Agreement was egregiously oppressive or one which no rational person would sign. Further, the Schwab defendants did not waive their right to arbitration, since (1) their motion to compel arbitration is their initial response to the complaint; (2) plaintiffs did not assert any claims against the Schwab defendants in the underlying arbitration; and (3) the claims of coercion could not have arisen until after the arbitration had been completed and the award rendered. Further, plaintiffs' allegation of fraud in the inducement is not directed at the arbitration clause itself, but at the parties relationship in general and concerns Gondal's participation in the arbitration hearings. Thus, there is no basis to invalidate the arbitration clause of the Service Agreement.

In opposition to the motion by defendants Chaudhry and Elite Limousine, plaintiffs argue that these defendants maintained a relationship with Sony, Anthony, the Qureshis, Naroor, Sadiq, Kupersmith, and the NYSE, and in so doing, provided false information about Gondal to the arbitration claimants. Chaudhry and Elite Limousine are also allegedly liable for negligently violating USC §§ 1983 [FN36] and 1986 by failing to warn plaintiffs of or prevent the conspiracy perpetrated against plaintiffs.

With respect to the arbitration, plaintiffs also add that they were not properly served with [*19]notice of intent to arbitrate. The Statement of Claim served upon Gondal by the NYSE failed to (1) specify the agreement pursuant to which the arbitration was being sought, (2) include the notice provisions required under CPLR 7503 (c), or identify Gondal as a party to the arbitration. Further, plaintiffs did not participate in the arbitration because (1) they did not pay any fees associated therewith, (2) their appearance was fraudulently induced, and (3) they had no part in selecting the arbitrators. And, since the NYSE and the Arbitrators lacked jurisdiction over Gondal, their award was advisory, not subject to confirmation. Plaintiffs insist that the letter indicating that neither the NYSE or the arbitrators had any jurisdiction over Gondal, coupled with the arbitrators' issuance of the award, demonstrated their bad faith. Thus, the award should be vacated since the Arbitrators exceeded their power, in violation of CPLR 7511 (b)(1)(iii).

With respect to the claims of res judicata and collateral estoppel, such claims are without merit since the allegations in the complaint have not been adjudicated or fully litigated before.

Analysis [FN37]

Plaintiffs' order to show cause for the relief sought in their complaint seeks judgment on their complaint, and therefore, the Court treats plaintiffs' application as one for summary judgment. It is worth noting that the complaint seeks damages in various forms under theories of fraud, fraudulent inducement, tortious interference with business relations, violations of various Federal and State civil and penal statutes, and conspiracy to commit same. The complaint also seeks to vacate the underlying arbitration award, on these and related grounds.

To obtain summary judgment, plaintiffs must establish their causes of action sufficiently to warrant the court as a matter of law in directing judgment in their favor (see CPLR § 3212 [b]). This standard requires that plaintiffs make a prima facie showing of entitlement to judgment as a matter of law, by advancing sufficient "evidentiary proof in admissible form" to demonstrate the absence of any material issues of fact (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Silverman v Perlbinder, 307 AD2d 230, 762 NYS2d 386 [1st Dept 2003]; Thomas v Holzberg, 300 AD2d 10, 11, 751 NYS2d 433, 434 [1st Dept 2002]).

Where the proponent of the motion makes a prima facie showing of entitlement to summary judgment, the burden shifts to the party opposing the motion to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action, or to tender an acceptable excuse for his or her failure to do so (Vermette v Kenworth Truck Co., 68 NY2d 714, 717 [1986]; Forrest v Jewish Guild for the Blind, 309 AD2d 546, 765 NYS2d 326 [1st Dept 2003]). [*20]

In determining a motion to dismiss, the Court's role is ordinarily limited to determining whether the complaint states a cause of action (Frank v DaimlerChrysler Corp., 292 AD2d 118, 741 NYS2d 9 [1st Dept 2002]). The standard on a motion to dismiss a pleading for failure to state a cause of action is not whether the party has artfully drafted the pleading, but whether deeming the pleading to allege whatever can be reasonably implied from its statements, a cause of action can be sustained (see Stendig, Inc. v Thom Rock Realty Co., 163 AD2d 46 [1st Dept 1990]; Leviton Manufacturing Co., Inc. v Blumberg, 242 AD2d 205, 660 NYS2d 726 [1st Dept 1997] [on a motion for dismissal for failure to state a cause of action, the court must accept factual allegations as true]). When considering a motion to dismiss for failure to state a cause of action, the pleadings must be liberally construed (see, CPLR §3026). On a motion to dismiss made pursuant to CPLR § 3211, the court must "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit into any cognizable legal theory" (Leon v Martinez, 84 NY2d 83, 87-88, 614 NYS2d 972, 638 NE2d 511 [1994]). However, in those circumstances where the bare legal conclusions and factual allegations are "flatly contradicted by documentary evidence," they are not presumed to be true or accorded every favorable inference (Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81, 692 NYS2d 304 [1st Dept 1999], affd 94 NY2d 659, 709 NYS2d 861, 731 NE2d 577 [2000]; Kliebert v McKoan, 228 AD2d 232, 643 NYS2d 114 [1st Dept], lv denied 89 NY2d 802, 653 NYS2d 279, 675 NE2d 1232 [1996], and the criterion becomes "whether the proponent of the pleading has a cause of action, not whether he has stated one" (Guggenheimer v Ginzburg, 43 NY2d 268, 275, 401 NYS2d 182 [1977]; see also Leon v Martinez, 84 NY2d 83, 88, 614 NYS2d 972 [1994]; Ark Bryant Park Corp. v Bryant Park Restoration Corp., 285 AD2d 143, 150, 730 NYS2d 48 [1st Dept 2001]).

On a motion to dismiss for failure to state a cause of action pursuant to CPLR §3211[a] [7] where the parties have submitted evidentiary material, including affidavits, the pertinent issue is whether claimant has a cause of action, not whether one has been stated in the complaint (see Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; R.H. Sanbar Projects, Inc. v Gruzen Partnership, 148 AD2d 316, 538 NYS2d 532 [1st Dept 1989]). Affidavits submitted by a plaintiff may be considered for the limited purpose of remedying defects in the complaint (Rovello v Orofino Realty Co., 40 NY2d 633, 635-36 [1976]; Arrington v New York Times Co., 55 NY2d 433, 442 [1982]).

Res judicata, or claim preclusion, is invoked when parties seek to relitigate entire causes of action between them and applies to matters which were actually litigated or could have been litigated in the earlier action (DaimlerChrysler Corp. v Spitzer, - NYS2d , 2004 NY Slip Op. 24357; see Hyman v Hillelson, 79 AD2d 725, 726, affd 55 NY2d 624). Pursuant to the doctrine of res judicata, "once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy" (O'Brien v City of Syracuse, 54 NY2d 353, 357; see also, Smith v Russell Sage Coll., 54 NY2d 185; Matter of Reilly v Reid, 45 NY2d 24; Feigen v Advance Capital Mgt. Corp., 146 AD2d 556, 558; Restatement [Second] of Judgments § 24). In order for the doctrine of res judicata to apply, the party to be precluded in the current action must have been a party to the prior action where the claim at issue was litigated or could have been litigated.

The courts have previously approved the pragmatic approach in determining what constitutes a single transaction or series of transactions for the purposes of applying the doctrine of res judicata. [*21]In Braunstein v Braunstein (114 AD2d 46, 53), the court stated: "Res judicata serves to preclude the renewal of issues actually litigated and resolved in a prior proceeding as well as claims for different relief which arise out of the same 'factual grouping' or 'transaction', and which should have or could have been resolved in the prior proceeding. This pragmatic transactional analysis approach of the res judicata doctrine arises out of an observation that 'a claim or cause of action [is] "coterminous with the transaction regardless of the number of substantive theories or variant forms of relief . . . available to the plaintiff" (Restatement, Judgments 2d [Tent Draft No. 4, 1978], § 61, Comment a; Smith v Russell Sage Coll., 54 NY2d 185, 192; see also, O'Brien v City of Syracuse, 54 NY2d 353, 357). In order for res judicata to apply, however, the foundational facts must be related in "time, space, origin, or motivation [as well as] form a convenient trial unit . . . and it must be established that the . . . treatment [of the foundational facts] as a unit conforms to the parties' expectations" (Smith v Russell Sage Coll., 54 NY2d at 192-193, supra , quoting from Restatement [Second] of Judgments [Tent Draft No. 1] § 61). This pragmatic approach is currently defined in Restatement (Second) of Judgments, Section 24(2), as follows: "What factual grouping constitutes a transaction', and what groupings constitute a series', are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage." This pragmatic approach is also reflected in the decision of the Appellate Division, First Department, in Jefferson Towers v Public Serv. Mut. Ins. Co. (195 AD2d 311 [1993]). In Jefferson Towers, the First Department stated, "a second action may not be barred even if both actions arise from an identical course of dealing, if the . . .elements of proof and evidence required to sustain recovery vary materially" (Jefferson Towers v Public Serv. Mut. Ins. Co., supra , at 313 citing Lukowsky v Shalit, 110 AD2d 563, 566). The Jefferson Towers decision also referred to a special exception to the doctrine of res judicata applicable to declaratory judgment actions. The First Department stated, "[t]he preclusive effect of the declaratory judgment [entered in the first action] is limited to the subject matter of the declaratory relief sought" (195 AD2d at 313 citing Harborside Refrig. Servs. v Vogel, 959 F2d 368, 372).

Collateral estoppel, or issue preclusion, is invoked when the cause of action in the second proceeding is different from that in the first and applies to a prior determination of an issue which was actually and necessarily decided in the earlier case (DaimlerChrysler Corp. v Spitzer, supra ). It is confined to the point actually determined and applies only to issues which were actually litigated, not to those which could have been litigated (Id.). In order for the doctrine of collateral estoppel to apply, two requirements must be satisfied: the party seeking the benefit of the doctrine must prove that the identical issue was decided in the prior action and is decisive in the current action, and that the party to be precluded from relitigating the issue had a full and fair opportunity to contest the prior determination (Id.). The doctrine of collateral estoppel precludes a party from relitigating an issue which has been previously, actually and necessarily decided against him or her in a prior proceeding in which there was a full and fair opportunity to litigate the point (Kaufman v Eli Lilly & Co., 65 NY2d 449, 455). The doctrine is applicable not only to court decisions, but to prior determinations made in administrative forums that are "quasi-judicial" in nature and governed by "procedures substantially similar to those used in a court of law" (Ryan v New York Telephone Co., 62 NY2d 494, 499; see also Johnson v Penn Mutual Life Insurance Co., 184 AD2d 230, 231, lv. app. den., 80 NY2d 757). "[T]he burden rests upon the proponent of collateral estoppel to [*22]demonstrate the identicality and decisiveness of the issue" (Ryan, supra 62 NY2d at 501; Capital Telephone Co., Inc. v Pattersonville Telephone Co., Inc., 56 NY2d 11, 18; Schwartz v Public Admin., 24 NY2d 65, 73). The opponent, on the other hand, has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the administrative hearing (Ryan, supra 62 NY2d at 501; Capital Telephone, supra 56 NY2d at 18).

Defendants Naroor, Qureshi, the NYSE, Kupersmith, the arbitrators, and Schwab were parties to the underlying arbitration and/or special proceedings. During the special proceedings, plaintiffs sought to vacate the award on the grounds of, inter alia, arbitrator bias and misconduct, lack of jurisdiction, fraudulent procurement of award, and improper procedure. Plaintiffs also sought vacatur of the award on the ground that the NYSE, Fordham University, arbitration claimants, and Schwab conspired to fraudulently misappropriate plaintiffs' clients. Therefore, since the Court's (Diamond, J.) judgment confirmed the results of arbitration, such judgment is res judicata on these issues plaintiffs seek to litigate herein, to wit: arbitrator bias and misconduct and violation of the no-contact rule, fraud and conspiracy to confer jurisdiction over plaintiffs, lack of participation by plaintiffs in the arbitration, and lack of agreement to arbitrate (John Street Leasehold, L.L.C. v Brunjes, 234 AD2d 26 [1st Dept 1996], citing Wally v General Arbitration Council, 630 NYS2d 627 {165 Misc 2d 896} ; O'Brien v City of Syracuse, 54 NY2d 353, 357; see also, Gramatan Home Investors Corp. v Lopez, 46 NY2d 481, 485-486). Furthermore, plaintiffs' claim against all of the defendants that it is possible that the arbitration process may possibly constitute an act of revenge for the World Trade Center destruction and a hate crime under the Hate Crimes Act of 2000 [FN38] is simply not worthy of discussion.

Further, the claim for discrimination based on race and national origin against defendants must fail, as plaintiffs failed to allege sufficient facts indicating that plaintiffs were a member of a protected group, that they suffered adverse treatment, and that the defendants' action occurred under circumstances giving rise to an inference of racial discrimination or discrimination based on Gondal's national origin (see generally, McDonnell Douglas Corp. v Green, 411 US [1973]).

The merits of plaintiffs' remaining claims as alleged against the defendants are discussed below.

Schwab [FN39]

Plaintiffs' additional claims against Schwab herein that Schwab fraudulently induced Gondal to enter into the Service Agreement, breached its fiduciary duty, misappropriation of plaintiffs' clients, and improper termination due to racial discrimination relate to the relationship between Schwab and Gondal surrounding the Service Agreement, and Schwab's performance of this [*23]Agreement.

Such claims were not raised by plaintiffs or addressed during the arbitration as defenses or cross-claims against Schwab. And, except for the claim of misappropriation of plaintiffs' clients, such claims were not raised in the underlying special proceedings. Nor were such claims necessarily decided by the Court in the special proceedings. CPLR 7511(b)(1) sets forth only four grounds for vacating an arbitration award: (i) corruption, fraud or misconduct in procuring the award; or (ii) partiality of an arbitrator appointed as a neutral; except where the award was by confession; or (iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or (iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection. Plaintiffs' claims against Schwab for fraudulent inducement to enter into contract, breach of fiduciary duty, misappropriation of clients, and improper termination based on racial discrimination are not barred by res judicata or collateral estoppel since these claims were outside the scope of the special proceedings, and were not adjudicated by the Court during the underlying special proceedings.

Relying on Wilko v Swan (346 US 427 [1953]), plaintiffs claim that the Securities Act of 1933 bars arbitration of disputes arising under this Act. However, this claim is without merit; even assuming plaintiffs have stated a claim against Schwab under the Securities Act of 1933, the Supreme Court's decision in Rodriguez de Quijas v Shearson/American Exp., Inc. (490 US 477 [1989]) that an agreement to arbitrate claims under the Securities Act of 1933 was enforceable, effectively overruled the case upon which plaintiffs' rely.

Schwab contends that the Federal Arbitration Act ("FAA") (9 USC § 1 et seq.), governs the Service Agreement and requires arbitration of this dispute. In this regard, the Service Agreement herein requires arbitration of "any controversy between you and Schwab . . . [which] arises out of this Agreement . . . between you and Schwab or which relates to any Client's Account, Client authorization, Account transactions, or in any way arising out of your [plaintiffs'] relationship to your Clients or to Schwab" (emphasis added). Notwithstanding that Schwab terminated the Service Agreement in May 2002, this Court finds that the parties agreed to arbitrate this dispute and that the dispute at issue comes within the scope of the arbitration agreement (see ACE Capital Re Overseas v Central United Life Ins. Co., 307 F3d 24, 29-30 [2d Cir 2002]; Hartford Acc. & Indem. Co. v Swiss Reins. Am. Corp., 246 F3d 219, 226-228 [2d Cir 2001]).

Plaintiffs contend that the FAA does not require arbitration since the arbitration clause herein is unconscionable and was procured by fraud and in violation of Federal and New York State antitrust laws. A party may resist enforcement of an arbitration agreement on any basis that could provide a defense to or grounds for the revocation of any contract, including fraud, unconscionability, duress, overreaching conduct, violation of public policy, or lack of contractual capacity (see Utica Mut. Ins. Co. v Gulf Ins. Co., 306 AD2d 877 [4th Dept 2003]). It is well settled that, in order to demonstrate that fraud permeated an agreement, a party must show that the agreement was not "the result of 'arm's length negotiation' or that the arbitration clause was inserted into the [agreement] in order to effect the fraudulent scheme" (Information Sciences v Mohawk Data Science Corp., 56 AD2d 706, 706, affd. 43 NY2d 918). Here, plaintiffs' bare conclusory assertions are insufficient to demonstrate that the alleged fraud was part of a grand scheme that permeated the entire agreement, including the arbitration provision. As this record is devoid of any facts supporting [*24]the allegation that the contract was permeated by fraud, the question of fraudulent inducement of the contract is one for the arbitrators, not for the court (Avalon Int'l Trading Corp. v GST Receivables Mgmt. Corp., 220 AD2d 248 [1st Dept 1995] citing, Matter of Weinrott [Carp], 32 NY2d 190, 198-199 and Dolomite, S.p.A. v Beconta, Inc., 129 Misc 2d 857, 860). Further, there are no factual allegations to support plaintiffs' contention that the Service Agreement was used by Schwab to control the brokerage or investment advisor market.

Additionally, there is no factual support in the record, or on the face of the Service Agreement to indicate that such Agreement was "unreasonably favorable" to Schwab, or "egregiously oppressive." And, plaintiffs' complaint is devoid of any allegations indicating that plaintiffs attempted to negotiate the terms the Agreement, or that they were denied any opportunity to negotiate its terms. Plaintiffs' remaining arguments, inter alia, that "the same set of facts have already been litigated in the arbitral forum" and that Schwab, defendants Naroor and Qureshi waived their right to arbitration are without merit.

Therefore, since such claims arise out of the Service Agreement, which was not permeated by fraud or otherwise unenforceable, and is not barred by collateral estoppel or res judicata, Schwab's cross-motion to compel arbitration of such claims and stay the instant proceeding pending arbitration is granted.

Lincoln Square Defendants

Plaintiffs allege that the Lincoln Square defendants fraudulently solicited the arbitration claimants to seek arbitration, coerced Gondal into participating in the arbitration in violation of their Fifth Amendment rights, and withheld certain correspondence from Gondal at the arbitration hearing. Such claims essentially mirror plaintiffs' claim in the special proceedings, and were alleged as a basis to vacate the arbitration award. Therefore, such claims are barred by res judicata and collateral estoppel, as discussed above.

Further, the allegations in plaintiffs' complaint are insufficient to support plaintiffs' claim that the Lincoln Square defendants conspired to undermine free competition in violation of Federal and State anti-competition and criminal statutes, or tortiously interfered with Gondal's business relationships.

To allege a claim under the Donnelly Act, a plaintiff must allege sufficient facts indicating that the defendants entered into a contract, agreement, or arrangement (which may be inferred from the conduct of defendants) that had the tendency to restrain competition, and that defendants acted to carry out same. In this regard, plaintiffs must (a) identify the relevant product and geographic market, (b) describe the nature and effects of the purported conspiracy, (c) allege how the economic impact of the conspiracy restrains trade in the market in question and (d) show a conspiracy or reciprocal relationship between two or more entities who are named (The Great Atlantic & Pacific Tea Co. Inc. v Town of East Hampton, 997 FSupp 340 [EDNY 1998]; Creative Trading Co., Inc. v Larkin-Pluznick, Inc., 136 AD2d 461 [1st Dept 1988]). The basis of plaintiffs' complaint against the Lincoln Square defendants are (1) a letter from Lincoln Square Legal Services dissolving plaintiffs' trading authority on Naroor's account; (2) Chiang's letter to Wynne of Schwab that Schwab informed "us" that Gondal was removed as investment advisor; (3) solicitation of a complaint from Mrs. Qureshi and letters to Schwab and the Attorney General full of unsubstantiated allegations; and (4) that defendant Silverman demanded money on behalf of Naroor and threatened to destroy Gondal and his business. Plaintiffs also allege in a cursory fashion, that the Lincoln Square defendant [*25]conspired with defendants to limit competition in the investment advisory and management business, in that Schwab was planning to acquire United States Trust Company of New York as an investment advisory and management company that catered to high net-worth individual investors in the same geographic market that Gondal was conducting business in. These claims are woefully insufficient to state a claim for violation of the Donnelly Act.

To allege a claim for tortious interference with contract or business relations, plaintiffs must allege (1) the existence of a valid contract between plaintiffs and a third party, (2) defendants' knowledge of the contract, (3) defendant's intentional procurement of a breach of the contract without justification, (4) actual breach of the contract, and (5) resulting damages (Avant Graphics v United Reprographics, 52 AD2d 462 [1st Dept 1998]). Tortious interference with business relations "applies to those situations where the third party would have entered into or extended a contractual relationship with plaintiff but for the intentional and wrongful acts of the defendant" (emphasis added) (M.J. & K. Co. v Matthew Bender & Co., 220 AD2d 488, 490 [2d Dept 1995], citing WFB Telecommunications v NYNEX Corp., 188 AD2d 257 [1st Dept 1992]). "In such an action '[t]he motive for the interference must be solely malicious, and the plaintiff has the burden of proving this fact' (72 NY Jur 2d, Interference, § 44, at 240; John R. Loftus, Inc. v White, 150 AD2d 857, 860).

Plaintiffs failed to allege any facts indicating that the arbitration claimants breached their contract with plaintiffs, or that the Lincoln Square defendants procured any such breach without justification. Furthermore, although plaintiffs have alleged that Schwab improperly terminated its Service Agreement with Gondal, and that such breach was procured with the assistance of the Lincoln Square defendants, plaintiffs fail to allege sufficient facts indicating that the acts of the Lincoln Square defendants' were done without justification or with malice. The complaint indicates that the Lincoln Square defendants' involvement with Schwab came "after a client of Gondal, Mr. Naroor, filed a . . . complaint against Mr. Gondal . . . ." The complaint further indicates that after the events of September 11, 2001, and the resulting drop in the market, Gondal advised the arbitration claimants of their losses. When the arbitration claimants threatened to destroy Gondal's business if he did not make them "whole" Gondal advised them to "pursue this matter via the Court of Law." To this, the arbitration claimants allegedly stated that "they knew Attorneys who will pursue this matter in their favor and for free . . . ." Plaintiffs then allege that "they may have already been in talk with Lincoln Square Legal Services . . . to initiate legal proceedings to put more pressure on Gondal." The Lincoln Square defendants were hired by the arbitration claimants to pursue their claims that plaintiffs mismanaged their accounts at Schwab. Thus, the Lincoln Square defendants' contacts with Schwab were on behalf of their clients. Furthermore, allegations that the Lincoln Square defendants communicated with Schwab to effectuate the cancellation of Gondal's advisory authority over the arbitration claimants' accounts is insufficient to maintain a cause of action for tortious interference with contract or business relations.

Moreover, defendants Ian Weinstein and James Cohen are subject to immunity under Not-for- Profit Law § 720-a, which provides, in pertinent part:

. . . no person serving without compensation as a director, officer or trustee of a corporation, association, organization or trust described in section 501(c)(3) of the United States internal revenue code shall be liable to any person other than such corporation, association, organization or trust based solely on his or her conduct in the execution of such office unless the conduct of such director, officer or trustee with respect to the person asserting liability constituted gross negligence or was [*26]intended to cause the resulting harm to the person asserting such liability. (Emphasis added)

Plaintiffs' claim for defamation on the basis of Silverman's complaint to the Attorney General's Office containing allegedly false accusations against Gondal, explanations to Naroor of the term "margin", and statements made during the arbitration hearing are not actionable. It is well established that an attorney, party, or witness in a judicial or quasi-judicial proceeding enjoys immunity from a defamation action for his or her spoken or written statement, if that statement is pertinent to the litigation (Park Knoll Assocs. v Schmidt, 59 NY2d 205, 210). The complaint fails to allege sufficient facts indicating that the statements were not pertinent to the litigation of the arbitration claimants' case. The same must be concluded as to defendant Caracciolo's alleged false statements at different points of her arguments. Therefore, the claims against the Lincoln Square defendants are dismissed.

The NYSE Defendants (NYSE, Kupersmith, arbitrators, Anthony, Sony Music)

Plaintiffs' claims against the NYSE, Kupersmith (the NYSE staff attorney assigned to the arbitration), and the arbitrators for fraud, violation of Gondal's statutory rights, malign (defame) and violation of the no-contact rule are dismissed. Arbitral immunity shields a defendant from liability for acts performed in his arbitral capacity (see, Austern v Chicago Bd. Options Exch., 898 F2d 882, cert denied 650 498 US 850, 111 SCt 141, 112 L. Ed. 2d 107; Wally v General Arbitration Council of the Textile & Apparel Indus., 165 Misc 2d 896, 630 NYS2d 627). In addition to this Court's finding that the Court's (Diamond, J.) Judgment confirming the results of the arbitration is res judicata on plaintiffs' claim of procedural violations and bias by the arbitrators, plaintiffs have also failed to state a claim against defendants Anthony and Sony Music. Plaintiffs claim that Anthony unduly influenced the Qureshis to pursue arbitration and assisted in having the arbitration coordinator replaced by contacting friends at Fordham Law, and her possible friend, defendant Kupersmith of the NYSE. Sony's liability is allegedly based on the allegation that it employs Mr. Sadiq and Mr. Qureshi, and Anthony, and that such employees violated plaintiffs' statutory or common law rights. Such allegations are wholly insufficient to impose any liability upon Sony or Anthony for the injuries alleged herein. Again, by confirming the arbitration award over plaintiffs' claims that the arbitration award was procured by fraud and in violation of plaintiffs' rights, the Court essentially upheld the procedural aspects of the arbitration. Since the Court (Diamond, J.) rejected plaintiffs' challenges to the arbitration, any alleged infirmities concerning the arbitration proceeding cannot form a basis of liability for plaintiffs' alleged damages. Further, there is no basis to impose liability under the theory of respondeat superior.

Sadiq

All of plaintiffs' conclusory allegations conspiracy, defamation, and obstruction of justice claims against Sadiq are insufficiently stated. The threshold question in determining liability is whether the defendant owed plaintiff a duty of care, and whether a member or group of society owes a duty of care to reasonably avoid injury to another is of course a question of law for the courts. To resolve this question, the courts must take into account "common concepts of morality, logic and consideration of the social consequences of imposing the duty" (Tenuto v Lederle Laboratories, Div. of American Cyanamid Co., 90 NY2d 606, 612 [1997]). "In the absence of a confidential relationship or fiduciary relationship between two parties, no duty to disclose exists (see Didomenico v Long Beach Plaza Corp. 2003 WL 22762712 (N.Y.Sup.), 2003 NY Slip Op. 51427(U), citing [*27]George Cohen Agency, Inc. v Donald S. Perlman Agency, Inc., 114 AD2d 930 [2d Dept 1985]). This Court is unaware of any compelling reasons for the imposition of such a duty in the present case. Thus, even assuming the Court has personal jurisdiction over Sadiq, the complaint fails to allege any relationship between Sadiq and plaintiffs giving rise to any duty to inform plaintiffs or authorities of any conspiracy. Further, the complaint fails to allege the elements necessary to sustain a cause of action for defamation, and the obstruction of justice statutes provide no private right of action, and are simply nonexistent.

Fordham University

Plaintiffs' claims against Fordham University, including their claim that Fordham University had the arbitration coordinator replaced with Kupersmith, are without merit.

Plaintiffs' claims against Fordham University are based on the fact that Fordham University's name appeared on all the communications that originated from Lincoln Square Legal Services. Plaintiffs also claim, in conclusory fashion, that Lincoln Square Legal Services is an "alter ego" of Fordham University.

As to the alter ego theory, the courts will exercise the authority to pierce the corporate veil in order to prevent fraud or achieve equity when a corporation is controlled or becomes the instrumentality of another (citing Walkovszky v Carlton, 18 NY2d 414, 417 [1966]). For instance, courts have held where a corporation is a fragment of a larger corporate combine which actually conducts the business, the larger corporate entity may be held financially responsible for the acts of that corporation (Walkovszky v Carlton, supra 18 NY2d 4 at 418; Dannasch v Bifulco, 184 AD2d 415, 417 [1st Dept 1992]; Goldberg v Lee Express Cab Corp., 227 AD2d 241 [1st Dept 1996]). Generally considered are factors including whether there is an overlap in ownership, officer, directors, and personnel; inadequate capitalization or an absence of the formalities; or absent separate paraphernalia that are part of the corporate existence (888 7th Avenue Assocs. Ltd Pshp. v Arlen Corp., 172 AD2d 445 [1st Dept 1991]). The complaint herein is devoid of any factual allegations indicating the existence of these factors.

In any event, since Fordham University's alleged liability to plaintiffs allegedly arises from its relationship to Lincoln Square Legal Services, and plaintiffs' claims against Lincoln Square Legal Services are not sustainable, no claim exists as against Fordham University.

Naroor and Qureshi Defendants

Plaintiffs' claims based on the State and Federal Criminal Law are without merit, since no private right of action exists under the statutes cited by plaintiffs under these circumstances. Further, plaintiffs' claim against these defendants for defamation arising from allegedly false statements made during the arbitration proceeding and in the form of a complaint written against Gondal is insufficiently stated. Further, such claim is without merit. Statements made by parties and witnesses in the course of a quasi-judicial proceeding are absolutely privileged, notwithstanding the motive with which they are made, so long as they are material and pertinent to the issues to be resolved in the proceeding (see, Herzfeld & Stern v Beck, 175 AD2d 689, 691, appeal dismissed 79 NY2d 914). Also, the complaint fails to allege any facts to maintain a claim for fraud or deceit against defendants Sajid Qureshi and VIP Plus Services. Even assuming a claim for fraud or deceit in connection with the underlying arbitration proceeding was sufficiently stated against Naroor and Qureshi, which this Court finds was not, such claims are barred by collateral estoppel, due to the confirmation of the arbitration award in their favor by the Court (Diamond, J.). [*28]

Chaudhry and Elite Limosine

Plaintiffs' claims against Chaudhry and Elite Limosine for conspiracy with the NYSE and Schwab to bring Gondal before arbitration, tortious interference with Gondal's business, defamation, intentional infliction of emotional distress, and for unduly influencing the arbitration claimants to seek arbitration are without merit.

The complaint fails to allege any facts indicating that Chaudhry knew about plaintiffs' contract with either the arbitration claimants or Schwab or that Chaudhry intentionally interfered with plaintiffs contracts. The complaint also fails to allege that Chaudhry engaged in any extreme or outrageous conduct, recklessly disregarded plaintiffs, and fails to indicate any causal connection between Chaudhry or any severe emotional distress caused by Chaudhry (see Howell v New York Post Co., 81 NY2d 115 [1993]). Further, plaintiffs' USC §§ 1983 and 1986 claims have no application to the facts as alleged by plaintiffs. There are no facts indicating a nexus between these defendants and any state action to sustain a claim under section 1983 (see Commodari v Long Island University, 62 Fed.Appx. 28, 2003 WL 1785893 [2nd Cir NY]). Section 1986 imposes liability for damages for failing to prevent a violation of section 1985, which was enacted to prevent conspiracies impelled by racial and political motives (Byrd v Hopson, 265 F Supp2d 594 [WDNC 2003]).[FN40] The allegations in the complaint are insufficient to support any claim that the acts of any of the defendants were motivated by race, politics, or religion.

And, as stated previously, any claim related to the manner in which the arbitration proceeding was initiated or sought was resolved by the Court (Diamond, J.) during the special proceedings. Accordingly, the complaint as against defendants Chaudhry and Elite Limosine is dismissed.

With respect to plaintiffs' claims against defendants for conspiracy, New York courts do not recognize an independent cause of action civil conspiracy (Alexander & Alexander of New York v Fritzen, 68 NY2d 968 [1986]). However, allegations of conspiracy are permitted when they serve to enable plaintiff to connect parties to an otherwise actionable tort (Alexander & Alexander of New York v Fritzen, supra ). Given that plaintiffs' tort claims fail, the claim for conspiracy likewise fails. The Court notes that plaintiffs' claims against Schwab for discrimination lacks merit and is dismissed, and the remaining claims arising from or related to the Service Agreement are subject to arbitration. However, the complaint is devoid of any allegations to sustain a cause of action against the remaining defendants for conspiracy to defraud Gondal to enter into the Service Agreement or improper termination of same.

Based on the foregoing, it is hereby

ORDERED that plaintiffs Order to Show Cause for an order (1) breaking up the New York Stock Exchange, Inc. (the "NYSE") such that the Regulatory Part of the NYSE is a totally separate entity; (2) awarding for costs and attorneys' fees; (3) staying the decision of the Court (Diamond, J.) and (4) enjoining defendants from any retaliatory proceeding against plaintiffs is denied; and it is further

ORDERED that plaintiffs' application for judgment on their complaint is denied; and it is further

ORDERED that the order to show cause by defendants the New York Stock Exchange, [*29]Kupersmith, Frank Sullivan, Richard Goldstein, and Patrick O'Neill, Sony Music Entertainment Inc., and Michelle Anthony (the "NYSE defendants") to dismiss the complaint as asserted against them, preclude plaintiffs from making any further filings or motions in any way related to the matters discussed in the complaint and for an award for sanctions is granted to the extent that the complaint as asserted against said defendants is dismissed and plaintiffs are precluded from making any further filings or motions against said defendants in any way related to the matters discussed in the complaint; and it is further

ORDERED that the motion by defendant Fordham University to, inter alia, dismiss the complaint as asserted against it is granted and plaintiffs are precluded from making any further filings or motions against said defendant in any way related to the matters discussed in the complaint; and it is further

ORDERED that the motion by defendants Naroor, Shaheen Qureshi, Sajid J. Qureshi, and VIP Plus Services, Inc. to, inter alia, dismiss the complaint as asserted against them is granted and plaintiffs are precluded from making any further filings or motions against said defendants in any way related to the matters discussed in the complaint; and it is further

ORDERED that the motion by defendant Sadiq to dismiss the complaint and for sanctions is granted to the extent that the complaint as against Sadiq shall be dismissed; and it is further

ORDERED that the cross motion and motion by defendants Schwab and Wynne to compel arbitration and stay this proceeding pending the completion of such arbitration, and motion to dismiss the complaint and enjoin plaintiffs from filing further actions is granted to the extent that the plaintiffs' claims related to the Service Agreement and Schwab's alleged breach of same shall be submitted for arbitration before the National Association of Securities Dealers, Inc., and the claims in plaintiffs' complaint relating to the underlying arbitration hearing and procedures thereof are dismissed; and it is further

ORDERED that the motion by defendants Lincoln Square Legal Services, James Cohen, Silverman, Ian Weinstein, Samuel Moore, Caracciolo, Vera Kagan, Dylan Murphy, Bradley Dyer, and Katie Cooperman to, inter alia, dismiss the complaint as asserted against them is granted and

plaintiffs are precluded from making any further filings or motions against said defendants in any way related to the matters discussed in the complaint; and it is further

ORDERED that plaintiffs' motion for discovery and jury trial is denied; and it is further

ORDERED that the motion by defendants Shafquat Chaudhry and Elite Limousine Inc. to dismiss the complaint as asserted against them is granted; and it is further

ORDERED that counsel for the NYSE defendants shall serve a copy of this order and memorandum decision upon all parties within 20 days of entry; and it is further

ORDERED that the Clerk shall enter judgment accordingly.

This constitutes the decision and order of the court.

Dated: November 5, 2004______________________________

Hon. Carol R. Edmead, J.S.C.

Based on the accompanying Memorandum Decision, it is hereby

ORDERED that plaintiffs Order to Show Cause for an order (1) breaking up the New York Stock Exchange, Inc. (the "NYSE") such that the Regulatory Part of the NYSE is a totally separate entity; (2) awarding for costs and attorneys' fees; (3) staying the decision of the Court (Diamond, J.) and (4) enjoining defendants from any retaliatory proceeding against plaintiffs is denied; and it is further

ORDERED that plaintiffs' application for judgment on their complaint is denied; and it is further

ORDERED that the order to show cause by defendants the New York Stock Exchange, Kupersmith, Frank Sullivan, Richard Goldstein, and Patrick O'Neill, Sony Music Entertainment Inc., and Michelle Anthony (the "NYSE defendants") to dismiss the complaint as asserted against them, preclude plaintiffs from making any further filings or motions in any way related to the matters discussed in the complaint and for an award for sanctions is granted to the extent that the complaint as asserted against said defendants is dismissed and plaintiffs are precluded from making any further filings or motions against said defendants in any way related to the matters discussed in the complaint; and it is further

ORDERED that the motion by defendant Fordham University to, inter alia, dismiss the complaint as asserted against it is granted and plaintiffs are precluded from making any further filings or motions against said defendant in any way related to the matters discussed in the complaint; and it is further

ORDERED that the motion by defendants Naroor, Shaheen Qureshi, Sajid J. Qureshi, and VIP Plus Services, Inc. to, inter alia, dismiss the complaint as asserted against them is granted and plaintiffs are precluded from making any further filings or motions against said defendants in any way related to the matters discussed in the complaint; and it is further

ORDERED that the motion by defendant Sadiq to dismiss the complaint and for sanctions is granted to the extent that the complaint as against Sadiq shall be dismissed; and it is further [*30]

ORDERED that the cross motion and motion by defendants Schwab and Wynne to compel arbitration and stay this proceeding pending the completion of such arbitration, and motion to dismiss the complaint and enjoin plaintiffs from filing further actions is granted to the extent that the plaintiffs' claims related to the Service Agreement and Schwab's alleged breach of same shall be submitted for arbitration before the National Association of Securities Dealers, Inc., and the claims in plaintiffs' complaint relating to the underlying arbitration hearing and procedures thereof are dismissed; and it is further

ORDERED that the motion by defendants Lincoln Square Legal Services, James Cohen, Silverman, Ian Weinstein, Samuel Moore, Caracciolo, Vera Kagan, Dylan Murphy, Bradley Dyer, and Katie Cooperman to, inter alia, dismiss the complaint as asserted against them is granted and

plaintiffs are precluded from making any further filings or motions against said defendants in any way related to the matters discussed in the complaint; and it is further

ORDERED that plaintiffs' motion for discovery and jury trial is denied; and it is further

ORDERED that the motion by defendants Shafquat Chaudhry and Elite Limousine Inc. to dismiss the complaint as asserted against them is granted; and it is further

ORDERED that counsel for the NYSE defendants shall serve a copy of this order and memorandum decision upon all parties within 20 days of entry; and it is further

ORDERED that the Clerk shall enter judgment accordingly.

This constitutes the decision and order of the court. Footnotes

Footnote 1: General Business Law ("GBL") § 340 et seq. The Donnelly Act, GBL § 340 prohibits monopolies "in the conduct of any business, trade or commerce or in the furnishing of any service in this [S]tate . . . ."

Footnote 2: NYC Administrative Code § 8-101 seeks to "eliminate and prevent discrimination from playing any role in actions relating to employment, public accommodations, and housing and other real estate, and to take other actions against prejudice, intolerance, bigotry, discrimination and bias-related violence or harassment as herein provided . . . ."

Footnote 3: 42 USCS § 1986 imposes liability for damages upon "every person who, having knowledge of the wrongs conspired to be done, and mentioned in 42 USCS § 1985, are about to be committed, and having the power to prevent or aid in preventing the commission of the same, neglects or refuses so to do," if such wrongful act is committed.

Footnote 4: 42 USCS § 1985 (2) provides a right of action to anyone injured "[i]f two or more persons . . . conspire to deter, by force, intimidation, or threat, any party or witness in any court . . . from attending such court, or from testifying to any matter pending therein, freely, fully, and truthfully . . .; or if two or more persons conspire for the purpose of impeding, hindering, obstructing, or defeating, in any manner, the due course of justice . . . with intent to deny to any citizen the equal protection of the laws, or to injure him or his property for lawfully enforcing, or attempting to enforce, the right of any person, or class of persons, to the equal protection of the laws; . . . ."

Footnote 5: 42 USCS § 1985 (3) provides a right of action to anyone injured where "two or more persons . . . conspire for the purpose of depriving . . . any person the equal protection of the laws . . . ."

Footnote 6: 18 USCS § 241 provides for the fining and/or imprisonment of any persons who "conspire to injure, oppress, threaten, or intimidate any person in the free exercise or enjoyment of any right or privilege secured to such person by the [United States] Constitution . . . or because such person exercised the same."

Footnote 7: 18 USCS § 242 provides for the fining and/or imprisonment of any person who, "under color of law, willfully subjects any person to the deprivation of any rights, privileges, or immunities secured or protected by the [United States] Constitution . . . or to different punishments, pains, or penalties on account of such person being an alien, or by reason of his color or race, than are prescribed for the punishment of citizens."

Footnote 8: 18 USCS § 1512 provides for the fining and/or imprisonment of any person who tampers with a witness, a victim, or an informant.

Footnote 9: Id.

Footnote 10: See Courtney v United States, 390 F2d 521 [9th Cir 1968] [18 USCS § 1503 makes unlawful any act, committed corruptly, in an endeavor to impede or obstruct due administration of justice, and the proper criterion to apply to acts is their reasonable tendency to obstruct the honest and fair administration of justice].

Footnote 11: Penal Law §§ 105-105.15 define the various degrees of the crime of conspiracy.

Footnote 12: Penal Law § 135.60 defines the crime of coercion in the second degree.

Footnote 13: Penal Law § 135.65 defines the crime of coercion in the first degree.

Footnote 14: Penal Law Article 110 concerns the crime of attempt to commit a crime.

Footnote 15: Penal Law Article 115 concerns the crime of criminal facilitation.

Footnote 16: Penal Law Article 460 concerns the crime of enterprise corruption.

Footnote 17: CPLR § 1353 [1] provides that upon or after the conviction of a person of enterprise corruption as defined in Penal Law § 460.20 the court may "enjoin future activity by the person so convicted or an enterprise he controls or in whose control he participates upon a showing that injunctive relief is necessary to prevent further violation of that section."

Footnote 18: CPLR § 1354 provides that a "person or enterprise not convicted of the crime of enterprise corruption

may be made a party to a civil action under this article . . . ."

Footnote 19: Penal Law Article 485 describes the legislative findings regarding hate crimes, defines the various elements of a hate crime and provides the sentencing scheme for hate crime convictions.

Footnote 20: Plaintiffs also seek damages for, inter alia, loss of business and compensation, physical and intentional emotional injury and pain and suffering, and loss of enjoyment of life.

Footnote 21: The arbitration record indicates that the claimants appeared by defendants Romaine Gardner ("Gardner"), Claudine Caracciolo ("Caracciolo"), Katie Cooperman ("Cooperman"), Samuel Moore, Dylan Murphy and Marcella Silverman ("Silverman"), of Counsel to defendants Lincoln Square Legal Services, Inc. ("Lincoln Square Legal Services") Fordham University School of Law ("Fordham Law School"). The arbitration record also notes that Schwab appeared by counsel, defendant Garrett Wynne ("Wynne"), and that plaintiffs appeared by Gopal Kukreja, Esq.

Footnote 22: Here, plaintiffs claimed that the NYSE and Schwab telephoned Gondal at home, even though they were aware that he had representation.

Footnote 23: Plaintiffs also argued that the issue as to the existence of a valid agreement to arbitrate was a matter for the courts, and not the arbitrators, and that the procedures for arbitration were not followed.

Footnote 24: Plaintiffs cited to two letters: (1) a letter dated September 5, 2003, in which Lincoln Square Legal Services argued that since plaintiffs were unresponsive to document requests, a default judgment should be entered against them, and (2) letter between the NYSE and the attorneys for the arbitration claimants indicating that plaintiffs will participate in the arbitration.

Footnote 25: In further support, plaintiffs submit a letter from Kupersmith in which she notes that the Arbitrators accepted the September 29, 2003 submission from Schwab and the September 30, 2003 submission from claimants, after the hearings and before the November 5, 2003 arbitration award.

Footnote 26: Plaintiffs also filed a sanctions motion seeking to disbar two attorneys and a billion dollars in damages based on counsels' fax of a copy of a letter to the ex parte judge to hold a conference, for improperly seeking to serve reply papers, and for lying to the assigned judge about the service of reply papers. This motion was also opposed.

Footnote 27: Within days of filing their Order to Show Cause, plaintiffs filed a motion to reargue before the Court (Diamond, J.), which, as of the date of this decision, is pending.

Footnote 28: Gondal also lists twelve account numbers Schwab allegedly took over.

Footnote 29: Gondal claims that Mrs. Sadiq did not initiate any legal proceedings against him because she signed a separate investment management agreement with Gondal in addition to the agreement to hold Gondal harmless built into the Schwab Account Agreement.

Footnote 30: Gondal claims that at the hearing, defendant Cooperman acknowledged that the copies of documents in Lincoln Square Legal Services' possession may not have been the same copies in Gondal's possession. At that point, defendant Kupersmith suggested that the arbitrators "leave the room" to have an executive session.

Footnote 31: Caracciolo stated that Gondal did not review the application with Naroor or Mrs. Qureshi, told them that he would triple their money in three months, that Naroor and Mrs. Qureshi assumed that Gondal would not steal their money, that Schwab gave Gondal the means to take out loans from Schwab in his customer's' names, and, that based on Gondal's representation, Qureshi gave $2000 in cash to Gondal which never showed up on any account statement. Further, Mr. Qureshi testified that he and Mrs. Qureshi gave $12,000 in cash to his brother, Sadiq, which Gondal denies herein. Further, Caracciolo's statement that Naroor and Qureshi were cheated out of the only savings they had was false, because Naroor kept maintained more than six figures in his bank account, and Mrs. Qureshi, who pretends to be a "housewife," is in fact the Chairman and CEO of VIP Plus.

Footnote 32: In support, plaintiffs submit a letter from Kupersmith in which she notes that the Arbitrators accepted the September 29, 2003 submission from Schwab and the September 30, 2003 submission from claimants, after the hearings.

Footnote 33: It is alleged that defendants violated 18 USC §§ 1503 and 1512 (b)(3) and (f), dealing with obstruction of justice.

Footnote 34: Lincoln Square Legal Services requested that St. Vincent De Paul Legal Program be substituted as counsel for Naroor and Qureshi because a conflict of interest has arisen from plaintiffs' accusations of conspiracy against Lincoln Square Legal Services' relating to its representation of Naroor and Qureshi in the prior proceedings.

Footnote 35: In reply, Naroor and Qureshi dispute the factual allegations plaintiffs raise in opposition, and essentially argue that plaintiffs' allegations are absurd, and lacking in evidentiary support.

Footnote 36: Pursuant to Section 1983, state actors are subject to civil action for using their badge of authority to deprive individuals of their federally guaranteed rights (42 USCA § 1983).

Footnote 37: Plaintiffs' Order to Show Cause with complaint bears sequence #

001. The branch of the Order to Show Cause by the NYSE defendants and motions by defendants Naroor and Qureshi, defendant Fordham, and defendant Mohammad Irfan Sadiq, to dismiss the complaint and for sanctions bear sequence #

002. The motion by defendant Schwab and Wynne to compel arbitration bears sequence #

003. The motion by defendants Lincoln Square Legal Services, Cohen, Silverman, Weinstein, Samuel Moore, Claudine Caracciolo, Vera Kagan, Dylan Murphy, Bradley Dyer, and Katie Cooperman bears sequence #

004. Plaintiffs' motion for discovery and a jury trial bears sequence #

005. The motion by defendants "Shafquat Chaudhary" and Elite Limousine Plus Inc. to dismiss the complaint bears sequence #

006. These motions are consolidated for disposition and same are decided as indicated herein.

Footnote 38: The Hate Crimes Act of 2000 (P.L. §§ 485.00485.10) enhance the penalties for Assault in the Third Degree by elevating that crime from a misdemeanor to a felony when it has been proved that the offender committed the crime of Assault in the Third Degree and intentionally selected the victim or intentionally committed the underlying offense because of a belief or perception, in whole or substantial part, because of a belief or perception

regarding the chosen victim's race, color, national origin, ancestry, gender, religion, religious practice, age, disability or sexual orientation, regardless of whether the belief or perception is correct (P.L.§§ 485.05(1)(a) and(b) and 485.10).

Footnote 39: Schwab also joins in the NYSE defendants' application to dismiss plaintiffs' complaint.

Footnote 40: 42 USC § 1985(3). Section 1985 creates no substantive rights, but merely provides a remedy for conspiracies to violate a person's right to equal protection of the laws.