Edita Applebaum v. William Fabian ( 2022 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 22-1049
_______________
EDITA APPLEBAUM,
Appellant
v.
WILLIAM P. FABIAN; FRANK RAJS; LEAH E. CAPECE; LAURENCE W. GOLD;
CECILIA KEH; THOMAS D’AMBROSIO; MAXINE MELNICK; MICHAEL
LACKEY; GERALD MACKO; DEREK SCHUMACHER; JIMMY SAMAYOA;
GARRETT APPLEBAUM; YOUSSEF ABDULAH YOUSSEF; VOYA FINANCIAL,
INC.; INTAC ACTUARIAL; JOHN DOES 1-10; ABC CORP 1-10.
_______________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 2:18-cv-11023)
District Judge: Honorable Kevin McNulty
_______________
Submitted Under Third Circuit L.A.R. 34.1(a)
on November 18, 2022.
Before: AMBRO, KRAUSE, and BIBAS, Circuit Judges
(Filed: November 21, 2022)
________
OPINION
__________
KRAUSE, Circuit Judge.

This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
Appellant Edita Applebaum appeals the District Court’s dismissal of her claims
under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961et seq., New Jersey’s equivalent racketeering statute, N.J. Stat. Ann. § 2C:41-1 et seq., and
the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., as well
as her common law civil conspiracy claim. She also appeals the denial of her latest motion
to amend her complaint to include a new claim under 17 C.F.R. § 240.10b-5 (Rule 10b-5)
and a fraudulent-concealment claim, and to add two new defendants. For the reasons
discussed below, we will affirm.1
I. DISCUSSION2
1. Applebaum’s New Jersey and Federal RICO Claims Are Time-Barred
or Otherwise Insufficiently Pleaded.
Applebaum asserts seven predicate violations under both RICO and New Jersey’s
equivalent statute. But as the District Court correctly concluded, six are time-barred and
the seventh is insufficiently pleaded.
1
Applebaum also brought state-law claims for common law fraud, defamation, violations
of New Jersey’s Conscientious Employee Protection Act, negligence, conversion,
intentional infliction of emotional distress, and tortious interference with prospective
economic advantage. As she does not contest their dismissal, however, these claims are
waived. See Kost v. Kozakiewicz, 1 F.3d 176, 182–83 (3d Cir. 1993).
2
The District Court had jurisdiction pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1367(a),
and we have jurisdiction pursuant to 28 U.S.C. § 1291. We review the District Court’s
dismissal of Applebaum’s complaint de novo and the denial of her motion to further amend
the complaint for abuse of discretion. See Lutz v. Portfolio Recovery Assocs., LLC, 49
F.4th 323, 326 (3d Cir. 2022).
2
The statute of limitations for both federal and New Jersey civil RICO claims is four
years from the date a plaintiff first “[knows] or should have known of their injury. . . . [and]
the source of their [RICO] injury.” Prudential Ins. Co. of Am. v. U.S. Gypsum Co., 359
F.3d 226, 233 (3d Cir. 2004) (internal quotation marks omitted); accord Lee v. Carabetta,
2014 WL 4098012, at *8 (N.J. Super. Ct. App. Div. Aug. 21, 2014). Applebaum had
knowledge of the factual bases underlying her first six alleged predicate violations by the
time she included them in her state court complaint in March 2014, so Applebaum had until
March 2018 to file her claim. Yet, she did not do so until June 2018, and she identifies no
valid basis for tolling. Thus, Applebaum’s first six RICO claims are time-barred. See
Santos ex rel. Beato v. United States, 559 F.3d 189, 197 (3d Cir. 2009).
While timely, her seventh predicate offense—premised on Appellees’ alleged
misrepresentations throughout state court proceedings—fails to state a claim, as it is well
established that fraudulent litigation activity “cannot act as a predicate offense for a civil-
RICO claim.” Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d 512, 525 (5th Cir.
2016); see also Kim v. Kimm, 884 F.3d 98, 104 (2d Cir. 2018); Raney v. Allstate Ins. Co.,
370 F.3d 1086, 1088 (11th Cir. 2004); Deck v. Engineered Laminates, 349 F.3d 1253, 1258
(10th Cir. 2003).
2. Applebaum’s ERISA Claim Is Barred by the Probate Exception.
Applebaum also seeks to reinstate her claim that Appellees’ “misappropriation of
funds” from her late husband’s “Voya/ING 401K plan” (401(k) plan) into his estate
3
violated ERISA, App. 564,3 which would require us to decide whether these proceeds were
rightly part of that estate. But we cannot “endeavor[] to (1) probate or annul a will, (2)
administer a decedent’s estate, or (3) assume in rem jurisdiction over property that is in the
custody of the probate court.” Three Keys Ltd. v. SR Util. Holding Co., 540 F.3d 220, 227
(3d Cir. 2008). And while Applebaum argues that she was the valid beneficiary of her
husband’s 401(k) plan and that its proceeds should have bypassed the probate system–
Culwick v. Wood, 384 F. Supp. 3d 328, 341 (E.D.N.Y. 2019)–Applebaum’s beneficiary
designation, and thus her right to estate property, is precisely what is disputed here.
Bollenbach v. Haynes, 2019 WL 1099704, at *4 n.2 (S.D.N.Y. Mar. 8, 2019). As a result,
this claim falls squarely within the “probate exception” to our jurisdiction. Three Keys
Ltd., 540 F.3d at 227.
3. Applebaum Lacks Standing to Bring a Rule 10b-5 Securities Fraud
Claim.
Applebaum next argues that Appellees violated Rule 10b-5 by making false
statements before the probate court in support of their efforts to secure an in-cash
distribution of Applebaum’s shares of her late husband’s company. Although Applebaum
concedes she neither sold nor purchased a security here and thus lacks standing to seek
monetary damages, see, e.g., Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc.,
140 F.3d 478, 485 (3d Cir. 1998), she contends she has standing to seek injunctive relief
as a beneficial owner and “de facto seller” of the company’s stock. Appellant’s Br. 35.
3
Applebaum’s complaint also includes allegations that Appellees’ “deferred compensation
scheme” violated ERISA. App. 563. But she does not challenge the District Court’s
dismissal of that claim and thus waives it on appeal. Kost, 1 F.3d at 182.
4
Applebaum rests her argument on Norris v. Wirtz, in which the Seventh Circuit held
that the beneficiary of a trust had standing to sue her trustees under Rule 10b-5 and 15
U.S.C. § 78j(b). 719 F.2d 256, 259–61 (7th Cir. 1983). But the Norris Court reached that
conclusion because, in that case, “plaintiff’s approval was required [for the sale of the at-
issue security] under the will.” Id. at 261. Here, by contrast, decedent’s will explicitly
enabled the executor to distribute Applebaum’s shares in cash, and New Jersey law did not
otherwise require her approval. In re Est. of Hope, 916 A.2d 469, 474 (N.J. Super. Ct.
App. Div. 2007). Thus, Applebaum lacks standing to seek even injunctive relief.
4. Applebaum Cannot State a Claim for Fraudulent Concealment.
According to Applebaum, the District Court also erred in dismissing her fraudulent
concealment claim, which was based on Appellees’ state court litigation activities and, in
particular, the actions of Defendant Thomas Howard, counsel for the estate. But New
Jersey law requires that a plaintiff be “damaged in the underlying action by having to rely
on an evidential record that did not contain the evidence defendant concealed,” Rosenblit
v. Zimmerman, 766 A.2d 749, 758 (N.J. 2001), and Applebaum has not established that
record. To the contrary, her complaint is replete with allegations demonstrating both
personal knowledge and the probate court’s awareness of the allegedly concealed
information, so she cannot state a claim for fraudulent concealment.
For the same reason, the District Court correctly concluded that Applebaum’s
request to join Howard as an indispensable party under Federal Rule of Civil Procedure 19
5
should be denied.4 See Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000) (holding that
leave to amend is futile if “the complaint, as amended, would fail to state a claim upon
which relief could be granted”).
5. Applebaum Cannot State a Civil Conspiracy Claim.
Lastly, Applebaum appeals the District Court’s dismissal of her civil conspiracy
claim and denial of her motion to amend that claim. She alleged that Appellees conspired
to (1) conceal information from the state court, and (2) “disinherit her” through the in-cash
distribution of her share of her husband’s company. Appellant’s Br. 43–45. But as the
District Court correctly observed, even if Appellees had conspired to achieve these
objectives, Applebaum cannot plausibly allege that she has been damaged. Appellees’
purported concealment is belied by Applebaum’s knowledge of their supposedly concealed
activities, as she attended various company meetings in which those activities were
discussed and Appellees’ push for an in-cash distribution was made pursuant to the
executor’s express authority under decedent’s will.5
4
Relatedly, Applebaum appeals the District Court’s denial of her request to join Appellee
William Fabian’s alleged shell company, Morey La Rue, Inc. Appellant’s Br. 46. Though
she claims that Morey La Rue was “used [by Fabian] to launder his off-the-books
financials” in connection with the sale of certain property of the estate, id., Applebaum
does not assert any independent claim against Morey La Rue and therefore could obtain
complete relief for her various RICO and fraud claims without its joinder.
5
To the extent Applebaum asserts that Appellees conspired to lie to the probate court about
Applebaum’s disruptive presence as a shareholder, she has failed to plausibly plead that
claim. For example, she offers nothing but speculation for her allegations that various
employee affidavits praising Appellees’ management of the business and highlighting the
disruptive nature of Applebaum’s involvement were “frivolous,” “outdated,” and the
product of collusion. Appellant’s Br. 32, 45; App. 263, 581.
6
II. CONCLUSION
For the foregoing reasons, we will affirm the District Court’s dismissal of
Applebaum’s complaint with prejudice, as well as its denial of her motion to amend.
7