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Case 2:12-cv-03036-JS-ETB Document 25 Filed 11/06/12 Page 1 of 3 PageID #: 488

Gallo Associates, AJ Gallo Associates PC


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445 Northern Boulevard, Suite 11, Great Neck, NY 11021

November 6, 2012

VIA ECF The Hon. Joanna Seybert, USDJ The Hon. E. Thomas Boyle, USMJ United States District Court, EDNY 100 Federal Plaza Central Islip, New York 11722

Re: Amiron Development Corp., et al v. Sytner, et al Case No.: 12-CV-03036

Dear Judge Seybert and Magistrate Boyle: This firm represents the plaintiffs in the above action. Please allow this to serve as opposition to the letter application of defendants requesting that the within matter be referred to arbitration. On another note, however, while the defendants respective motions to dismiss will not be addressed herein but will be the subject of separately filed opposition, as Defendants deny any involvement with the scheme alleged by plaintiffs in their respective letter applications on the arbitration issue, I just wish to note for the Court that not only does the complaint and the voluminous exhibits attached thereto clearly belie any such contention, but also, despite their wholesale, self-serving denials, the defendants do in the same breath admit their participation in, among other things, meetings, et cetera, with respect to plaintiffs investment. In this regard, it is plaintiffs contention that their involvement was as active participants to help sell the plaintiffs on the subject investment transaction for their own personal gain, and not merely as innocent bystanders as they would have this Court believe. Accordingly, the application of defendants for dismissal of this case should be denied. In any event, for the reasons that follow, it is also respectfully submitted that arbitration is not appropriate in this case; and that referring this matter out to arbitration will only serve to prejudice the plaintiffs and serve as a windfall for defendants.

Case 2:12-cv-03036-JS-ETB Document 25 Filed 11/06/12 Page 2 of 3 PageID #: 489


Firstly it must be noted that while the defendants rely on a contractual provision purportedly requiring arbitration of any dispute arising between the parties, Plaintiffs are not suing under the contract but instead choose to institute a RICO action based upon the pervasive scheme of defendants that defrauded them out of their money. It is plaintiffs contention that the contract that defendants rely on was so permeated by fraud as to render it void ab initio under New York law. This Court of course has the jurisdiction to decide the arbitrability of the underlying claims herein, and where the validity of an agreement to arbitrate is called into question, issues relating to the validity of the contract upon which the application to compel arbitration is based must first be resolved by the Court. Rhodes v. Consumers Buyline, Inc., 868 F. Supp. 368 (1993). Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, S. Ct. 927, 939, 74 L.Ed.2d 765 (1983). Shearson Lehman Bros., Inc. v. Brady, 783 F. Supp. 1490, 1493 (D. Mass. 1991). See also Housekeeper v. Lourie, 39 A.D.2d 280, 283, 333 N.Y.S.2d 932, 936 (N.Y. App. Div.). It has been long recognized under New York law that a contract to do a thing which cannot be performed without violation of law is itself void and cannot be enforced. Shedlinsky v. Budweiser Brewing Co., 163 N.Y. 437, 439, 57 N.E. 620 (1900). It is respectfully submitted that the agreement upon which defendants rely is violative in se of New York and Federal statutes, including RICO and securities law, and is thus void as a matter of law. Mahoney v. Andersen, 72 Misc.2d 1054, 1055-1057, 340 N.Y.S.2d 553, 554-557 (N.Y. City Civ. Ct. 1973). East Coast Moving and Storage, Inc. v. Flappin, 78 Misc.2d 140, 355 N.Y.S.2d 525 (N.Y. City Civ. Ct. 1974). Further, it is also respectfully submitted that where the fraud alleged was part of a grand scheme that permeated the entire contract, the arbitration provision falls with the rest of the contract as an arbitration clause of a void contract is itself void and unenforceable. Weinrott v. Carp, 32 N.Y.2d 190, 197, 344 N.Y.S.2d 848, 855, 298 N.E.2d 42, 26 (1973). See also, In re Kramer & Uchitelle, Inc., 288 N.Y. 467, 471, 43 N.E2d 493 (1942), (proceedings to enforce arbitration presuppose the existence of a valid and enforceable contract at the time arbitration is sought). See also, Zanesville v. Mohwak Data Sciences Corp., 97 A.D.2d 64, 468 N.Y.S.2d 271 (N.Y. App. Div. 1983), where contract in its entirety is invalid or void, an arbitration clause contained therein is of no force and effect and cannot be enforced). Further to the above, it is equally well established that New York courts recognize a public policy exception to the general enforceability of arbitration clauses which provides for judicial intervention where the dispute involves an alleged violation of public policy. Hirsch v. Hirsch, 37 N.Y.2d 312, 315, 333 N.E.2d 371, 373, 372 N.Y.S.2d 71, 73 (1975). See also In re Heilman, 188 A.D.2d 294, 590 N.Y.S.2d 495 (1992). Port Washington Union Free School District v. Port Washington Teachers Association, 45 N.Y.2d 411, 417, 408 N.Y.S.2d 453, 380 N.E.280, 283 (1978). In the case at bar, it cannot be seriously contended that public policy concerns do not weigh heavily in favor of judicial intervention upon the facts alleged in the plaintiffs Complaint.

Case 2:12-cv-03036-JS-ETB Document 25 Filed 11/06/12 Page 3 of 3 PageID #: 490


Accordingly, for all of the foregoing reasons, plaintiffs pray that the respective applications of defendants to compel arbitration be denied in their entirety by this Honorable Court. Respectfully Submitted,

Anthony J Gallo
Anthony J. Gallo, Esq.