Detrick v. Panalpina, Inc.
| Citation | 108 F.3d 529 |
| Decision Date | 18 March 1997 |
| Docket Number | 95-3074,Nos. 95-2937,s. 95-2937 |
| Parties | RICO Bus.Disp.Guide 9259 Guy R. DETRICK; Donna Detrick; Fast Forward, Incorporated, Plaintiffs-Appellants, and Northeast Container Corporation, Plaintiff, v. PANALPINA, INCORPORATED; Panalpina Air Freight, Incorporated; Multi-Modal Freight Systems, Incorporated; Multi-Modal Freight Systems Of Virginia; Sylvan Friedman, Defendants-Appellees, and American Motor Lines, Incorporated; Baltimore Freightways, Incorporated; Blue Star Freight Lines, Incorporated; General Motor Lines, Incorporated; Hagerstown Motor Express, Incorporated; Jennifer Motor Express, Incorporated; Maryland Transport And Storage Company; Mills Trucking, Incorporated; National Motor Lines, Incorporated; New Windsor Express, Incorporated; South Carolina Motor Express, Incorporated; Tidewater Trucking Company, Incorporated; U.S. Motor Express, Incorporated; U.S. Transport Group; Vista Motor Express, Incorporated; John Does, 1-10, Defendants. Guy R. DETRICK; Donna Detrick; Fast Forward, Incorporated, Plaintiffs-Appellees, and Northeast Container Corporation, Plaintiff, v. PANALPINA, INCORPORATED; Panalpina Air Freight, Incorporated, Defendants-Appellants, and Multi-Modal Freight Systems, Incorporated; Multi-Modal Freight Systems of Virginia; Sylvan Friedman; American Motor Lines, Incorporated; Baltimore Freightways, Incorporated; Blue Star Freight Lines, Incorporated; General Motor Lines, Incorporated; Hagerstown Motor Express, Incorporated; Jennifer Motor Express, Incorporated; Maryland Transport and Storage Company; Mills Trucking, Incorporated; National Motor Lines, Incorporated; New Windsor Express, Incorporated; South Carolina Motor Express, Incorporated; Tidewater Trucking Company, Incorporated; U.S. Motor Express, Incorporated; U.S. Transport Group; Vista Motor Express, Incorporated; John Does, 1-10, Defendants. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
ARGUED: Robert Paul Stein, Camhy, Karlinsky & Stein, L.L.P., New York City, for Appellants. David K. Monroe, Galland, Kharasch, Morse & Garfinkle, P.C., Washington, DC, for Appellees. ON BRIEF: Martin E. Karlinsky, Allison J. Unger, Camhy, Karlinsky & Stein, L.L.P., New York City; Frank C. Razzano, Lisa E. Perry, Camhy, Karlinsky, Stein, Razzano & Rubin, L.L.P., Washington, DC, for Appellants. Andrew T. Goodson, Galland, Kharasch, Morse & Garfinkle, P.C., Washington, DC, for Appellees Panalpina; Max H. Lauten, Kramon & Graham, P.A., Baltimore, MD, for Appellees Multi-Modal and Friedman.
Before MURNAGHAN and NIEMEYER, Circuit Judges, and HARVEY, Senior United States District Judge for the District of Maryland, sitting by designation.
Affirmed by published opinion. Judge MURNAGHAN wrote the opinion, in which Judge NIEMEYER and Senior Judge HARVEY joined.
In April, 1990, Guy R. Detrick, Donna Detrick, and Fast Forward, Inc., 1 abandoned their contract with Panalpina, Inc., and Panalpina Air Freight, Inc. (collectively, Panalpina), under which the Detricks provided warehouse services at Panalpina's Sterling, Virginia facility. The Detricks maintain that Panalpina, Multi-Modal, and Friedman conspired to force them to abandon the contract.
In their first amended complaint, the Detricks alleged various violations of the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., and the Virginia conspiracy statute, Va.Code Ann. § 18.2-500 (Michie 1995). Subsequently, Panalpina counterclaimed against Guy and Donna Detrick alleging that the Detricks provided false invoices in breach of their contractual obligations to Panalpina, and that the Detricks willfully and maliciously conspired to injure Panalpina in its business, in violation of Va.Code Ann. §§ 18.2-499-500 (Michie 1995).
After the close of discovery, the district court granted summary judgment in favor of Panalpina, Multi-Modal, and Friedman on the grounds that the Detricks' RICO and Virginia state law claims were time-barred. On Panalpina's cross-claim, the district court also granted summary judgment in favor of the Detricks on the grounds that Panalpina had offered insufficient evidence that the Detricks breached their contractual obligations, and that Panalpina's conspiracy claim was barred by the intracorporate conspiracy doctrine. The Detricks and Panalpina now appeal. After careful consideration, we affirm in all aspects the decision of the district court.
Guy R. Detrick and Donna Detrick are the sole stockholders of Fast Forward, Inc. (Fast Forward), and are majority stockholders of an affiliated corporation known as Northeast Container Corporation (Northeast). Panalpina, an international freight forwarder, arranges for the world-wide transportation of goods on behalf of its customers. Northeast and later Fast Forward, provided warehouse handling services for Panalpina in Herndon, Virginia and Sterling, Virginia, pursuant to informal understandings and later pursuant to written agreements dated October 24, 1988, and September 5, 1989. Pursuant to these agreements, the Detricks were Panalpina's primary warehouse service provider.
In November, 1988, Panalpina was awarded a substantial Foreign Military Sales Program (FMSP) 2 contract for the transportation of arms, weapons, and military equipment in connection with orders placed by the government of Turkey (Turkey or Turkish/FMSP). In Spring, 1989, the Detricks began to process the Turkish/FMSP freight moving through the Sterling warehouse.
At this same time, the relationship between the Detricks and Panalpina began to deteriorate as Panalpina began to demand discounts in fees charged by Fast Forward. In addition, Panalpina sought increases of staff, and insisted on "charging back" the Detricks for expenses not related to the warehouse contract. Panalpina also refused to lease additional space in the warehouse complex needed to accommodate the Turkish/FMSP contract.
As a result of Panalpina's actions, the Detricks' costs increased and the warehouse contract became unprofitable. As such, in April, 1990, the Detricks abandoned the warehouse contract. Contemporaneously, Friedman and Multi-Modal stepped in and using the former Northeast employees and assets Friedman had purchased from the Detricks, began to provide warehouse services to Panalpina at the Sterling site. 3
In May, 1990, shortly after the Detricks abandoned the warehouse contract, Friedman hired Guy Detrick to work in a sales position at Multi-Modal at the Panalpina warehouse in Sterling; Multi-Modal also employed Donna Detrick on a hourly basis during the summer of 1990 to answer telephones and to perform light clerical work. On March 11, 1991, a former Fast Forward employee then employed by Multi-Modal approached Guy Detrick with an invoice containing an obvious billing discrepancy. Later that day, Detrick entered the copy room in the Panalpina warehouse, where he saw a stack of similar documents, including a freight bill "that looked like it had been done in a cheap print shop, that once again for the second time that day had the exact same information but a huge mark-up on the price." Upon further investigation, Detrick confirmed his suspicions that Friedman, Panalpina, and others were possibly engaged in an unlawful rebilling scheme, the object of which was to defraud the United States and foreign governments. 4
Following the discovery of the alleged fraud, in March, 1991, the Detricks consulted counsel in an effort to determine whether they had sustained an injury for which the Detricks could sue. The Detricks also met with agents of the Internal Revenue Service (IRS), the Office of the Inspector General of the United States Department of State (OIG), and agents of the Federal Bureau of Investigation (FBI) and Defense Investigatory Service (DIS). 5
On March 9, 1995, the Detricks filed the instant action in the district court alleging that the alleged rebilling scheme, operated by Panalpina, Multi-Modal, and Friedman violated RICO, 18 U.S.C. § 1961 et seq., and the Virginia conspiracy statutes, Va.Code. Ann. § 18.2-500 (Michie 1995). 6 Panalpina filed a counterclaim alleging that the Detricks had (1) provided false invoices to Panalpina in breach of their contractual obligations to Panalpina; and (2) conspired willfully and maliciously to injure Panalpina in its business, in violation of Va.Code Ann. §§ 18.2-499 and 500. 7 At the close of discovery, Panalpina, Multi-Modal, and Friedman moved for summary judgment on two grounds: (1) the RICO and Virginia conspiracy claims were barred by the statute of limitations, and (2) the Detricks lacked standing with respect to the RICO and Virginia conspiracy claims. 8
On October 26, 1995, the district court denied the motion on the standing ground, but granted summary judgment with respect to the statute of limitations ground. A day later, on October 27, 1995, the district court granted summary judgment in favor of the Detricks on Panalpina's cross-claim finding that Panalpina had failed to present sufficient evidence to sustain its state law claims, and further, that the intracorporate doctrine barred Panalpina's conspiracy claim pursuant to Va.Code Ann. §§ 18.2-499-500.
The Detricks argue that the district court erred in dismissing their RICO and Virginia conspiracy claims. We now address the Detricks' contentions.
Before turning to the merits of the instant appeal, the court must address Guy and Donna Detrick's, and Fast Forward's Motion to Substitute the Detricks' bankruptcy Trustees, H. Jason Gold and Gordon P. Peyton for Guy and Donna Detrick as Appellants. Panalpina has filed an opposition to the substitution motion arguing that the substitution will unnecessarily complicate the instant appeal. Friedman and Multi-Modal have no opposition to the substitution. 9
The Bankruptcy Code defines property of the debtor's estate to include "all legal or equitable...
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