Fc Inv. Group Lc v. Ifx Markets, Ltd.

• Decision Date: 06 February 2007
• Docket Number: Civil Action No. 04-1939 (PLF).
• Citation: 479 F.Supp.2d 30
• Parties: FC INVESTMENT GROUP LC and Lawrence Jay Eisenberg, Plaintiffs, v. IFX MARKETS, LTD., Defendant.
• Court: U.S. District Court — District of Columbia

479 F.Supp.2d 30

FC INVESTMENT GROUP LC and Lawrence Jay Eisenberg, Plaintiffs, v. IFX MARKETS, LTD., Defendant.

Civil Action No. 04-1939 (PLF).

United States District Court, District of Columbia.

February 6, 2007.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Gregory David Grant, Courtney R. Sydnor, Shulman, Rogers, Gandal, Pordy & Ecker, P.A., Rockville, MD, for Plaintiffs.

Kenneth Scott Nankin, Nankin & Verma PLLC, Washington, DC, Gerald Haberkorn, Joan M. Kubalanza, Kevin J. Clancy, Lowis & Gellen, Chicago, IL, for Defendant.

OPINION

PAUL L. FRIEDMAN, District Judge.

This matter is before the Court on defendant's motion to dismiss pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure for lack of personal jurisdiction and Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Upon consideration of the motion to dismiss, the opposition, the reply, and all other materials submitted by the parties the Court concludes that it lacks-jurisdiction over the sole defendant, IFX Markets, Ltd. ("IFX"). The amended complaint therefore is dismissed in its entirety.

I. BACKGROUND

Plaintiffs' claims arise out of a series of investments made by plaintiffs with nonparty Titan Global Strategies, Ltd. ("Titan"). The investments were made initially by plaintiff Lawrence Eisenberg, a resident of the State of Maryland, and later by plaintiff FC Investment Group LC ("FCIG"), a Maryland limited liability company with its principal place of business in the District of Columbia. Amended Complaint ("Am.Compl.") ¶¶ 1-2. Plaintiffs allege that defendant IFX, a United Kingdom corporation, conspired with Titan to fraudulently induce plaintiffs to invest millions of dollars in Titan, which turned out to be no more than a pyramid scheme through which investors' money was funneled to other illegitimate business. See id. ¶¶ 3, 6.

Plaintiffs allege that the scheme began in September 1998, at which time plaintiff Eisenberg and Milan Martinic, Titan's owner, discussed investment opportunities with; Titan. See Am. Compl. ¶ 7. Eisenberg was informed by Martinic at that time that all trades managed by Titan would be made by non-party IG Group, PLC ("IG"), a currency trader. See id. ¶ 7. Based on these representations and others made in Titan's "information brochure," which was sent to Eisenberg in the District of Columbia, Eisenberg made an initial investment of $10,000 with Titan. See id. ¶ 8. In April 2001 Eisenberg formed FCIG to "facilitate his and other investors dealings with Titan." See id. ¶ 11. Nevertheless, Eisenberg apparently continued to invest on his own behalf, as well as on FCIG's. See id. ¶ 14.

Plaintiffs made several subsequent investments with Titan, although the dates and amounts of the investments are unclear from the amended complaint. The amended complaint is internally inconsistent with regard to the extent of Titan's alleged fraud. See Am. Compl. ¶ 6 (alleging that defendant and Titan defrauded plaintiffs of $9.5 million); ¶¶ 8-9 (describing investments of $10,000, approximately $1.065 million, and $400,000 between 1998 and 2003, for a total of roughly $1.5 million); ¶ 12 (alleging total investments of $5 million as of October 2003), ¶ 37 (alleging total loss of $5 million in investment funds). Thus, plaintiffs' alleged total investments with Titan vary depending on which part of the amended complaint is credited. Plaintiffs give reasonably reliable dates for only two investments: the first for $10,000 in or around September 1998, see id. ¶ 8, and the last for $2 million made in November 2002. See id. ¶ 23. Plaintiffs' failure to properly and more specifically allege facts that are entirely under their control serves only to obfuscate any alleged wrongdoing on the part of defendant.

Beginning sometime in 2001 and ending sometime in 2003, Titan sent account statements to Eisenberg and FCIG at their shared business address in the District of Columbia, allegedly showing large earnings. See Am. Compl. ¶ 13. Meanwhile, in "early 2001" Titan named Charles Knott as investment advisor and point of contact for Eisenberg and FCIG. Id. ¶ 14. Knott traveled to the District of Columbia an unspecified number of times to meet with Eisenberg on unspecified dates "in 2001 and 2002." Id.

At an unspecified time "[i]n or about 2002" Knott informed FCIG that defendant IFX would assume responsibility for management, investment, and brokerage service from IG. Am. Compl ¶ 15. Sometime thereafter, Christopher Cruden, an IFX employee, developed a professional relationship with Eisenberg and began calling him "regularly to offer assurances about IFX's role" in Titan's investment program. Id. In addition, both Cruden and Knott contacted Eisenberg to invite him to London for a presentation at IFX's offices. See id.

In November 2002, Eisenberg accepted Cruden and Knott's invitation and attended an IFX/Titan presentation at IFX's offices in London. See Am. Compl ¶ 18. Based on the PowerPoint presentation made to Eisenberg at the London meeting, FCIG made a final investment of $2 million with Titan. See id.

In late 2003, Eisenberg attempted to close his account and withdraw the balance of his funds, but he was rebuffed. See Am. Compl. ¶ 25. In spite of assurances by Titan board members Milan Martinic and Lawrence Lichtenstein that Titan would return Eisenberg's funds, which they said were in a U.S. bank account, Eisenberg has yet to receive his requested refund. See id. ¶ 26. Plaintiffs allege that Titan and Martinic used Eisenberg and FCIG's investments to fund a number of fraudulent ventures and for personal use. See id ¶ 27.

Plaintiffs bring four claims against defendant: intentional fraud/fraud in the inducement (Count I), see Am. Compl. ¶¶ 33-37; civil conspiracy (Count II), see id. ¶¶ 38-41; civil aiding and abetting (Count III), see id ¶¶ 42-46; and conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act ("RICO") (Count IV), see id. ¶¶ 47-59. Because the Court finds that it lacks personal jurisdiction over defendant, it dismisses the amended complaint.

II. DISCUSSION

Defendant moves to dismiss the amended complaint for lack of personal jurisdiction in this Court pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. See Motion to Dismiss ("Mot.") at 6. Defendant argues that plaintiffs have failed to demonstrate that this Court may exercise general, specific, conspiracy, or RICO jurisdiction over it. See id. at 6, 8, 12. Each of these theories will be considered in turn. Upon careful consideration of the parties' briefs, arguments, and other materials, the Court concludes that it lacks personal jurisdiction over defendants and therefore dismisses the complaint.

A. Rule 12(b)(2) Standard of Review

Plaintiffs bear the burden of establishing personal jurisdiction over defendant. In order to meet their burden, plaintiffs must allege specific facts on which personal jurisdiction can be based; they cannot rely on conclusory allegations. See GTE New Media Services, Inc. v. Ameritech Corp., 21 F.Supp.2d 27, 36 (D.D.C. 1998), remanded on other grounds sub nom GTE New Media Services, Inc. v. BellSouth Corp., 199 F.3d 1343 (D.C.Cir. 2000); Blumenthal v. Drudge, 992 F.Supp. 44, 53 (D.D.C.1998); COMSAT Corp. v. Finshipyards S.A.M., 900 F.Supp. 515, 520 (D.D.C.1995). When considering personal jurisdiction, the Court need not treat all of the plaintiffs' allegations as true. Instead, the court "may [also] receive and weigh affidavits and other relevant matter to assist in determining the jurisdictional facts." Jung v. Assoc. Amer. Med. Coll., 300 F.Supp.2d 119, 127 (D.D.C.2004) (quoting United States v. Philip Morris Inc., 116 F.Supp.2d 116, 120 n. 4 (D.D.C.2000)); see also Brunson v. Kalil & Co., 404 F.Supp.2d 221, 223 (D.D.C.2005).

B. General Jurisdiction: "Doing Business" under D.C.Code § 13-334.

Plaintiffs first argue that this Court has general jurisdiction over IFX pursuant to D.C.Code § 13-334. The statute reads in pertinent part:

In an action against a foreign corporation doing business in the District, process may be served on the agent of the corporation or person conducting its business, or, when he is absent and can not be found, by leaving a copy at the principal place of business in the District, or, where there is no such place of business, by leaving a copy at the place of business or residence of the agent in the District, and that service is effectual to bring the corporation before the court.

D.C.Code § 13-334(a). The statute is facially concerned with service of process, but it "has been construed to provide a general jurisdictional grant under certain circumstances." Atlantigas Corp. v. Nisource, Inc., 290 F.Supp.2d 34, 44 n. 12 (D.D.C.2003).

1. Standard

Under the doctrine of general jurisdiction, a court may exercise personal jurisdiction over a non-resident defendant when that non-resident defendant has engaged in "continuous and systematic" general business contacts in the forum, notwithstanding the fact that those contacts do not relate to the underlying cause of action. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); see also Gorman v. Ameritrade Holding Corp., 293 F.3d 506, 509 (D.C.Cir.2002) (same); El-Fadl v. Central Bank of Jordan, 75 F.3d 668, 675 (D.C.Cir.1996) (contacts must be "continuous and substantial"). Jurisdiction under Section 13-334(a) requires that such systematic contacts demonstrate "a continuing corporate presence in the forum ... directed at advancing the corporation's objectives.'" El-Fadl v. Central Bank of Jordan, 75 F.3d at 675 (quoting AMAF Int'l Corp. v. Ralston Purina Co., 428 A.2d 849, 851 (D.C. 1981)). The reach of such general jurisdiction in the District of Columbia is "coextensive with the reach of constitutional due process." Gorman v. Ameritrade Holding Corp., 293 F.3d at 510 (citing Hughes v. A.H. Robins Co., 490 A.2d 1140, 1148 (D.C. 19...