Bankatlantic v. Coast to Coast Contractors, Inc.

• Decision Date: 17 July 1996
• Docket Number: No. 91-2940-Civ-Moreno.,91-2940-Civ-Moreno.
• Court: U.S. District Court — Southern District of Florida
• Parties: BANKATLANTIC, A Federal Savings Bank, a federally chartered savings bank, Plaintiff, v. COAST TO COAST CONTRACTORS, INC., Brother's Home Remodeling, Satellite Mike, National Air Conditioning Sales, Inc. a/k/a Kitchen Masters, Built Right Remodelers, Inc., Berkut Enterprises, Rich Company, Inc., Contractors Financial Consultants, Inc., Four Sons Home Contracting Inc., Jen-Cri, Inc., Vanguard Roofing and Siding Corp., Citiwide Home Improvement of Queens, Inc., Dura-Built, Inc., Aldo General Contracting, Shore Builders, Maywood Builders, Inc., Shamrock Builders, Inc., Mayflower Home Improvement Corp., Craftmark, Inc., Hallmark Home Design f/k/a Harbor Crest Associates, Ltd., Harris Home Designs, Inc., Belair Construction Corp., Empire State Insulation, Mandy of Quality, Regency Remodeling, Sharpe Home Improvements, Venus Siding and Window, Venus Contracting, Northeastern Holding Company of Florida, Northeastern Holding Co. Inc., Northeastern Holding Company of New Jersey, Sterling Southern Resources, Inc., Sterling Resources, Ltd., Sterling Resources of New Jersey Ltd., Bell Financial Services, Inc., Beyer Brothers Metal & Roofing Supply, Inc., Beyer Brothers of Long Island, Yankee Supply Co. Inc., Yankee Supply East Corp., Insulite Window Manufacturing Brooklyn Building Supply, Inc., Hy Beyer, David Beyer, Barry Beyer, Manny Beyer, Jeffrey Beyer, Bruce Beyer, Charles Mulligan, Eugene Donatutti, Henry York, Phillip Sedgwick, Howard Greenblatt, Joseph Ronzino, Mike Green, Nandor Nagi, Joan Sobel, Perry Blank, Seymour Yarnold, Tom Alison, George Rizzo, Shari Santschi, Stephen Bohlen, George Gardner a/k/a Rick Gardner, Jay Cholost, Gary Feldman, Bernard Perry a/k/a Bob Perry, Gino Ciuffetelli, Ron Scott, Joseph Giarizzo, James Gansky, Leon Martin, Harris Poulikides, William Belair, Howard Gosin, John F. Leanza, Aaron Mandelbaum, Harvey Scheer, Loretta Santucci, George Kaimis, Kenneth Bittle, Wayne Fischer, Carol Plack, B.D.M. Investment Corp. Money Purchase Plan and Trust, National Union Fire Company of Pittsburgh, Pennsylvania, and John Doe(s) 1 through 100, Defendants.

947 F.Supp. 480

BANKATLANTIC, A Federal Savings Bank, a federally chartered savings bank, Plaintiff, v. COAST TO COAST CONTRACTORS, INC., Brother's Home Remodeling, Satellite Mike, National Air Conditioning Sales, Inc. a/k/a Kitchen Masters, Built Right Remodelers, Inc., Berkut Enterprises, Rich Company, Inc., Contractors Financial Consultants, Inc., Four Sons Home Contracting Inc., Jen-Cri, Inc., Vanguard Roofing and Siding Corp., Citiwide Home Improvement of Queens, Inc., Dura-Built, Inc., Aldo General Contracting, Shore Builders, Maywood Builders, Inc., Shamrock Builders, Inc., Mayflower Home Improvement Corp., Craftmark, Inc., Hallmark Home Design f/k/a Harbor Crest Associates, Ltd., Harris Home Designs, Inc., Belair Construction Corp., Empire State Insulation, Mandy of Quality, Regency Remodeling, Sharpe Home Improvements, Venus Siding and Window, Venus Contracting, Northeastern Holding Company of Florida, Northeastern Holding Co. Inc., Northeastern Holding Company of New Jersey, Sterling Southern Resources, Inc., Sterling Resources, Ltd., Sterling Resources of New Jersey Ltd., Bell Financial

Services, Inc., Beyer Brothers Metal & Roofing Supply, Inc., Beyer Brothers of Long Island, Yankee Supply Co. Inc., Yankee Supply East Corp., Insulite Window Manufacturing Brooklyn Building Supply, Inc., Hy Beyer, David Beyer, Barry Beyer, Manny Beyer, Jeffrey Beyer, Bruce Beyer, Charles Mulligan, Eugene Donatutti, Henry York, Phillip Sedgwick, Howard Greenblatt, Joseph Ronzino, Mike Green, Nandor Nagi, Joan Sobel, Perry Blank, Seymour Yarnold, Tom Alison, George Rizzo, Shari Santschi, Stephen Bohlen, George Gardner a/k/a Rick Gardner, Jay Cholost, Gary Feldman, Bernard Perry a/k/a Bob Perry, Gino Ciuffetelli, Ron Scott, Joseph Giarizzo, James Gansky, Leon Martin, Harris Poulikides, William Belair, Howard Gosin, John F. Leanza, Aaron Mandelbaum, Harvey Scheer, Loretta Santucci, George Kaimis, Kenneth Bittle, Wayne Fischer, Carol Plack, B.D.M. Investment Corp. Money Purchase Plan and Trust, National Union Fire Company of Pittsburgh, Pennsylvania, and John Doe(s) 1 through 100, Defendants.

No. 91-2940-Civ-Moreno.

United States District Court, S.D. Florida.

July 17, 1996.

Vicki L. Monroe, Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., Miami, FL, for Plaintiff BankAtlantic.

James F. Crowder, Jr., Kimbrell & Hamann, P.A., Miami, FL, for Plaintiff National Union Fire Insurance Company of Pittsburgh, P.A.

William S. Reese, Wicker, Smith, Tutan, O'Hara, McCoy, Graham & Ford, Miami, FL, for Defendant Bruce Beyer.

Howard Gosin, Syosset, NY, pro se.

Miranda Fritz, New York City, for Defendant Jay Cholost, Vanguard Roofing & Siding Corp., and Empire State Insulation.

James Gansky, Centereach, NY, pro se.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS FOR LACK OF JURISDICTION AND ORDER REQUIRING DEFENDANTS TO FILE AN ANSWER

MORENO, District Judge.

THIS CAUSE came before the Court upon Defendant Bruce Beyer's Motion to Dismiss the Second Amended Complaint (docket no. 429); Defendant Howard Gosin's Motion to Dismiss the Second Amended Complaint (docket no. 668); Defendant James Gansky's Motion to Dismiss the Second Amended Complaint (docket no. 677); and Defendants Jay Cholost, Vanguard and Empire State's Motion to Dismiss the Second Amended Complaint (docket no. 680). Magistrate Judge Stephen T. Brown issued a Report and Recommendation on these motions on March 7, 1996, and recommended that the motions to dismiss be granted. A hearing was held on the parties' objections to the Magistrate Judge's Report and Recommendation before the undersigned, United States District Judge Moreno, in Miami, Florida on May 23, 1996.

THE COURT has conducted a de novo review of the motions, responses, replies, Report and Recommendation by Magistrate Judge Brown, objections to the Report and Recommendation, responses to the objections, and other pertinent portions of the record. Additionally, the Court has considered the arguments asserted by counsel at the hearing, and being otherwise fully advised in the premises, it is

ADJUDGED that Defendants' Motions to Dismiss for lack of personal jurisdiction are DENIED. Therefore, it is

ADJUDGED that this Court has jurisdiction over these six Defendants.

LEGAL STANDARD

Where a defendant challenges the exercise of a court's jurisdiction over it, a plaintiff has the burden of establishing a prima facie case of personal jurisdiction over the moving defendants. Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir.1990); Morris v. SSE Inc., 843 F.2d 489, 492 (11th Cir.1988). When ruling on a motion to dismiss, the court must view the complaint in the light most favorable to the plaintiff and accept the plaintiff's well pleaded facts as true. Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); St. Joseph's Hospital, Inc. v. Hospital Corp. of America, 795 F.2d 948 (11th Cir.1986). A court must resolve any conflicts in favor of establishing personal jurisdiction. Madara, 916 F.2d at 1514.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff BankAtlantic is a federally chartered savings bank with its principal place of business in Broward County, Florida. The initial action in this case was instituted by BankAtlantic in 1991. BankAtlantic, filed a Second Amended Complaint on August 18, 1994, asserting claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq. ("RICO"), and adding approximately eighty-two (82) named RICO Defendants to this action. BankAtlantic's RICO allegations attempt to describe an elaborate and complex scheme involving Defendants Supply Companies, Contractors and Sales Finance Companies, in concert with the Homeowners, to defraud BankAtlantic and other federally insured financial institutions by inducing them to buy millions of dollars of questionable home improvement loans through misrepresentations and concealment of material facts.

Plaintiff alleges that these misrepresentations and concealments included, but were not limited to: a) alleged construction of home improvements for homeowners and financing of the home improvements; b) preparation of loan applications with the assistance and consent of the homeowners which misrepresented the actual income of the homeowners, the value of the properties, the homeowner's occupation and the purpose of a loan; c) payments of kick backs and bribes to homeowners in exchange for the execution of false documentation; d) preparation of false financial information to support loan applications, and the issuance of home improvement loans to homeowners knowing that such loan applications and financial information were false and fraudulent; and e) selling of fraudulent home improvement loans and mortgages securing the loans to federally insured institutions for a substantial fee, among other allegations. (See Second Amended Complaint, ¶ 2).¹

The Magistrate Judge held a scheduling conference in the above-entitled matter, and entered an order on June 26, 1995, requiring all defendants who raised the issue of personal jurisdiction in their answer to the complaint to file a motion challenging jurisdiction within thirty days of the order. Defendants Bruce Beyer, James Gansky, Howard Gosin, Jay Cholost, Vanguard and Empire State filed Motions to Dismiss Plaintiff's Second Amended Complaint for lack of personal jurisdiction. The Magistrate Judge issued a Report and Recommendation on the four motions on March 7, 1996. According to the Magistrate Judge's Report and Recommendation, personal jurisdiction under RICO is governed by 18 U.S.C. § 1965(b), which is a nationwide service of process provision. The Magistrate Judge concluded that Plaintiff is required to make an "ends of justice" showing pursuant to § 1965(b) in order to exercise jurisdiction over the Defendants, and recommended that the four motions to dismiss be granted without prejudice.

LEGAL ANALYSIS

In deciding whether to exercise personal jurisdiction over a particular defendant, a federal court generally should conduct a two-part inquiry. First, the court should determine whether the defendant can properly be served with process under the applicable statutory authority, and then ascertain whether that service comports with constitutional due process requirements. Sun Bank, N.A. v. E.F. Hutton & Co., 926 F.2d 1030, 1033 (11th Cir.1991); Go-Video, Inc. v. Akai Elec. Co., 885 F.2d 1406, 1413 (9th Cir.1989); Willingway Hospital v. Blue Cross & Blue Shield of Ohio, 870 F.Supp. 1102, 1104 (S.D.Ga.1994). However, as a preliminary matter, the Court must address the arguments raised by the parties to determine the applicable statute under which it will conduct the two-part jurisdictional inquiry.

Defendants² move to dismiss Plaintiff's Second Amended Complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Defendants are residents of New York and argue that Plaintiff has failed to assert sufficient allegations establishing a basis to support personal jurisdiction over them in this Court. According to each of the four motions to dismiss, Defendants claim that Plaintiff has failed to allege or refer to any specific conduct on the part of these Defendants associated with the State of Florida. Therefore, Defendants assert that due to the lack of minimum contacts with the State of Florida, the exercise of jurisdiction over them would constitute a violation of the due process requirements of the United States Constitution.

As stated by the Supreme Court in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), "it is essential in each case that there be some act by which the defendant purposely avails itself of the privileges of conducting activities within the forum state, thus evoking the protections and benefits of its laws." Defendants assert that Plaintiff alleges no acts by Defendants which would satisfy the minimum contacts test in order to enable this Court to exercise...