Bulk Oil (USA) Inc. v. Sun Oil Trading Co.

• Decision Date: 11 August 1983
• Docket Number: No. 81 Civ. 3497(CES).,81 Civ. 3497(CES).
• Citation: 584 F. Supp. 36
• Parties: BULK OIL (USA) INC., a New York Corporation (formerly Western Hemisphere Bulk Oil (U.S.A.) Inc.), Plaintiff, v. SUN OIL TRADING COMPANY, a Delaware Corporation, Sun International Inc., a Delaware Corporation, Sun International Limited, a Bermuda Corporation, G.F. Cerchio, R.H. Rodgers, W.C. Lemmer, F.R. Copple, G.R. Henderson, P.E. Macht, and B.H. Cross, Defendants.
• Court: U.S. District Court — Southern District of New York

584 F. Supp. 36

BULK OIL (USA) INC., a New York Corporation (formerly Western Hemisphere Bulk Oil (U.S.A.) Inc.), Plaintiff, v. SUN OIL TRADING COMPANY, a Delaware Corporation, Sun International Inc., a Delaware Corporation, Sun International Limited, a Bermuda Corporation, G.F. Cerchio, R.H. Rodgers, W.C. Lemmer, F.R. Copple, G.R. Henderson, P.E. Macht, and B.H. Cross, Defendants.

No. 81 Civ. 3497(CES).

United States District Court, S.D. New York.

August 11, 1983.

De Vos & Co., P.C., New York City, for plaintiff; Lloyd M. De Vos, New York City, of counsel.

Parker, Auspitz, Neesemann & Delahanty, New York City, for defendants; John Delehanty, New York City, of counsel.

MEMORANDUM DECISION

STEWART, District Judge:

In this action, plaintiff seeks to recover damages from defendants for their alleged breach of contract, fraud, conspiracy, conversion and violation of the RICO statute. The facts of this case concern defendants' failure to pay for fuel oil brought from plaintiff in May of 1981. In a Memorandum Decision dated March 24, 1982, we granted partial summary judgment for the plaintiff on its contract claim. This decision was affirmed in part and reversed in part by the Second Circuit in Bulk Oil (USA), Inc. v. Sun Oil Trading Co., 697 F.2d 481 (2d Cir.1983). In our decision of March 1982, we also granted defendants' motion to dismiss plaintiff's fraud claim, but granted plaintiff leave to replead this claim. Defendant now moves to dismiss portions of the amended complaint filed after our March 1982 decision on the grounds that

(1) the doctrine of res judicata bars plaintiff from asserting any claim other than common law fraud (2) the plaintiff's RICO claim is legally insufficient;

(3) venue in this district is improper for plaintiff's RICO claim against defendants other than Sun, SIL and Cross;

(4) this court lacks personal jurisdiction over the individual defendants; and

(5) plaintiff's jury demand is untimely under Fed.R.Civ.P. 38.

We address these grounds in turn.

1. Res Judicata Effect of April 1982 Judgment

In our Memorandum Decision of March 1982, we acknowledged that the scope of plaintiff's fraud claim appeared "considerably greater than the complaint regarding the 15,000 barrels of oil". Our granting of leave for plaintiff to replead this claim was thus premised on the fact that it appeared that new facts in the case had been discovered. Under these circumstances, we do not believe the doctrine of res judicata should bar new claims based upon the newly discovered facts. Indeed, Fed.R.Civ.P. 60(b)(2) would appear to allow plaintiff to be relieved from the April 1982 Judgment under these circumstances if necessary. Accordingly, we decline to hold the April 1982 Judgment bars assertion of any claims other than the fraud claim.

2. The RICO Claim

As explained more fully in our Bulk Oil (Zug) decision, to state a civil claim under the RICO statute, a plaintiff must allege an injury "by reason of section 1962" of the RICO statute. See 18 U.S.C. § 1964(c) (1976). As was the case in Bulk (Zug), plaintiff here clearly does not allege injury "by reason of" violations of sections 1962(a)¹ or (b).² As for injury under section 1962(c)³ plaintiff has again failed to distinguish the enterprise whose affairs are conducted and the persons who "conduct or participate ... in the conduct of such enterprise's affairs through a pattern of racketeering activity ...". We would assume that plaintiff intends SOTC as the "enterprise" and the named individuals as the "persons". If this assumption is correct, however, plaintiff has not stated a claim for treble damages against SOTC under section 1962(c). "It is only a person, or one associated with an enterprise, not the enterprise itself, who can violate the provisions of the section." Van Schaick v. Church of Scientology of California, Inc., 535 F.Supp. 1125, 1136 (D.Mass.1982). With respect to the individual defendants, it appears that the Amended Complaint, read in a liberal fashion, does state a claim of injury by reason of a violation of section 1962(c), however. That is, given paragraphs 82 and 83⁴ of the Amended Complaint, it is not clear to a certainty that the plaintiff would not be able to prove that the named individuals participated in the conduct of SOTC's affairs "through a pattern of racketeering activity". Given this conclusion, moreover, we find that plaintiff has stated a claim against SOTC for injury by reason of violation of section 1962(d)⁵ inasmuch as paragraph 52 of the Amended Complaint alleges:

SII, SIL, P.E. Macht and B.H. Cross conspired in pursuit of the same common plan to commit tortious acts of fraud upon BOUSA together with SOTC, G.F. Cerchio, R.H. Rodgers, W.C. Lemmer, F.R. Copple and G.R. Henderson and have actively taken part in a scheme to defraud BOUSA and furthered it by cooperation or request.

(emphasis added). We thus deny defendants' motion to dismiss this claim for legal insufficiency.

3. Venue of the RICO Claim

Defendants Cerchio, Rodgers, Lemmer, Copple, Henderson and Macht move to dismiss plaintiff's RICO claims as to them on the grounds of improper venue. Plaintiff contends that venue is proper under RICO's venue provision. 18 U.S.C. § 1965(a).⁶

18 U.S.C. § 1965(a) provides that a civil RICO claim may be brought against any person in "any district in which such person resides, is found, has an agent, or transacts his affairs".

We conclude that venue as to these defendants is improper under the RICO statute. Affidavits submitted by the moving defendants indicate that none reside in the Southern District of New York, and that all transact Sun's business from offices in Pennsylvania. None maintain offices in New York. Plaintiff argues that venue is nonetheless proper as to these defendants because SOTC's affairs in New York were transacted on its behalf by Cerchio, Rodgers, Lemmer, Copple and Henderson. "If SOTC transacts business in this district for purposes of venue under 18 U.S.C. § 1965(a)", plaintiff reasons, "then venue here must be proper also for those individuals who transact that business on SOTC's behalf." We find this argument contrary to the express language of the statute: venue under section 1965(a) is proper in the district in which a defendant "transacts his affairs" (emphasis added). This language suggests to us that it is the personal affairs of the defendant that are to be considered not affairs he may have transacted on behalf of his employer. Cf. King v. Vesco, 342 F.Supp. 120, 123 (N.D.Cal.1972) (examining personal affairs of Robert Vesco to determine whether he "transacted his affairs" in Northern District of California).

The legislative history of section 1965(a) reveals that it was patterned after the venue provision of the antitrust statutes. See H.R.Rep. No. 1549, 91st Cong., 2d Sess. (1970), reprinted in 2 U.S.Code Cong. & Adm.News 1970, 4007, 4034 (1970). The "transacts his affairs" language of section 1965(a) has thus been held to be synonymous with the "transacts business" language of section 12 of the Clayton Act, 15 U.S.C. § 22. King v. Vesco, 342 F.Supp. at 124. Since section 12 of the Clayton Act concerns the "District in which to sue corporation", it does not yield any authority precisely on point with respect to the question of whether the corporation's affairs may be imputed to an individual for venue purposes. However, we note that it has been held that "the test for transacting business for venue purposes under the antitrust laws is co-extensive with the test for jurisdiction under New York CPLR § 302". Agra Chemical Distributing Co., Inc. v. Marion Laboratories, Inc., 523 F.Supp. 699, 702 (W.D.N.Y.1981). Under the "fiduciary shield doctrine", as established by courts of this circuit and New York in applying New York's long arm statute, if an individual has contacts with the state only by virtue of his acts as a fiduciary of a corporation, he may be personally shielded from the exercise of jurisdiction in that state on the basis of that conduct. Marine Midland Bank N.A. v. Miller, 664 F.2d 899, 902 (2d Cir.1981).⁷ Although the argument here admittedly has several steps— since the corporation's business would not be imputable to the defendants under the long arm statute, it would not under the Clayton Act, and thus not under RICO—we believe each step is sound. We thus conclude that venue is not proper as to these defendants under section 1965(a), and dismiss this claim as to them.

4. Jurisdiction over the Individual Defendants.

In its Amended Complaint, plaintiff added as defendants seven individuals who are officers and agents of various Sun entities. These defendants move for dismissal of the complaint as to them for lack of personal jurisdiction.

In diversity cases, the law of the forum state governs the exercise of personal jurisdiction by the federal court. Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 901 (2d Cir.1981). As for suits brought in federal court on a federally created right, however, general federal law determines amenability to suit. C. Wright & A. Miller, 4 Federal Practice and Procedure § 1075 at 302 (1969). In this case, since we have dismissed the federal RICO claim as to six of the seven defendants, the law of New York determines whether we have personal jurisdiction over them with respect to the remaining state claims. For the one defendant as to whom the RICO claim stands, a federal "minimum contacts" analysis must be applied.

a. Jurisdiction under New York's Long Arm Statute

Plaintiff asserts that in this case, jurisdiction over the individual defendants exists by virtue of New York's Long Arm Statute, N.Y.Civ.Prac.Law § 302(a) (McKinney 1972 & 1983 Supp.). Specifically, plaintiff asserts that jurisdiction exists under section 302(a)(2) ("tortious act within the state"); section 302(a)(3)(ii) (tortious act without the state plus substantial revenue from interstate or international commerce); and section 302(a)(1) ("contracts anywhere...