Clark v. Milam, No. 2:92-0935.

CourtUnited States District Courts. 4th Circuit. Southern District of West Virginia
Writing for the CourtWalter C. Walden, pro se
Citation847 F. Supp. 409
PartiesHanley C. CLARK, Commissioner of Insurance for the State of West Virginia, as Receiver of George Washington Life Insurance Company, Plaintiff, v. Arthur W. MILAM, et al., Defendants.
Decision Date10 February 1994
Docket NumberNo. 2:92-0935.

847 F. Supp. 409

Hanley C. CLARK, Commissioner of Insurance for the State of West Virginia, as Receiver of George Washington Life Insurance Company, Plaintiff,
v.
Arthur W. MILAM, et al., Defendants.

No. 2:92-0935.

United States District Court, S.D. West Virginia, Charleston Division.

February 10, 1994.


847 F. Supp. 410
COPYRIGHT MATERIAL OMITTED
847 F. Supp. 411
Joshua I. Barrett, Rudolph L. DiTrapano, Debra L. Hamilton, DiTrapano & Jackson, Charleston, WV, Ellen G. Robinson, C. Philip Curley, Mary Cannon Veed and Cynthia H. Hyndman, Robinson Curley & Clayton, P.C., Chicago, IL, for Hanley C. Clark, Com'r of Ins. for the State of West Virginia, as Receiver of George Washington Life Ins. Co

John E. Jenkins, Jr., John M. Poma, and Suzanne McGinnis Oxley, Jenkins, Fenstermaker, Krieger, Kayes & Farrell, Huntington, WV, for Arthur W. Milam.

John H. Wilbur, pro se.

Walter C. Walden, pro se.

Dudley D. Allen, pro se.

Frank E. Clark, Jr., pro se.

Michael J. Davoli, pro se.

Rebecca A. Betts, Robert B. King, King, Betts & Allen, Charleston, WV, Paul J. Bschorr and Alice K. Jump, White & Case, New York City, for Carolyn B. Lamm.

Michael Bonasso, and Jeffrey M. Wakefield, Flaherty, Sensabaugh & Bonasso, Charleston, WV, for Betty Cordial and John Pendlebury, John Collins, and Cheryl Davis.

John H. Tinney, John J. Nesius, Miller A. Bushong, III, Spilman, Thomas, Battle & Klostermeyer, Charleston, WV, and David Alden, Cleveland, OH, for Tom Fennell and Ernst & Young.

John Andrew Smith, Kay, Casto, Chaney, Love & Wise, Charleston, WV, for Lamar Walker and Walker & Associates.

Michael Bonasso, Jeffrey M. Wakefield, Flaherty, Sensabaugh & Bonasso, Charleston, WV, and Therese Koelle Desai, Michael R. Glover and Joyce N. Van Cott, Glover & Van Cott, Phoenix, AZ, for CTF & Associates, Inc.

MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Pending is the motion to dismiss filed by the two Defendants who were added to this action by way of the Plaintiffs' amended complaint. This Court has previously addressed motions to dismiss filed by other named defendants. Clark v. Milam (Clark II)1 830 F.Supp. 316 (S.D.W.Va.1993). This action was brought by the Plaintiff, Hanley C. Clark, Commissioner of Insurance for the State of West Virginia, the appointed Receiver of the George Washington Life Insurance Company ("GW LIFE"). The Commissioner, as Receiver, contends that Defendants, Donald F. Withers and Byron N. Thompson, were aiders and abettors to a wide-ranging conspiracy to loot the assets of GW LIFE, that they breached their professional services contract with GW LIFE, and that they committed professional malpractice in their dealings with GW LIFE.

The Defendants raise four significant issues in support of their motion to dismiss: (1) that this Court lacks personal jurisdiction over them; (2) that the Plaintiff's claims against the Defendants pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962, fail to state claims upon which relief may be granted; (3) that the applicable statutes of limitation bar Plaintiff's state law claims; and (4) the Plaintiff's state law claims fail to state claims upon which relief may be granted.

I.

PERSONAL JURISDICTION

In Clark II this Court addressed other defendants' motions to dismiss similarly based on allegations of lack of personal jurisdiction. The standard used to evaluate contested

847 F. Supp. 412
personal jurisdiction was stated as follows
"When a court's personal jurisdiction is contested by a Rule 12(b)(2) motion, the jurisdictional question raised is one for the court, and the plaintiff bears the burden of ultimately proving by a preponderance of the evidence the existence of a ground for jurisdiction." Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989). But where ... the court addresses the challenge only on the motion papers, supporting legal memoranda, affidavits, other documents, and the relevant allegations of the complaint, the burden on the plaintiff is to make a mere prima facie showing of jurisdiction to survive the jurisdictional challenge. Id., Ryobi America Corp. v. Peters, 815 F.Supp. 172, 175 (D.S.C.1993); Verosol B.V. v. Hunter Douglas, Inc., 806 F.Supp. 582, 588 (E.D.Va.1992).
The burden plaintiff bears to establish the court's jurisdiction normally is not a heavy one, particularly where the court chooses to rule on the issue without an evidentiary hearing. 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1351 (1990). Mere allegations of personal jurisdiction are sufficient for a party to make a prima facie showing. Dowless v. Warren-Rupp Houdailles, Inc., 800 F.2d 1305, 1307 (4th Cir. 1986). When considering a challenge to its personal jurisdiction on the parties' filings, the court must resolve factual conflicts in favor of the party asserting jurisdiction for the purpose of determining whether he or she has made the requisite prima facie showing. Bakker, 886 F.2d at 676; Eastern Marketing Corp. v. Texas Meridian Prod. Co., Inc., 798 F.Supp. 363, 364 (S.D.W.Va.1992) (Haden, C.J.)." 830 F.Supp. at 318-19.

West Virginia's long-arm statute, W.Va. Code § 56-3-33 (1984), confers, inter alia, jurisdiction over non-residents who are: "... (1) Transacting any business in this State; (2) Contracting to supply services or things in this State." Thus, if the Plaintiff has alleged facts showing that the Defendants transacted any business or contracted to supply services in West Virginia, this Court may exercise personal jurisdiction over them.2 In this regard, the West Virginia Supreme Court of Appeals has stated that there, "must be a sufficient connection or minimum contacts between the defendant and the forum state so that it will be fair and just to require a defense to be mounted in the forum state."3 Pries v. Watt, 186 W.Va. 49, 52, 410 S.E.2d 285, 288 (1991).4

847 F. Supp. 413

The Defendants assert that this Court's previous holding in Clark II, supra, is dispositive of the jurisdictional issue in their favor. They argue that, like other defendants previously dismissed from this litigation, they do not have sufficient minimum contacts with West Virginia for this Court to exercise personal jurisdiction over them. However, although previous holdings as to other defendants are instructive, "to what extent the defendant has minimum contacts depends upon the facts of the individual case." Pries, 186 W.Va. at 52, 410 S.E.2d at 288.

The Supreme Court of the United States stated in Burger King Corporation v. Rudzewicz, 471 U.S. 462, 475-76, 105 S.Ct. 2174, 2184, 85 L.Ed.2d 528 (1985):

"Where the defendant `deliberately' ... has created `continuing obligations' between himself and residents of the forum, Travelers Health Assn. v. Virginia, 339 U.S. 643, at 648, 70 S.Ct. 927, at 929, 94 L.Ed. 1154 (1950), he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by `the benefits and protections' of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well."

The Defendants are both partners in the auditing firm of Coopers & Lybrand. In his amended complaint, the Plaintiff alleges that both Defendants supervised and performed annual audits of GW LIFE's financial statements, and that Defendants knew or should have known that the audit reports generated for GW LIFE would be provided to, among others, the West Virginia Insurance Commission.5 In his response to the Defendants' motion to dismiss, the Plaintiff further contends the Defendants' firm, Coopers & Lybrand, received $725,224.53 from GW LIFE between 1976 and 1990.6 In 1989, in connection with services provided by the Defendants' firm to GW LIFE, the firm was designated by GW LIFE as its independent certified public accountant and so listed with the West Virginia Insurance Commissioner pursuant to the requirements of W.Va.Code § 33-33-5(b).7

847 F. Supp. 414

The Defendants argue that their contacts with West Virginia are similar to those of other defendants who have been dismissed from this action. They point out that they have never physically been in West Virginia. However, physical presence in the forum state is unnecessary for the exercise of personal jurisdiction if "a commercial actor's efforts are `purposefully directed' toward residents of another State." Burger King, supra, 471 U.S. at 476, 105 S.Ct. at 2184, 85 L.Ed.2d at 543.

The allegations made by the Plaintiff against these Defendants are distinguishable from the allegations made against defendants previously dismissed on jurisdictional grounds. Unlike the allegations made against the defendants who were previously dismissed, the Plaintiff alleges that these Defendants committed professional negligence when they generated audits for GW LIFE and failed to perform their obligation to report financial irregularities.8 The Plaintiff contends that the Defendants realized their audit reports would be utilized by West Virginia Insurance regulators in the regulators' determination of the solvency of GW LIFE. Plaintiff claims that the defendants failed to report financial irregularities because they were concealing the looting of GW LIFE by its officers and directors.

For the purposes of this motion to dismiss, the Court must construe all the facts in a light most favorable to the party asserting personal jurisdiction and "draw the most favorable inferences for the existence of jurisdiction." Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989); Clark II, 830 F.Supp. at 319. It is clear to this Court that where allegations are made that defendants have rendered accounting services to a West Virginia resident for a period of fifteen years, have been paid for those services by the West Virginia resident, and that they know that the work they perform for the West Virginia resident will be utilized by the resident in proceedings before the West Virginia Insurance...

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23 practice notes
  • In re American Honda Motor Co. Dealerships Litig., Civil No. MDL-95-1069.
    • United States
    • U.S. District Court — District of Maryland
    • August 30, 1996
    ...to cases upholding section 1962(c) allegations against professionals acting to further a fraudulent scheme. See, e.g., Clark v. Milam, 847 F.Supp. 409, 417 (S.D.W.Va.1994) (declining to dismiss allegation that accountants "knowingly concealed the activity Page 560 other defendants who exerc......
  • Ironshore Specialty Ins. Co. v. Everest Ins. Co., Case No. CV 20-01652-AB (GJSx)
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • July 21, 2020
    ...defendant's arguments that the agreement had only tolled its ability to raise the statute of limitations as a defense); Clark v. Milam , 847 F. Supp. 409, 421 (S.D. W. Va. 1994) ; Cuadra , 17 Cal. 4th at 864-65, 72 Cal.Rptr.2d 687, 952 P.2d 704.However, all of the cases Plaintiff cites are ......
  • Superior Bank, F.S.B. v. Tandem Nat. Mortg., Inc., No. MJG-99-2360.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • May 9, 2000
    ...of the enterprise's upper management engage in sufficient conduct or participation to be liable under RICO."). 49. See Clark v. Milam, 847 F.Supp. 409, 416 (S.D.W.Va.1994) (defendants who knowingly concealed the activity of other defendants who exercised day-to-day control over the RICO ent......
  • In re Petters Co., No. 08–45257
    • United States
    • United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — District of Minnesota
    • June 19, 2013
    ...of their forum state had already recognized the basic discovery rule for a liberal application in cases of fraud. E.g., Clark v. Milam, 847 F.Supp. 409, 422 (S.D.W.Va.1994); In re Reading Broad., Inc., 390 B.R. at 552–553;Wilson v. Paine, 288 S.W.3d 284, 288–289 (Ky.2009) (collecting federa......
  • Request a trial to view additional results
23 cases
  • In re American Honda Motor Co. Dealerships Litig., Civil No. MDL-95-1069.
    • United States
    • U.S. District Court — District of Maryland
    • August 30, 1996
    ...to cases upholding section 1962(c) allegations against professionals acting to further a fraudulent scheme. See, e.g., Clark v. Milam, 847 F.Supp. 409, 417 (S.D.W.Va.1994) (declining to dismiss allegation that accountants "knowingly concealed the activity Page 560 other defendants who ......
  • Ironshore Specialty Ins. Co. v. Everest Ins. Co., Case No. CV 20-01652-AB (GJSx)
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • July 21, 2020
    ...defendant's arguments that the agreement had only tolled its ability to raise the statute of limitations as a defense); Clark v. Milam , 847 F. Supp. 409, 421 (S.D. W. Va. 1994) ; Cuadra , 17 Cal. 4th at 864-65, 72 Cal.Rptr.2d 687, 952 P.2d 704.However, all of the cases Plaintiff cites are ......
  • Economic Dev. v. Arthur Andersen & Co., No. 85 Civ. 1292 (MBM).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • April 2, 1996
    ...the operation or management of a RICO enterprise by knowingly concealing the fraudulent activities of the enterprise. In Clark v. Milam, 847 F.Supp. 409 (S.D.W.Va.), recons. denied, 872 F.Supp. 307 (S.D.W.Va.1994), the Court refused to dismiss a § 1962(c) claim against accountants who had p......
  • Superior Bank, F.S.B. v. Tandem Nat. Mortg., Inc., No. MJG-99-2360.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • May 9, 2000
    ...the enterprise's upper management engage in sufficient conduct or participation to be liable under RICO."). 49. See Clark v. Milam, 847 F.Supp. 409, 416 (S.D.W.Va.1994) (defendants who knowingly concealed the activity of other defendants who exercised day-to-day control over the RICO e......
  • Request a trial to view additional results

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