Al-Ghena Int'l Corp. v. Talat Radwan, Jason Radwan, Cortez Holding Grp., Inc.

Decision Date16 July 2013
Docket NumberCivil Action No. 12–cv–0047 (KM).
Citation957 F.Supp.2d 511
PartiesAL–GHENA INTERNATIONAL CORP. and Shairco New Jersey (as assignee of Shairco for Trading, Industry and Contracting), Plaintiffs, v. Talat RADWAN, Jason Radwan, Cortez Holding Group, INC., Cortez Property Development LLC; and John Does 1–10 (being fictitious names), Defendants.
CourtU.S. District Court — District of New Jersey

OPINION TEXT STARTS HERE

Jeffrey A. Bronster, Union City, NJ, for Plaintiffs.

Shaji M. Eapen, Morgan, Melhuish & Abrutyn, Esqs., Livingston, NJ, for Defendants.

OPINION AND ORDER

McNULTY, District Judge.

This matter comes before the Court upon Defendants' Motion to Dismiss the Amended Complaint for lack of personal jurisdiction over the Defendants pursuant to Federal Rule of Civil Procedure 12(b)(2), or, in the alternative, to dismiss or transfer for improper venue pursuant to Fed.R.Civ.P. 12(b)(3) and 28 U.S.C. § 1406(a). The Complaint alleges violations of federal and New Jersey RICO laws and Florida's Civil Remedies for Criminal Practices Act, as well as various related common law causes of action, including fraud, conversion, conspiracy, breach of fiduciary duty, and unjust enrichment. Plaintiffs' claims all arise from a soured business deal to develop a boutique hotel in Fort Lauderdale, Florida.

For the reasons set forth below, I find that the Defendants have satisfactorily established that the District of New Jersey is an improper venue for this action. In addition, Plaintiffs have not met their burden of establishing that the Court has in personam jurisdiction over the Defendants. “A court without personal jurisdiction over the defendants or venue over a case has the option of dismissing the action or transferring the case to another district pursuant to 28 U.S.C. § 1406(a).” China Am. Co-op. Auto., Inc. v. Estrada Rivera Enterprises Corp., 2008 WL 305744 (D.N.J. Jan. 28, 2008) (citing Goldlawr v. Heiman, 369 U.S. 463, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962)). As I find that the Southern District of Florida is an appropriate venue for this action and that a district court sitting there will likely have personal jurisdiction over the Defendants, I will transfer this action to the United States District Court for the Southern District of Florida.

I. Factual Background
A. The Parties

Plaintiffs in this case are essentially two foreign investment entities. Plaintiff Al–Ghena International Corp. (Al–Ghena) is incorporated in the Commonwealth of Dominica with a principal place of business in Al–Qibla, Kuwait. Amended Complaint, February 7, 2012, ECF No. 8 (“AC” or “Complaint”) at 2.1 Plaintiff Shairco New Jersey LLC (Shairco NJ) is a limited liability company formed under the laws of New Jersey with a principal place of business in Edgewater, NJ. See id. Shairco NJ has a single member, Shairco for Trading, Industry and Contracting (Shairco SA), an entity incorporated in the Kingdom of Saudi Arabia. Id. Shairco NJ sues as “an assignee of the rights of” Shairco SA. Id. Shairco SA is a privately-held entityowned by a Saudi national named Mostafa Alshair (“Alshair”) and his two brothers. See Affirmation of Mostafa Alshair in Support of Plaintiffs' Opposition to Defendants' Motion to Dismiss the Amended Complaint, June 11, 2012, ECF No. 18–1 (“Alshair Aff.”) ¶¶ 4–6.

Both corporate Defendants, Cortez Holding Group, Inc. (Cortez Holding) and Cortez Property Development LLC (Cortez LLC), are entities formed under the laws of Florida, and each has its principal place of business in Mission Viejo, California. AC at 2. Individual Defendants Talat Radwan (Talat) and Jason Radwan (Jason) (Talat's son) are residents of California and are principals of Cortez Holding. See AC at 2.

B. The Dispute

This dispute arises out of a failed business venture to acquire and develop real property in Fort Lauderdale, Florida. Plaintiffs allege that Talat approached Shairco and Al–Ghena in 2007 to solicit their investment for a down payment to buy Cortez LLC, an already-existing entity that owned property which, with the assistance of bank financing, was to be developed into a boutique hotel owned and operated by the LLC (the “Cortez Project”). See AC at 3–4.

Talat proposed that each investor (Shairco, Al–Ghena and Cortez Holding) make an initial contribution of $6 million USD, giving each company a one-third membership interest. Id. In December 2007, Plaintiffs executed the “Operating Agreement for Cortez Property Development, LLC (the “Agreement”),2 which provides that Cortez LLC, at least initially, would be managed by Cortez Holding “through its duly authorized officer or manager.” See § 2.7 of the Agreement, included in the Appendix to Plaintiffs' Verified Complaint, January 3, 2012, ECF No. 1–1 (“Appendix”). As agreed, Al–Ghena and Shairco each transferred $6 million USD into an escrow account. AC at 4. Plaintiffs allege that Cortez Holding was also required to, but failed to, transfer its $6 million USD contribution into the escrow account. See id. Defendants eventually disclosed that only $10 million USD was used for the initial purchase of shares, while the remaining capital was to “be used for Architectural/Engineering, Soft Costs, Legal Costs, and Equity needed to contribute to the Construction Loan and ultimately obtain the financing to finish the project.” See Appendix to Plaintiffs' Verified Complaint, January 3, 2012, ECF No. 1–1 (“Appendix”) at 33.3

Thereafter, Cortez Holding, acting as the manager of the Cortez Project, sought financing and permits to begin construction on the hotel. Defendants maintain that Cortez Holding, “on behalf of the LLC, submitted development applications to the City of Fort Lauderdale to advance the Florida development project and expected to obtain approval for the development. However, the City denied approval for the development.” Defendants' Brief in Support of Motion to Dismiss the Amended Complaint or in the Alternative to Transfer Venue, May 4, 2012, ECF No. 14–1 (“Def. MTD”) at 4. Defendants also maintain that Florida's declining real estate market and decreasing tourism contributed to the Cortez Project's troubles. See id. Once the Cortez Project stalled, in 2009, Cortez Holding bought an alternative property, the “Breakers Hotel Project”; repaired the Cortez Property's existing rental units to generate rental income; and “invested the remaining capital in a ‘Foreclosure Fund,’ intended “to help mitigate the Group's losses.” See Appendix at 34. 4 Defendants maintain that “Cortez Holding is diligently continuing to work to overturn the City Commission's decision, obtain fair value for the property, maintain the property, collect rents and find alternative methods to recoup some of the unrealized losses from the decrease in property values.” Def. MTD at 5.

Much of the foregoing is stated as background for understanding the parties' contentions with respect to venue and personal jurisdiction. The gravamen of the Complaint is that Cortez Holding never invested its $6 million share of the down payment as required by the Agreement, despite Defendants' representations otherwise; that despite Plaintiffs' repeated requests for information about their investments and the status of the Project, the Defendants failed to comply with their obligation to produce and disclose books and records of the LLC pursuant to the terms of the Agreement; and that Defendants have “used the plaintiffs' money in ways for which they had no permission or authorization, and have converted that money to their own use.” See AC at 1.

C. New Jersey Contacts

None of the Defendants maintain residential or business addresses, own property, pay taxes, or maintain bank accounts in New Jersey. Plaintiffs nonetheless maintain that Defendants repeatedly visited New Jersey in connection with the Cortez Project and other business ventures, and that these contacts with the State adequately establish a basis for venue and personal jurisdiction over the Defendants in this District.

According to Plaintiffs,

Talat Radwan courted Shairco for years to invest money with him; many of those discussions took place in New Jersey, which for over a decade has been Shairco's home in the United States. He came to New Jersey on multiple occasions to meet with [Alshair] to solicit Shairco's participation in ventures both in and out of New Jersey, including for the [Cortez Project]. And both Talat and Jason Radwan came to New Jersey to meet with [Alshair] after the company had invested its money, for the specific purpose of perpetuating their scheme and of concealing their misconduct.

Pl. Opp. at 2. In his Affirmation, Alshair states that [o]ver the past 12 years, I have personally come to New Jersey on behalf of Shairco many times. I estimate that on average I spend three to four months a year living in New Jersey and conducting Shairco business....” Alshair Aff. ¶ 10.

Plaintiffs, however, offer few specifics about Talat Radwan's “multiple” business trips to New Jersey. Alshair maintains that “while I cannot provide more details as to the dates of [Talat's] visits without further research, I can say with certainty that they took place both before and after the signing of the Cortez agreement in December 2007.” Id. ¶ 49. Alshair also recounts that Talat approached him about investing in other ventures, including the development of 154 acres in Voorhees, New Jersey, in 2004, and a waterfront townhouse development in Edgewater in 2007. See id. ¶¶ 37–44. Alshair maintains that Talat came to New Jersey at least once in 2004 and again in 2007 to discuss those potential ventures. See id. Alshair states that his relations with the Radwans were business-related, not personal; Alshair insists that he did not have “a single meeting or conversation in which [Talat] did not try to persuade me to invest my family's money in one project or another....” Id. ¶¶ 45–46.

With regard to Jason, Plaintiffs maintain that “a significant meeting took place in New Jersey in 2009, when Jason...

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