Herbstein v. Bruetman
| Decision Date | 28 June 1991 |
| Docket Number | No. 89 Civ. 6864 (RWS).,89 Civ. 6864 (RWS). |
| Citation | 768 F. Supp. 79 |
| Parties | Diego J. HERBSTEIN, Plaintiff, v. Martin E. BRUETMAN, High Tech Medical Parks Development Corp., Ronald Tash, Douglas Keill, Mauricio Agudelo and Alta Tecnologia Medica, S.A., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Carro, Spanbock, Kaster & Cuiffo (Ronald E. DePetris, of counsel), New York City, for plaintiff.
Bell & McGurk, Ltd. (James A. McGurk, of counsel), Chicago, Ill., for defendant Alta Tecnologia Medica, S.A.
Baer Marks & Upham (Barry J. Mandel, Peter E. Cooper, of counsel), New York City, for defendants.
Defendant Alta Tecnologia Medica S.A. ("Altec-2") has moved pursuant to Rule 12(b)(2), Fed.R.Civ.P., for an order dismissing the complaint in this RICO action for lack of personal jurisdiction. For the reasons set forth below, the motion is denied.
Plaintiff Diego Herbstein ("Herbstein"), a medical doctor, is a citizen of Argentina but currently a permanent United States resident domiciled in the State of New York. Herbstein is an officer, director, and 50% shareholder in Imagenes Por Computacion ("IxC"). He is also listed as a director and 8% shareholder of Altec-2.
Altec-2 is an Argentine corporation with its headquarters in Buenos Aires, Argentina engaged in the development of diagnostic centers in Argentina and other countries in South America.
Defendant Martin Bruetman ("Bruetman"), a medical doctor, is a citizen and a resident of Illinois. He is a member of the board of directors of Altec-2. He is president and chief executive officer of IxC and also serves as chairman of its board of directors.
Defendant High Tech Medical Parks Development Corp. ("High Tech") is an Illinois corporation with its principal place of business in Illinois. High Tech specializes in the scientific and technical advising of medical establishments. It also owns 49% of Altec stock.
Defendant Ronald Tash ("Tash") is a citizen of Illinois and is a 12.25% shareholder in High Tech. Tash also serves as secretary and legal counsel for High Tech.
Defendant Douglas Kiell is a citizen of Connecticut, and at all relevant times, owned 12.25% of High Tech stock. Until January 1989, he was the president and chief financial officer of High Tech.
The defendants are referred to collectively as the "Bruetman Defendants."
In 1989, Herbstein initiated a civil suit in Argentina against Bruetman and Amerigo Pescio ("Pescio"). At approximately the same time, Bruetman brought a suit on behalf of himself and IxC, requesting an investigation of several people, including Herbstein. The proceedings in the above action are set forth in this court's opinion of July 11, 1990 (the "Opinion").
On October 16, 1989, Herbstein filed his complaint in the Southern District of New York seeking damages for fraud racketeering, conversion, and breach of fiduciary duty. On January 17, 1990, the Bruetman Defendants filed a motion to dismiss Herbstein's case on the grounds of comity or forum non conveniens, or alternatively, to stay the case until the resolution of the proceedings in Argentina. The Opinion of July 11, 1990 denied the motion.
In an order of October 30, 1990, the court dismissed the action without prejudice for failure to prosecute. On November 1, 1990, the court issued an order vacating the dismissal and reinstating the case.
On January 10, 1991, Altec-2 moved to dismiss the complaint as against itself for lack of personal jurisdiction. Oral argument was heard on March 8, 1991 and the motion was considered submitted as of that date.
For the purposes of the instant motion to dismiss, the facts are assumed to be as alleged by Herbstein. Dwyer v. Regan, 777 F.2d 825, 827 (2d Cir.1985).
This action arises out of a pattern of alleged fraudulent activity in which the defendants obtained approximately $447,000 from Herbstein in New York and attempted to divest him of his interest in IxC, a business that operates a medical diagnostic center in Argentina.
Until mid-1988, Bruetman was a 50% shareholder in IxC. At that time he transferred all his shares in IxC to Altec-2. Bruetman remained president and chief executive officer of IxC and chairman of its board of directors.
Bruetman is chairman of the board of High Tech and owns 51% of the shares in High Tech. Bruetman's son owns another 43% of the shares of High Tech. Herbstein owns the remaining shares of High Tech.
Bruetman controls and is a director of Altec-2. Altec-2 has no employees located in the United States. Altec-2 neither sells products nor performs services in the United States.
The complaint describes three phases of the pattern of alleged fraudulent activity: (1) the obtaining of sums of money from Herbstein as a result of Bruetman's fraudulent representations with respect to the capital contributions to and proposed formation of IxC and its predecessor; (2) the Bruetman Defendants' fraudulent misappropriations and transfers of money from IxC; and (3) the Bruetman Defendants' fraudulent scheme to divest Herbstein of his financial and ownership interests in IxC.
In July, 1988, Bruetman and High Tech instructed the president of Altec-2 to transfer $24,000 to the account of High Tech at Boulevard bank, and further instructed him to enter that amount in the books as "repayment of debt from IxC to High Tech" when no such debt existed and no such payment had been authorized by the director of IxC.
On August 16, 1988, Bruetman, High Tech and Altec-2 caused to be transmitted by wire from Illinois to Herbstein in New York a letter asking Herbstein to divest himself of his half ownership in IxC.
On December 16, 1988, Bruetman, Tash, Altec-2 and High Tech caused to be transmitted by wire from Illinois to Herbstein in New York a memorandum written by the president of Altec-2 to the board of directors concerning the negotiation of the sale of the shares of IxC held by Altec-2.
On or about January 18, 1989 Bruetman, High Tech, and Altec-2 caused to be transmitted by wire from Illinois to Herbstein in New York an accounting which allegedly fraudulently attributed to IxC expenses and debts that had nothing to do with IxC, but related solely to the business of High Tech and Altec-2.
On July 12, 1989 Bruetman, Tash, High Tech and Altec-2 caused a letter signed by Tash and addressed to the new accountants for IxC to be mailed from Illinois to Herbstein in New York and to the accountants in Buenos Aires, which contained allegedly false statements.
Process was served on Altec-2 by means of service upon its director, Bruetman, in Illinois.
On a motion to dismiss pursuant to Rule 12(b)(2), Fed.R.Civ.P., all pleadings and affidavits are construed in the light most favorable to the plaintiffs, and all doubts are to be resolved in the plaintiff's favor. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986). To withstand a 12(b)(2) motion to dismiss, a plaintiff need only make out a prima facie case of personal jurisdiction. Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 768 (2d Cir.1983).
The complaint invokes federal question jurisdiction pursuant to the civil RICO statute, which authorizes national service of process. 18 U.S.C. § 1965. When a complaint invokes federal question jurisdiction under a statute providing for nation-wide service of process, the jurisdictional inquiry focuses on the defendant's contacts with the entire United States, not just the forum state. Mariash v. Morrill, 496 F.2d...
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