Joseph v. Algemene Bank Nederland, NV

• Decision Date: 29 March 1984
• Docket Number: Civ. A. No. 83-2281.
• Citation: 592 F. Supp. 141
• Parties: James H. JOSEPH and Barbara S. Joseph, Plaintiffs, v. ALGEMENE BANK NEDERLAND, N.V., Jan Soels and Megatol, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

592 F. Supp. 141

James H. JOSEPH and Barbara S. Joseph, Plaintiffs, v. ALGEMENE BANK NEDERLAND, N.V., Jan Soels and Megatol, Inc., Defendants.

Civ. A. No. 83-2281.

United States District Court, W.D. Pennsylvania.

March 29, 1984.

COPYRIGHT MATERIAL OMITTED

James H. Joseph, Pittsburgh, Pa., for plaintiffs.

James D. Morton, Buchanan, Ingersoll, Rodewald, Kyle & Buerger, Pittsburgh, Pa., for Algemene Bank Nederland.

Stanley W. Greenfield, Greenfield & Murtagh, Pittsburgh, Pa., for Jan Soels and Megatol, Inc.

OPINION

COHILL, District Judge.

Presently before the Court is Defendant Algemene Bank Nederland's Motion to Dismiss the Complaint. Defendants Soels and Megatol have joined Algemene Bank Nederland's motion.

I. The Complaint

The Complaint in this case is comprised of seven counts, three of which allege violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., ("RICO"). The three defendants are 1) Algemene Bank Nederland ("ABN"), 2) an ABN loan officer, Jan Soels, and 3) Megatol, a Swiss company in which Soels allegedly either had an interest or controlled.

Count I is captioned "First Count By the Plaintiffs Against the Defendants Stating Claims Under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(b)." This count of the complaint identifies the parties (¶¶ 1-4), the jurisdictional basis (¶¶ 5-6), and contains a highly detailed factually-specific narrative of the alleged events which form the basis of the complaint (¶¶ 7-74).

Count 2 is captioned "Second Count ... Stating Claims Under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(a)" (¶ 75). This count alleges no new facts, but incorporates the averments of paragraphs 1-74.

Count 3 is captioned "Third Count ... Stating Claims Under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(d)" (¶¶ 76-77). These paragraphs incorporate the averments made in paragraphs 1-74 and allege, in addition, that "by virtue of the premises, ABN, Soels and Megatol conspired with one another, and with other persons, including agents, servants and employees of ABN and customers of ABN, in the foregoing pattern of racketeering activity and racketeering enterprise" (Complaint, ¶ 77).

Count 4 is captioned "Fourth Count Stating Claims for Civil Conspiracy." (¶¶ 78-80). This count incorporates the averments of paragraphs 1-73, alleges that defendants acted in bad faith and with malice, and demands actual and exemplary damages, costs and attorneys' fees.

Count 5 is captioned "Fifth Count ... Stating Claims for Tortious Interference with Contractual and Proespective Contractual Relationships" (¶¶ 81-82). Paragraph 81 incorporates the averments of paragraphs 1-73, 79 and 80, and asserts that no defendant had any absolute or qualified privilege with respect to any conduct alleged.

Count 6 is titled "Sixth Count ... Stating Claims for Failing to Deal in Good Faith" (¶ 83), and incorporates the averments of paragraphs 1-73, 79 and 80.

Count 7 is captioned "Seventh Count ... For Breach of Fiduciary Duties Arising Out of a Joint Venture." (¶ 84-85). These paragraphs incorporate the averments of paragraphs 1-73, 79 and 80, and allege that the relationship among plaintiffs, defendants and others was in the nature of joint adventurers.

II. Factual Background

The facts alleged in this case may be summarized as follows. In February 1981, plaintiffs and one Daniel Mushegian entered into an unwritten agreement to buy, as partners, a Westmoreland County, Pennsylvania newspaper, the News Dispatch. A condition of the agreement was that Joseph and Mushegian obtain the necessary financing. Joseph contacted one Murray Litmans, an attorney who represented Algemene Nederland Bank ("ABN"), and asked whether ABN was interested in participating in the acquisition. Litmans allegedly arranged a meeting on February 9, 1981 between Joseph, Litmans, and Jan Soels, a lending officer at ABN; at the meeting, ABN, through Litmans and Soels, agreed to lend Joseph $250,000. Two corporations, Seramark Holdings U.S.A., and News-Dispatch Publishing Co. ("NDPC") were formed for purposes of the acquisition: NDPC held the personal property, goodwill, contract and circulation rights of the newspaper. Joseph and Mushegian each owned 50% of the stock with Joseph acting as President, and Mushegian as Secretary-Treasurer. An assistant publisher, Robert Hyman, was hired in February, and, as part of his employment contract, was to receive 20% of the stock of NDPC on September 1, 1981.

The complaint, covering a chronological period from approximately February 1981 until the end of 1981, alleges acts by defendants which may be best understood in two "stages": 1) the extortion from plaintiffs of a "fee" for the ABN loan, in the form of a grant of interest in NDPC, which was allegedly transferred to Megatol, a Swiss company in which Soels, the ABN loan officer, either had an interest or controlled; and 2) the participation in a course of conduct, using additional financing as leverage, to assist Mushegian in a takeover bid for NDPC.

Paragraph 61 of the Complaint alleges that:

Mushegian and Soels had agreed that Soels and/or Megatol would receive a substantial increase in his, its or their interest in News-Dispatch Publishing Company upon Joseph abandoning the newspaper venture in favor of Mushegian. Soels undertook to loan, or arrange a loan through other persons and institutions, of the amount being sought by Joseph and Mushegian for News-Dispatch Publishing Company and for the acquisition of the two additional newspapers, but only upon the condition of the Josephs' shares being available to Soels and/or Megatol.

(Complaint, ¶ 61).

When the bid failed, defendants allegedly called in the loan, guaranteed by plaintiff and his wife, as punishment for plaintiff Joseph opposing the takeover bid.

As has been summarized, the Complaint alleges that defendants obtained agreements from prospective borrowers of ABN, and specifically from plaintiffs, whereby payments were made to defendants as a price for providing credit. These payments took the form of interests in the borrowers' businesses. The Complaint alleged that "in connection therewith, the Defendants utilized threats, fear and coercion in obtaining, maintaining and increasing or enhancing such interests in the businesses of ABN's borrowers." (Complaint, ¶ 69).

III. Discussion

In evaluating a motion to dismiss, the allegations of the complaint and all reasonable inferences must be accepted as true and viewed in the light most favorable to the nonmoving party. Miree v. DeKalb County, 433 U.S. 25, 27 n. 2, 97 S.Ct. 2490, 2492 n. 2, 53 L.Ed.2d 557 (1977); Kugler v. Helfant, 421 U.S. 117, 125 n. 5, 95 S.Ct. 1524, 1531 n. 5, 44 L.Ed. 15 (1975); Empire Abrasive Equipment Corp. v. H.H. Watson, Inc., 567 F.2d 554, 557 (3d Cir.1977); Amanto v. Witlin, 544 F.Supp. 140, 141 (E.D.Pa.1982). A complaint should not be dismissed unless it appears that plaintiff could prove no set of facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

A. The RICO Claims

Defendants move to dismiss each of the three RICO claims set forth by plaintiff, namely, 18 U.S.C. §§ 1962(a), (b), and (d). We will first address defendants' arguments directed to §§ 1962(a) and (b).

1. Section 1962(a) and (b)

Section 1962(a) prohibits

The use or investment of income derived from a pattern of racketeering activity to acquire an interest in an enterprise affecting interstate or foreign commerce. (18 U.S.C. § 1962(a))

Section 1962(b) prohibits

The acquisition or maintenance, through a pattern of racketeering activity, of any interest in or control over an enterprise affecting interstate commerce (18 U.S.C. § 1962(b)).

Defendants first argue that plaintiffs have not established a "pattern of racketeering activity" as required by these sections. Section 1961(5) defines "pattern of racketeering activity" as "at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years after the commission of a prior act of racketeering activity." 18 U.S.C. § 1961(5). "Racketeering activity" is defined by the statute to include specified federal and state offenses. 18 U.S.C. § 1961(1).

Plaintiffs have alleged, as the predicate acts, violations of 18 U.S.C. §§ 894, 1951 and 1952. The Complaint alleges:

The conduct of the Defendants as aforesaid contravenes the provisions of 18 U.S.C. § 894, 1951 and 1952, and constitutes a pattern of racketeering activity and racketeering enterprise within the meaning of 18 U.S.C. 1961 et seq.

Complaint ¶ 71. Section 894 prohibits collection or attempted collection of credit by extortionate means. 18 U.S.C. § 894 (1976). The three elements of an offense under § 894 are 1) a collection or attempted collection; 2) the use of extortionate means; and 3) that the accused knowingly participated. United States v. Benedetto, 558 F.2d 171 (3d Cir.1977); 2 Devitt & Blackmar, at § 5713. The complaint alleges that Soels and Litmans, on behalf of ABN, participated in the takeover attempt of the News-Dispatch by Mushegian, and called in the loan made to the newspaper to punish Joseph for refusing to cede control to Mushegian. These actions are alleged to have occurred from August 5, 1981 until about August 25, 1981 (Complaint, ¶¶ 51-59). We feel these allegations are sufficient to state a claim as to a predicate act based on a violation of 18 U.S.C. § 894.

Plaintiffs further allege as a predicate act a violation of 18 U.S.C. § 1951, which prohibits interference with commerce by threats or violence. The elements of a Hobbs Act offense are extortion and a nexus with interstate commerce. Stirone v. United States, 361 U.S. 212, 80 S.Ct. 270, 4 L.Ed.2d 252 (1960). "Extortion" is defined as "the obtaining of property from another, with his consent, induced by the...