Megatel Homes LLC v. Moayedi

• Decision Date: 27 June 2022
• Docket Number: Civil Action 3:20-cv-00688-L
• Parties: MEGATEL HOMES, LLC; MEGATEL HOMES II, LLC; and MEGATEL HOME III, LLC, Plaintiffs, v. MEHRDAD MOAYEDI; UNITED DEVELOPMENT FUNDING, L.P.; UNITED DEVELOPMENT FUNDING II, L.P.; UNITED DEVELOPMENT FUNDING III, L.P.; UNITED DEVELOPMENT FUNDING IV; UNITED DEVELOPMENT FUNDING INCOME FUND V; UMT SERVICES INC.; UMT HOLDINGS, L.P.; HOLLIS GREENLAW; THEODORE F. ETTER; BENJAMIN WISSINK; and BRANDON JESTER, Defendants.
• Court: U.S. District Court — Northern District of Texas

MEGATEL HOMES, LLC; MEGATEL HOMES II, LLC; and MEGATEL HOME III, LLC, Plaintiffs,
v.
MEHRDAD MOAYEDI; UNITED DEVELOPMENT FUNDING, L.P.; UNITED DEVELOPMENT FUNDING II, L.P.; UNITED DEVELOPMENT FUNDING III, L.P.; UNITED DEVELOPMENT FUNDING IV; UNITED DEVELOPMENT FUNDING INCOME FUND V; UMT SERVICES INC.; UMT HOLDINGS, L.P.; HOLLIS GREENLAW; THEODORE F. ETTER; BENJAMIN WISSINK; and BRANDON JESTER, Defendants.

Civil Action No. 3:20-cv-00688-L

United States District Court, N.D. Texas, Dallas Division

June 27, 2022

MEMORANDUM OPINION AND ORDER

Sam A. Lindsay United States District Judge

Before the court are the UDF Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint (Doc. 47), filed January 12, 2022, and Defendant Mehrdad Moayedi's Motion to Dismiss Plaintiffs' First Amended Complaint and Brief in Support (Doc. 49), filed January 12, 2022. After careful consideration of the motions, legal briefs, pleadings, and applicable law, the court, for the reasons stated herein, denies the UDF Defendants' Motion to Dismiss Plaintiffs' First Amended Complaint and denies Defendant Mehrdad Moayedi's Motion to Dismiss Plaintiffs' First Amended Complaint.

1

I. Factual and Procedural Background

This case is the subject of two prior memorandum opinions. See Megatel Homes, LLC v. Moayedi et al., No. 3:20-cv-00688-L, 2021 WL 5360509 (N.D. Tex. Nov. 16, 2021) (“Megatel I”); Megatel Homes, LLC v. Moayedi et al., No. 3:20-cv-00688-L, 2021 WL 5325919 (N.D. Tex. Nov. 16, 2021) (“Megatel II”). The court assumes the parties' familiarity with Megatel I and Megatel II and recounts only the background facts and procedural history necessary to understand this decision.

This case arises out of an alleged scheme to defraud a Texas homebuilding company comprised of Megatel Homes, LLC, Megatel Homes II, LLC, and Megatel Homes III, LLC (collectively, “Megatel”). On March 20, 2020, Megatel filed its Original Complaint (Doc. 1) against Defendant Mehrdad Moayedi (“Mr. Moayedi”), founder and operator of Centurion American Custom Homes d/b/a Centurion American Development Group (collectively, “Centurion”), a real estate development company. He also sued the UDF Defendants-various entities comprising a family of investment funds that finance land development projects, as well as the founders and employees of those entities.^[1]

In the Original Complaint, Megatel alleged that since the inception of United Development Funding, L.P. (“UDF I”) in or around 2003, Centurion and its affiliates were some of its largest borrowers. Orig. Compl. ¶ 3. During this time, “Centurion frequently contracted with Megatel to serve as a primary builder on land development projects predominately financed by UDF [I].” Id.

2

¶ 4. By 2011, however, Centurion and UDF I experienced financial trouble, leading Mr. Moayedi and UDF I to “surreptitiously and behind closed-doors scheme[] to keep themselves afloat.” Id. ¶ 5. The Original Complaint alleges that Mr. Moayedi “fraudulently induced” Megatel to enter into various real estate contracts and amendments to obtain “earnest money and other benefits from Megatel” to repay his UDF I loans. Id. ¶ 6. It further alleges that Mr. Moayedi and the UDF Defendants “syphoned hundreds of millions of dollars off loans[,] intended for the development of projects for which Megatel had contracted[,] for their own personal enrichment.” Id. ¶ 9.

Based on these and other allegations set forth in detail by the court in Megatel I and Megatel II, Megatel asserted claims against Mr. Moayedi for violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) under 18 U.S.C. §§ 1962(a)-(c), and a RICO conspiracy claim against Mr. Moayedi and the UDF Defendants under 18 U.S.C. § 1962(d). See id. ¶¶ 39-58. As underlying “predicate acts,” Megatel alleged that Mr. Moayedi and the UDF Defendants committed wire fraud and mail fraud (in violation of 18 U.S.C. §§ 1341 and 1343) and interstate transportation of stolen property (in violation of 18 U.S.C. § 2314). See id. ¶¶ 32-33. Megatel also asserted claims against Mr. Moayedi for common-law fraud, fraudulent inducement, and statutory fraud, as well as claims against the UDF Defendants for aiding and abetting fraud. See id. ¶¶ 6972.

On May 18, 2020, the UDF Defendants and Mr. Moayedi each moved to dismiss Megatel's claims pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b).^[2] On November 16, 2021,

3

the court granted the motions in part and denied them in other part. See Megatel I, 2021 WL 5360509; Megatel II, 2021 WL 5325919.

With respect to the UDF Defendants' motion to dismiss the Original Complaint, the court determined that Megatel had adequately alleged predicate acts of mail fraud; a pattern of racketeering activity; a RICO enterprise; and a RICO conspiracy under 18 U.S.C. § 1962(d). Megatel I, 2021 WL 5360509, at *5-8. The court, therefore, denied the UDF Defendants' motion to dismiss with respect to Megatel's claims for RICO conspiracy to the extent the conspiracy was based on predicate acts of mail fraud. Id. at *8. As for its RICO claims based on the predicate acts of wire fraud under 18 U.S.C. § 1343, however, the court concluded that Megatel failed to allege “any facts” supporting an inference that Mr. Moayedi and the UDF Defendants used interstate communications to further an alleged scheme to defraud, as required to plead a viable claim for wire fraud pursuant to Federal Rule of Civil Procedure 9(b). Id. at *5. As for its RICO claims based on interstate transportation of stolen property under 18 U.S.C. § 2314, the court determined that Megatel failed to sufficiently allege the predicate act of interstate transportation of stolen property under 18 U.S.C. § 2314 because it failed to allege “any facts” supporting an inference that more than $5,000 in fraudulently-obtained funds was actually “transported interstate.” Id. at *6. The court granted the UDF Defendants' motion to dismiss the deficient claims and dismissed these claims without prejudice. The court allowed Megatel leave to replead the deficient claims:

Specifically, [Megatel] must amend and replead [its] claims related to the predicate acts of wire fraud, in violation of 18 U.S.C. § 1343, and interstate transportation of stolen property, in violation of 18 U.S.C. § 2314. If the amended pleading fails to cure the deficiencies noted by the court, [Megafund's] deficient claims will be dismissed with prejudice pursuant to Rule 12(b)(6)

4

Id. at *9. Finally, with regard to Megatel's claim against the UDF Defendants for aiding and abetting fraud, the court determined it failed as a matter of law and dismissed the claim with prejudice. Id. at *8.

After considering Mr. Moayedi's motion to dismiss the Original Complaint, the court determined that Megatel had adequately alleged RICO claims under Sections 1962(a) and (c), as well as under Section 1962(d), to the extent those claims were based on predicate acts of mail fraud, and that these claims were not time-barred under the applicable four-year statute of limitations. Megatel II, 2021 WL 5325919, at *4, *7-9. The court, therefore, denied Mr. Moayedi's motion to dismiss with respect to these claims. The court concluded, however, that Megatel had failed to allege adequately that Mr. Moayedi committed predicate acts of wire fraud and interstate transportation of fraudulently-obtained property or that he violated 18 U.S.C. § 1962(b). Id. at *4, *7. The court also determined that Megatel failed to allege sufficiently common-law fraudulent inducement and statutory fraud. Id. at *8-9. With respect to the deficient claims, the court granted Mr. Moayedi's motion to dismiss and dismissed these claims without prejudice. Id. at *10. The court, however, granted Megatel leave to replead the deficient claims:

Specifically, [Megatel] must amend the following claims: (1) that [Mr. Moayedi] committed the predicate acts of interstate transportation of stolen property, in violation of 18 U.S.C. § 2314, and wire fraud, in violation of 18 U.S.C. § 1343; (2) that [he] violated 18 U.S.C. § 1962(b); (3) common law fraud; and (4) statutory fraud. If the amended pleading fails to cure the deficiencies noted by the court, [Megatel's] deficient claims will be dismissed with prejudice pursuant to Rule 12(b)(6).

Id.

Megatel timely filed a First Amended Complaint (Doc. 37). Pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b), the UDF Defendants now move to dismiss those claims the court previously dismissed without prejudice, arguing that Megatel's allegations in the First

5

Amended Complaint are insufficient to cure the pleading deficiencies identified in Megatel I. Mr. Moayedi moves to dismiss all claims in the First Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b), even those claims the court previously found had been adequately alleged. Megatel opposes the motions in two separate responses. After setting forth the applicable legal standards, the court will consider the pending motions to dismiss.

II. Legal Standards

A. Rule 12(b)(6) - Failure to State a Claim

To defeat a motion to dismiss filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Reliable Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir. 2008); Guidry v. American Pub. Life Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007). A claim meets the plausibility test “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal...