Sadighi v. Daghighfekr

• Decision Date: 22 January 1999
• Docket Number: No. 2:98-2648-18.,2:98-2648-18.
• Citation: 36 F.Supp.2d 279
• Court: U.S. District Court — District of South Carolina
• Parties: Ahmad SADIGHI, et al., Plaintiffs, v. Ali DAGHIGHFEKR, et al., Defendants.

36 F.Supp.2d 279

Ahmad SADIGHI, et al., Plaintiffs, v. Ali DAGHIGHFEKR, et al., Defendants.

No. 2:98-2648-18.

United States District Court, D. South Carolina, Charleston Division.

January 22, 1999.

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Mark Mason, Charleston, SC, for plaintiffs.

John Massalon, Charleston, SC, C. Allen Gibson, Jr., Charleston, SC, for defendants.

ORDER

NORTON, District Judge.

This action is before the court on Defendants' Motion to Strike and Motion to Dismiss for Failure to State a Claim Upon Which Relief May be Granted.¹

I. PROCEDURAL HISTORY

On September 11, 1998, Plaintiffs filed their Complaint against twenty-three Defendants for twenty-two causes of action: RICO, breach of contract, breach of contract with fraudulent intent, misappropriation of corporate opportunity, statutory wage act violations, tortious interference with contract, quantum meruit, unjust enrichment, rescission of alleged release, breach of fiduciary duty, fraud, civil conspiracy, Title VII violations, intentional infliction of emotional distress, and unfair trade practices.

On September 18, 1998, the Feker Defendants moved to dismiss and strike items from the Complaint.

II. BACKGROUND

Because this is a Rule 12(b)(6) motion, the facts are set forth as alleged by Plaintiffs. Ali Daghighfekr (Allan Feker) is a real estate developer who owns a large number of residential golf communities. Plaintiffs essentially allege that Feker fraudulently hires law abiding professionals to work for his fraud-ridden business enterprises, all the while secretly intending to use them as "front men" and "window dressing" to carry out his fraudulent schemes and shield him from criminal culpability. Plaintiffs' allegations of Feker's wrongdoing principally encompass transactions relating to the Golden Ocala residential project in Florida and the Dunes West project in South Carolina. Plaintiffs allege that Feker has (1) attempted to bribe employees at Georgia-Pacific to obtain the Dunes West development at a reduced sales price; (2) bribed and obtained funds under false pretenses from employees of General American Life Insurance Company (GALIC); (3) misrepresented the value of infrastructure improvements to be sold to Golden Ocala Community Development District (GOCDD); (4) sexually harassed Plaintiff NeSmith (including unwanted sexual advances and sexual intercourse leading to a constructive discharge); and (5) wrongfully or constructively discharged the remaining Plaintiffs.

III. LAW/ANALYSIS

Defendants moved to dismiss Plaintiffs' claims for violations of RICO, Title VII, and the South Carolina Unfair Trade Practices Act. Defendants also moved to dismiss the claims for breach of contract, tortious interference with contractual relations, and the "alter ego" allegations based on an insufficient pleading of that doctrine. Finally, Defendants moved to strike a number of the allegations in the Complaint. Each claim will be analyzed separately below.

A. Standard of Review

Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, Defendants filed this Motion to Dismiss for failure to state a claim upon which relief may be granted. A Rule 12(b)(6) motion should be granted "only in very limited circumstances." Rogers v. Jefferson-Pilot Life Ins. Co., 883 F.2d 324, 325 (4th Cir.1989). When ruling on such a motion, the court should "accept as true all well-pleaded allegations and should view the complaint in the light most favorable to the plaintiff." Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993); see also Colleton Regional Hosp. v. MRS Med. Review Sys., Inc., 866 F.Supp. 896, 899 (D.S.C.1994). Indeed, a Rule 12(b)(6) motion should not be granted unless the court is certain that the plaintiff could not prove any facts in support of the plaintiff's claim. See Martin Marietta Corp. v. International Telecommunications Satellite Org., 991 F.2d 94, 97 (4th Cir.1992).

B. Motion to Dismiss RICO Cause of Action

1. Overview of RICO Standing and Causation

Plaintiffs have alleged that Defendants are liable to Plaintiffs for a substantive violation of RICO. Although RICO is a criminal statute, the legislation provides for a civil remedy for private plaintiffs. See 18 U.S.C § 1964(c) (1994). Section 1964(c) provides that "[a]ny person injured in his business or property by reason of a violation of section 1962 ... may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee." Id. (emphasis added). The Supreme Court has framed this causation requirement as one of standing. See Brandenburg v. Seidel, 859 F.2d 1179, 1187 (4th Cir.1988), overruled on other grounds by Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996).

Plaintiffs must allege that Defendants' violations were a proximate cause of their injuries. See Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992); Chisolm v. TranSouth Fin. Corp., 95 F.3d 331, 336 (4th Cir.1996). In Holmes, the Supreme Court cautioned lower courts against an overly expansive view of the common law doctrine of proximate cause by noting that "a plaintiff who complained of harm flowing from the misfortunes visited upon a third person by the defendant's acts [is] generally said to stand at too remote a distance to recover." Holmes, 503 U.S. at 268-69, 112 S.Ct. 1311. Instead, proximate cause requires a nexus between the proscribed acts and the injuries. See Mid Atl. Telecom, Inc. v. Long Distance Servs., Inc., 18 F.3d 260, 263 (4th Cir.1994). However, this nexus does not mean that only injuries "suffered by the immediate victim of a predicate act" satisfies the "by reason of" requirement of § 1964(c). Id. The court should instead focus its inquiry on deciding "`whether the conduct has been so significant and important a cause that the defendant should be held responsible.'" Chisolm, 95 F.3d at 336 (quoting Brandenburg v. Seidel, 859 F.2d 1179, 1189 (4th Cir. 1988)). The court should be guided in this inquiry by such factors as "the foreseeability of the particular injury, the intervention of other independent causes, and the factual directness of the causal connection." Brandenburg v. Seidel, 859 F.2d 1179, 1189 (4th Cir.1988), overruled on other grounds by Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996).

Plaintiffs allege that Defendants engaged in conduct in violation of 18 U.S.C. §§ 1962(a), (b), (c), and (d). To have standing to assert private causes of action for these RICO violations, Plaintiffs must allege (1) violations of § 1962; and (2) injuries to their business or property that were proximately caused by these RICO violations.

2. 18 U.S.C. § 1962(a)

a. Alleging a Violation

To state a claim under § 1962(a), Plaintiffs must allege that (1) a defendant person² (2) received income derived from (3) a pattern of racketeering activity³ (4) and invested the racketeering income or its proceeds (5) in the acquisition of an interest in or the establishment or operation of (6) any enterprise⁴ (7) engaged in, or the activities of which affect, interstate or foreign commerce. See 18 U.S.C. § 1962(a) (1994). In short, section 1962(a) prohibits a person from receiving income from a pattern of racketeering activity and then using that income in the operation of an enterprise engaged in commerce. See New Beckley Mining Corp. v International Union, UMW of America, 18 F.3d 1161, 1165 (4th Cir.1994).

Were this court relying merely on Plaintiffs' Complaint, the RICO cause of action might have been dismissed for failure to state a claim. However, this court will consider both the Complaint and the Second Amended RICO Case Statement (RCS) filed on November 6, 1998. See Cardwell v. Sears Roebuck & Co., 821 F.Supp. 406, 407 & n. 3 (D.S.C.1993) (similarly considering both the Complaint and the RICO Case Statement in response to a Rule 12(b)(6) motion).⁵ Plaintiffs' allegations in their RICO Case Statement sufficiently state a claim under § 1962(a). The following quotation is the verbatim answer to the court's pertinent interrogatory regarding § 1962(a):⁶

Beginning in 1995, Defendant Allan Feker, and Defendant, Golden Ocala Golf Course Partners, fraudulently obtained funds from the Resolution Trust Corporation ["RTC"], acting as Receiver of First State Savings Bank, F.S.B., Mountain Home, Arkansas, by the creation of fake documents misrepresenting that the Feker Defendants had expended monies to remove asbestos and contaminated soil from the Golden Ocala project. These fake documents were prepared for the purpose of obtaining monies belonging to and held in escrow by the RTC. These fake documents were transmitted to the RTC and others by acts of wire and mail fraud. The racketeering funds so obtained were thereafter invested in the acquisition and operation of Golden Ocala Golf Course Partners [and numerous other companies owned by Feker] and the Feker Defendants' parent company, U.S. Golf & Leisure, Inc. From U.S. Golf & Leisure, Inc.[,] these funds were invested into the Feker Defendants' various real estate projects.

Funds obtained by the Feker Defendants through use of fake invoices, receipts and checks submitted by acts of wire and mail fraud to General American Life Insurance Company ("GALIC") for "reimbursement" of expenses relating to the Dunes West real estate project were invested into U.S. Golf & Leisure, Inc. and from U.S. Golf & Leisure into the Golden Ocala real estate project in Ocala, Florida, and Feker's other real estate projects.

Funds obtained and retained by the Feker Defendants as a result of the fraudulent inducement of the employment and business associations of and with Sadighi, Miller, Riggins, and NeSmith were invested in the acquisition and operation of the...