Sadighi v. Daghighfekr

• Decision Date: 05 January 1999
• Docket Number: No. 2:98-2648-18.,2:98-2648-18.
• Citation: 36 F.Supp.2d 267
• Parties: Ahmad SADIGHI, et al., Plaintiffs, v. Ali DAGHIGHFEKR, et al., Defendants.
• Court: U.S. District Court — District of South Carolina

36 F.Supp.2d 267

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 5, 1999.

COPYRIGHT MATERIAL OMITTED

Mark Mason, Charleston, SC, for plaintiffs.

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

ORDER

NORTON, District Judge.

This action is before the court on the Fekr Defendants' Motion to Dismiss for Failure to State a Claim Upon Which Relief May be Granted¹ and the Sealy Defendants' Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue.

I. PROCEDURAL HISTORY

On September 11, 1998, Plaintiffs filed their Complaint against twenty-three Defendants. For simplicity, the Defendants have been labeled either "Fekr Defendants" or "Sealy Defendants." Plaintiffs sought relief for twenty causes of action: Racketeer Influenced and Corrupt Organizations Act (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 violation, intentional infliction of emotional distress, and unfair trade practices.²

On September 18, 1998, the Fekr Defendants moved to dismiss and strike items from the Complaint. On September 29, 1998, the Sealy Defendants moved to dismiss for lack of personal jurisdiction and improper venue.

II. BACKGROUND

In an effort to heed the advice of Ecclesiastes to "Let thy speech be short, comprehending much in few words," the court will attempt to summarize, and not reiterate, the Plaintiffs' voluminous allegations. See Ecclesiastes 32:8.³ Ali Fekr is a real estate developer who owns a large number of residential golf communities. Plaintiffs' allegations of wrongdoing principally encompass transactions relating to the Golden Ocala residential project in Florida and the Dunes West project in South Carolina.

Plaintiffs allege that the Fekr Defendants have (1) attempted to bribe employees of 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 Golden Ocala Community Development District (GOCDD); and (4) sexually harassed Plaintiff NeSmith (including unwanted sexual advances and sexual intercourse leading to a constructive discharge); (5) wrongfully or constructively discharged the remaining Plaintiffs.

Plaintiffs allege that the Sealy Defendants, as bond underwriters for the Golden Ocala project, prepared the Preliminary Limited Offering Memorandum (PLOM) containing information they knew to be false about the Fekr Defendants, and they caused this PLOM to be disseminated by mail. Plaintiffs also allege that the Sealy Defendants prepared a "lulling letter" to assist with the formation of the GOCDD when the Marion County Administrator and Utilities Director raised questions about the economic viability of the Golden Ocala project. Plaintiffs also allege that the Sealy Defendants conspired with the Fekr Defendants to remove Sadighi from his employment in Florida so that he would be ineligible to serve on the Board of the GOCDD and to replace him with Bret Sealy as head of construction on the Golden Ocala project.

III. LAW/ANALYSIS

Generally, courts address issues relating to personal jurisdiction before reaching the merits of the plaintiff's claims. See, e.g., Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 940 (11th Cir.1997); Falkirk Mining Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 372 (8th Cir.1990). Consequently, this court turns first to the Sealy Defendants' Motion to Dismiss for Lack of Personal Jurisdiction or Improper Venue.

A. Personal Jurisdiction Over the Sealy Defendants⁴

When a district court decides a pre-trial personal jurisdiction dismissal motion without an evidentiary hearing, Plaintiffs need only prove a prima facie case of personal jurisdiction. See Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir.1993). In determining whether Plaintiffs have proved a prima facie case of personal jurisdiction, the court "must draw all reasonable inferences arising from the proof, and resolve all factual disputes, in the plaintiffs['] favor." Id. Nevertheless, Plaintiffs' showing must be based on specific facts set forth in the record, see Magic Toyota, Inc. v. Southeast Toyota Distribs., Inc., 784 F.Supp. 306, 310 (D.S.C. 1992), and the district court must look to both Plaintiffs' and Defendants' proof in ruling upon the Sealy Defendants' Motion. See Mylan Labs., Inc., 2 F.3d at 62.

Plaintiffs can attempt to establish personal jurisdiction over the Sealy Defendants by two methods: (1) the nationwide service of process provisions of the RICO statute and then pendent personal jurisdiction over the state causes of action or (2) by a traditional minimum contacts and due process analysis for all causes of action. Because Plaintiffs can establish personal jurisdiction over the Sealy Defendants under the first analysis, this court need not engage in the traditional personal jurisdiction analysis.

1. 18 U.S.C. § 1965: Nationwide Service of Process

The Sealy Defendants argue that Plaintiffs fail to state a colorable claim against them under RICO and so should not be able to take advantage of its nationwide service of process provisions. "When a federal claim is not wholly immaterial or insubstantial, a plaintiff is entitled to take advantage of the federal statute's nationwide service of process provision." Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 942 (11th Cir. 1997); cf. IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1055 (2d Cir.1993). The Sealy Defendants must meet the "high burden"⁵ of demonstrating that Plaintiffs' RICO claim is not colorable, that is, the RICO claim is "`so insubstantial, implausible, ... or otherwise devoid of merit' as to deprive [Plaintiffs] of the right to utilize RICO's nationwide service of process provision." Republic of Panama, 119 F.3d at 941 (quoting IUE AFL-CIO Pension Fund, 9 F.3d at 1055)). The Fourth Circuit has recently adopted similar reasoning. See ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 629 (4th Cir.1997). In ESAB Group, the court of appeals found personal jurisdiction under the RICO statute and then approved of the exercise of pendent personal jurisdiction over the plaintiff's state law claims "so long as the federal [RICO] claim [was] not wholly immaterial or insubstantial." Id. (citing Republic of Panama, 119 F.3d at 942, 951 & n. 26). The Fourth Circuit has also, in the context of an ERISA claim, noted that "[a] claim is colorable if it is arguable and nonfrivolous, whether or not it would succeed on the merits." Davis v. Featherstone, 97 F.3d 734, 737-38 (4th Cir.1996).

The Sealy Defendants have failed to carry their "high burden" of demonstrating that Plaintiffs' RICO claim is not even colorable. The Sealy Defendants argue that Plaintiffs' RICO claim is not colorable because they could not have violated RICO by tortiously interfering with contractual relations and by civil conspiracy as these actions do not constitute predicate acts as set forth in 18 U.S.C. § 1961(1).⁶ Plaintiffs allege that the Sealy Defendants have, at the very least, engaged in a conspiracy to violate one of the substantive provisions of the RICO statute in violation of 18 U.S.C. § 1962(d). As part of a claim for a section 1962(d) violation, Plaintiffs do not need to allege that the Sealy Defendants committed at least two predicate acts, or even that they conspired to do so; instead, Plaintiffs can establish a RICO conspiracy claim by demonstrating that the Sealy Defendants agreed to the overall objective of the conspiracy. See Salinas v. United States, 522 U.S. 52, 118 S.Ct. 469, 476-77, 139 L.Ed.2d 352 (1997) (finding that a RICO conspiracy defendant does not need to commit or agree to commit two predicate acts because "[a] conspiracy may exist even if a conspirator does not agree to commit or facilitate each and every part of the substantive offense"); Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 950 (11th Cir.1997) ("A plaintiff can establish a RICO conspiracy claim ... by showing that the defendant agreed to the overall objective of the conspiracy."). Plaintiffs have alleged that the overall objective of the conspiracy between the Sealy Defendants and the Fekr Defendants was to defraud the GOCDD and that the conspiracy to remove Sadighi from Florida was a necessary and crucial step in that conspiracy. Plaintiff Sadighi alleges that he suffered injury as a result of the conspiracy to remove him from Florida. The circuits are split on whether, in a section 1962(d) claim, a plaintiff's alleged injury need only flow from an overt act in furtherance of the conspiracy and not necessarily from the commission of a predicate act. Compare, e.g., Schiffels v. Kemper Financial Servs., Inc., 978 F.2d 344, 351 (7th Cir.1992) (finding that a RICO plaintiff claiming a violation of section 1962(d) has standing to sue if the "complaint alleges an injury to [his] business or property proximately caused by an overt act in furtherance of a conspiracy to violate RICO, even though the overt act is not a predicate act required in a RICO pattern"),⁷ with Bowman v. Western Auto Supply Co., 985 F.2d 383, 388 (8th Cir.1993) (finding that a RICO plaintiff has standing to sue under section 1962(d) only if the plaintiff was harmed by a "RICO predicate act committed in furtherance of a conspiracy to violate RICO").⁸ At least arguably, this circuit may follow the group of sister circuits which have held that a plaintiff has standing to assert a section 1962(d) claim if the plaintiff alleges...