Southway v. Central Bank of Nigeria

• Decision Date: 26 February 1998
• Docket Number: Civil Action No. 96-B-2540.
• Citation: 994 F.Supp. 1299
• Parties: Henry T. SOUTHWAY, Southway Construction Company, Inc., Douglas Houghton, Randy Thurston, J.E. Losavio, Jr., and Russ Gray, doing business as Gray Real Estate, Plaintiffs, v. CENTRAL BANK OF NIGERIA, Republic of Nigeria, The Law Firm of Kirk P. Brown, P.C., Kirk Patterson Brown, Helen Tomicich, also known as Helen Tomicich Brown, [Both Browns] individually and doing business as The Communications Connection, Defendants.
• Court: U.S. District Court — District of Colorado

994 F.Supp. 1299

Henry T. SOUTHWAY, Southway Construction Company, Inc., Douglas Houghton, Randy Thurston, J.E. Losavio, Jr., and Russ Gray, doing business as Gray Real Estate, Plaintiffs, v. CENTRAL BANK OF NIGERIA, Republic of Nigeria, The Law Firm of Kirk P. Brown, P.C., Kirk Patterson Brown, Helen Tomicich, also known as Helen Tomicich Brown, [Both Browns] individually and doing business as The Communications Connection, Defendants.

Civil Action No. 96-B-2540.

United States District Court, D. Colorado.

February 26, 1998.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

J.E. Losavio, Jr., Margaret L. Herdeck, William Judson Culver, Law Offices of J.E. Losavio, Jr., Pueblo, CO, for Plaintiffs.

Michael A. Williams, Steven D. Plissey, Williams, Youle & Koenigs, P.C., Denver, CO, Helen Tomicich, Pueblo, CO, Kirk P. Brown, Pueblo, CO, for Defendants.

MEMORANDUM OPINION AND ORDER

BABCOCK, District Judge.

Defendants Central Bank of Nigeria (CBN) and Republic of Nigeria (Nigeria) (collectively, "Nigeria defendants"), move for dismissal of plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(2), and 12(b)(6). The motions are adequately briefed and oral argument will not materially aid their resolution. For the reasons set forth below, I deny the Nigeria defendants' motions to dismiss.

I. FACTS

The material facts, with disputes resolved in plaintiffs' favor, follow. Plaintiffs are residents of southern Colorado. Defendants Kirk Patterson Brown (Mr. Brown) and Helen Tomicich Brown (Mrs. Brown) are also residents of southern Colorado. Mr. Brown is an attorney licensed to practice law in the State of Colorado and operates a law firm in Pueblo, Colorado.

In November 1995, Mr. Brown received a letter in Pueblo from Nigeria. The author claimed to be a representative of the Nigerian National Petroleum Corporation (NNPC). The person claimed to have access to $21,320,000.00, which funds resulted from an "over-invoiced" contract with a foreign contractor. The letter implied that NNPC already paid the foreign contractor, but that an accounting error caused the over-invoice. The alleged representative of NNPC hoped to secure the over-invoiced funds by wire-transferring such funds to a foreign company's account. The purported NNPC representative claimed that officials of the Nigerian government would aid the transfer in consideration for a large percentage of the funds. It was also stated that Mr. Brown would receive a percentage of the funds if he claimed to be a subsidiary of the original foreign firm and allowed use of his bank account. The letter contained a fax number that Mr. Brown should contact if the proposal interested him. It did and Mr. Brown began to communicate directly with purported representatives of NNPC.

Shortly thereafter, on November 30, 1995, Mr. Brown sent a letter, via facsimile transmission, to "Dr. T.S. Adedipe, Office of the Director General, Contract Review Panel, Federal Secretariat Complex" in Ikoyi-Lagos, Nigeria. The letter appears on letterhead from "The Communication Connection, Inc.," located at 196 Alhambra, Pueblo, Colorado. Mr. Brown signed the letter as "Kirk P. Brown, Corporate Secretary." The letter requests "settlement" of a bill past due in the amount of $21,320,000.00. The letter references "Contract No. NNPC/PED/2039-X92," regarding "Supply of Heavy Duty Crude Oil Passage Drilling Machines and Calibrators for Port-Harcourt, Warri, and Kaduna Refineries." The letter requests immediate wire transfer of such funds to Mr. Brown's bank account in Pueblo.

This letter, together with six other letters attached to and incorporated within the complaint evidence communications between Mr. Brown and people purporting to be representatives of Nigeria, NNPC, and CBN. All communications reference "Contract No. NNPC/PED/2039-X92" and appear on official-looking letterhead, bearing various stamps and signatures.

The first communication is a letter from "Bunu Isiaka, Debt Reconciliation Officer of CBN's Office of Debt Reconciliation Committee, Foreign Operations Department in Tinubu Square, Lagos, Nigeria" to Mr. Brown, "The Managing Director, Communications Connections, Inc.," dated February 3, 1996 (Isiaka Letter). The Isiaka Letter directs Mr. Brown to pay a 1% stamp duty fee of $213,200.00, via wire transfer, to the account of "M.M.B. LTD." at "Citibank N.A." in New York. The Isiaka Letter identifies the beneficiary of such account as "A. Dan-Azumi."

The second is a letter from "Dr. B.O. Eguaibor, Principal Partner, Eguaibor & Eguaibor, Solicitors and Advocates, Ikeja, Lagos State" to Mr. Brown dated February 7, 1996 (First Eguaibor Letter). The Eguaibor Letter acknowledges receipt of $2,000.00 from Mr. Brown as payment for legal representation regarding receipt of the over-invoiced contract funds. The Eguaibor Letter instructs Mr. Brown to transfer an additional $21,320.00 for payment of a "Bond Fee."

The third is another letter from "Dr. B.O. Eguaibor, Principal Partner, Eguaibor & Eguaibor, Solicitors and Advocates, Ikeja, Lagos State" to Mr. Brown dated February 21, 1996 (Second Eguaibor Letter). The Second Eguaibor Letter states that Dr. Eguaibor has signed the necessary papers to release the over-invoiced funds to Mr. Brown and instructs Mr. Brown to remit $100,000.00 to Eguaibor & Eguaibor after receipt of the over-invoiced funds.

The next is a letter from "Dr. M.R. Rasheed, Director, Foreign Operations Department" of CBN to Mr. Brown, "The Managing Director, Communications Connections, Inc.," dated March 19, 1996 (First Rasheed Letter). The First Rasheed Letter acknowledges receipt, via wire transfer, of $32,000.00 from Mr. Brown for "Handling/Cable/Signing Fees."

The fifth communication is a letter from "Dr. M.R. Rasheed, Director, Foreign Operations Department" of CBN to "Alberta L. Vega" of the Pueblo District Office of "The Honourable Senator Ben Nighthorse Campbell, United States of America Senate" dated March 25, 1996 (Second Rasheed Letter). The Second Rasheed Letter states that Communications Connections, Inc. will receive payment of $21,320,000.00 less "Refund Tax" as soon as Communications Connections, Inc. satisfies its "obligation in regard to the stamp duty payment of $213,200.00."

The last is a letter from "Major General Joe Garba" of the "Foreign Exchange Allocation Department, Office of the Presidency, Garki District Office, Abuja, Nigeria" to Mr. Brown of "Communications Connections, Inc. c/o Law Firm of Kirk P. Brown" dated April 12, 1996 (Garba Letter). The Garba Letter, which appears on official-looking government letterhead bearing various stamps and signatures, directs Mr. Brown to pay $319,800.00 to the account of "Gulf Bank Auto Account" at "Bankers Trust" in New York. The Garba letter identifies the beneficiary of such account as "Alvan Pharood."

In March 1996, Mr. and Mrs. Brown, purportedly short the funds necessary to take full advantage of this opportunity, contacted plaintiffs Randy Thurston (Thurston) and J.E. Losavio, Jr. (Losavio) (himself a lawyer and former Colorado State district attorney) regarding an investment opportunity. Mr. and Mrs. Brown offered Thurston and Losavio the opportunity to invest in a contract between The Communications Connection, Inc. and Nigeria. Mr. and Mrs. Brown encouraged Thurston and Losavio to invest $213,200.00 to pay for "stamp duties" and enable the transfer of $21,300,000.00 to the trust account of the Law Firm of Kirk. P. Brown, P.C. Mr. and Mrs. Brown represented that The Communications Connection, Inc. and Mr. Brown would receive a commission of $2,100,000.00 from CBN. They offered to "split" the commission with Thurston and Losavio, entitling Thurston and Losavio to $1,065,00.00 (a true split would be $1,050,000.00) in return for their $213,200.00 investment. Thurston and Losavio accepted. On March 27, 1996, Mr. and Mrs Brown, Thurston, and Losavio entered into a "Reimbursement Agreement" and "Indemnity Agreement" memorializing the transaction.

In April 1996, Mr. Brown contacted plaintiff Russ Gray (Gray) regarding the Nigeria transaction. Mr. Brown represented to Gray that he was a party to a financial transaction with Nigeria involving millions of dollars. Mr. Brown advised that the transaction would close in thirty days, but Mr. Brown had insufficient funds to fulfill his financial obligation. Gray, doing business as Gray Real Estate, paid Mr. Brown $50,000.00.

Also in April 1996, Mr. Brown contacted plaintiff Henry T. Southway (Southway). Mr. Brown represented to Southway that CBN would transfer millions of dollars to Mr. Brown's trust account, but that Mr. Brown needed to pay certain fees to exchange Nigerian currency for United States dollars. In consideration for Southway's payment of $160,000.00, Mr. Brown offered to pay Southway $800,000.00 "upon receipt of the contract funds into his law firm trust account from the Central Bank of Nigeria and the government of Nigeria." Southway accepted Mr. Brown's offer. On April 15, 1996, Mr. Brown and Southway entered into a written agreement memorializing the transaction.

On approximately the same date in April 1996, Mr. and Mrs. Brown contacted plaintiff Douglas Houghton (Houghton). Mr. and Mrs. Brown represented to Houghton that they "brokered a contract on the sale of oil field equipment" to NNPC. Mr. and Mrs. Brown told Houghton that the contract was complete and ready for disbursement, but that they needed to raise 1.5% of the total contract amount to pay for "exchange rate levies." They offered to pay Houghton $550,000.00 in consideration for Houghton's loan of $110,000.00. Mr. and Mrs. Brown also offered to "personally indemnify" Houghton for his investment "if something goes wrong." Houghton also accepted their offer. On April 16, 1996, Mr. and Mrs. Brown and Houghton entered into an "Indemnity Agreement" memorializing the transaction.

The proverbial ship never came in. To everyone's chagrin, the expected wire transfer of...