Wuliger v. Sewell
| Decision Date | 06 April 2005 |
| Docket Number | No. 3:03 CV 719.,3:03 CV 719. |
| Parties | William T. WULIGER, Plaintiff, v. Steven A. SEWELL, Defendant. |
| Court | U.S. District Court — Northern District of Ohio |
Roger J. Katz, Chesterland, OH, Victor M. Javitch, Javitch, Block & Rathbone, Cleveland, OH, for Plaintiff.
Dana Childress-Jones, Gregory F. Hahn, Tabbert, Hahn, Earnest & Weddle, Indianapolis, IN, for Defendant.
This matter is before the Court on the Defendant's motion to dismiss and Plaintiff's response thereto. For the reasons stated below, the Defendant's motion is granted in part and denied in part.
Plaintiff William T. Wuliger ("Wuliger") commenced this action against Defendant for recovery of commissions in connection with the sale of viatical investments. This case is an outgrowth of the Liberte v. Capwill1 litigation which has spawned satellite litigation in state and federal courts. The essence of this action contends that Defendant Steven Sewell entered into an agent sales agreement whereby he solicited individuals to invest in viatical settlements offered by Alpha Capital Group ("Alpha"). In return, Sewell is alleged to have received approximately $100,564.05 in commissions.
Wuliger was appointed Receiver of Alpha in the fall of 2001. Thereafter, he was authorized by the Court in the Liberte action, in part, to:
[U]se his best judgment to protect the rights of Alpha investors and to discharge his duties in a manner calculated to preserve the greatest monetary recovery for the maximum number of all Alpha investors.
(Liberte, Doc. No. 1290.) One year later those responsibilities included the right to pursue actions against Liberte and Alpha agents and brokers. (Liberte, Doc. No. 1758.) More recently, the Court clarified the expanded role of both the General and Alpha Receivers, stating that:
[I]n keeping with the ultimate goal of maximizing the estates for the benefit of the investors, [the Receivers] are empowered to represent and pursue the interests of the investors directly. The Receivers shall further continue to carry out their duties and obligations as set forth by previous and existing Order of the Court. Finally, the Receivers shall continue to coordinate their efforts with class counsel to recover, protect and preserve receivership assets.
(Doc. No.1982.)
Wuliger initiated this suit in April 2003 against Sewell, alleging the following claims: (1) violations of the 1933 Securities Act, 15 U.S.C. § 77; (2) violations of the Securities Exchange Act of 1934, 15 U.S.C. § 78 j; (3) violations under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962 and 1964(c); (4) common law fraud; (5) fraud in the inducement; (6) breach of contract; (7) unjust enrichment; (6) conversion; (9) breach of fiduciary duty/breach of covenant to act in good faith and fair dealing; and (10) intentional or negligent misrepresentation. Sewell now moves for dismissal of these claims under Fed.R.Civ.P. 12(b)(2) and (6).
In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the function of the Court is to test the legal sufficiency of the complaint. In scrutinizing the complaint, the Court is required to accept the allegations stated in the complaint as true, Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984), while viewing the complaint in a light most favorable to the plaintiffs, Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir.1976). The Court is without authority to dismiss the claims unless it can be demonstrated beyond a doubt that the plaintiff can prove no set of facts that would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); Westlake, supra, at 858. See generally 2 JAMES W. MOORE, MOORE'S FEDERAL PRACTICE, § 12.34[1] (3d ed.2004).
Plaintiffs bear the burden of making a prima facie showing that the Court has jurisdiction over the person of each Defendant to the action. On a motion to dismiss for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2), the Court treats the allegations contained in Plaintiffs' complaint, affidavits, and depositions as true, and resolves any factual dispute in Plaintiffs' favor. Welsh v. Gibbs, 631 F.2d 436, 438-39 (6th Cir.1980), cert. denied, 450 U.S. 981, 101 S.Ct. 1517, 67 L.Ed.2d 816 (1981); Gold Circle Stores v. Body Maven, Inc., 711 F.Supp. 897, 899 (S.D.Ohio 1988).
In support of his motion, the Defendant advocates a lack of sufficient minimum contacts with Ohio insofar as Plaintiff is unable to establish the existence of either general or specific jurisdiction. The Plaintiff provides a full response to the Defendant's challenge under International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and correctly notes the Sixth Circuit's position where there exists a basis for nationwide service of process. Medical Mut. of Ohio v. deSoto, 245 F.3d 561 (6th Cir.2001).
Where statutory authority exists for national service of process, the minimum contacts analysis is altered by applying the national contacts test Id. at 566. While the situation in deSoto involved ERISA, the Sixth Circuit used the national service provision pertaining to the Securities Exchange Act of 1934 as an example, which is equally applicable here. That provision states in pertinent part:
Any suit or action to enforce any liability or duty created by this chapter or rules and regulations thereunder, or to enjoin any violation of such chapter or rules and regulations, may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found.
15 U.S.C. § 78aa. Application of a nationwide service statute has been deemed "as broad as the limits of due process under the Fifth Amendment." In re Automotive Refinishing Paint Antitrust Litig., 358 F.3d 288, 299 n. 13 (3d Cir.2004) (). As noted by the Sixth Circuit in deSoto:
[W]hen a federal court exercises jurisdiction pursuant to a national service of process provision, it is exercising jurisdiction for the territory of the United States and the individual liberty concern is whether the individual over which the court is exercising jurisdiction has sufficient minimum contacts with the United States. [] This reading of the Due Process Clause, in addition to being not inconsistent with the Court's statements in Insurance Corp. of Ireland, is supported by its more recent explanation of the Clause's effect. "The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful `contacts, ties, or relations.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).
245 F.3d at 567-568. See also Obee v. Teleshare, Inc., 725 F.Supp. 913, 915 (E.D.Mich.1989).
While Defendant disputes he has engaged in business or has a presence in the state of Ohio, he does not dispute the factual contention that he resides in the United States. Accordingly, the Plaintiff has established personal jurisdiction over the Defendant and this branch of his motion is denied.
The starting point for this analysis begins with the relevant statute. Regarding statutory construction, the Sixth Circuit has set forth the following guidelines:
"In all cases of statutory construction, the starting point is the language employed by Congress." Appleton v. First Nat'l Bank of Ohio, 62 F.3d 791, 801 (6th Cir.1995). Moreover, where "the statute's language is plain, the sole function of the courts is to enforce it according to its terms." United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989) (citation and internal punctuation omitted).
Chapman v. Higbee Co., 319 F.3d 825, 829 (6th Cir.2003), cert. denied, ___ U.S. ___, 124 S.Ct. 2902, 159 L.Ed.2d 827 (2004). It is only when "a literal interpretation would lead to internal inconsistencies, an absurd result, or an interpretation inconsistent with the intent of Congress" that a court may "look beyond the language of the statute." Dorris v. Absher, 179 F.3d 420, 429 (6th Cir.1999), citing United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981).
The statute of limitations applicable to the claim under the 1933 Act is set forth at 15 U.S.C. § 77m, which states as follows:
No action shall be maintained to enforce any liability created under section 77k or 77 l (a)(2) of this title unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence, or, if the action is to enforce a liability created under section 77 l (a)(1) of this title, unless brought within one year after the violation upon which it is based. In no event shall any such action be brought to enforce a liability created under section 77k or 77l(a)(1) of this title more than three years after the security was bona fide offered to the public, or under section 77l(a)(2) of this title more than three years after the sale.
(Emphasis added.) In Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991), the Supreme Court adopted the one and three year periods of limitations found in sections 9(e) and 18(a) of the 1934 Act and in section 13 of the 1933 Act. Therefore, in order to maintain a private...
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