O'Neal Steel Inc et al v. Worldwide Steel Unlimited Inc et al

Filing 92

MEMORANDUM OPINION Signed by Judge Karon O Bowdre on 5/8/13. (SAC )

FILED
2013 May-08 PM 02:35
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
O’NEAL STEEL, INC., et al.,
Plaintiffs,
v.
WORLDWIDE STEEL UNLIMITED,
INC., et al.,
Defendants.

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Case No. 2:11-cv-00137-KOB

MEMORANDUM OPINION
This matter comes before the court on Defendant David Chatkin’s “Motion to Dismiss, or
the alternative, for a More Definite Statement” (doc. 60) and Defendants Ryan Chatkin and Von
Argyle’s “Motion to Dismiss and Motion for More Definite Statement.” (Doc. 63). IN this RICO
action, Plaintiffs allege that the Defendants fraudulently represented the quality of the steel they
sold to the Plaintiffs and induced the Plaintiffs to purchase inferior, untested steel at inflated
prices. The three individual Defendants who have filed motions to dismiss argue that three of the
claims against them should be dismissed and that the Plaintiffs need to provide a more definite
statement of their RICO claims against them. For the following reasons, the court will GRANT
IN PART and DENY IN PART the motions to dismiss.
I.

STATEMENT OF FACTS
A.

Factual History

On a motion to dismiss, “a court must accept as true all of the allegations contained in a
complaint.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Amended Complaint in this case is

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eighty-three pages in length, and thus for purposes of the motions to dismiss, the court will only
outline the pertinent incident that gave rise to this lawsuit and the specific allegations on which
the court bases this opinion. Plaintiffs O’Neal Steel, Inc. and Leeco Steel, LLC allege that the
individual Defendants, Lance Chatkin, Bruce Adelstein, Ryan Chatkin, Von Argyle, and David
Chatkin, formed an enterprise through the guise of two corporate entities, General Purpose Steel,
Inc. and Worldwide Steel Unlimited, Inc., and then knowingly engaged in a pattern of selling
steel to the Plaintiffs and others at inflated prices based on fraudulent certificates of conformance
and mill test reports, transmitted via mail and wire. Specifically, the Plaintiffs allege that David
Chatkin, Ryan Chatkin, and Von Argyle “exercised control over General Purpose, participating
in the operation and management of its affairs” and “exercised management control over
Worldwide, participating in the operation and management of its affairs.” (Doc. 56, at 12).
General Purpose purchased surplus steel from mills that did not meet desired
specifications, and the mills did not provide General Purpose with mill tests to show the industry
standards, grades, and strength of the steel. (Doc. 56, at 23). Worldwide would then buy the steel
from General Purpose and sell it to customers, like the Plaintiffs. Id. The Plaintiffs allege that the
Defendants participated in a fraudulent enterprise: once a customer, like the Plaintiffs would
submit a purchase order to Worldwide, a Worldwide employee would email or fax the customer
sales information to General Purpose, and then David Chatkin, Ryan Chatkin, Lance Chatkin, or
Von Argyle would decide whether to accept the sale and release steel to the customer. If they
accepted the sale, then General Purpose would transfer the steel to Worldwide who would
transmit a fraudulent certificate of conformance to the customer, including the Plaintiffs and
others, via e-mail or mail and with physical delivery of the steel to locations across the country.
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(Doc. 56, at 27). In the steel industry, certificates of conformance certify to the purchaser that
“the steel is as represented and that the vendor is in possession of either a mill test report or
independent testing data to support the vendor’s representations as to the standard, grade and
chemical and physical properties of the steel.” (Doc. 56, at 21).
In September 2009, Richard Kuny, a Worldwide salesman, began preparing certificates of
conformance to accompany the steel purchased by the Plaintiffs from Worldwide. (Doc. 56, at
25). The Plaintiffs assert that these certificates were false and that “Mr. Kuny was instructed by
[Defendant Bruce] Adelstein and others to fill in the certificates of conformance so that the
physical and chemical properties shown met the customer’s specifications, regardless of the
steel’s actual properties.” (Doc. 56, at 25). The Plaintiffs allege that “Mr. Kuny was instructed,
whether directly or indirectly, by Bruce Adelstein, David Chatkin, Lance Chatkin, Ryan Chatkin,
and Von Argyle to prepare a certificate of conformance containing information that met O’Neal’s
or Leeco’s specifications and matched the fraudulently assigned standard and grade.” (Doc. 56, at
26-27).
The Plaintiffs assert that Mr. Kuny was provided with computer “menus” to prepare false
certificates of conformance at Von Argyle’s behest. (Doc. 56, at 27). Allegedly, Mr. Kuny
complained to at least some of the Defendants about being forced to falsify certificates of
conformance and specifically informed Ryan Chatkin that he sometimes had to completely
generate the test reports without any information about the steel to rely on. (Doc. 56, at 28). The
Plaintiffs allege that Ryan Chatkin, David Chatkin, and Von Argyle all “knew that they, through
General Purpose and Worldwide, were representing steel as meeting a particular [industry]
standard grade when it did not.” (Doc. 56, at 29). The individual Defendants received the
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purchase orders from customers that included desired grades of steel and then ultimately filled
those purchase orders with steel that did not meet those qualifications and fraudulently issued
certificates of conformance in compliance with the purchase orders. (Doc. 56, at 29-30).
The Plaintiffs allege that because of the small size of the two corporate Defendants and
the level of control and personal involvement in the enterprise as a whole, the individual
Defendants all were fully aware that Worldwide was buying one type of steel from General
Purpose and then selling it through Worldwide as an entirely different standard and grade of
steel. (Doc. 56, at 30). The Plaintiffs allege that David Chatkin, General Purpose Steel, Inc.’s
founder and chairman met with the other individual Defendants to form Worldwide Steel
Unlimited, Inc. and “orchestrated the organization of Worlwide and General Purpose, and . . .
exercised management control over the enterprise through the two corporate entities.” (Doc. 56,
at 10). Specifically, the Plaintiffs allege that David Chatkin received sales reports on a daily,
weekly, and monthly basis and financial reports on a monthly and yearly basis, all of which
reflected the fraudulent transactions. (Doc. 56, at 13).
The Plaintiffs allege that Ryan Chatkin, General Purpose’s Secretary and Executive Vice
President of Products & Logistics, participated in the fraudulent enterprise by “making decisions
regarding Worldwide’s operation.” (Doc. 56, at 12). The Plaintiffs allege that Von Argyle, Chief
Financial Officer of both General Purpose and Worldwide, generated “financial reports, sales
reports, accounts receivable reports, and any other documents related to the financial operations
of each company” and provided financial reports to the individual Defendants involved in the
enterprise. (Doc. 56, at 12).
In March 2010, the Plaintiffs discovered that the steel they purchased from the
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Defendants was not of the quality assured on the certificates of conformance issued by the
Defendants. (Doc. 56, at 35). The Plaintiffs allege that in March or early April of 2010, after the
Plaintiffs communicated with the Defendants about the non-conforming steel, Lance Chatkin,
David Chatkin, and Bruce Adelstein met in Florida to “discuss how to avoid the looming
consequences of their liability as a result of the fraudulent steel provided to O’Neal and Leeco.”
(Doc. 56, at 46). Ultimately approximately 60% of steel tested by O’Neal and 40% of steel tested
by Leeco that was provided by the Defendants failed to meet the specifications represented by
Worldwide on the certificates of conformance it provided to the Plaintiffs. (Doc. 56, at 47). In the
Amended Complaint, the Plaintiffs list specific dated purchase orders that failed to meet the
specifications in Worldwide’s certificates of conformance. (Doc. 56, at 48-54).
B.

Procedural History

On January 14, 2011, the Plaintiffs filed a complaint against Bruce Adelstein, Lance
Chatkin, General Purpose, and Worldwide. (Doc. 1). Almost exactly two years later, the
Plaintiffs filed an Amended Complaint adding Ryan Chatkin, Von Argyle, and David Chatkin as
defendants. (Doc. 56). The Amended Complaint contains nine counts. Count I alleges that the
Defendants violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
§ 1964(c) and § 1962(c). The Plaintiffs allege that David Chatkin and Ryan Chatkin violated
RICO by “knowingly and directly or indirectly condut[ing] the racketeering activities through the
enterprise by directly or indirectly sending, or approving the sending of, fraudulent
representations through the mail or by wire to Plaitiffs and directing Rich Kuny and others,
through the enterprise’s chain of command to do so.” (Doc. 56, at 67). The Plaintiffs allege that
Von Argyle violated RICO in the same regard as the Chatkins but also generated “a false mill test
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report template being fully aware that such template would be used to create representations of
actual mill test reports and be sent across interstate lines via wire or mail.” (Doc. 56, at 67-68).
Count II alleges that the Defendants committed a RICO conspiracy under 18 U.S.C.
§ 1962(d) by agreeing to and directing the “racketeering activity of mail and wire fraud . . .
conducted by the association-in-fact enterprise.” (Doc. 56, at 70). Count III alleges fraudulent
misrepresentation against the Defendants who did not file a motion to dismiss. Count IV alleges
negligence and/or wantonness against all of the Defendants, and Count V alleges civil conspiracy
against all of the Defendants. Count VI for breach of contract; Count VII for breach of express
warranty; and Count VII for breach of implied warranties are alleged only against the corporate
defendants. Count IX seeks a declaratory judgment requiring all of the Defendants to indemnify
and hold harmless the Plaintiffs for sums paid to defend and settle claims brought by the
Plaintiffs’ customers as a result of the Plaintiffs sale of the non-conforming steel to its customers.
David Chatkin, Ryan Chatkin, and Von Argyle now move to dismiss counts IV, V, and
IX against them and seek a more definite statements of counts I and II against them.1 Worldwide,
General Purpose, Lance Chatkin, and Bruce Adelstein have not filed motions to dismiss at this
time.
III.

LEGAL DISCUSSION
A.

Counts I & II: RICO violations

The Plaintiffs allege two claims for relief under 18 U.S.C. § 1964(c), which allows any
person injured by a violation of RICO, 18 U.S.C. § 1962, to bring a civil suit in District Court to

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David Chatkin initially moved to dismiss counts I and II but withdrew that motion to
dismiss in his Reply brief. (Doc. 78).
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seek relief. Section 1962(c) makes it illegal for “any person employed by or associated with any
enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct
or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of
racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c)
“Civil RICO claims, which are essentially a certain breed of fraud claims, must be pled
with an increased level of specificity. . . . To satisfy the Rule 9(b) standard, RICO complaints
must allege: (1) the precise statements, documents, or misrepresentations made; (2) the time and
place of and person responsible for the statement; (3) the content and manner in which the
statements misled the Plaintiffs; and (4) what the Defendants gained by the alleged fraud.”
Ambrosia Coal & Const. Co. v. Pages Morales, 482 F.3d 1309, 1316-17 (11th Cir. 2007) (citing
FED.R.CIV.P. 9(b); Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d 1364,
1380-81 (11th Cir.1997)).
The Plaintiffs allege that the Defendants were engaged in an enterprise through the two
corporate Defendants that conducted racketeering activity “through a pattern of sending
fraudulent certificates of conformance and mill tests reports concerning the steel they sold
through mail and wire causing injury to the property and business of Plaintiffs.” (Doc. 56, at 62).
The Plaintiffs allege that the Defendants fraudulently manufactured mill test reports and
certificates of conformance and then sent those reports and certificates via wire and mail to the
Plaintiffs, satisfying the first element. The Plaintiffs also allege that they relied on these reports
and certificates and warranties made about the steel in the reports and certificates in selling the
steel to its customers, satisfying the third element. The Plaintiffs allege that the Defendants
gained a significant profit from selling the surplus steel at an inflated price to the Plaintiffs based
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on the fraudulent reports and certificates, satisfying the fourth element. The Defendants do not
contest that the Plaintiffs sufficiently alleged these three elements.2 The real issue is whether the
Plaintiffs have sufficiently alleged the time, place, and person responsible for the alleged
fraudulent actions so as to hold David Chatkin, Ryan Chatkin, and Von Argyle liable for RICO
violations.
The Defendants do not specifically argue that the Plaintiffs have failed to allege the time
and place of the misleading statements, presumably because the Plaintiffs have included in their
Amended Complaint specific purchase order dates in a chart of their orders that were filled with
non-conforming steel. (See Doc. 56, at 48-54). Ryan Chatkin, David Chatkin, and Von Argyle do
argue, however, that the Plaintiffs have failed to allege individual instances of misrepresentation
or participation in the enterprise’s racketeering activity against them. When alleging a RICO
claim against several defendants, “the complaint should inform each defendant of the nature of
his alleged participation in the fraud.” Brooks, 116 F.3d at 1381 (emphasis added). The
complaint must contain “statements of individual wrongs by individual defendants.” Cruz v.
Cinram Intern., Inc., 574 F. Supp. 2d 1227, 1233 (N.D. Ala. 2008).
In over fifty pages of factual allegations, which are briefly summarized above, the
Plaintiffs specifically describe several instances of each individual Defendant engaging in
fraudulent activity or overseeing fraudulent activity, and do not simply lump the Defendants
together as a group. The court will not repeat what has already been laid out above in the

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Defendant David Chatkin argues that the Plaintiffs have not properly segregated their
claims and pled the amount of damages that each plaintiff claims to have sustained. (Doc. 60, at
12). As stated in this court’s previous order on David Chatkin’s motion to compel, “the court
finds that the Plaintiffs’ categorization of damages is sufficient at this time.” (Doc. 88, at 2).
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statement of facts nor will it cite to every instance of individual conduct alleged by the Plaintiffs
against David Chatkin, Ryan Chatkin, and Von Argyle. Suffice it to say the court is able to
“determine which Defendant(s) allegedly participated in which acts complained of” and the
Defendants are put on sufficient notice of the precise claims against them because the Amended
Complaint specifically describes part each the individual Defendants played in the allegedly
fraudulent enterprise. See Cruz, 574 F. Supp. 2d at 1233.
To be held liable under § 1962(c), a defendant must have “some part in directing the
enterprise’s affairs.” Reves v. Ernst & Young, 507 U.S. 170, 180 (1993) (emphasis in original).
“[L]iability is not limited to those with primary responsibility for the enterprise’s affairs . . . [and]
is not limited to those with a formal position in the enterprise.” Id. As the Plaintiffs pointed out
in the Response Brief, it is enough to allege that an individual Defendant knew or reasonably
could foresee that the fraudulent documents were produced and would be mailed or transmitted
via wire to the Plaintiffs with the purpose of defrauding them. The Plaintiffs have clearly alleged
that the Defendants developed and maintained a business scheme wherein the individual
Defendants either directly participated in, knew, or at least reasonably should have known that
the certificates and reports Mr. Kuny was fraudulently producing would be sent via mail or wire
to the Plaintiffs so that the Plaintiffs would rely on them in selling the steel to their customers.
The court agrees with the Supreme Court’s interpretation of § 1962(c) in that “Congress
did not intend to extend RICO liability under § 1962(c) beyond those who participate in the
operation or management of an enterprise through a pattern of racketeering activity.” However,
the court cannot accept the Defendants’ argument that General Purpose’s chairman, David
Chatkin; General Purpose’s Secretary and Executive Vice President of Products and Logistics,
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Ryan Chatkin; and General Purpose and Worldwide’s CFO, Von Argyle; did not have “some part
in directing the enterprise’s affairs” so that knowledge of the fraudulent activity cannot be
attributed to them. Reves, 507 U.S. at180 (emphasis in original). The Plaintiffs have sufficiently
stated a claim for a RICO violation under 1962(c), and the court will DENY the Defendant’s
motion for more definite statement of Count I.
Section 1962(d) makes it illegal for any person to conspire to violate any subsection of 18
U.S.C. § 1962. 18 U.S.C. § 1962(d). “The touchstone of liability is an agreement to participate
in a RICO conspiracy, which may be shown in two ways: (1) showing an agreement on the
overall objective of the conspiracy, or (2) showing that a defendant agreed to commit personally
two predicate acts, thereby agreeing to participate in a ‘single objective.’” U.S. v. Browne, 505
F.3d 1229, 1264 (11th Cir. 2007) (quoting U.S. v. Abbell, 271 F.3d 1286, 1299 (11th Cir. 2001)).
Additionally:
If the [plaintiff] can prove an agreement on an overall objective, it need not prove a
defendant personally agreed to commit two predicate acts. . . . In the absence of direct
evidence of an agreement on an overall objective, the [plaintiff] may prove such an
agreement through inferences from the conduct of the alleged participants or from
circumstantial evidence of a scheme, . . . amounting to evidence that each defendant
necessarily must have known that the others were also conspiring to participate in the
same enterprise through a pattern of racketeering.

Browne, 505 F.3d at 1264 (internal quotation marks and citation omitted).
The Plaintiffs have alleged that all three individual Defendants who filed motions to
dismiss controlled the financial affairs of the enterprise and participated in the formation and
direction of both Worldwide and General Purpose so that they were directly involved in or at the
very least had knowledge of the enterprise’s overall objective of fabricating documents to sell

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non-conforming steel at inflated prices. The Plaintiffs’ Amended Complaint is sufficient to state
a claim for a RICO conspiracy under § 1964(c) and § 1962(d), and the court will DENY the
Defendants’ motion for more definite statement of Count II.
B.

Count IV: Negligence and/ or Wantonness

The Defendants argue that both the Plaintiffs’ claims for negligence and wantonness are
barred by the 2-year statute of limitations. The Plaintiffs acknowledge that a two year statute of
limitations applies to their negligence claim but do not argue that their negligence claim is timely
within that statute of limitations. Therefore, the court will GRANT the Defendants’ motion to
dismiss and DISMISS WITH PREJUDICE the Plaintiffs’ claims of negligence against the
Defendants. (Doc. 68, at 11 n. 6). See Coal. for the Abolition of Marijuana Prohibition v. City of
Atlanta, 219 F.3d 1301, 1326 (11th Cir. 2000) (finding that a party’s failure to brief and argue an
issue before the district court is grounds for declaring it abandoned).
To support their argument that the wantonness claim should also be dismissed as time
barred, the Defendants cite Ex Parte Capstone Building Corp., 96 So. 2d 77,79 (Ala. 2012)
(“We hereby . . . confirm that claims of wantonness are subject to the two-year statute of
limitations found in Ala. Code 1975, § 6-2-38(l).”). The Alabama Supreme Court, however,
clarified that its holding would only apply prospectively from the date of its decision— June 3,
2011: “[W]e adhere to our conclusion that it would be unjust to announce a decision that applied
retroactively so as to immediately cut off the right to bring suit upon any claim that had accrued
more than two years prior to our original decision and that would not provide a reasonable
transition to the rule announced then and affirmed today.” Id. at 93.
Any claim of wantonness accruing before June 3, 2011 is not time-barred if filed within
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two years of the Capstone decision, or by June 3, 2013, “unless and to the extent that the time for
filing their action under the six year limitations period . . . would expire sooner.” Id. at 91. The
acts supporting the Plaintiffs’ claims occurred in 2009 and 2010, and thus their claims fall into
the former category whose statute of limitations will expire on June 3, 2013. The Plaintiffs filed
their original Complaint in January 2011, well within the statute of limitations period. The
Defendants argue that the Plaintiffs’ Amended Complaint does not relate back to the time of the
filing of the original Complaint, but the relation back of the Amended Complaint is irrelevant on
this point because the Plaintiffs filed their Amended Complaint on January 15, 2013, within the
statute of limitations period that will expire on June 3, 2013. Under Capstone Building Corp., the
Plaintiffs can maintain their claims for wantonness, and the court will DENY the Defendants’
motion to dismiss the Plaintiffs’ wantonness claim.
C.

Count V: Civil Conspiracy

The Defendants argue that the Plaintiffs’ state law civil conspiracy claim is time-barred
or, alternatively, fails to state a claim upon which relief can be granted. “Under Alabama law,
civil conspiracy is not an independent action; rather, a plaintiff must have a viable underlying
cause of action.” U.S. Steel, LLC v. Tieco, Inc., 261 F.3d 1275, 1294 (11th Cir. 2001) (citing
Drill Parts & Service Co. v. Joy Mfg. Co., 619 So. 2d 1280, 1289 (Ala. 1993)). Because a civil
conspiracy claim is dependent on an underlying claim of misconduct, the statute of limitations on
the conspiracy claim expires at the same time as the statute of limitations on the underlying
misconduct. Boyce v. Cassese, 941 So. 2d 932, 944 (Ala. 2006) (citing Kelly v. Alexander, 554
So. 2d 343, 344 (Ala.1989); Ford Motor Co. v. Neese, 572 So. 2d 1255 (Ala.1990)). Because the
court has already ruled that the Plaintiffs’ underlying wantonness claim is timely, the civil
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conspiracy claim is also timely.
“Civil conspiracy is a combination of two or more persons to accomplish an unlawful end
(by civil law standards) or to accomplish a lawful end by unlawful means. . . . By its very nature,
the existence of a conspiracy must often be inferred from circumstantial evidence and the
relationship of the parties, as opposed to direct evidence.” Edison v. Olin Corp., 527 So. 2d 1283,
1285 (Ala. 1988) (citations omitted). In this case, the Plaintiffs allege that the Defendants
underlying wanton conducts also supports its claim of civil conspiracy. The Alabama Supreme
Court has defined wantonness as “the conscious doing of some act or the omission of some duty
while knowing of the existing conditions and being conscious that, from doing or omitting to do
an act, injury will likely or probably result.” Ex parte Essary, 992 So. 2d 5, 9 (Ala. 2007) (citing
Bozeman v. Central Bank of the South, 646 So. 2d 601 (Ala.1994)). The Plaintiffs have not
attacked the sufficiency of the Plaintiffs’ claim for wantonness, and thus the court will not
analyze it here.
The Plaintiffs pled in great detail the elaborate enterprise created by the Defendants to
falsify mill test reports and certificates of conformance to “sell inferior, untested product as
substantially better and more expensive product, meeting exacting [industry] specifications, thus
illiciting profits for its participants.” (Doc. 56, at 55). The whole of the Plaintiffs’ Amended
Complaint paints a portrait of the individual Defendants all working in concert to create an
enterprise that misled and defrauded its customers; the very specific factual averments about the
individual Defendants and the enterprise they created certainly comply with the pleading
requirements for both the underlying claim of wantonness and the claim of civil conspiracy.
David Chatkin argues that Rule 9(b)’s heightened pleading standard applies to the
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Plaintiffs’ claim of civil conspiracy, but provides no authority for this argument. (Doc. 60, at 10).
By its very terms, Rule 9(b) only applies to claims of fraud and mistake. See Fed. R. Civ. P. 9(b).
The Plaintiffs’ claim for civil conspiracy is not one for fraud, nor is the claim underlying the civil
conspiracy for fraud; thus, rule 9(b)’s heightened pleading requirements do not apply. Because
the Plaintiffs have sufficiently alleged a claim for civil conspiracy and because that claim is not
time-barred, the court will DENY the Defendants’ motion to dismiss Count V of the Amended
Complaint.
D.

Count IX: Declaratory Judgment

The Defendants argue that the Plaintiffs’ request for a declaratory judgment from this
court is not appropriate because the court cannot issue advisory opinions. For a declaratory
judgment claim to be justiciable, it must be “definite and concrete, touching the legal relations of
parties having adverse legal interests.” Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300
U.S. 227, 240-41 (1937). Further, the case “must be a real and substantial controversy admitting
of specific relief through a decree of a conclusive character, as distinguished from an opinion
advising what the law would be upon a hypothetical state of facts.” Id. For this court to have
jurisdiction to issue a declaratory judgment, the Plaintiffs “must assert a reasonable expectation
that the injury they have suffered will continue or will be repeated in the future.” Malowney v.
Fed. Collection Dep. Group, 193 F.3d 1342, 1347 (11th Cir. 1999) (citing Emory v. Peeler, 756
F.2d 1547, 1551-52 (11th Cir. 1985)). “The remote possibility that a future injury may happen is
not sufficient to satisfy the ‘actual controversy’ requirement for declaratory judgments.”
Malowney, 193 F.3d at 1347.
In this case, a dispute between adverse parties exists because the Plaintiffs claim
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violations of federal statute and state common law along with their request for a declaratory
judgment. The dispute between the Plaintiffs and the Defendants is concrete and not abstract; the
Plaintiffs claim that the Defendants’ violation of the law has injured them financially in the past
and will potentially harmfully affect them in the future. The Plaintiffs specifically allege that the
Defendants actions have already forced them to resolve claims with some of their customers over
the non-conforming steel and that they “may be exposed to liability by virtue of other nonconforming steel that may be incorporated into end products of other customers to an extent not
yet known.” (Doc. 56, at 80). Taking all of the Plaintiffs’ allegations as true, the Defendants sold
the Plaintiffs non-conforming steel, which the Plaintiffs then sold to their customers. Some
customers have already brought claims for the non-conforming steel. These facts alone create
more than a “remote possibility” of future claims against the Plaintiffs; it is reasonable to expect
that the Plaintiffs will be held liable for other claims in the future because of the Defendants
supplying non-conforming steel to the Plaintiffs. See Malowney, 193 F.3d at 1347.
Because the Plaintiffs have sufficiently plead a reasonable expectation of future harm
arising directly from the Defendants’ allegedly wrongful conduct, the court will DENY the
motion to dismiss count XI of the Plaintiffs’ Amended Complaint.
IV.

CONCLUSION
The court finds that even under Rule 9(b)’s heightened pleading standards, the Plaintiffs’

RICO claims as contained in the Amended Complaint against the Defendants are sufficient to
apprise the Defendants of the claims made against them. Although the statute of limitations on
the Plaintiffs’ claim for negligence has run, the Plaintiffs’ claims for wantonness and civil
conspiracy are not time-barred, and the Plaintiffs have sufficiently pled both of those claims.
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Finally, the Plaintiffs’ request for a declaratory judgment on indemnity from future claims from
its customers is ripe for judicial review. For the following reasons, the court will GRANT IN
PART and DENY IN PART the motions to dismiss filed by David Chatkin, Ryan Chatkin, and
Von Argyle. The court will enter an order simultaneously to that effect.
DONE and ORDERED this 8th day of May, 2013.

____________________________________
KARON OWEN BOWDRE
UNITED STATES DISTRICT JUDGE

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