Graham v. Tasa Group, Inc. et al

Filing 59

MEMORANDUM OPINION. Signed by Judge L Scott Coogler on 3/2/2015. (KAM, )

FILED
2015 Mar-02 PM 04:15
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
RODERICK GRAHAM,
Plaintiff,
vs.
TASA GROUP, INC., et al.,
Defendants.

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2:13-cv-00748-LSC

MEMORANDUM OF OPINION
I.

Introduction
Plaintiff Roderick Graham (“Graham”) filed this action on April 22, 2013,

naming as defendants Tasa Group, Inc. (“Tasa Group”), Richard Beckert, David
Seltzer, and Leonard Schwartz d/b/a Schwartz & McClure. Graham alleges that all
defendants violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692
(“FDCPA”) and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
§ 1961 et seq. (“RICO”), and asserts fraud, theft of property, and negligent and
wanton hiring, training, supervision and retention claims under Alabama state law.
Graham’s complaint seeks damages, a temporary restraining order, a preliminary
injunction, and a permanent injunction.
This Court currently has for consideration several pending motions:

1)

Defendant Leonard Schwartz filed a motion to dismiss Graham’s
complaint for lack of subject matter jurisdiction and failure to state a
claim pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6).
(Doc. 7.)

2)

Graham filed a motion to amend his complaint within his response to
defendant Leonard Schwartz’s motion to dismiss. (Doc. 12.)

3)

Defendants Tasa Group, Richard Beckert, and David Seltzer filed a joint
motion to dismiss Graham’s complaint pursuant to Fed. R. Civ. P.
12(b)(1) and (6). (Doc. 14.)

4)

Graham filed a motion to strike an exhibit used by defendants Tasa
Group, Richard Beckert, and David Selzter in their motion to dismiss.
(Doc. 32).

5)

The magistrate judge previously assigned to the case issued a report and
recommendation regarding a Suggestion of Death filed on the record as
to defendant Leonard Schwartz, and Graham filed a timely objection
thereto. (Docs. 23 and 24.)

6)

Defendants Tasa Group, Richard Beckert, and David Seltzer have twice
renewed their pending motion to dismiss. (Docs. 39 and 56.)

This opinion will explain why all of the motions to dismiss are due to be granted
and this case dismissed for lack of subject matter jurisdiction,1 Graham’s motion to
amend his complaint is due to be denied, the magistrate judge’s report and
recommendation is due to be accepted and adopted, and Graham’s motion to strike
is due to be denied as moot.

1

As explained herein, Graham’s federal claims are due to be dismissed with prejudice and
his state-law claims dismissed without prejudice.
Page 2 of 43

II.

Facts2
Graham is an attorney residing in Alabama. (Doc. 1 at ¶ 3.) Defendant Tasa

Group is a Pennsylvania corporation that delivers expert witness referrals to attorneys
throughout the country. (Id. at ¶ 4.) In or around July 2009, Graham engaged Tasa
Group to retain an expert witness to testify in a case in federal court in Alabama in
which Graham was acting as an attorney. (Id. at ¶ 9-10.) Graham entered into an
agreement with Tasa Group whereby Tasa Group agreed to facilitate a relationship
between Graham and defendant Richard Beckert (“Mr. Beckert”) in exchange for
Graham making payments to Tasa Group. (Id. at ¶ 16.) Mr. Beckert is an individual
residing in South Carolina who provides expert services in litigation. (Id. at ¶ 5).
According to Graham, Tasa Group quoted him an initial fee of $1,394.00 and told
Graham that said fee would cover the cost of providing the initial expert report
required by the Federal Rules of Civil Procedure. (Id. at ¶ 11-15.) Graham sent a
check to Tasa Group in the amount of $1,394.00. (Id. at ¶ 13.) However, when
Graham would ask Mr. Beckert about the initial report, he would “stall by saying that
he did not know whether he could help [Graham] in the case.” (Id. at ¶ 16.) Graham

2

For purposes of a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, the Court treats facts alleged in the complaint as true and construes them in the
plaintiff’s favor. Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1215 (11th Cir. 2012).
Unless otherwise noted, the Court will do so here.
Page 3 of 43

alleges that “[a]fter several phone calls about the initial report, [Graham] had no
choice, but to inform the court and opposing counsel in the [] case that he would not
use an expert in the case.” (Id.). Graham then called Tasa Group and Mr. Beckert and
told them that he did not want to use Mr. Beckert as an expert and that he no longer
wanted an expert report. (Id. at ¶ 17.)
On September 24, 2009, Graham received a bill from Tasa Group for
$6,034.43. (Id. at ¶ 19.) From January 26, 2010 to March 31, 2010, Graham received
several phone calls from defendant David Seltzer (“Mr. Seltzer”), Tasa Group’s
Pennsylvania attorney, and Tasa Group, claiming that Graham owed Tasa Group
$5,140.43. (Id. at ¶ 20.) Tasa Group then filed a complaint against Graham in the
District Court for the Commonwealth of Pennsylvania, Montgomery County, to
recover the monies it said Graham owed. Tasa Group engaged Mr. Seltzer to act as
Tasa Group’s legal counsel in that lawsuit. The Pennsylvania complaint alleged that
Graham owed Tasa Group $5,140.43 for professional services rendered. Despite
being served,3 Graham did nothing to defend against the Pennsylvania lawsuit. Tasa

3

As will be explained herein, Graham’s allegation that he was not properly served is not a
fact that must be taken as true, but is instead a legal conclusion and is belied by the record. See
Aldana v. Del Monte Fresh Produce, N.A., 416 F.3d 1242, 1248 (11th Cir. 2005) (a court need not
accept as true “unwarranted deductions of fact” or legal conclusions).
Page 4 of 43

Group obtained a default judgment against Graham on May 2, 2011.4
That judgment was then domesticated—through the efforts of Tasa Group’s
Alabama counsel, defendant Leonard Schwartz (“Mr. Schwartz”)—in the Circuit
Court of Jefferson County, Alabama, in case number CV-2011-01855. Judgment was
entered against Graham in the Circuit Court of Jefferson County, Alabama, on
October 12, 2011.5

4

The defendants have attached documents from the Pennsylvania lawsuit to their motion
to dismiss. However, Graham also acknowledges in his complaint that a default judgment was
obtained against him in Pennsylvania state court. See Doc. 1 at ¶ 21 (“On or about May 11, 2011, the
defendants obtained a default judgment through false representations against the plaintiff in
Pennsylvania without properly serving the plaintiff. The plaintiff did not discover the fraudulent
misrepresentation until he received a copy of the default judgment on or about May 28, 2011.”); see
also id. at p. 9 ¶ D. Because Graham referenced it in his complaint, this Court may consider the
Pennsylvania action and the default judgment in ruling on these motions to dismiss. See Horsley v.
Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002) (noting that, under Rule 12(b)(6), “ . . . a document
attached to a motion to dismiss may be considered by the court without converting the motion into
one for summary judgment only if the attached document is: (1) central to the plaintiff’s claim; and
(2) undisputed.”); La Grasta v. First Union Securities, Inc., 358 F.3d 840, 845 (11th Cir. 2004)
(noting that, when “analyzing the sufficiency of the complaint, we limit our consideration to the
well-pleaded factual allegations, documents central to or referenced in the complaint, and matters
judicially noticed”).
5

Although not mentioned in Graham’s complaint, the Court may also nonetheless consider
the domesticated judgment in Alabama. When a motion to dismiss, such as this one, is brought
pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction, the Court may consider factual
matters outside the pleadings. See Carmichael v. Kellogg, Brown & Root Servs., Inc., 572 F.3d 1271,
1279 (11th Cir. 2009) (“[W]here a defendant raises a factual attack on subject matter jurisdiction,
the district court may consider extrinsic evidence such as deposition testimony and affidavits.”).
Furthermore, “a court ordinarily may treat documents from prior state court adjudications as public
records.” Boateng v. InterAmerican University, Inc., 210 F.3d 56, 60 (1st Cir. 2000) (holding that “a
court may look to matters of public record in deciding a Rule 12(b)(6) motion without converting the
motion into one for summary judgment”) (citing Henson v. CSC Credit Services, 29 F.3d 280, 284
(7th Cir. 1994)).
Page 5 of 43

Graham, representing himself pro se, filed the instant lawsuit against Tasa
Group, Mr. Beckert, Mr. Seltzer, and Mr. Schwartz in April 2013. This action was
reassigned to the undersigned on February 12, 2015. (Doc. 58.)
III.

Discussion of Pending Motions
A.

The Magistrate Judge’s Report and Recommendation

On October 14, 2013, counsel for Mr. Schwartz filed a Suggestion of Death
Upon the Record, stating that Mr. Schwartz died on October 13, 2013. (Doc. 22.)
The magistrate judge previously assigned to this case entered a report and
recommendation on January 23, 2014, recommending that the district court dismiss
all of Graham’s claims against Mr. Schwartz pursuant to Federal Rule of Civil
Procedure 25(a)(1), because over 90 days had passed since the Suggestion of Death
was filed and Graham had not filed a motion for substitution of Mr. Schwartz’s
personal representative as a defendant.6 (Doc. 23.) Graham filed a timely objection
to the report and recommendation. (Doc. 24.)
Pursuant to Fed. R. Civ. P. 72(b)(3), this Court has reviewed the magistrate
6

Fed. R. Civ. P. 25 provides in relevant part:

(1) Substitution if the Claim Is Not Extinguished. If a party dies and the claim is not
extinguished, the court may order substitution of the proper party. A motion for
substitution may be made by any party or by the decedent’s successor or
representative. If the motion is not made within 90 days after service of a statement
noting the death, the action by or against the decedent must be dismissed.
Page 6 of 43

judge’s report and recommendation and Graham’s objection to it de novo. Graham
argues that the 90-day period of time did not begin running at the filing of the
Suggestion of Death for several reasons: 1) the Suggestion of Death did not identify
the decedent’s successor or representative; 2) the Suggestion of Death was not filed
by either a party or by a representative of the decedent, and the decedent’s attorney
does not count as an appropriate representative; and 3) the Suggestion of Death was
not served on the decedent’s successor or representative. In making these arguments,
Graham incorrectly attributes the rules and requirements for filing a motion for
substitution of a party under Fed. R. Civ. P. 25(a)(1) to the filing of the Suggestion of
Death. Nothing in Rule 25 requires the Suggestion of Death to identify the decedent’s
successor or representative; nor does it say anything about who may properly file the
Suggestion of Death. The only requirement Rule 25 sets forth for the Suggestion of
Death is that it must be served on all parties as provided for in Fed. R. Civ. P. 5 and
served on all non-parties as provided for in Fed. R. Civ. P. 4. See Fed. R. Civ. P.
25(a)(3). Here, Mr. Schwartz’s attorney properly served the Suggestion of Death on
all parties by serving it on their attorneys of record pursuant to Fed. R. Civ. P. 5(b)(1).
However, without citing any rule or case with precedential value in support, Graham
argues that the Suggestion of Death had to be served on Mr. Schwartz’s legal

Page 7 of 43

representative because that person is an appropriate non-party to this lawsuit. Even
if Mr. Schwartz’s legal representative could be considered a non-party to this lawsuit
such that he or she had to also be served with the Suggestion of Death, Graham cannot
now complain about an alleged defect in service on a non-party and use that as an
excuse not to file a timely motion to substitute a party as required under Rule 25(a)(1).
Indeed, other than to object to the magistrate judge’s report and recommendation,
Graham has taken no action since the Suggestion of Death was filed in October 2013
to substitute a party for Mr. Schwartz, either by naming a representative or opening
an estate himself and asserting claims against it. Graham also argues that he was not
required to move for substitution because he sued Mr. Schwartz in his firm’s name,
suggesting that any judgment entered against Mr. Schwartz would automatically
transfer to his law partners. Graham has cited no authority for his excuse for not filing
a motion for substitution of parties on this ground, and the Court can find none.
Accordingly, the magistrate judge’s report and recommendation is due to be
adopted and accepted. Accordingly, Graham’s claims against Mr. Schwartz d/b/a
Schwartz & McClure are due to be dismissed with prejudice and Mr. Schwartz d/b/a
Schwartz & McClure is due to be dismissed with prejudice as a defendant from this
action. The Court also notes that Mr. Schwartz’s motion to dismiss, filed prior to his

Page 8 of 43

death, raises many of the same arguments and defenses as does the joint motion to
dimiss filed by Tasa Group, Mr. Beckert, and Mr. Seltzer. In the alternative, and for
the reasons stated herein, Mr. Schwartz’s motion to dismiss is due to be granted and
all claims against him dismissed even if he were not dismissed from this action
pursuant to Fed. R. Civ. P. 25.
B.

Tasa Group, Mr. Beckert, and Mr. Seltzer’s Motion to Dismiss and
Renewed Motions to Dismiss
1.

Standards of Review on a Motion to Dismiss

The defendants have raised arguments that dismissal is proper for lack of
subject matter jurisdiction and, in the alternative, for failure to state a claim. Rule
12(b)(1) motions to dismiss for lack of subject matter jurisdiction can be asserted on
either facial or factual grounds. Morrison v. Amway Corp., 323 F.3d 920, 925 n. 5 (11th
Cir. 2003). When defendants, such as here, raise a factual attack on subject matter
jurisdiction, by relying on evidence outside the pleadings, this Court may consider
extrinsic evidence and is not constrained to viewing the facts in the light most
favorable to Graham. Id.
With regard to the defendants’ alternative argument that Graham’s complaint
fails to state a claim for relief, Rule 8(a) of the Federal Rules of Civil Procedure
requires a pleading to contain “a short and plain statement of the claim showing that
Page 9 of 43

the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “Rule 8 marks a notable and
generous departure from the hyper-technical, code-pleading regime of a prior era, but
it does not unlock the doors of discovery for a plaintiff armed with nothing more than
conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678-679 (2009). Instead, “[t]o survive
a motion to dismiss, a complaint must contain sufficient factual matter, accepted as
true, to state a claim for relief that is plausible on its face.” Id. at 678 (internal
quotations omitted). Iqbal establishes a two-step process for evaluating a complaint.
First, the Court must “begin by identifying pleadings that, because they are no more
than conclusions, are not entitled to the assumption of truth.” Id. at 679. Second,
“[w]hen there are well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise to an entitlement to
relief.” Id. Factual allegations in a complaint need not be detailed, but they “must be
enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007).
2.

Request for Dismissal Pursuant to Rule 12(b)(1) for Lack of
Subject Matter Jurisdiction

This Court must consider first the defendants’ argument that it lacks subject
matter jurisdiction to consider Graham’s complaint. See Belleri v. United States, 712
F.3d 543, 547 (11th Cir. 2013) (“We may not consider the merits . . . unless and until
Page 10 of 43

we are assured of our subject matter jurisdiction.”)
i.

Dismissal Pursuant to the Compulsory Counterclaim
Rule

The defendants first assert that Graham’s complaint is due to be dismissed
pursuant to the compulsory counterclaim rule found in Rule 13(a) of the Federal Rules
of Civil Procedure because Graham should have asserted all of his claims as
counterclaims in the Pennsylvania action. Pursuant to Rule 13(a), “[c]ompulsory
counterclaims which are not brought are ‘thereafter barred.’ “ Nippon Credit Bank,
Ltd. v. Matthews, 291 F.3d 738, 755 (11th Cir. 2002), abrogation on other grounds
recognized in 593 F.3d 1249, 1258 & n.7 (11th Cir. 2010) (quoting Baker v. Gold Seal
Liquors, Inc., 417 U.S. 467, 469 n. 1 (1974)). A counterclaim is compulsory if it “(A)
arises out of the transaction or occurrence that is the subject matter of the opposing
party’s claim; and (B) does not require adding another party over whom the court
cannot acquire jurisdiction.” Fed. R. Civ. P. 13(a). “A determination of whether a
counterclaim is compulsory is not discretionary; rather, such a determination is made
as a matter of law.” Republic Health Corp. v. Lifemark Hosps. of Fla, Inc., 755 F.2d 1453,
1454 (11th Cir. 1985). To make a determination as to whether a claim “arises out of
the transaction or occurrence,” the Eleventh Circuit relies on the “logical
relationship” test. Id. at 1455. A logical relationship exists “when the same operative
Page 11 of 43

facts serve as the basis of both claims or the aggregate core of facts upon which the
claim rests activates additional legal rights, otherwise dormant, in the defendant.” Id.
When a court concludes that a claim was a compulsory counterclaim in a previous
action, the appropriate remedy is dismissal of the claim. See Cleckner v. Republic Van
and Storage Co., 556 F.2d 766, 769 n.3 (5th Cir. 1977)).
The defendants’ reliance on the federal compulsory counterclaim rule is
misplaced. This is because Supreme Court and Eleventh Circuit precedent appears
to indicate that Pennsylvania law regarding compulsory counterclaims, and not the
federal compulsory counterclaim rule, controls in this situation. There is no question
that when the first suit is brought in state court and the second suit is brought in
federal court based on diversity, the failure to bring a compulsory counterclaim is a
question of state law. See Montgomery Ward Development Corp. v. Juster, 932 F. 2d
1378, 1380 (11th Cir. 1991) (applying Florida’s compulsory counterclaim rule).
However, Graham has invoked the jurisdiction of this Court based on a federal
question, and not on the diversity of citizenship of the parties—indeed, complete
diversity is lacking, as Graham and Mr. Schwartz are both Alabama residents.
Nonetheless, in Amey, Inc. v. Gulf Abstract & Title, Inc., 758 F.2d 1486 (11th Cir.
1985), which the Eleventh Circuit relied on in Montgomery Ward to state the rule as

Page 12 of 43

recounted above, the Eleventh Circuit stated that regardless of whether the federal
case is based on diversity or federal question jurisdiction, the state’s law of res judicata
applies:
Where the first suit is brought in state court and the second suit is
brought in federal court based on diversity, state law of res judicata is to
be applied. Commercial Box & Lumber v. Uniroyal, 623 F.2d 371, 373 (5th
Cir. 1980); Cleckner v. Republican Van & Storage Co., 556 F.2d 766, 768
(5th Cir. 1977). Similarly, when a federal court exercises federal question
jurisdiction and is asked to give res judicata effect to a state court
judgment, it must apply the res judicata principles of the law of the state
whose decision is set up as a bar to further litigation. Hernandez v. City
of Lafayette, 699 F.2d 734, 736 (5th Cir. 1983) (citing ED Systems Corp.
v. Southwestern Bell Telephone Co., 674 F.2d 453, 457 (5th Cir. 1982)). See
Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 105
S.Ct. 1327, 84 L. Ed.2d 274 (1985). See also St. John v. Wisconsin
Employment Relations Board, 340 U.S. 411, 71 S.Ct. 375, 95 L.Ed. 386
(1951); Rollins v. Dwyer, 666 F.2d 141 (5th Cir. 1982).
Amey, Inc., 758 F.2d at 1509. Although Amey, Inc., and the cases on which it relied,
discussed the doctrine of res judicata and not the federal compulsory counterclaim rule
specifically, the former Fifth Circuit has stated, “Although the bar resulting from
failure to bring a compulsory counterclaim is not identical to the bar of res judicata, our
court has held that the ‘principles of res judicata’ govern.” Cleckner, 556 F.2d at 769
(holding that Florida’s compulsory counterclaim rule and not the federal rule applies
to decide whether claims brought in a federal diversity case are barred as non-asserted
compulsory counterclaims) (quoting Dupuy-Busching General Agency v. Ambassador
Page 13 of 43

Ins., 524 F.2d 1275, 1277 (5th Cir. 1977)).7
Additionally, in Marrese, another case relied on in Amey, Inc., supra, the
Supreme Court explained that the preclusive effect of a state court judgment in a
subsequent federal lawsuit generally is determined by the full faith and credit statute,
which provides that state judicial proceedings “shall have the same full faith and
credit in every court within the United States . . . as they have by law or usage in the
court of such State . . . from which they are taken.” 470 U.S. at 380 (quoting 28
U.S.C. § 1738). The issue in Marrese was whether a state court judgment may have
preclusive effect on a federal antitrust claim that could not have been raised in the
state proceeding. Id. at 379. The Supreme Court held that even though the antitrust
claim was within the exclusive jurisdiction of the federal courts, the court of appeals
erred by suggesting that a federal court should determine the preclusive effect of a
state court judgment without regard to the law of the State in which the judgment was
rendered. Id. The Court stated that the full faith and credit statute “does not allow
federal courts to employ their own rules of res judicata in determining the effect of
state judgments. Rather, it goes beyond the common law and commands a federal

7

In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), the Eleventh
Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to
October 1, 1981.
Page 14 of 43

court to accept the rules chosen by the State from which the judgment is taken.” Id.
at 379-80 (quoting Kremer v. Chemical Construction Corp., 456 U.S. 461, 481-82
(1982)). The Court thus instructed courts to “look first to state preclusion law in
determining the preclusive effects of a state court judgment,” id. at 381, even though
Marrese involved a federal question, not diversity of citizenship.
Before Marrese, the former Fifth Circuit had to decide in Chapman v. Aetna
Finance Co., 615 F.2d 361 (5th Cir. 1980),8 whether the “petitioner’s Truth in Lending
claims were properly dismissed on account of their non-assertion as compulsory
counterclaims in previous state foreclosure proceedings.” Id. at 362. The court
recognized that the petitioner’s Truth in Lending claims arose under federal law and
that its analysis would thus have no application to diversity cases, citing Cleckner, 556
F.2d 766. Chapman, 615 F.2d at 363 n.6. The court held that the full faith and credit
statute did not compel dismissal of the federal actions because Georgia’s compulsory
counterclaim rule was essentially procedural and more akin to a statute of limitations,
which like other “common and statutory law” would “not ordinarily be entitled to full
faith and credit in foreign jurisdictions.” Id. at 363. However, the court went on to
decide that the principles of comity compelled operation of the Georgia compulsory

8

See footnote 5, supra.
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counterclaim rule because it was very similar to Fed. R. Civ. P. 13(a) in both purpose
and scope. Id. at 364. Accordingly, the court held that Georgia’s compulsory
counterclaim rule operated to preclude adjudication of Truth in Lending claims that
were not asserted in Georgia state court suits on the underlying debt. Id. However,
the Court held that its decision was prospective only. Id.
Based on the reasoning in these cases, the Court is of the opinion that
Pennsylvania law regarding compulsory counterclaims, and not federal Rule 13(a),
applies, whether it is because the full faith and credit statute compels it, as it did to
give credit to the state law of res judicata in Marrese, or whether it is for reasons of
comity to the state law, as in Chapman. The conclusion that Pennsylvania law applies
is fatal for the defendants’ argument because Pennsylvania does not have a
compulsory counterclaim rule; all counterclaims are permissive. See Hunsicker v.
Brearman, 586 A.2d 1387, 1389 (Pa. Super. Ct. 1991) (“Under the Pennsylvania Rules
of Civil Procedure, a defendant is not required to file a counterclaim; rather, the rule
is permissive.”) (citing Pa. R. Civ. P. 1031). Thus, because Graham was not required
to assert his claims in the Pennsylvania action or lose them forever, the defendants’
contention that they are now barred as non-asserted compulsory counterclaims fails.
Indeed, the former Fifth Circuit’s holding in Chapman compels this conclusion. As

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the court explained there:
It is now settled that, had respondents originally been able to bring
foreclosure proceedings in the federal court system, petitioners’
Truth-in-Lending claims would have been compulsory counterclaims
under Fed. R. Civ. P. 13(a). See Plant v. Blazer Financial Services, Inc.,
598 F.2d 1357 (5th Cir. 1979). As earlier indicated, the same rule obtains
under [Georgia’s compulsory counterclaim rule,] Ga. Code Ann. §
81A-113(a) (Harrison 1978). See Aycock v. Household Finance Corp., 142
Ga.App. 207, 235 S.E.2d 578 (1977), cert. dismissed, 240 Ga. 570, 241
S.E.2d 835 (1978). Manifestly, therefore, the instant lawsuits derogate
the policies of both Georgia and this Circuit. We decline to sanction the
very repetitious litigation that both our and Georgia’s compulsory
counterclaim rules were intended to prevent.
615 F.2d at 361. Unlike Georgia, Pennsylvania does not have the same policy barring
compulsory counterclaims from being asserted for the first time in a later suit. Thus
the reasoning in Chapman indicates that Graham’s claims are not barred under the
compulsory counterclaim rule.
ii.

Dismissal Pursuant to the Rooker-Feldman Doctrine

Although their compulsory counterclaim argument fails, the defendants also
asserted that this Court lacks subject matter jurisdiction over any of Graham’s claims
by operation of the Rooker-Feldman doctrine. The Rooker-Feldman doctrine recognizes
that the federal trial courts lack appellate jurisdiction to review a state court’s judicial
proceedings. District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 482
(1983) (“[A] United States District Court has no authority to review final judgments
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of a state court in judicial proceedings.”); Rooker v. Fidelity Trust Co., 263 U.S. 413,
415-416 (1923). However, this doctrine has also been narrowly construed to be
“confined to cases of the kind from which the doctrine acquired its name: cases
brought by state-court losers complaining of injuries caused by state-court judgments
rendered before the district court proceedings commenced and inviting district court
review and rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Industries
Corp., 544 U.S. 280, 284 (2005). The Rooker-Feldman doctrine applies to bar all of the
claims in the instant case because (1) Graham is a “state-court loser” in the
Pennsylvania action; (2) the Pennsylvania judgment was rendered before the instant
lawsuit was filed; and (3) Graham now complains of injuries caused by the judgment
in the Pennsylvania action. See id.
First, Graham is a “state-court loser” in the Pennsylvania action. The default
judgment taken against Graham counts for purposes of Rooker-Feldman. See MSK
EyEs Ltd. v. Wells Fargo Bank, Nat’l Ass’n, 546 F.3d 533, 539 (8th Cir. 2008) (“The
fact that a judgment was entered on a party’s default does not alter the applicability
of the Rooker–Feldman doctrine.”); Ballyhighlands, Ltd. v. Bruns, 182 F.3d 898, *2
(2nd Cir. 1999) (“Rooker-Feldman applies to default judgments just as it does to other
types of judgments.”); cf. Jones v. Commonwealth Land Title Ins. Co., 459 F. App’x

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808, 810 (11th Cir. 2012) (rejecting argument that a motion for default summary
judgment was a final judgment for purposes of Rooker–Feldman because “there is
nothing in the record that indicates that there was a final or conclusive judgment on
the merits in Jones’s state court case, and merely filing a default summary judgment
motion does not result in the entry of a default judgment”).
Second, there is no dispute that the Pennsylvania court rendered judgment
before these federal proceedings commenced. The Pennsylvania court entered
judgment on May 2, 2011. The instant lawsuit was not filed until nearly two years
later, on April 23, 2013. However, the procedural history of this case requires this
Court to make some observations about the finality of the Pennsylvania action. In
Nicholson v. Shafe, 558 F.3d 1266 (11th Cir.2009), the Eleventh Circuit was called on
to decide when a state court judgment becomes final for Rooker-Feldman purposes,
because in that case, at the time of the filing of the federal action, the state proceeding
in the Georgia courts had not ended but remained pending on appeal. Id. at 1275-76.
The court held that “state proceedings have not ended for purposes of RookerFeldman when an appeal from the state court judgment remains pending at the time
the plaintiff commences the federal action that complains of injuries caused by the
state court judgment and invites review and rejection of that judgment.” Id. at 1279.

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At the time that Graham filed this lawsuit in April 2013, there was no question
that the state proceedings had ended because Graham had no appeal pending from the
Pennsylvania judgment. Indeed, Graham did not represent to this Court that he had
any appeal pending. However, Mr. Schwartz filed a supplement to his motion to
dismiss that noted that Tasa Group had filed a motion to hold Graham in contempt
of court in the Alabama domesticated judgment action, to which Graham had filed an
opposition in which he argued that the Alabama case should be stayed because he had
filed a motion to reopen the Pennsylvania case and set aside the default judgment. See
doc. 8 at 2. The magistrate judge previously assigned to the case made inquiries of the
parties into the matter, and it was revealed that Graham had not actually filed any such
motion to reopen. See Plaintiff’s status report, doc. 26 (discussing that he attempted
to file a motion to reopen, but that it was returned to him along with the filing fee, and
that he was told that he needs to file a petition to appeal the judgment outside of the
statutory deadline with Pennsylvania’s Court of Commons Pleas, but that “the
plaintiff has no guarantee that the Court of Common Pleas will hear his case”).
Nonetheless, the magistrate judge determined that Graham still had a course of action
available to him to challenge the Pennsylvania judgment against him, and opined that
if Graham pursued that course of action, the Pennsylvania judgment would not be

Page 20 of 43

“final” for Rooker-Feldman purposes. See Magistrate Judge’s Order, doc. 33. The
magistrate judge informed Graham that, pursuant to Rule 1009 of the Pennsylvania
Rules of Civil Procedure Governing Actions and Proceedings Before Magisterial
District Judges, he could file a “praecipe for writ of certiorari” with the prothonotary
of the Court of Common Pleas, claiming that the judgment should be set aside because
the magisterial court lacked jurisdiction over him. See id. According to the rule cited
by the magistrate judge, Graham still had this remedy available because a party
challenging jurisdiction could file such an appeal at any time after the judgment is
entered. See id.; see also Pa. R. C. P. M. D. J. No. 1009. The magistrate judge gave
Graham 30 days to report back to the court whether he pursued this remedy and stated
that if he did not pursue it, the Pennsylvania judgment would be considered final for
Rooker-Feldman purposes. See doc. 33.
Graham did not file the appeal within the time allotted by the magistrate judge,
even though the magistrate judge gave him an extension of time in which to do so.
Instead, Graham filed a “Petition to Appeal Nunc Pro Tunc” to the Court of
Common Pleas outside of the period of time designated by the magistrate judge. See
Status Report, doc. 44. At this point the defendants renewed their motion to dismiss,
arguing that Graham’s action should be dismissed for failure to comply with the

Page 21 of 43

magistrate judge’s order. (Doc. 39.) The new magistrate judge to which this case was
then assigned held a motion hearing in which the parties informed her that
Pennsylvania’s Court of Common Pleas had scheduled a hearing on Graham’s
Petition to Appeal Nunc Pro Tunc as well as on a motion that Tasa Group filed
seeking to quash Graham’s petition. See text order, doc. 50. The magistrate judge
encouraged the parties to attend the hearing and report back on any rulings entered.
See id. On July 15, 2014, the Pennsylvania Court of Common Pleas quashed Graham’s
petition in its entirety, and the defendants so informed this Court. See Status Report,
doc. 54. On July 31, 2014, Graham notified the court that he “is filing” an appeal of
the Pennsylvania court’s order, asserting, not surprisingly, that the decision was not
yet final for Rooker-Feldman purposes. (Doc. 55.) On August 5, 2014, the defendants
again renewed their motion to dismiss, arguing that Graham’s complaint is due to be
dismissed for failure to state a claim without regard to what happens in Pennsylvania.
(Doc. 56.) On August 22, 2014, Graham filed a status report in which he again stated
that he “is filing an appeal of the Pennsylvania State Court’s order . . . .” (Doc. 57.)
In the ensuing six months before this case was reassigned to the undersigned judge,
neither party has provided the Court with any indication of whether Graham actually
appealed the Court of Common Pleas’ order or the disposition, if any, of that appeal.

Page 22 of 43

All this is to say that this Court will not allow the procedural history of this case
to muddy the waters made clear by the Eleventh Circuit’s pronouncement that state
proceedings have ended for Rooker-Feldman purposes when there is no appeal pending
at the time that the federal lawsuit is filed. See Nicholson, 558 F.3d at 1275-76. The
Pennsylvania judgment was final when Graham filed this action. Graham waited three
years after judgment was entered against him in Pennsylvania before filing this case,
doing nothing to properly appeal the Pennsylvania default judgment during that time.
The Eleventh Circuit held in Powell v. Powell, 80 F.3d 464 (11th Cir. 1996), that “[a]
litigant may not escape application of the [Rooker-Feldman] doctrine by merely electing
not to appeal an adverse state trial court judgment.” Id. at 467. In Nicholson, the
court stated that “Powell stands for the proposition that the Rooker-Feldman doctrine
applies where the state court loser declines to appeal an adverse state trial court
judgment . . . .” 558 F.3d at 1276. The court in Nicholson also discussed the First
Circuit’s case of Federacion de Maestros de Puerto Rico v. Junta de Relaciones del Trabajo
de Puerto Rico, 410 F.3d 17 (1st Cir. 2005), where that court determined that state
proceedings have “ended” “if the state action has reached a point where neither party
seeks further action.” Nicholson, 558 F.3d at 1275 (quoting Federacion, 410 F.3d at 2425). The Eleventh Circuit stated that its decision in Powell was in line with the

Page 23 of 43

reasoning in Federacion. Id. at 1276. Although Graham, acting on the previous
magistrate judge’s encouragement, filed an out-of-time appeal four years after the
default judgment was entered, the Pennsylvania court has now confirmed that any
appeal in Pennsylvania is time-barred. Graham has twice stated that he “is filing an
appeal” of that order, but has provided nothing by way of proof of such a filing. This
Court finds that the requirement that the state proceedings be over at the time the
plaintiff files the federal lawsuit is more than satisfied in this case.
Finally, Graham complains to this Court of injuries caused by the default
judgment entered against him in Pennsylvania. On this point, the Eleventh Circuit has
instructed courts to determine whether the plaintiff’s claims are “inextricably
intertwined” with the state court judgment. Casale v. Tillman, 558 F.3d 1258, 1260
(11th Cir. 2009) (quoting Feldman, 460 U.S. at 482 n.16). “A claim is inextricably
intertwined if it would effectively nullify the state court judgment or it succeeds only
to the extent that the state court wrongly decided the issues.” Id. Because Graham
complains he did not owe the underlying debt and Tasa Group engaged in a
conspiracy to commit fraud and theft in connection with the underlying debt, his
claims fall “squarely within these strictures.” Franklin v. Dean, 2013 WL 1867105
(M.D. Ala. May 03, 2013). Although not binding on this Court, Franklin is directly

Page 24 of 43

on point and persuasive. In that case, the plaintiff—who previously had a default
judgment entered against her in state court on the underlying debt—filed suit in
federal district court alleging violations of the FDCPA and further alleged that she did
not owe the underlying debt made the subject of the allegedly improper collection
activities. Id. at *2, *4. The district court held, “To the extent that [the plaintiff] asks
this court to undo the state district court’s default judgment against her and to decide
whether she owed the underlying debt, the court lacks subject matter jurisdiction to
do so under the Rooker–Feldman doctrine.” Id. at *8. Here, as in Franklin, Graham
asks the Court to conclude that the debt is not properly owed. Specifically, he asks the
Court to conclude that (1) Tasa Group fraudulently entered into an agreement (doc.
1 at ¶¶ 22-32); (2) Tasa Group engaged in theft when it took money from him without
providing what he believes he was entitled to in return (id. at ¶¶ 33-37); (3) Tasa
Group violated the FDCPA by attempting to collect on a debt that is not properly
owed (id. at ¶¶ 45-47); and (4) Tasa Group violated the RICO statute by engaging in
a scheme to fraudulently enter into an agreement relating to expert witness services
and engaging in a scheme to collect money not lawfully owed (id. at ¶¶ 48-60).
Graham’s federal RICO and FDCPA claims are “inextricably intertwined”
with the judgment entered by the Pennsylvania court, i.e., that Graham owes Tasa

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Group the underlying debt, in the sense that they are premised on the state court
having ruled erroneously. In other words, this Court can not decide in Graham’s
favor on these federal claims unless it decides that the Pennsylvania court erred in its
judgment. Moreover, if the Pennsylvania court had not ruled against Graham, the
portion of Graham’s RICO and FDCPA claims premised on Tasa Group’s attempts
to collect the debt based on the default judgment would cease to exist. Thus, again,
the only way this Court could find that these attempts to collect the debt could have
injured Graham is by finding that the state court ruled erroneously. As such, this
Court is without subject matter jurisdiction to entertain Graham’s two federal claims.
See Franklin v. Arbor Station, LLC, 549 F. App’x 831, 833 (11th Cir. 2013) (in case
where apartment complex brought an unlawful detainer action and won a judgment
of possession against plaintiff in state court and plaintiff then brought FDCPA claims
in federal court, affirming district court’s dismissal of plaintiff’s FDCPA claims on
Rooker-Feldman grounds because ruling in plaintiff’s favor on any of those claims
would necessitate a finding that the state court’s decision was erroneous); Figueroa v.
Merscorp, Inc., 766 F. Supp. 2d 1305, 1316-27 (S.D. Fla. 2011) (dismissing a RICO
claim under Rooker–Feldman, where plaintiff sought to attack a state foreclosure
judgment, because the RICO claims were inextricably intertwined with that

Page 26 of 43

foreclosure judgment), affirmed 477 F. App’x 558 (11th Cir. 2012).
Moreover, Graham’s state law fraud and theft of property claims are also
“inextricably intertwined” with the Pennsylvania judgment because they challenge
the propriety of the underlying debt and the judgment entered against Graham. In any
event, because this Court does not have jurisdiction to consider the claims Graham
makes based on federal law, it has no jurisdiction to consider the remaining state law
claims of theft of property, fraud, and negligent and wanton hiring, training and
retention. See Franklin, 549 F. App’x at 833 (“Because the district court had no
jurisdiction [pursuant to the Rooker-Feldman doctrine] to consider the claims Franklin
made based on federal law, it had no jurisdiction to consider the remaining state-law
claims.”), citing Scarfo v. Ginsberg, 175 F.3d 957, 962 (11th Cir. 1999) (“[O]nce the
district court determines that subject matter jurisdiction over a plaintiff’s federal
claims does not exist, courts must dismiss a plaintiff’s state law claims.”).
Graham asserts several arguments in opposition to the application of the RookerFeldman doctrine that must be addressed. Graham first argues that he could not have
raised his claims in the Pennsylvania court because it only has jurisdiction over cases
involving less than $12,000.00, citing 42 Pa. C.S.A. § 1515. There is indeed a
limitation on the Rooker-Feldman doctrine when the plaintiff had no “reasonable

Page 27 of 43

opportunity to raise his federal claim in state proceedings.” Powell v. Powell, 80 F.3d
464, 467 (11th Cir. 1996). However, Graham’s argument is misplaced because Rule
315 of Pennsylvania’s magisterial district court rules expressly contemplates the
situation in which Graham found himself in Pennsylvania. That Rule permits a
defendant who has lost in a magisterial district court and who intends to assert a claim
against the plaintiff not within the magisterial district judge’s jurisdiction to
commence an action in the Court of Common Pleas against the plaintiff. See Official
Note to Pa. R. C. P. M. D. J. No. 315. There are no limits on the jurisdiction of
Pennsylvania’s Courts of Common Pleas. See 42 Pa. C.S.A. § 931 (stating that the
Courts of Common Pleas have unlimited original jurisdiction); Itri v. Equibank, N.A.,
464 A.2d 1336, 1342 (Pa. Super. Ct. 1983) (holding that FDCPA claims may be
brought in the Court of Common Pleas). Thus, Graham could have appealed the
default judgment, and in the very same pleading, asserted these claims against the
defendants.
Second, Graham argues that he was not properly served with notice of the
hearing in the Pennsylvania action where the default judgment was taken against him,
so the judgment should be rendered void and have no preclusive effect. The facts
belie this assertion. Tasa Group, through its counsel, mailed to Graham a Notice of

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Civil Action Hearing on April 4, 2011, nearly one month prior to the hearing, set for
May 2, 2011. Graham says that the mail was placed in the wrong mailbox within his
office building, but he concedes that the Notice was mailed to 2107 5th Avenue North,
Birmingham, Alabama 35203, which is the same address listed for Graham on
www.martindale.com and www.lawyers.com.9 See Graham’s response brief, doc. 19
at 26. This method of service is consistent with the Pennsylvania Rules. See Pa. R.
Civ. P. 440(a)(2)(i) (providing that hearing notices may be mailed to a party’s place
of business). Service was complete upon mailing. See Pa. R. Civ. P. 440(b) (“Service
by mail of legal papers other than original process is complete upon mailing.”).
Further, Graham concedes that he had actual knowledge of the hearing several days
before it occurred. See Graham’s response brief, doc. 19 at 26 (“. . . the defendant
received the notice of the case and hearing at 4:00 p.m. on the Friday evening before
the matter was set for hearing on the following Monday morning. The defendant did
not have time to properly respon[d] to the notice, or prepare to travel from Alabama
to the hearing.”). Graham further concedes that he spoke to the Pennsylvania court
and learned of the default judgment within a day of the entry of the default judgment.

9

See http://www.martindale.com/Roderick-D-Graham/26125-lawyer.htm;
http://www.lawyers.com/birmingham/alabama/Roderick-D-Graham-26125-a.
Page 29 of 43

See id. (“When the defendant was able to get someone on the phone on the following
Tuesday, he was told that it was too late.”). If Graham had an argument that service
was improper, he had ample time to ask the court to set aside the default judgment or
appeal the judgment to the Court of Common Pleas. Magisterial District Court Rule
1002(a) provides thirty days for a party to appeal from an order of the magisterial
district court. Pa. R. C. P. M. D. J. No. 1002(a). That same Rule provides for a
presumably unlimited time to appeal the decision with leave of the court “for good
cause shown.” Id. In short, this is not the appropriate forum for Graham to assert that
he was never properly served in the Pennsylvania action.
Third, Graham argues that the Pennsylvania court did not have personal
jurisdiction over him, so the judgment is void and has no preclusive effect. This
argument is meritless. Graham concedes he initiated contact with a Pennsylvania
corporation (doc. 1 at ¶ 10), entered into a contract with the Pennsylvania corporation
(Graham’s response brief, doc. 19 at 29), made a payment to the Pennsylvania
corporation (doc. 1 at ¶ 15), and then engaged in a negotiation with the Pennsylvania
corporation about the proper amount owed to the corporation (doc. 1 at ¶ 20). Those
contacts are more than sufficient to establish specific jurisdiction over Graham in
Pennsylvania. See Gen. Motors Acceptance Corp. v. Keller, 737 A.2d 279, 282 (Pa. Super.

Page 30 of 43

Ct. 1999) (holding that a party contracting with a resident of Pennsylvania despite not
physically signing the contract in Pennsylvania, was sufficient to determine purposeful
availment and vest Pennsylvania with jurisdiction given that the party mailed the
contract to Pennsylvania and directed payments to Pennsylvania).
Given that the Rooker-Feldman elements have been established, this Court is
without jurisdiction to entertain Plaintiff’s claims, see Fed R. Civ. P. 12(b)(1), and the
defendants’ motions to dismiss are due to be granted and this case dismissed.10
However, in an abundance of caution, the Court will discuss why the federal claims
in Graham’s complaint fail to state claims upon which relief may be granted in any
event.

10

The Court notes that Mr. Schwartz argued in his separately-filed motion to dismiss that
Graham’s claims are also barred by the doctrines of res judicata and collateral estoppel. The Court
notes that neither doctrine applies to bar Graham’s litigation in this forum. First, Pennsylvania law
governs for purposes of this Court’s res judicata or collateral estoppel analysis. See Cmty. State Bank
v. Strong, 651 F.3d 1241, 1263 (11th Cir. 2011) (“In considering whether to give preclusive effect to
state-court judgments under res judicata or collateral estoppel, the federal court applies the rendering
state’s law of preclusion.”). In Pennsylvania, “[t]echnical res judicata provides that where a final
judgment on the merits exists, a future lawsuit on the same cause of action is precluded. Collateral
estoppel acts to foreclose litigation in a subsequent action where issues of law or fact were actually
litigated and necessary to a previous final judgment.” J.S. v. Bethlehem Area Sch. Dist., 794 A.2d
936, 939 (Pa. 2002). In Pennsylvania, a default judgment is not entitled to the preclusive effect of
collateral estoppel because there is no decision on the merits in the first proceeding. Id. (citing
McGill v. Southwark Realty Co., 828 A.2d 430, 435 (Pa. 2003). Similarly, in Pennsylvania, “[a]
default judgment is res judicata [only] with regard to transactions occurring prior to the entry of
judgment.” McGill, 828 A.2d at 435.

Page 31 of 43

3.

Request for Dismissal of Graham’s Federal Claims Pursuant
to Rule 12(b)(6) for Failure to State a Claim
i.

The FDCPA Claim

The defendants argue that should this Court find that it has jurisdiction,
Graham’s FDCPA claim is due to be dismissed because the debt at issue is not a
consumer debt and, therefore, falls outside the scope of the statute. This Court
agrees. The applicability of the FDCPA presupposes the existence of a “debt” as
defined by the Act. Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367, 1370 (11th Cir.
1998). The FDCPA defines “debt” as “any obligation or alleged obligation of a
consumer to pay money arising out of a transaction in which the money, property,
insurance, or services which are the subject of the transaction are primarily for
personal, family, or household purposes, whether or not such obligation has been reduced
to judgment.” 15 U.S.C.A. § 1692a(5) (emphasis added). In other words, the debt
must be a consumer debt. See Heintz v. Jenkins, 514 U.S. 291, 293 (1995) (explaining
that the FDCPA “limits ‘debt’ to consumer debt . . . .”); Hawthorne, 140 F.3d at 137172 & n.2 (“[T]he statutory language further limits application of the FDCPA to debts
arising from consumer transactions.”) (citing the Senate Report on the FDCPA that
defines the scope of the act as applying “only to debts contracted by consumers for
personal, family, or household purposes; it has no application to the collection of
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commercial accounts,” S. Rep. 95-382 (1977)).
The Eleventh Circuit has indicated that debts arising out of commercial or
business transactions fall outside the bounds of the statute. For example, in
Oppenheim v. I.C. System, Inc., 627 F.3d 833 (11th Cir. 2010), the defendant argued
that the debt the plaintiff owed to PayPal did not satisfy the FDCPA’s requirement
that the debt be for personal, family, or household purposes because the transaction
at issue served a commercial purpose. Id. at 838. The court held that the defendant
waived the issue by not raising it below, but also stated:
In any event, we are unpersuaded that the sale of Oppenheim’s personal
computer—the funds from which were ultimately transferred to
Oppenheim’s personal bank account—violates the “personal, family, or
household purposes” requirement. Oppenheim does not run a business
and specifically registered his PayPal account as a “personal account,”
which the User Agreement defines as an account “used for non-business
purposes and used primarily for personal, family, or household
purposes.” PayPal User Agreement ¶ 15.aj.
Id. at 838-39 (emphasis supplied). In contrast, in Lingo v. City of Albany Department
of Community & Economic Development, 195 F. App’x 891, 893 (11th Cir. 2006), the
court held that the loan the plaintiff obtained to help him develop his pest control
business was for business, and not for personal, family, or household purposes, so the
district court properly granted summary judgment on the plaintiff’s FDCPA claim.
See also First Gibraltar Bank, FSB v. Smith, 62 F.3d 133, 136 (5th Cir. 1995)
Page 33 of 43

(partnership’s loan to purchase real estate was commercial, not for personal or
household purposes, and thus outside of the scope of the FDCPA).
It is clear to this Court that Graham’s debt to Tasa Group arose out of a
business transaction.

Graham concedes he contracted with Tasa Group for

professional expert services, not for personal edification. See Doc. 1 at ¶¶ 9-21;
Graham’s response brief, doc. 12 at 14 (“The plaintiff entered into a contract for an
initial report and designation of an expert.”). There was no personal, family, or
household purpose in engaging the services of Tasa Group. Accordingly, Graham’s
FDCPA claim is due to be dismissed because the complaint does not allege that
Graham has been the object of collection activity arising from consumer debt—i.e.,
an obligation arising from a transaction “primarily for personal, family, or household
purposes.” 15 U.S.C.A. § 1692a(5).
ii.

The RICO Claim

This Court agrees with the defendants that, should it be determined that this
Court in fact had jurisdiction over this action, Graham’s complaint does not state a
claim under RICO because Graham provides virtually no facts from which this Court
could determine that any RICO claim is plausible. Graham’s RICO allegations are
almost entirely conclusory statements, and his allegations that each defendant agreed

Page 34 of 43

to a conspiracy to commit RICO violations are merely formulaic recitations of the
elements of a RICO claim.
As an initial matter, Graham has not alleged the defendants violated any of the
substantive provisions of RICO. Rather, he makes clear that he is prosecuting his
claim under 18 U.S.C. § 1962(d), the RICO provision which governs conspiracy
claims. See Doc. 1 at ¶ 49 (“This count is brought by the plaintiff . . . alleging a cause
of action under 18 U.S.C. § 1962(d).”). Even if Graham sought to pursue a claim
under section 1962(a)-(c), the substantive provisions of RICO, he would be precluded
from doing so. Each of the substantive provisions of RICO requires Graham to
establish either “racketeering activity,” which is not alleged, or the existence of “an
unlawful debt.” See 18 U.S.C. §§ 1962(a)–(c). As explained above, asking this Court
to determine that the underlying debt was unlawful violates the Rooker-Feldman
doctrine, because the Court would be nullifying a previous state court’s decision. As
such, Graham cannot maintain a cause of action under RICO’s substantive provisions.
In order to state a RICO conspiracy claim, a plaintiff must allege the defendants
(1) agreed to the overall objective of the conspiracy, or (2) agreed to commit at least
two predicate acts. ADA v. Cigna Corp., 605 F.3d 1283, 1293 (11th Cir. 2010) (citing
Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 950 (11th Cir.

Page 35 of 43

1997)). Those allegations must be analyzed under the pleading standards articulated
by the United States Supreme Court in Twombly and Iqbal. Id. at 1286. The allegations
must be more than “formulaic recitations” of the RICO elements. Twombly, 550 U.S.
at 555; see also Iqbal, 556 U.S. 662. Instead, the complaint must allege factual
allegations sufficient to “state a claim to relief” under the RICO statute. Twombly,
550 U.S. 544 at 570.
In Cigna Corp., the Eleventh Circuit found that mere allegations the defendants
had agreed to the overall objective of a conspiracy were “formulaic recitations”
insufficient under the pleading standard required by Twombly and Iqbal. 605 F.3d at
1293–94. Thus, the court eliminated those conclusory allegations. Id. at 1294. The
court then turned to the remaining factual allegations and determined that the
plaintiff’s allegations of collective or parallel conduct were insufficient to give rise to
an inference of conspiracy. Id. The court noted “allegations of parallel conduct,
accompanied by nothing more than a bare assertion of a conspiracy, do not plausibly
suggest a conspiracy . . . [and] ‘without that further circumstance pointing to a
meeting of the minds, an account of a defendant’s commercial efforts stays in neutral
territory.’” Id. at 1294–95 (citing Twombly, 550 U.S. at 557). Without a
“plausibly-alleged ‘meeting of the minds,’ [such allegations] fail to ‘nudge . . . claims

Page 36 of 43

across the line from conceivable to plausible.’” Id. at 1296 (quoting Twombly, 550 U.S.
at 570).
Like the plaintiff in Cigna Corp., Graham’s RICO allegations are entirely
conclusory statements. He first states that all of the defendants are “persons” and
“enterprises” as those terms are defined by the RICO statute, and states that the
defendants were engaged in interstate commerce as required by the statute. See doc.
1 at ¶¶ 50-54. Then, his allegation that each defendant agreed to RICO violations is
merely a formulaic recitations of the elements of a RICO claim. See Doc. 1 at ¶ 56
(“[E]ach of the RICO Defendants agreed to the Theft by Trick and Fraudulent Expert
Witness Scheme, and also, to further perpetrate it through the three RICO
enterprises, Law Offices of David Seltzer, Tasa Group, Inc. and Richard Beckett.”).
Under Twombly and Iqbal, this statement is not entitled to an assumption of veracity
and must be eliminated from the Court’s analysis. Once the conclusory allegations
have been stricken from the analysis, the few remaining allegations fail to meet the
requisite pleading standard under Twombly and Iqbal. Like the allegations in Cigna
Corp., Graham’s allegations of parallel or collective conduct in the complaint are
accompanied only by a bare assertion of a conspiracy. Graham merely states:
All of the USPS mailings and the numerous telephone calls, faxed
communications, e-mails, bank checks and internet postings were made
Page 37 of 43

in furtherance of the Fraudulent Expert Witness Scheme and the
subsequent scheme to collect money not owed the defendants.
Therefore, all of these communications were made in violation of the
mail and wire fraud statutes. The plaintiffs were defrauded by one or
more of these mails and wires. This pattern of mails, bank and interstate
communications occurred over a period of 27 months from the date the
Fraudulent Expert Witness Scheme began when TASA Group, Inc. [sic]
In carryout [sic] the Fraudulent Expert Witness Scheme, the defendant
entered into a contract to do business in the State of Alabama in violation
of Alabama law, because the defendant did not have a certificate to do
business in the state of Alabama. The Fraudulent Expert Witness
Scheme was furthered with the hiring of the Law Offices of David
Seltzer to collects monies from the defendant that was not owed to
TASA Group, Inc. The Fraudulent Expert Witness Scheme victimized
other persons in addition to the plaintiffs.
(Doc. 1 at ¶ 55.) These allegations of collective conduct are insufficient to give rise to
a plausible inference of conspiracy as required by Twombly/Iqbal. Thus, assuming the
Court has jurisdiction, the RICO claim would be due to be dismissed.
4.

Request for Dismissal of Graham’s State Law Claims
Pursuant to Rule 12(b)(6) for Failure to State a Claim

The defendants argue that, assuming this Court has jurisdiction to consider any
claims in this lawsuit, this Court should decline to exercise supplemental jurisdiction
over Graham’s state law claims. 28 U.S.C. § 1367(c)(3) provides “the district courts
may decline to exercise supplemental jurisdiction over a claim under subsection (a)
if . . . (3) the district court has dismissed all claims over which it has original
jurisdiction.” Assuming solely for argument that the Court has jurisdiction over this
Page 38 of 43

action, the RICO and FDCPA claims against the defendants are due to be dismissed
for the reasons stated above, leaving only Graham’s state law claims. Furthering the
aim of 28 U.S.C.A. § 1367(c)(3), the Eleventh Circuit has “encouraged district courts
to dismiss any remaining state claims when, as here, the federal claims have been
dismissed prior to trial.” Raney v. Allstate Ins. Co., 370 F.3d 1086, 1089 (11th Cir.
2004) (citing L.A. Draper & Son v. Wheelabrator-Frye, Inc., 735 F.2d 414, 428 (11th
Cir. 1984). Accordingly, assuming this action is not barred by the Rooker-Feldman
doctrine, this Court declines to exercise supplemental jurisdiction over Graham’s
state law claims of fraud, theft of property, and negligent and wanton hiring because
the federal claims are due to be dismissed.11
C.

Graham’s Motion to Amend his Complaint

At the end of his opposition to Mr. Schwartz’s motion to dismiss, Graham
sought leave to amend his complaint in accordance with Rule 15 of the Federal Rules
of Civil Procedure. Graham has nowhere given notice of why he wants to amend.
Once the time period for amending a pleading as of right has expired,
11

The Court also declines to exercise supplemental jurisdiction over Graham’s state law
claims for injunctive relief. Counts VI, VII, and VIII in the complaint seek a temporary restraining
order, a preliminary injunction, and a permanent injunction. See Doc. 1 p. 21-23 ¶¶ 61-71. No
federal statute is cited as giving this Court original jurisdiction to consider these claims.
Accordingly, it appears that the basis for jurisdiction for these claims is the Court’s supplemental
jurisdiction to consider state law claims in conjunction with the Court’s original jurisdiction over
Federal statutory claims. See 28 U.S.C. § 1367(a).
Page 39 of 43

Rule 15(a) of the Federal Rules of Civil Procedure , provides amendment
“only by leave of court or by written consent of the adverse party.” The
decision whether to grant leave to amend a complaint is within the sole
discretion of the district court. Rule 15(a), however, limits the court’s
discretion by mandating that “leave shall be freely given when justice so
requires.” See Halliburton & Assoc. v. Henderson, Few & Co., 774 F.2d
441 (11th Cir. 1985). There must be a substantial reason to deny a motion
to amend. Id. Substantial reasons justifying a denial include “undue
delay, bad faith, dilatory motive on the part of the movant, . . . undue
prejudice to the opposing party by virtue of allowance of the amendment,
[and] futility of amendment.” Foman v. Davis, 371 U.S. 178, 182, 83 S.
Ct. 227, 9 L. Ed. 2d 222 (1962).
Laurie v. Alabama Court of Criminal Appeals, 256 F.3d 1266, 1274 (11th Cir. 2001).
When challenges to the sufficiency of a plaintiff’s pleading have been raised
pursuant to Fed. R. Civ. P. 12(b)(6), this Court would ordinarily allow an amendment.
However, because this Court lacks subject matter jurisdiction over Graham’s claims
pursuant to the Rooker-Feldman doctrine, there exists a substantial reason to deny
Graham’s motion to amend; that is, that any amendment would be futile. Indeed, the
parties have engaged in extensive briefing on these issues, and there is nothing that
Graham could add to his complaint—and that is not already before this Court in
briefs—that would change the fact that the Rooker-Feldman doctrine bars Graham’s
claims from proceeding in this Court. Accordingly, Graham’s motion to amend his
complaint is due to be denied.
D.

Graham’s Motion to Strike Exhibit D Attached to Tasa Group, Mr.
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Seltzer, and Mr. Beckert’s Motion to Dismiss12
Plaintiff moves the court to strike Exhibit D to Tasa Group’s Motion to Dismiss
(Doc. 32.) The document is a Memorandum of Confirmation from Tasa Group dated
March 27, 2009, and contains information about the hourly rates charged by Mr.
Beckert and the cost to designate him as an expert. It sets out the terms of the
agreement between Graham and Tasa Group. It also contains the following language:
You consent to the concurrent exclusive jurisdiction and venue of the
Montgomery County Court of Common Pleas of the Commonwealth of
Pennsylvania and the United States District Court for the Eastern
District of Pennsylvania, with respect to the enforcement of this
Memorandum, the collection of any amounts due under this
Memorandum, or any disputes arising under this Memorandum.
(Doc. 14-1 at 10). The defendants originally submitted the Memorandum only to
support their assertion that, should the Court not dismiss all of Graham’s claims for
the reasons stated in their motions to dismiss, this action should be transferred to the
United States District Court for the Eastern District of Pennsylvania. See Doc. 14, at
29-30. However, the defendants later utilized the exhibit as additional evidence to

12

Graham first filed this motion to strike on July 22, 2013. (Doc. 18.) On February 27, 2014,
the magistrate judge entered an order granting the motion on the ground that the exhibit was not
authenticated. (Doc. 29.) On the same day, the defendants filed the declaration of Melinda Sugenis,
President of Tasa Group, which satisfied to the magistrate judge the requirement that Exhibit D be
authenticated. As such, the magistrate judge vacated his previous order granting the motion to
strike. (Doc. 31). Graham then renewed his motion to strike, and that renewed motion is pending
before this Court. (Doc. 32.)
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counter Graham’s argument that the Pennsylvania court did not have personal
jurisdiction over him.
As grounds for his Motion to Strike, Graham asserts that he never has seen the
document labeled Exhibit D. Graham’s argument that he has never seen the
Memorandum of Confirmation goes to the weight of the evidence, rather than its
admissibility. In any event, the Court did not use the Memorandum in making any of
its rulings as set out in this opinion. As such, the motion to strike is due to be denied
as moot.
IV.

CONCLUSION
For the foregoing reasons, the defendants’ motions to dismiss (docs. 7, 14, 39,

and 56) are due to be granted. The entire action is due to be dismissed under the
Rooker-Feldman doctrine for lack of subject matter jurisdiction. The federal RICO and
FDCPA claims are due to be dismissed with prejudice and the three state law claims
dismissed without prejudice because, in the event Rooker-Feldman did not apply,
Graham’s federal claims would still be dismissed with prejudice under Rule 12(b)(6)
for failure to state a claim, and his state law claims would be dismissed under section
1367(c) without prejudice to re-filing in state court. See Frederiksen v. City of Lockport,
384 F.3d 437, 438 (7th Cir. 2004) (“When the Rooker–Feldman doctrine applies, there

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is only one proper disposition: dismissal for lack of federal jurisdiction. A
jurisdictional disposition is conclusive on the jurisdictional question: the plaintiff
cannot re-file in federal court. But it is without prejudice on the merits, which are
open to review in state court to the extent the state’s law of preclusion permits.”).
The magistrate judge’s report and recommendation (doc. 23) is due to be adopted
and accepted. Graham’s motion to amend his complaint (doc. 12) is due to be denied,
and his motion to strike (doc. 32) is due to be denied as moot. A separate order will
be entered.
Done this 2nd day of March 2015.

L. Scott Coogler
United States District Judge
[160704]

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