TFFI Corp. v. Williams et al

Filing 91

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 2/8/2016. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
TFFI CORP. D/B/A TOP FUNDING,
INC.
v.

:
:

Civil Action No. DKC 13-1809

:
WILBERT WILLIAMS, ET AL.
:
MEMORANDUM OPINION
Presently pending and ready for resolution in this breach
of contract and fraud case are two motions filed by Plaintiff
TFFI Corp. (“Plaintiff”): (1) a motion for summary judgment (ECF
No. 83); and (2) a motion seeking an order granting adverse
inferences (ECF No. 65).

The issues have been fully briefed,

and the court now rules, no hearing being deemed necessary.
Local Rule 105.6.

For the following reasons, the motion for

summary judgment will be granted in part and denied in part, and
the motion for adverse inferences will be denied as moot.1
I.

Background
A.

Factual Background

Defendant

Wilbert

resident

agent

and

Systems,

Inc.

(“ATS”)

1

Williams

officer
and

of

(“Mr.

Williams”)

Defendants

Williams

Alpha

Global

was

the

Technology

Holdings,

LLC

Plaintiff requests that the court make adverse inferences
in considering its motion for summary judgment. The undersigned
analyzes this request as part of the motion for summary
judgment.
At this point, a separate motion for adverse
inferences is not necessary, and it will be denied as moot.

(“Williams Global”) (collectively, the “Defendants”).
Nos.

1-1;

1-7;

82

¶

4).

Plaintiff

entered

(See ECF

into

factoring

agreements with ATS in November 2011 and October 2012.
Nos.

1-22).2

1-15;

“factoring

Under

agreement”),

the

2012

Plaintiff

factoring

made

(ECF

agreement

payments

to

(the

ATS

or

Williams Global in order to provide ATS with upfront capital to
fulfill purchase order contracts it made with the United States
Department

of

Housing

and

Urban

Development

(“HUD”).

In

exchange for these payments, ATS assigned the purchase order to
Plaintiff, and once ATS completed the work for HUD, HUD would
pay Plaintiff the full amount of the purchase order.
1-22, at 6).3

(ECF No.

The factoring agreement attested that “[e]ach

[purchase order] submitted for assignment by [ATS] is a bona
fide

purchase

order

and

conforms

in

all

respects

to

the

representations contained in the Certificate, which Certificate
is

true

and

Certificate,

correct
which

in
was

indicated

that

attached

“purchase

order/contract

all

respects.”

part
to
with

of
the

the

(Id.

factoring

factoring

number

at

11).

The

agreement,

agreement

R-2012-AY-00532

was
in

a
the

2

Plaintiff asserts that Defendants performed under the 2011
factoring agreement.
(ECF No. 81 ¶ 18).
Factoring is “[t]he
buying of accounts receivable at a discount.”
Factoring,
Black’s Law Dictionary (10th ed. 2014).
3

The factoring agreement provided that if, “from time to
time,” ATS received payment from HUD directly, it “shall
immediately pay” Plaintiff the sums owed. (ECF No. 1-22, at 6).
2

total amount of $55,000.00 . . . between [ATS] and [HUD].”
at 18).

(Id.

The factoring agreement further indicated that a Mr.

Kamran Jones was ATS’s point of contact within the Office of the
Chief Procurement Officer at HUD.

Mr. Williams sent Plaintiff a

document that he purported was a valid purchase order, signed by
a HUD contracting officer, Darlene Walls.

(ECF No. 1-18).

Pursuant to the factoring agreement and in response to a
purchase order invoice, Mr. Williams sent Plaintiff (the “first
invoice”) (ECF No. 1-20), Plaintiff sent Williams Global $45,000
on October 22, 2012 (ECF No. 1-26).

Plaintiff received what was

purported to be an acknowledgment of the arrangement signed by
Mr. Jones, the HUD point of contact.

(ECF No. 1-24).

Mr.

Williams then provided Plaintiff with additional documentation
outlining the work supposedly completed under the first invoice.
(ECF No. 1-27).

On December 15, Plaintiff received a check for

$55,000 from Williams Global, which was purported to be HUD’s
payment for work performed under the first invoice.

(ECF No. 1-

42).
In late November 2012, Mr. Williams sent Plaintiff another
invoice

under

the

(ECF No. 1-29).

same

HUD

contract

(the

“second

invoice”).

Plaintiff sent Mr. Williams a purchase order

funding agreement, which he signed, stating that Plaintiff would
send ATS $80,533 to complete the second invoice project, and ATS
would repay Plaintiff $98,500.

(ECF No. 1-38).
3

Similar to the

procedure surrounding the first invoice, Plaintiff attempted to
send Mr. Jones confirmation of the arrangement and received what
was purported to be an acknowledgment signed by Mr. Jones.
No. 1-32).4

(ECF

Plaintiff has only received one payment of $55,000,

which was late, under the second invoice.

(ECF No. 1-4).

In late December 2012, Mr. Williams sent Plaintiff a third
invoice (the “third invoice”).

(ECF No. 1-36).

Under this

invoice, Plaintiff was to pay ATS $76,011 for a future return of
$97,500.

(ECF No. 1-2).

Mr. Williams sent Plaintiff an e-mail

purporting to be from Mr. Jones confirming the third invoice.
(ECF No. 83-21).

Pursuant to this agreement, on January 22,

2013, Plaintiff sent Williams Global $76,011.

(ECF No. 1-6).

Plaintiff has not been paid any amount under the third invoice.
In January 2013, Peter Chao, Plaintiff’s senior business
manager, growing concerned about the overdue repayment under the
second invoice and the recent substantial payment made for the
third

invoice,

e-mailed

expected payments.

Mr.

Williams

(ECF No. 1-14).

to

inquire

about

the

After much delay and back

and forth, Plaintiff received the aforementioned partial payment
for

the

second

invoice,

but

none

4

for

the

third.

During

It is not clear exactly how Plaintiff attempted to send
Mr. Jones the confirmation other than that it was “via
electronic mail.”
(See ECF No. 81, at 7 n.13).
The record
seems to indicate that Plaintiff would e-mail Mr. Williams, who
would purportedly forward the confirmation to Mr. Jones, but it
is unclear.
4

additional

correspondence

between

Mr.

Chao

and

Mr.

Williams

regarding the overdue payments, Mr. Williams asserted that he
was in contact with Mr. Jones to resolve any issues with the
payments and that the delay was due to problems with the bank.
(ECF No. 1-21).
On February 25, 2013, Mr. Chao wrote to Mr. Jones directly
to alert him that it had not yet been fully paid under the
factoring agreement for work purported to be done by ATS under
HUD

contract

number

R-2012-AY-00532.

(ECF

No.

1-16).

In

response, Mr. Jones said that he had “been instructed not to
talk to any vendors about contractual topics” and copied Mr.
Williams.
between

(Id.).
Mr.

Chao

According to Plaintiff, following a call
and

Mr.

Williams

in

which

Mr.

Williams

allegedly admitted to creating a fraudulent scheme, Plaintiff
began communicating with the HUD Office of Inspector General
(“HUD OIG”).

(ECF No. 81 ¶¶ 57-59).

On March 13, Mr. Williams

e-mailed Mr. Chao that he “need[ed] a little time to resolve,
but will account for all damage to [Plaintiff’s] operation.”
(ECF No. 83-5).
The HUD OIG investigated the matter and issued a report,
which concluded that the investigation “discovered no evidence
to

support

the

verification”
suggests

that

allegation

to

Plaintiff,

[Mr.]

that
and

Williams
5

[Mr.

Jones]

“develop[ed]
devised

and

provided
evidence
carried

loan
which

out

a

fraudulent

scheme

to

induce

[Plaintiff]

contractual agreement with [ATS].”

to

enter

into

(ECF No. 83-1, at 5).

a
The

HUD OIG report noted that R-2012-AY-00532 “was not a valid HUD
contract

number.”

(Id.

at

6).

Moreover,

Ms.

Walls,

the

contracting officer who purportedly signed the purchasing order
Mr.

Williams

sent

to

Plaintiff

working at HUD in 2010.
employees

contacted

in

October

2012

had

stopped

According to the HUD OIG report, HUD

Mr.

Williams

telephonically

during

the

investigation, and he “admitted the contracting documentation
was

fraudulent,

and

that

he

falsified

the

documentation

and

provided it to [Plaintiff] in order to convince [Plaintiff] that
[ATS]

held

a

valid

contract

with

HUD.”

(Id.).

During

an

interview with the HUD OIG, Mr. Jones stated that “he had no
knowledge regarding a 2012 contract held by [ATS] with HUD” and
contends

that

he

provided Plaintiff.
B.

never

signed

the

documents

Mr.

Williams

(Id.).

Procedural History

On June 20, 2013, Plaintiff filed its initial complaint
against Defendants and Mr. Jones.

(ECF No. 1).

On January 24,

2014, the clerk entered default as to ATS and Williams Global.
(ECF No. 40).

After obtaining the HUD OIG report, Plaintiff

moved for leave to file an amended complaint, which the court
granted.

(ECF

No.

80).

Mr.

complaint on September 3, 2015.
6

Williams

answered

(ECF No. 82).

the

amended

The amended

complaint removed Mr. Jones as a defendant and asserted the
following counts: breach of contract (Count I); fraud (Count
II); civil conspiracy (Count III); and racketeering pursuant to
RICO’s civil provision (Count IV).
complaint

seeks

compensatory,

(ECF No. 81).5

consequential,

The amended
and

punitive

damages against Defendants jointly and severally, treble damages
under RICO, and attorney’s fees and interest.

Mr. Williams

answered the amended complaint, invoking his right under the
Fifth Amendment to the United States Constitution and largely
declining

to

respond.

(ECF

No.

82).

During

discovery,

Plaintiff deposed Mr. Williams, who invoked his rights under the
Fifth Amendment and refused to answer nearly every question.
(See ECF No. 65-1).
On September 21, 2015, Plaintiff filed the pending motion
for summary judgment.

(ECF No. 83).

Mr. Williams responded

(ECF No. 88), and Plaintiff replied (ECF No. 90).

Plaintiff has

also filed a pending motion asking the court to grant adverse
inferences because of Mr. Williams’s invocation of the Fifth
Amendment.

(ECF No. 65).

Mr. Williams responded to that motion

(ECF No. 69), and Plaintiff replied (ECF No. 71).

5

The clean amended complaint (ECF No. 81) differs from the
redline amended complaint Plaintiff submitted with its motion to
amend (ECF No. 76-3). Any material variations will be addressed
in the analysis section.
7

II.

Standard of Review
Summary judgment is appropriate under Federal Rule of Civil

Procedure Rule 56(a) when there is no genuine dispute as to any
material

fact,

and

the

moving

party

is

plainly

judgment in its favor as a matter of law.

entitled

In

to

Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 249 (1986), the Supreme Court
of the United States explained that, in considering a motion for
summary judgment, the “judge’s function is not himself to weigh
the

evidence

determine

and

whether

determine

the

there

a

is

truth

genuine

of

the

issue

matter

for

but

trial.”

to
A

dispute about a material fact is genuine “if the evidence is
such

that

nonmoving

a

reasonable

party.”

jury

Id.

at

could

248.

return
Thus,

a

verdict

“the

judge

for

the

must

ask

himself not whether he thinks the evidence unmistakably favors
one

side

return

a

or

the

other

verdict

presented.”

but

for

the

whether

a

[nonmoving

fair-minded
party]

on

jury

the

could

evidence

Id. at 252.

In undertaking this inquiry, a court must view the facts
and the reasonable inferences drawn therefrom “in the light most
favorable to the party opposing the motion.”

Matsushita Elec.

Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)
(quoting

United

States

v.

Diebold,

Inc.,

369

U.S.

654,

655

(1962)); see also EEOC v. Navy Fed. Credit Union, 424 F.3d 397,
405 (4th Cir. 2005).

The mere existence of a “scintilla” of
8

evidence

in

support

of

the

nonmoving

party’s

case

is

not

sufficient to preclude an order granting summary judgment.

See

Liberty Lobby, 477 U.S. at 252.
A “party cannot create a genuine dispute of material fact
through mere speculation or compilation of inferences.”

Shin v.

Shalala, 166 F.Supp.2d 373, 375 (D.Md. 2001) (citation omitted).
Indeed,

this

court

has

an

affirmative

obligation

to

prevent

factually unsupported claims and defenses from going to trial.
See

Drewitt

v.

Pratt,

999

F.2d

774,

778–79

(4th

Cir.

1993)

(quoting Felty v. Graves–Humphreys Co., 818 F.2d 1126, 1128 (4th
Cir. 1987)).
III. Analysis
A.

Adverse Inferences and Evidentiary Issues

As a threshold matter, Plaintiff requests that the court
draw adverse inferences from Mr. Williams’s “patently overbroad
invocation

of

frustrated

the

Fifth

[Plaintiff’s]

discovery.”

Amendment[,]
ability

which

to

has

completely

adequately

conduct

(ECF No. 65; see also ECF No. 83, at 3-4).

Mr.

Williams argues that any adverse inference “should be allowed
only at trial (not at summary judgment) and then only in the
context of an adverse inference to specific questions that are
relevant

and

admissible.”

to

which

the

answer

would

be

probative

(ECF Nos. 69, at 5-6; 88, at 5-6).

9

and

He further

asserts

that

any

adverse

inference

made

should

not

relieve

Plaintiff of its burden of putting forth appropriate evidence.
Although

the

Fifth

Amendment

prohibits

the

drawing

of

adverse inferences in criminal matters, “the ‘prevailing view’
is that ‘the Fifth Amendment does not forbid adverse inferences
against parties to civil actions when they refuse to testify in
response to probative evidence offered against them.’”

Maryland

v. Univ. Elections, Inc., 862 F.Supp.2d 457, 464 (D.Md. 2012)
(quoting Baxter v. Palmigiano, 425 U.S. 308, 318 (1976)); see
also Richardson v. Cabarrus Cnty. Bd. of Educ., 151 F.3d 1030,
*3 (4th Cir. 1998) (unpublished table opinion) (noting that a
district court granting an adverse inference due to a party’s
refusal to testify was “proper”).
inferences

at

the

summary

A court may draw adverse

judgment

stage.

In

Universal

Elections, Judge Blake found that the plaintiff was “entitled to
an adverse evidentiary inference from [a defendant’s] invocation
of his Fifth Amendment privilege” at the summary judgment stage.
862 F.Supp.2d at 464.
“refusal

to

answer

Judge Blake held that the defendant’s
basic

questions

about

his

knowledge

corroborates the reasonable inference that he had knowledge,”
and “[c]ombined with the other evidence, including [] deposition
testimony, this leaves no genuine dispute that [the defendant]
knowingly and willfully violated the statute” in question.

10

Id.

Here, it is appropriate to draw certain adverse inferences
against

Mr.

Williams

at

the

summary

judgment

stage

in

the

context of analyzing Plaintiff’s arguments and evidence for each
count.

Mr. Williams is correct, however, that such adverse

inferences

do

sufficient

to

not

relieve

satisfy

its

Plaintiff
burden

of

of

establishing

proof.

Because

facts
of

the

specific and limited nature of the adverse inferences that will
be

drawn,

Plaintiff’s

it

is

inappropriate

motion

for

and

adverse

unnecessary

inferences

to

writ

grant
large.

Accordingly, Plaintiff’s motion for adverse inferences will be
denied

as

moot,

but

the

court

will

draw

specific

adverse

inferences as appropriate in subsequent sections analyzing its
summary judgment motion.
In addition, Mr. Williams argues that Plaintiff has not put
forth sufficient evidence to succeed on a motion for summary
judgment.

Mr. Williams asserts in his opposition to Plaintiff’s

motion for that:
[A] mere citation to an exhibit attached to
the plaintiff’s complaint does not make
facts undisputed.
A mere citation to a
government document not made under oath and
which contains multiple levels of hearsay
does not make the facts asserted therein
undisputed.
Bald assertions of “fact”
without any citation to the record likewise
do not make those “facts” undisputed.
(ECF No. 88, at 6-7).
separate

arguments:

Mr. Williams appears to be making two
first,

that
11

Plaintiff’s

purported

“undisputed facts” are actually disputed; and second, that the
evidence Plaintiff has presented in support of its motion is
inadmissible under Federal Rule of Civil Procedure 56(c)(2).
Mr. Williams’s conclusory assertion that facts are disputed
is not sufficient to create an actual dispute of material fact.
Plaintiff

has

put

forth

evidence

in

the

form

of

e-mails,

business records, and Mr. Chao’s sworn affidavit attesting to
the facts alleged in the amended complaint.

As Mr. Williams

himself notes, “‘Once the moving party satisfies [its] initial
burden, the non-moving party may not rest upon his allegations,
but

must

present

evidence

demonstrating

the

genuine issue of material fact for trial.’”

existence

of

a

(ECF No. 88, at 3

(quoting Polacsek v. Debticated Consumer Counseling, Inc., 413
F.Supp.2d 539, 543 (D.Md. 2005) (citing Liberty Lobby, 477 U.S.
at 248))).

Mr. Williams has put forth no evidence to show that

there is a genuine dispute of material fact.

Contrary to his

assertion, a citation to a fact in the record, if not disputed,
makes

the

Accordingly,

fact
facts

undisputed.
shown

by

See
Plaintiff

Fed.R.Civ.P.
will

be

56(e).

considered

undisputed.
Mr. Williams’s evidentiary concerns fare no better.

First,

it is not clear that this objection is proper under Rule 56.
Rule 56(c)(2) was amended in 2010 to provide that “[a] party may
object that the material cited to support or dispute a fact
12

cannot

be

presented

evidence.”
[thus]

in

a

form

that

would

be

admissible

in

“The objection now contemplated by the amended Rule

is

not

admissible

that

form,

the

but

material

that

it

has

cannot

not

been

be.”

submitted

Brown

v.

in

Siemens

Healthcare Diagnostics, Inc., No. DKC-11-0769, 2012 WL 3136457,
at *5 (D.Md. July 31, 2012) (citations and internal quotation
marks omitted); see also Humphreys & Partners Architects, L.P.
v. Lessard Design, Inc., 790 F.3d 532, 538-39 (4th Cir. 2015)
(“The court and the parties have great flexibility with regard
to

the

evidence

proceeding.

that

The

may

court

be

used

may

on

consider

a

[summary

materials

judgment]

that

would

themselves be admissible at trial, and the content or substance
of otherwise inadmissible materials where the party submitting
the

evidence

information
quotation

show[s]
into

marks

argument here.

that

admissible
omitted)).

it

will

form.”
Mr.

be

possible

(citations

Williams

has

to
and

made

put

the

internal
no

such

Furthermore, Mr. Williams makes only a “vague

hearsay objection.”

See Williams v. Silver Spring Volunteer

Fire Dep’t, 86 F.Supp.3d 398, 408 (D.Md. 2015) (citing Maltas v.
Maltas, 197 F.Supp.2d 409, 427 (D.Md. 2002) (“It is not the
responsibility of the court to sift through the documents to
determine

exactly

what

should

be

excluded,

if

anything.”)).

Although Mr. Williams appears to allege that the HUD OIG report
contains hearsay, he does not put forth specific objections to
13

instances of hearsay within the report, and he has not alleged
that the facts presented within the report, or elsewhere in the
record, would be inadmissible at trial.
B.

Breach of Contract

“To

prevail

in

an

action

for

breach

of

contract,

a

plaintiff must prove that the defendant owed the plaintiff a
contractual

obligation

obligation.”

Jaguar

and
Land

that

the

Rover

N.

defendant
Am.,

breached

LLC

v.

that

Manhattan

Imported Cars, Inc., 738 F.Supp.2d 640, 649 (D.Md. 2010) (citing
Taylor v. NationsBank, N.A., 365 Md. 166, 175 (2001)).

Under

the objective theory of contracts, which applies in Maryland:
[A] court is to determine from the language
of the agreement, what a reasonable person
in the position of the parties would have
understood the contract to mean at the time
the contract was entered into; when the
language of the contract is plain and
unambiguous,
there
is
no
room
for
construction as the courts will presume that
the parties meant what the expressed.
Mathis v. Hargrove, 166 Md.App. 286, 319 (2005).

“It is not

necessary that the plaintiff prove damages resulting from the
breach, for it is well settled that where a breach of contract
occurs,
failed

one
to

may
prove

recover

nominal

actual

damages.”

damages

even

Taylor,

though

365

Md.

he

has

at

175

(citations omitted).6

6

that

The factoring agreement contains a choice-of-law provision
states the agreement should be construed according to
14

Plaintiff alleges that Defendants breached their duty under
the factoring agreement by failing to repay fully the amount
owed Plaintiff.

In support of their argument, Plaintiff points

to a copy of the factoring agreement signed by Mr. Williams on
behalf of ATS (ECF No. 1-22), subsequent documentation regarding
payments

made

by

Plaintiff

and

payments

owed

by

Defendants

(multiple exhibits attached to ECF No. 1), and evidence that
Defendants did not pay the full amount owed (see, e.g., ECF No.
83-2 ¶ 6).

Plaintiff is also entitled to an adverse inference

from Mr. Williams’s refusal to respond to questions and evidence
at his deposition regarding the factoring agreement and failure
to pay Plaintiff under the terms of the factoring agreement.
(ECF No. 65-1).

Mr. Williams offers no evidence or argument to

dispute the evidence in the record other than asserting that
“there exists a dispute as to the existence of a contract, and
the relationship of the parties to it (e.g., was [Mr. Williams]
a [principal] or merely a guarantor) if it did exist.”

(ECF No.

88, at 8).
Nevada law, which is Plaintiff’s state of incorporation.
(ECF
No. 1-22, at 15). In its motion for summary judgment, Plaintiff
applies Maryland law, however, and Mr. Williams does not object.
Moreover, it is likely that applying Nevada law would lead to
the application of the same basic test.
See Tarr v. Narconon
Fresh Start, 72 F.Supp.3d 1138, 1141 (D.Nev. 2014) (“A breach of
contract claim under Nevada law requires (1) the existence of a
valid contract, (2) a breach by the defendant, and (3) damage as
a result of the breach.”).
Accordingly, the court will apply
Maryland law.
15

Mr.

Williams’s

bald

assertion

disputing

that

a

contract

exists does not create a genuine dispute of material fact.

See

CapitalSource Finance, LLC v. Delco Oil, Inc., 608 F.Supp.2d
655, 664 n.4 (4th Cir. 2009) (noting that, in addition to failing
to

raise

appropriately

affirmative

defenses,

the

defendant

“failed to present evidence generating a material dispute of
fact”).

Mr. Williams’s meager assertions cannot overcome the

overwhelming undisputed evidence in the record that a contract
existed, creating an obligation for Defendants to pay Plaintiff
certain amounts owed in exchange for cash advances Plaintiff
provided Defendants.
breached

this

duty

There is also no dispute that Defendants
by

not

paying

fully

the

amounts

owed.

Specifically, Plaintiffs are owed $43,500 that has not been paid
for the second invoice and $97,500 for the third invoice – a
total of $141,000.7
Plaintiff argues that all three defendants are jointly and
severally liable for damages caused by the breach.

The issue of

liability for ATS and Williams Global is not currently ripe for
decision because Plaintiff has not served properly the amended
complaint on ATS and Williams Global.

See Fed.R.Civ.P. 5(a)(2)

(requiring that “a pleading that asserts a new claim for relief

7

The amended complaint asserts that Defendants owe $155,000
in compensatory damages, but that figure is not supported by the
record.
16

against [a party in default] must be served on that party under
Rule 4”).

Although the breach of contract claim against ATS and

Williams Global is not new, the amended complaint added claims
of civil conspiracy and civil RICO against ATS and Williams
Global.

Thus, the amended complaint must be served on the two

corporations in accordance with the requirements of Fed.R.Civ.P.
4, and nothing in the record indicates that Plaintiff served ATS
and Williams Global in accordance with the requirements of Rule
4.

Judgment is not appropriate against ATS and Williams Global

on any claim within the amended complaint until Plaintiff has
effectuated

proper

service.

See

Varnes

v.

Local

91,

Glass

Bottle Blowers Ass’n of U.S. and Canada, 674 F.2d 1365, 1369-70
(11th Cir. 1982) (holding that “no default could issue on the
amended complaint against [a defaulted defendant] because it was
not properly served”) (cited in 4B Fed. Prac. & Proc. Civ. §
1146 (4th ed.)).

The court in Varnes noted that “[t]he concern

of Rules 4 and 5(a) is notice to the defendant of claims of
relief,” and a defendant “is entitled to make . . . strategy
decisions

[on

all

claims]

following

additional claim of relief.”
default

judgments

are

notice

Id. at 1369.

disfavored,

“there

of

the

new

or

Moreover, because
must

be

strict

compliance with the legal prerequisites establishing the court’s
power to render the judgment.

Id. at 1369; see also St. Paul

Surplus Lines Ins. Co. v. Davis, 983 F.2d 1057, *2 (4th Cir.
17

1993)

(unpublished

Circuit,

default

table

opinion)

judgments

are

(“Under

the

law

disfavored.”).

in

this

Although

Plaintiff’s motion is styled as a motion for summary judgment,
it is correctly viewed as a motion for summary judgment against
Mr. Williams and a motion for default judgment against ATS and
Williams Global.
Rule 4(m) mandates that the court “must dismiss [an] action
without prejudice” if a defendant has not been served properly
“within 90 days after the complaint is filed.”

Plaintiff has

not shown proper service of the amended complaint against ATS
and

Williams

Global,

and

90

days

Plaintiff filed the amended complaint.

have

long

passed

since

Accordingly, Plaintiff’s

motion for summary judgment will be granted as to liability on
Count I against Mr. Williams, and the claims within Count I will
be dismissed as to ATS and Williams Global.
C.

Fraud

In Maryland, to prevail on a claim of fraud, a plaintiff
must establish:
(1)
that
the
defendant
made
a
false
representation to the plaintiff, (2) that
its
falsity
was
either
known
to
the
defendant or that the representation was
made with reckless indifference as to its
truth, (3) that the misrepresentation was
made for the purpose of defrauding the
plaintiff, (4) that the plaintiff relied on
the misrepresentation and had the right to
rely on it, and (5) that the plaintiff

18

suffered compensable injury
the misrepresentation.

resulting

Gourdine v. Crews, 405 Md. 722, 758 (2008).

from

Here, Plaintiff

argues “that Mr. Williams made several false representations,
that each representation was known to be false at the time it
was made, that the representations were made to perpetuate fraud
on

[Plaintiff],

that

on

these

representations and that it was damaged by its reliance.”

(ECF

No. 83, at 14).

[Plaintiff]

justifiably

relied

Plaintiff’s original complaint alleged fraud

against Mr. Williams and Mr. Jones.

(ECF No. 1 ¶ 82).

Although

the clean version of the amended complaint purports to allege
fraud against all “Defendants” (ECF No. 81 ¶ 82), the fraud
claim in the redline version is only against “Defendant Mr.
Williams” (ECF No. 76-3 ¶ 82).

Because the amended complaint

was

or

not

original

served

properly

complaint

did

on

ATS

not

Williams

allege

fraud

Global,
against

and
the

the
two

corporations, Plaintiff’s fraud count will be construed as being
alleged

only

against

Mr.

Williams.

In

his

opposition,

Mr.

Williams contends only that “there exists a genuine dispute of
material

fact

as

to

the

material

statements

made

by

defendant as well as any intent to defraud the plaintiff.”

the
(ECF

No. 88, at 8-9).
First, there is no genuine dispute that Mr. Williams made
false

statements

to

Plaintiff.

19

Mr.

Williams

made

multiple

statements

and

representations

to

Plaintiff

that

ATS

was

performing work under a valid HUD contract numbered R-2012-AY00532, but the record shows that such a contract did not exist,
work was not being performed, and HUD was not processing any
payments to Plaintiff or ATS.
6).
as

(See, e.g., ECF No. 83-1, at 5-

Furthermore, Plaintiff is entitled to an adverse inference
to

the

existence

of

a

contract

based

on

Mr.

Williams’s

invocation of the Fifth Amendment at his deposition.
65-1).

(ECF No.

The record also shows that Plaintiff knew about the

falsity of his statements and intended to defraud Plaintiff.
“Fraudulent intent can be inferred from: (1) the situation of
the parties; (2) the activity of the promisor in procuring the
transaction; (3) a short time period between the promise and the
failure to perform; and (4) the promisor’s subsequent conduct.”
Sagent Tech., Inc. v. Micros Sys., Inc., 276 F.Supp.2d 464, 468
(D.Md. 2003) (citing Holman v. IMC Mortg. Co., No. 99-11778,
2001 WL 21222, at *2 (D.Md. Jan. 9, 2001); Tufts v. Poore, 219
Md.

1,

10-11

(1959)).

“Fraud

is

not

a

single

fact

but

a

conclusion to be drawn from all of the circumstances of the
case.”

Fuller v. Horvath, 42 Md.App. 671, 685 (1979) (citation

omitted).

Here, the evidence and the circumstances of the case

show that Mr. Williams made the false statements with the intent
to defraud Plaintiff.

The contract Mr. Williams presented as

the basis for the factoring agreement did not exist and no work
20

was completed, making it hard to discern any purpose for Mr.
Williams’s false statements other than to induce fraudulently
Plaintiff into signing the factoring agreement.
Mr.
Mr.

Williams’s

Williams

subsequent

failed

to

conduct

answer

also

Plaintiff’s

evidences
direct

fraud.

inquiries

regarding the status of the contract and payments, and he failed
to provide payments as promised.
approach

HUD

regarding

the

He also urged Plaintiff not to

problem

providing Plaintiff with information.

and

consistently

delayed

(ECF Nos. 1-23; 1-39).

What funds were paid to Plaintiff came from Mr. Williams and
Williams Global, not from HUD, as specified in the factoring
agreement.

(See

ECF

Nos.

1-4;

1-42).

Mr.

Chao’s

sworn

affidavit attests that Mr. Williams told him in a telephone call
that he intended to defraud Plaintiff.
¶ 11).

(ECF Nos. 81 ¶ 58; 83-2

The HUD OIG report notes that Mr. Williams admitted to

HUD employees that he intended to defraud Plaintiff.
83-1, at 6).

(ECF No.

Moreover, Plaintiff is entitled to an adverse

inference

because

Amendment

in

of

Mr.

response

to

Williams’s
questions

against him at his deposition.

invocation
and

of

evidence

(ECF No. 65-1).

the

Fifth

presented

Taken together

and viewed within the circumstances of the case, the facts in
the record show that Mr. Williams intended to defraud Plaintiff.
Finally, the record shows that Plaintiff reasonably relied
on Mr. Williams’s misrepresentations and suffered compensable
21

damages.

The initial correspondence between Plaintiff and Mr.

Williams shows clearly that Plaintiff entered into the factoring
agreement because it believed that ATS contracted to perform
work for HUD.
documents

and

This reliance was reasonable in light of the
representations

Mr.

Williams

sent

to

Plaintiff

purporting to show the existence of a valid contract.
also

clear

that

Plaintiff

suffered

damages

It is

from

the

misrepresentation because it was not repaid the money owed under
the

factoring

agreement

despite

making

a

significant

capital

outlay.

Accordingly, Plaintiff’s motion for summary judgment

will

granted

be

as

to

liability

on

Count

II

against

Mr.

Williams.
D.

Civil Conspiracy
“Under Maryland Law, a civil conspiracy
is defined as the ‘combination of two or
more
persons
by
an
agreement
or
understanding to accomplish an unlawful act
or to use unlawful means to accomplish an
act not in itself illegal, with the further
requirement that the act or the means
employed must result in damages to the
plaintiff.’
In addition to proving an
agreement, ‘the plaintiff must also prove
the
commission
of
an
overt
act,
in
furtherance of the agreement, that caused
the plaintiff to suffer actual injury.’”

Marshall v. James B. Nutter & Co., 758 F.3d 537, 541 (4th Cir.
2014) (quoting Hoffman v. Stamper, 385 Md. 1, 24 (2005)).
Mr. Williams argues that “a civil conspiracy may not be
entered into between a person and a non-living entity.”
22

(ECF

No. 88, at 9).

Although Mr. Williams’s argument is conclusory

and misstates applicable law, he is correct that Plaintiff is
not entitled to summary judgment on its civil conspiracy claim,
and instead the claim should be dismissed for failure to state a
claim.

Both the United States Court of Appeals for the Fourth

Circuit

and

doctrine,

Maryland

which

corporation

apply

provides

and

its

the

that

agent

intracorporate
“a

acting

conspiracy

conspiracy

within

employment is a legal impossibility.”

the

between

scope

of

a
his

BEP, Inc. v. Atkinson,

174 F.Supp.2d 400, 409 (D.Md. 2001) (citing Kairys v. Douglas
Stereo, Inc., 83 Md.App. 667, 683 (1990) (“No conspiracy can lie
between a corporation and its agent acting within the scope of
his duties.”), overruled on other grounds by Montgomery Ward v.
Wilson, 339 Md. 701 (1995).

This court consistently applies the

intracorporate

doctrine

regarding
agents.

conspiracy

alleged

conspiracies

to
a

between

conspiracy
corporation

claims
and

its

See, e.g., Bailey v. Atlantic Automotive Corp., 992

F.Supp.2d

560,

intracorporate
conspiracy

568

(D.Md.

conspiracy

claims,

2014)

(“Courts

doctrine

including

to

common

a

law

have

applied

variety
and

RICO

of

the
civil

conspiracy

claims”); Walters v. McMahen, 795 F.Supp.2d 350, 358-59 (D.Md.
2011)

(applying

civil

RICO

intracorporate

conspiracy

claim),

conspiracy
aff’d,

2012).
23

684

doctrine
F.3d

435

to

bar

(4th

a

Cir.

Here, Plaintiff does not allege, and the record does not
show, that anyone outside of Mr. Williams, ATS, and Williams
Global

was

Plaintiff’s

part

of

conspiracy

a

conspiracy

claim

is

to

also

defraud

afflicted

Plaintiff.

by

issues

of

improper service because the original complaint did not allege
civil conspiracy against ATS or Williams Global.
89).

(ECF No. 1 ¶

These issues are irrelevant for the conspiracy count,

however,
properly,

because
it

even

fails

to

if

the

state

a

amended
claim.

complaint

was

Plaintiff’s

served

original

complaint alleged that Mr. Jones was involved in the conspiracy,
but the amended complaint does not include, and the record does
not support, such an allegation.
ATS

were

nominally

two

Although Williams Global and

separate

companies,

courts

broadly

construe the intracorporate conspiracy doctrine, extending it
“to preclude, as a matter of law, claims of conspiracies among
sister corporations wholly owned by the same parent.”

Bailey,

992 F.Supp.2d at 568 (citing Advanced Health-Care Servs., Inc.
v. Radford Cmty. Hosp., 910 F.2d 139, 145-47 (4th Cir. 1990)).
Accordingly,

Plaintiff’s

motion

for

summary

judgment

will

be

pursuant

to

denied as to Count III, but the claim will be dismissed.
E.

Civil RICO

Plaintiff

asserts

a

claim

for

racketeering

RICO’s civil provision, 18 U.S.C. § 1964, which provides a cause
of action to “[a]ny person injured in his business or property
24

by reason of a violation of [18 U.S.C. § 1962].”

Plaintiff

alleges that Defendants violated § 1962(c), which prohibits “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.”
To establish a civil RICO violation, a plaintiff must show
“(1) conduct; (2) of an enterprise; (3) through a pattern; (4)
of racketeering.”

Chambers v. King Buick GMC, LLC, 43 F.Supp.3d

575, 588 (D.Md. 2014) (citation and internal quotation marks
omitted).

A plaintiff must also show “proximate cause, that is

[it] was injured in [its] business or property ‘by reason of’
the RICO violation.”

Id. (quoting Hemi Group, LLC v. City of

New York, N.Y., 559 U.S. 1, 6 (2010)).

The Fourth Circuit has

noted that RICO “‘does not cover all instances of wrongdoing.
Rather, it is a unique cause of action that is concerned with
eradicating organized, long-term, habitual criminal activity.’”
US Airline Pilots Ass’n v. Awappa, LLC, 615 F.3d 312, 317 (4th
Cir. 2010) (quoting Gamboa v. Velez, 457 F.3d 703, 705 (7th Cir.
2006)).

Thus, the Fourth Circuit cautioned that district courts

“ensure that RICO’s extraordinary remedy does not threaten the
ordinary
suits

run

are

of

not

commercial

brought

transactions;

against
25

isolated

that

treble

offenders

for

damage
their

harassment and settlement value; and that the multiple state and
federal laws bearing on transactions . . . are not eclipsed or
preempted.”

Id. (quoting Menasco, Inc. v. Wasserman, 886 F.2d

681, 683 (4th Cir. 1989)).
1.

RICO Claim Against ATS and Williams Global

The

original

complaint

alleged

a

against only Mr. Williams and Mr. Jones.

civil

RICO

violation

(ECF No. 1 ¶ 95).

The

amended complaint removed Mr. Jones and added RICO allegations
against ATS and Williams Global.

(ECT No. 81 ¶¶ 95-96).

As

discussed above, Plaintiff did not serve ATS and Williams Global
with the amended complaint as required by Fed.R.Civ.P. 5(a)(2).
Accordingly,

the

civil

RICO

claim

against

ATS

and

Williams

Global will be dismissed.
2.

RICO Claim Against Mr. Williams

To satisfy the “enterprise” element, a plaintiff “prove the
existence of two distinct entities: (1) a ‘person’; and (2) an
‘enterprise’ that is not simply the same ‘person’ referred to by
a different name.”

Cedric Kushner Promotions, Ltd. v. King, 533

U.S. 158, 161 (2001).
U.S.C.

§

1961(4),

An “enterprise,” as set forth in 18

“includes

any

individual,

partnership,

corporation, association, or other legal entity, and any union
or group of individuals associated in fact although not a legal
entity.”
three

Establishing

elements:

(1)

an

“[a]n

‘enterprise’

ongoing
26

requires

organization;

(2)

proof

of

associates

functioning as a continuing unit; and (3) the enterprise is an
entity ‘separate and apart from the pattern of activity in which
it engages.’”
Metro.

Money

Chambers, 43 F.Supp.3d at 589 (quoting Proctor v.
Store

Corp.,

645

F.Supp.2d

464,

477-48

(D.Md.

2009)).
Plaintiff alleges that the enterprise is the associationin-fact of Mr. Williams, ATS, and Williams Global.

Assuming

arguendo that Mr. Williams, ATS, and Williams Global constituted
an enterprise distinct from the “persons,” Plaintiff has not
shown that, as a matter of law, the alleged enterprise is an
entity separate and apart from the pattern of activity in which
it engages.8
(4th

Cir.

See Turner v. First Nat. Bank of Md., 983 F.2d 1057

1993)

(unpublished

table

opinion)

(affirming

the

district court’s reasoning that a complaint failed to allege “an
‘enterprise’ separate and apart from the pattern of racketeering
activity” (citing United States v. Tillett, 763 F.2d 628 (4th
Cir.

1985))).

Courts

have

noted

that

an

enterprise

may

be

separate and apart from the pattern of activity in which it
engages when the enterprise is “also engaged in legitimate . . .

8

The specific contours of what constitutes a distinct
enterprise for the sake of establishing a RICO violation is
murky at best, particularly in situations where the alleged
enterprise consists of intertwined individual and corporate
defendants.
Compare Cedric Kushner Promotions, 533 U.S. 158,
and Chambers, 43 F.Supp.3d at 587-92, with Bailey, 992 F.Supp.2d
at 581-83, and Gondel v. PMIG 1020, LLC, No. CCB-08-1768, 2009
WL 248681 (D.Md. Jan 22, 2009).
27

transactions over the same period of time for the purpose of
further

concealing

the

true

intent

of

their

enterprise.”

Proctor, 645 F.Supp.2d at 480; see also Chambers, 43 F.Supp.3d
at 592 (accepting a plaintiff’s allegations that the enterprise
had

“an

existence

separate

and

apart

from

the

pattern

of

racketeering activity in which it was engaged” because it was
also engaged in legitimate consumer business); Tillett, 763 at
632

(holding

trafficking

that

the

enterprise

evidence

existed

showed

separate

that
and

a

narcotics

apart

from

the

activity because it also ran a “legitimate business front for
the smuggling operation”).
Here, the record does not show that the enterprise existed
for any purpose other than to execute the underlying fraud.

See

Myland Labs., Inc. v. Akzo, N.V., 770 F.Supp. 1053, 1080 (D.Md.
1991) (dismissing a RICO claim because the plaintiff “alleged no
ascertainable
racketeering

structure
acts”).

distinct
For

from

example,

the

nothing

pattern
in

the

of

record

indicates that Mr. Williams, ATS, and Williams Global worked
together

as

an

enterprise

to

execute

valid

HUD

contracts,

perform other legitimate work, or do anything besides devise and
collect on fraudulent factoring agreements.
mention,

in

its

summary

judgment

motion,

Plaintiff’s brief
that

RICO

requires

Plaintiff to prove that the enterprise is separate and apart
from the pattern of racketeering activity includes no supporting
28

argument and points to no evidence in the record.
83, at 20).
Williams

Although it is possible that Mr. Williams, ATS, and

Global

fraudulent
record.

(See ECF No.

functioned

conduct,

such

as

an

enterprise

activity

is

from

the

apparent

not

apart

from

the

Accordingly, Plaintiff’s motion for summary judgment

will be denied as to Count IV.
IV.

Conclusion
For the foregoing reasons, Plaintiff’s motion for summary

judgment will be granted in part and denied in part, and its
motion for adverse inferences will be denied as moot.
will be dismissed as to all Defendants.
dismissed
purports

as
to

to

ATS

seek

and

summary

Williams
judgment

Counts I and IV will be

Global.
in

Count III

full,

While
and

it

Plaintiff
would

be

entitled to judgment for compensatory damages in the amount of
$141,000 on Counts I and II against Mr. Williams, it has not
briefed

issues

consequential

regarding

and

punitive

its

request

damages.

for

interest

Accordingly,

or

summary

judgment is being granted as to liability only, and a telephone
conference

will

unresolved issues.

be

scheduled

with

the

parties

to

discuss

A separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

29