504 Tavern LLC et al v. Vitti et al

Filing 39

ORDER -DENIES AS MOOT Philipp Vitti's Motion to Dismiss for Lack of Jurisdiction 3 ; DENIES AS MOOT plaintiffs' Motion to Stay Proceedings 8 ; GRANTS IN PART and DENIES IN PART Vitti's Motion to Dismiss for Lack of Jurisdiction [14 ]; DENIES plaintiffs' Motion for Discovery on a Limited Basis 19 ; GRANTS the Joint Motion to Continue Fed.R.Civ.P. 26(f) Conference and Submit Discovery Plan 21 ; DENIES Vitti's Motion for Sanctions 22 ; and GRANTS plaintiffs' Motion for Extension of Time to Complete Service of Process 34 . Joint proposed discovery plan due 8/15/14. Signed on 7/15/14 by District Judge Fernando J. Gaitan, Jr. (Enss, Rhonda)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
504 TAVERN LLC, et al.,

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Plaintiffs,
v.

VITTI, et al.,
Defendants.

NO. 14-CV-00115-FJG

ORDER
Currently pending before the Court is Defendant Philipp Vitti’s Motion to Dismiss
for Lack of Jurisdiction (Doc. # 3), Plaintiff 504 Tavern LLC’s and Shawn Nelson’s
Motion to Stay Fed.R.Civ.P. 12(b)(6) Proceedings (Doc. # 8), Vitti’s Motion to Dismiss
for Lack of Jurisdiction (Doc. # 14), plaintiffs’ Motion for Discovery on a Limited Basis
(Doc. # 19), the parties’ Joint Motion to Continue Fed.R.Civ.P. 26(f) Conference and
Submit Discovery Plan (Doc. # 21), Vitti’s Motion for Sanctions (Doc. # 22) and plaintiffs’
Motion for Extension of Time to Complete Service of Process (Doc. # 34).
I.

BACKGROUND

Shawn Nelson was the owner of a 504 Tavern LLC, located at 504 Westport Road,
Kansas City, Missouri. Philipp Vitti was hired by plaintiffs to be the operations manager
of 504 Tavern. On November 1, 2011, Vitti signed a management contract. This
agreement required Vitti to attend to the daily operations, maintain compliance with the
liquor laws and pay the bills for the Tavern. After approximately six weeks on the job,

the owners noticed that there were some serious problems with the business, such as a
failure to document employees on a legitimate payroll account, failure to pay utility bills
in a timely manner, failure to engage in proper accounting and failure to pay insurance
premiums. In mid-December, the owners met with Vitti to discuss the problems and to
remind him of his obligations under the contract. In early February 2012, Vitti took an
unexplained and unauthorized absence from the business. When Vitti failed to return
after a month, the ownership of the Tavern decided to terminate his contract on
February 28, 2012. Plaintiffs allege that shortly after he was notified that he had been
terminated, Vitti withdrew several thousands of dollars from the Tavern’s bank account.
Plaintiffs allege that after Vitti was terminated, they discovered that he had not been
paying the utility bills for the Tavern or making the necessary sales tax payments to the
State. Plaintiffs also allege that after Vitti left, they discovered that during February
2012, he had taken approximately $17,000 from 504 Tavern’s bank account and used
the money to fund a completely unrelated business located in Orlando, Florida, called
“Liquid.” Plaintiffs also allege that while in Florida, Vitti stole and misappropriated the
identity of 504 Tavern LLC and the members of 504 Tavern LLC in order to set up
business accounts for “Liquid.” Plaintiffs allege that Vitti accomplished this by forging
Shawn Nelson’s signature numerous times in order to induce Heartland Payroll
Processing Corporation to process transactions for the Florida business. Plaintiffs have
asserted claims against Vitti, Robert Sippio and BEPEC, LLC for breach of contract,
conversion of funds, fraud, identity theft, negligence, breach of fiduciary duty, unjust
enrichment, civil conspiracy RICO and the Fair Credit Reporting Act.
Defendants have moved to dismiss the Amended Complaint on the ground that

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there is no diversity jurisdiction and alternatively that there is no federal question
jurisdiction.
II.

STANDARD

To survive a motion to dismiss under 12(b)(6), Aa complaint must contain sufficient
factual matter, accepted as true, to state a claim for relief that is plausible on its face.@
Ashcroft v. Iqbal, 556 U.S. 662,129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167
L.Ed.2d 929 (2007)). A pleading that merely pleads Alabels and conclusions@ or a
Aformulaic recitation@ of the elements of a cause of action, or Anaked assertions@
devoid of Afurther factual enhancement@ will not suffice. Id. (quoting Twombly).
ADetermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.@ Id. at 1950. Under Fed. R. Civ. P. 12(b)(6) we must
accept the plaintiff=s factual allegations as true and grant all reasonable inferences in
the plaintiff=s favor. Phipps v. FDIC, 417 F.3d 1006, 1010 (8th Cir. 2005).
It should also be noted that Fed.R.Civ.P. 9(b)’s pleading requirements are also
applicable in this case. In H & Q Properties, Inc. v. Doll, No. 8:13CV38, 2014 WL
2919139 (D.Neb. June 26, 2014), the Court stated, “[t]he particularity requirements of
Rule 9(b) apply to allegations of . . . fraud . . .when used as predicate acts for a
RICO claim. . . .However, the particularity requirements of Rule 9(b) do not apply to
allegations of the other elements of a RICO claim.” Id. at *4 (internal citations and
quotations omitted).

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III.
A.

DISCUSSION

Motions to Dismiss for Lack of Jurisdiction
Defendant Vitti states that the Court should dismiss this action because the parties

are not completely diverse. Vitti states that he is a citizen of the same state as one of
the plaintiffs. Additionally, Vitti argues that there is no federal question jurisdiction
because plaintiffs have failed to state a claim for Civil Conspiracy RICO or the Fair
Credit Reporting Act.
1. Diversity Jurisdiction
A. Citizenship of Defendant Vitti.
Plaintiffs assert that all the defendants, including Vitti are Florida citizens.
However, Vitti argues that he is a citizen of Missouri, and thus there is no diversity of
citizenship, because 504 Tavern is a Missouri corporation. In Damon v. Groteboer, 937
F.Supp.2d 1048 (D.Minn. 2013), the Court stated
There are two requirements to establish a domicile: (1) physical
presence in a state; and (2) intent to remain there indefinitely. . . .Domicile
is determined at the time the action is instituted. . . .[T]he Eighth Circuit
held that [t]here are rebuttable presumptions [1] that the place where a
person actually lives is his domicile and [2] that a domicile, once
established, continues until a change is shown, so that the burden of
proving a change of domicile rests on the party alleging it. . . .[t]he
presumption is in favor of an original or former domicile as against an
acquired one, and of a domestic as against a foreign one, and that [p]roof
of a change of domicile must be clear and convincing.
Id. at 1065 (internal citations and quotations omitted). In Cooney v. Usher, No. 4:12CV-38-JAR, 2012 WL 484697,*2 (E.D.Mo.Feb.14, 2012), the Court stated that in
determining a party’s citizenship these are some factors which courts consider: “the
party’s current residence, voter registration and voting practices, location of real estate
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and personal property, location of brokerage and bank accounts, membership in unions,
fraternal organizations, churches, clubs, and other associations, place of employment or
business, driver’s license and automobile registration, and payment of taxes.” The
Court noted that “[n]o single factor is conclusive.” Id.
Defendant Vitti filed an affidavit in support of the Motion to Dismiss stating that his
permanent residence is located in Kansas City, Missouri in a home owned by his
mother. He states that nearly all of his personal property is located at that house,
except for his clothing and computer. Vitti states that he is registered to vote in
Missouri, the Missouri Department of Revenue sends all official mail to that address, he
receives personal correspondence at the Missouri address and he has a bank account
in Missouri. Plaintiff states that in 2012, he began working temporary jobs in the service
industry, first in Florida and then in Connecticut. He states that while he has been living
in Connecticut, he has not bought or leased real estate, registered to vote or
established a primary care physician. Vitti states that although he currently lives in
Connecticut, he does not consider this to be his home state and has no intention to
remain in Connecticut after his employment there is finished. (Vitti Affid. Doc. 15, Ex.
2). Thus, defendants argue that plaintiffs have failed to meet their burden to show that
Vitti is a citizen of the state of Florida.
Plaintiffs argue that Vitti is domiciled in Florida because Vitti’s mother told the
process server, Robert Vick, that her son was living in Florida and she did not have any
contact information for him. (Robert Vick Affid. Doc. 18, Ex. 1). Plaintiffs assert that this
statement illustrates an intention of Vitti to stay in Florida and not return to Missouri.
Plaintiffs also argue that Vitti represented in court papers filed in Florida in February and

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March 2012 that he had a Florida address and that he was the registered agent of a
Florida company. Plaintiffs argue that the facts show that Vitti changed in domicile from
Missouri to Florida in 2012. Plaintiffs also argue that at a minimum they should be
allowed to conduct limited discovery in order to resolve the conflicting accounts
regarding diversity jurisdiction that have been submitted to the Court.
The Court finds that plaintiffs, as the parties asserting jurisdiction, have failed to
carry their burden to show that defendant Vitti is not domiciled in Missouri. In Joyce v.
Armstrong Teasdale LLP, No. 4:08-CV-1390(CEJ), 2010 WL 3613942, *1 (E.D.
Mo.Sept. 7, 2010), the Court noted that “[a] person’s domicile persists until a new one is
acquired. Holmes v. Sopuch, 639 F.2d 431,434 (8th Cir.1981). Transitory absence from
the state does not diminish the person’s domicile in that state unless it becomes his
intention to indefinitely reside at that new location. Id.” Vitti’s affidavit establishes that
although he has had temporary positions in both Florida and Connecticut, he had no
intention to remain in either of these states and he considers Missouri to be his
permanent domicile. Thus, because Vitti’s domicile was originally Missouri and
because he has only had transitory absences from the state and never evidenced an
intent to acquire a new domicile, the Court finds that Vitti retained his Missouri domicile.
Because plaintiff 504 Tavern, LLC is also a Missouri corporation, the Court finds that
there is a lack of diversity between the parties.
Plaintiffs had sought leave to conduct limited discovery regarding these
jurisdictional issues and depose Vitti, his mother and Robert Vick, the process server.
However, the Court finds that there is no factual dispute regarding Vitti’s residence or
his intentions, thus the Court determines that this issue is capable of resolution without

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conducting jurisdictional discovery. Accordingly, the Court hereby DENIES plaintiffs’
Motion for Leave to Conduct Limited Discovery Regarding Jurisdictional Issues (Doc. #
19). Having determined that there is no diversity jurisdiction the Court will proceed to
analyze whether federal question jurisdiction exists.
2. Federal Question Jurisdiction
Defendants argue that the Court also lacks jurisdiction over this case because
plaintiffs’ Amended Complaint has failed to state either a RICO claim or a Fair Credit
Reporting Act claim. If these two federal claims are dismissed, defendants argue that
the entire case should be dismissed as there will be no basis for federal court
jurisdiction.
A.

RICO Claim.
Defendants state that plaintiff’s RICO claim is entirely based on the allegation

that “Defendants Vitti and Sippio misled Plaintiff 504 Tavern LLC’s payroll processing
company, Heartland [Payroll Processing], into a fraudulent contract for services (under
Plaintiff 504 Tavern’s business name and liability) through forging a multitude of
signatures of a member of 504 Tavern LLC.” (Doc. 10, ¶ 78). Defendants argue that
plaintiffs have alleged only forgery or potentially fraud, but certainly not racketeering.
“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.’”
Crest Const. II Inc. v. Doe, 660 F.3d 346, 353 (8th Cir. 2011)(quoting Gamboa v. Velez,
457 F.3d 703, 705 (7th Cir.2006)). Defendants state that plaintiff’s claim centers on
allegations that Vitti and Sippio misled Tavern 504’s payroll processing company,
Heartland Payroll Processing, into a fraudulent contract for services through forging a

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multitude of signatures. Defendants argue that these allegations constitute garden
variety forgery, or potentially fraud, but not racketeering.
1.

Elements of RICO.
“Section 1962 of the RICO Act makes it unlawful for any person employed by or

associated with any enterprise engaged in, or the activities of which affect, interstate or
foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such
enterprise’s affairs through a pattern of racketeering activity or collection of an unlawful
debt.” Crest Const. II, 660 F.3d at 353. In order to establish a violation of the statute,
plaintiffs must show: “(1) conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity.” Id. (internal citations and quotations omitted).
2.

Definition of Enterprise – “(1) a common purpose that animates the individuals

associated with it; (2) an ongoing organization with members who function as a
continuing unit; and (3) an ascertainable structure distinct from the conduct of a pattern
of racketeering.” United States v. Lee, 374 F.3d 637, 647 (8th Cir. 2004). “The
enterprise must be more than just the pattern of racketeering activity. In other words,
the court ‘must determine if the enterprise would still exist were the predicate acts
removed from the equation.’” Jennings v. Bonus Building Care, Inc., No.4:13-CV-663W-DGK, 2014 WL 1806776, *7 (W.D.Mo. May 7, 2014) (quoting Crest Constr. II, 660
F.3d at 354-55).
Plaintiffs allege in ¶ 78 their Amended Complaint:
78. As alleged above, Defendants engaged in a multifaceted enterprise to
purposefully defraud the Plaintiffs and the public as a whole. Specifically
to Plaintiffs’ RICO assertions, the following facts pertain:
Existence of an Enterprise:

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a. Defendant Philipp Vitti and Defendant Robert Sippio, in 2011 and
2012, conspired together to misappropriate the personal identity of a
member of 504 Tavern LLC, Plaintiff Shawn Nelson (including Mr.
Nelson’s social security number, credit report, home address, phone
number, and all other personal information) as well as business
information of Plaintiff 504 Tavern LLC for the purpose of perpetrating a
fraud on the Plaintiffs as well as an additional future fraud on the public.
b. Defendants Vitti and Sippio purposefully misappropriated Mr.
Nelson’s personal information, and the business information of 504 Tavern
LLC, in order to defraud the Plaintiffs by converting funds in Kansas City,
Missouri, and, later, attempt to “legitimately” (through the Plaintiffs’ stolen
information) organize a business and/or criminal organization in another
state for the purpose of orchestrating a criminal fraud on the public.
c. As stated above, Defendants Vitti and Sippio, in concert, forged
the signature of a member of 504 Tavern LLC (Shawn Nelson) multiple
times in order to organize a business enterprise organized for the sole
purpose of defrauding the public.

Defendants argue that plaintiffs have failed to allege that Vitti and Sippio had
anything in common other than allegedly undertaking the acts of racketeering.
Defendants thus argue that plaintiffs have failed to allege an enterprise because they
have alleged no “ascertainable structure distinct from the conduct of a pattern of
racketeering.” Lee, 374 F.3d at 647. Plaintiffs argue that they have adequately alleged
a RICO violation because they have alleged that the Florida enterprise was organized
for the purpose of defrauding the public and was in fact used to defraud the public.
Plaintiffs state that the Complaint alleges that the defendants jointly formulated and
participated in a conspiracy to commit multiple acts of wire fraud.
The Court finds that plaintiffs have failed to show that the enterprise was distinct
from the pattern of racketeering activity. The allegations above describe only that the
defendants obtained plaintiff Shawn Nelson’s personal information, forged his signature
multiple times and then used this information to establish a business. However, this is
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exactly what the plaintiffs have alleged constitute the pattern of racketeering activity. In
¶ 78 n, o, plaintiffs allege:
Pattern of Racketeering Activity and Future Criminal Conduct
n. As stated above, the Defendants defrauded the Plaintiffs (and the
public) by misappropriating information through the interstate wires, for the
purpose of setting up a criminal enterprise through the interstate wires,
and then utilized the information pertaining to the Plaintiffs to perpetrate a
fraud on the public by systematically overcharging innocent consumers
through the interstate wires.
o. Such fraud committed by the Defendants’ enterprise would have
continued in perpetuity against the Plaintiffs and the general public had
Heartland’s procedures related to credit card fraud not recognized the
criminality taking place and contacted Mr. Nelson to inquire about why “his
company” appeared to be systematically overcharging customers.

Because the plaintiffs have failed to plead facts showing that the entity was
distinct from the alleged racketeering activity, the Court finds that plaintiffs have failed to
sufficiently allege this element of the RICO claim.
3.

Definition of a Pattern of Racketeering.
In order to show a pattern of racketeering, plaintiffs must allege two predicate

acts. The acts must be related and must amount to or pose a threat of continuing
criminal activity. The two predicate acts must occur within a specified time frame.
Additionally, where the plan is to defraud a single company, there is no RICO violation.
Terry A. Lambert Plumbing v. Western Sec. Bank, 934 F.2d 976, 981 (8th Cir.1991).
Defendants state that the only predicate act which plaintiffs vaguely allege is wire fraud.
Defendants argue that plaintiffs’ boilerplate allegations are insufficient. Additionally, a
claim for civil conspiracy RICO is only permitted when the plaintiff suffers an injury from
an act that is independently wrongful under RICO.

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Plaintiffs allege that they pled multiple acts of wire fraud, violations of 18 U.S.C. §
1957 (engaging in monetary transactions in property derived from unlawful activity);
violations of 18 U.S.C. § 2314 (transportation of stolen monies) and violations of
Mo.Rev.Stat. §§ 570.130 (fraudulent use of a credit device) and § 570.223 (forgery).
Plaintiffs also allege that Vitti’s conduct resulted in substantial financial harm to
plaintiffs.
In their Amended Complaint, plaintiffs allege that the predicate acts committed
were:
Predicate Acts Regarding RICO Activity
r. With regard to Plaintiffs’ RICO allegations, Defendants engaged in
predicate acts indictable under the following provisions of the United
States Code and Missouri law.
(1) Multiple acts of wire fraud as alleged above in violation of
18 U.S.C. §§ 1341 and 1343;
(2) Acts in violation of 18 U.S.C. § 1957 as alleged above.
(3) Acts in violation of 18 U.S.C. § 2314 as alleged above.
(4) Acts in violation of the criminal provisions of RSMo. §§
570.130 and 570.223 as alleged above.
(Plaintiff’s Amended Complaint, ¶ 78(r)).
However, the only acts which were alleged in the preceding paragraphs include
allegations that the defendants forged the signature of Shawn Nelson and other
members of 504 Tavern multiple times (¶78 c, f) and used fax transmissions and email
to transmit the forged signatures to Heartland Payroll Processing to set up fraudulent
accounts to overcharge the credit cards of Florida residents (¶ 78 g). Plaintiffs also
assert that this criminal fraud would have continued in perpetuity had Heartland not

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recognized the fraudulent activity and contacted plaintiffs. However, what is lacking in
these factual allegations is the sort of specificity which is demanded by Fed.R.Civ.P.
9(b).
A party must plead such facts as the time, place, and content of the
defendant’s false representations, as well as the details of the defendant’s
fraudulent acts, including when the acts occurred, who engaged in them,
and what was obtained as a result to satisfy Rule 9(b)’s particularity
requirements. . . . Put another way, the complaint must identify the who,
what, where, when, and how of the alleged fraud.
H&Q Properties, Inc., 2014 WL 2919139 at *4 (internal citations and quotations
omitted). In this case, plaintiffs have not alleged which defendants engaged in these
actions, when the actions allegedly took place, and what was communicated through
the email and fax transmissions. Rather, the Court finds that plaintiff’s Amended
Complaint contains merely boilerplate, conclusory allegations and does not contain the
requisite specificity required by the Rule.
Additionally, the Court finds that plaintiffs have failed to show that the predicate
acts were related and continuous. See H.J. Inc. v. Northwestern Bell Telephone Co.,
492 U.S. 229, 239, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989)(“[T]o prove a pattern of
racketeering activity a plaintiff . . .must show that the racketeering predicates are
related, and that they amount to or pose a threat of continued criminal activity.”) In
Dewitt Insur. v. Horton, No. 4:13-CV-2585JAR, 2014 WL 2208073 (E.D.Mo. May 28,
2014), the plaintiff alleged that the defendant had engaged in the predicate acts of mail
and wire fraud to set up a company and obtain excessive commissions from plaintiff.
However, the Court did not find that the allegations met the continuity requirement. The
Court stated, “[t]here is no allegation that Defendants’ fraud or alleged racketeering

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activity will continue as to Plaintiff or that Defendants’ activities threatened or will
threaten any other victim.” Id. at *8. The Court continued:
A single, fraudulent contractual business venture, which is narrowly
tailored toward one victim does not constitute the pattern of racketeering
required for criminal activity under a RICO claim. The Court finds that the
alleged acts of everyday business emails and the monthly commission
checks received by [defendants] are neither broad nor far reaching
enough to constitute a pattern of racketeering under RICO. . . .Further, as
noted by several circuit courts, this type of garden variety fraud does not
state a claim under RICO simply because Defendants allegedly used the
internet, interstate mail, and interstate wires to implement their fraud:
Virtually every garden-variety fraud is accomplished through a series of
wire or mail fraud acts that are ‘related’ by purpose and spread over a
period of at least several months. Where such a fraudulent scheme inflicts
or threatens only a single injury, we continue to doubt that Congress
intended to make the availability of treble damages and augmented
criminal sanctions dependent solely on whether the fraudulent scheme is
well enough conceived to enjoy prompt success or requires pursuit for an
extended period of time. Given its ‘natural and common sense approach
to RICO pattern element,’ we think it unlikely that Congress intended
RICO to apply in the absence of a more significant societal threat.
Id. at *8.
Accordingly, the Court finds that plaintiffs have failed to assert a violation of the
RICO statute, because they have failed to allege that the defendants conducted an
enterprise through a pattern of racketeering activity. Additionally, the plaintiffs have
failed to plead the RICO claim with sufficient specificity to meet the Rule 9(b) pleading
standard and have failed to show that the alleged predicate acts were related and
continuous. For these reasons the Court hereby GRANTS defendants’ Motion to
Dismiss Count VIII – Civil Conspiracy RICO Violation against all defendants.
B.

Fair Credit Reporting Act Claim
Defendants argue that plaintiffs allege only that Vitti forged a credit report

authorization form allowing Heartland Payroll Processing, not Vitti, to obtain and use the

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credit report. Defendants argue that even if plaintiffs’ allegations are true, there is no
basis under the FCRA for private causes of action against alleged forgers or identity
thieves. Defendants also argue that the claim is barred by the statute of limitations
because the claim was discovered more than two years before the Amended Complaint
was filed.
Plaintiffs argue in opposition that Vitti assumed Nelson’s identity for the purpose
of obtaining and using Nelson’s consumer/credit report without a permissible purpose
and without Nelson’s knowledge or consent. Plaintiffs state that the FCRA applies to
those who request or use credit reports for an improper purpose. Plaintiffs state that
they have alleged that Vitti personally obtained and used a consumer report for an
impermissible purpose – to commit fraud. Plaintiffs also state that the claim is within the
statute of limitations because the fraud was discovered in May 2012, which is within the
two year statute of limitations, as the Amended Complaint was filed on April 4, 2014.
In Nixon v. Enterprise Car Sales Co., No. 4:09CV1896HEA, 2011 WL 4857941
(E.D.Mo. Oct. 13, 2011), the Court stated:
Under § 1681b(f), [a] person shall not use or obtain a consumer report for
any purpose unless . . . the consumer report is obtained for a purpose for
which the consumer report is authorized to be furnished under this
section. In order to establish a violation of the FCRA for obtaining a credit
report without a legitimate business need, plaintiff must prove that (1)
there was a consumer report; (2) defendant used or obtained it; (3)
defendant did so without a permissible statutory purpose; and (4)
defendant was negligent or willful in so doing.
Id. at *3 (internal citations and quotations omitted). In the Amended Complaint, plaintiffs
allege that:
84. Defendant Vitti assumed Plaintiff Nelson’s identity for the purpose of
obtaining and using Mr. Nelson’s consumer/credit report without a
permissible purpose and without Mr. Nelson’s knowledge or consent.
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85. Mr. Vitti, along with his co-Defendants, used Mr. Nelson’s unlawfully
obtained credit report to set up business accounts for a business that Mr.
Nelson did not know existed and did not consent to participate in through
the use of his credit information. Although the term “user” is undefined by
the FCRA, Defendant Vitti clearly qualifies as a “user” of Mr. Nelson’s
credit report under the FCRA.
85. As alleged above, Defendant Vitti willfully obtained and used Mr.
Nelson’s consumer/credit report without a permissible purpose and with
an intent to commit fraud.
86. 15 U.S.C. § 1681b(f) prohibits any “person” from obtaining or using a
credit report on any consumer unless the person has a permissible
purpose for procuring the report. 15 U.S.C. § 1681a(b) defines “person” to
encompass any individual and, therefore, Defendant Vitti qualifies as a
person under the FCRA.
(First Amended Complaint, Doc. # 10 (emphasis added).
In comparing the elements of a FCRA claim against the allegations contained in
the First Amended Complaint, the Court finds that plaintiffs have sufficiently alleged the
elements necessary to state a claim. Additionally, the Court finds that the claim is within
the statute of limitations because the Affidavit of Shawn Nelson shows that he did not
discover the fraud until May 2012 (Doc. # 18, Ex. 4). Therefore, because the Court
finds that plaintiffs have sufficiently alleged a FCRA claim, the Court DENIES
defendants’ Motion to Dismiss this claim.
For the reasons stated above, the Court GRANTS IN PART and DENIES IN
PART Defendants’ Motion to Dismiss (Doc. # 14). The Court DENIES as MOOT
defendants’ initial Motion to Dismiss filed on March 14, 2014, as it was filed before
plaintiffs’ filed their Amended Complaint (Doc. # 3). The Court also DENIES as MOOT
plaintiffs’ Motion to Stay Rule 12(b)(6) Proceedings (Doc. # 8), as plaintiffs were
requesting an extension of time to respond to the first Motion to Dismiss.

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C.

Motion for Sanctions
Defendant Vitti moves the Court to impose sanctions on plaintiffs as well as

plaintiff’s counsel Peter Chung, for engaging in improper litigation strategy, manipulating
the forum and increasing the cost of the litigation. Defendants argue that the Court
should sanction plaintiffs for asserting claims for RICO and FCRA without any
evidentiary or legal basis and for incorrectly alleging that Vitti was a Florida citizen. In
the Motion for Sanctions, defendants basically reiterate all of the arguments which were
previously raised in the Motion to Dismiss. Although the Court found that plaintiffs did
not sufficiently allege a violation under RICO, the Court did find that plaintiffs had stated
a claim for violation of the FCRA. Additionally, the Court finds that the plaintiffs had a
good faith basis for asserting that defendant Vitti’s domicile was in Florida. Even though
the Court ultimately disagreed with plaintiffs on this point, the Court does not find that
these assertions were made without a good faith basis. Accordingly, the Court hereby
DENIES defendants’ Motion for Sanctions (Doc. # 22).
D.

Motion for Extension of Time to Serve Process on Defendants Sippio and
BEPEC
Plaintiffs state that they attempted to serve defendants Sippio and BEPEC, but

they have been unsuccessful. Plaintiffs are requesting an additional sixty days in which
to complete service upon these defendants. Defendants have opposed the motion for
an extension arguing that the plaintiffs have failed to show good cause for an extension
of time.
Fed.R.Civ.P. 4(m) states, “[i]f a defendant is not served within 120 days after the
complaint is filed, the court-on motion or on its own after notice to the plaintiff-must
dismiss the action without prejudice against that defendant or order that service be
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made within a specified time. The plaintiffs filed their Motion for an extension of time
before the expiration of the 120 day deadline and state that they have made efforts to
accomplish service. Accordingly, the Court hereby GRANTS plaintiffs’ Motion for an
Extension of Time and directs that plaintiffs accomplish service on these defendants on
or before August 29, 2014.
E.

Joint Motion to Continue Rule 26(f) Conference and Submit Discovery Plan
The Court had initially requested that the parties submit a joint proposed discovery

plan and scheduling order no later than May 27, 2014. In light of the pending motion to
dismiss, the parties jointly requested an extension of that deadline. Now that the Court
has ruled on the Motion to Dismiss and granted plaintiffs an extension of time to serve
process on defendants Sippio and BEPEC, the Court hereby GRANTS the parties Joint
Motion to Continue the Rule 26(f) Conference. The parties shall conduct their Rule
26(f) conference on or before August 1, 2014 and shall submit their proposed
scheduling and trial order on or before August 15, 2014.

IV.

CONCLUSION

Accordingly, for the reasons stated above, the Court hereby DENIES AS MOOT
Philipp Vitti’s Motion to Dismiss for Lack of Jurisdiction (Doc. # 3), DENIES AS MOOT
plaintiffs’ Motion to Stay Fed.R.Civ.P. 12(b)(6) Proceedings (Doc. # 8), GRANTS IN
PART and DENIES IN PART Vitti’s Motion to Dismiss for Lack of Jurisdiction (Doc. #
14), DENIES plaintiffs’ Motion for Discovery on a Limited Basis (Doc. # 19), GRANTS
the Joint Motion to Continue Fed.R.Civ.P. 26(f) Conference and Submit Discovery Plan

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(Doc. # 21), DENIES Vitti’s Motion for Sanctions (Doc. # 22) and GRANTS plaintiffs’
Motion for Extension of Time to Complete Service of Process (Doc. # 34).

Date: July 15, 2014
Kansas City, Missouri

S/ FERNANDO J. GAITAN, JR.
Fernando J. Gaitan, Jr.
United States District Judge 

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