Zagorski v. Mancuso et al

Filing 19

ORDER granting 14 Motion to Dismiss; granting 15 Motion to Dismiss for Lack of Jurisdiction. Signed by Honorable Timothy D. DeGiusti on 7/1/2014. (mb)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA

ANDREW J. ZAGORSKI,

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Plaintiff,
vs
ROBERT MCADAM, et al.,
Defendants.

No. CIV-13-1209-D

ORDER
Before the Court is Defendant Anita Palozzi’s Motion to Dismiss [Doc. No. 14]. Defendant
Palozzi seeks dismissal of this action on grounds that the Court lacks in personam jurisdiction over
her and that Plaintiff has failed to state claims for extortion, conspiracy and defamation upon which
relief can be granted. Alternatively, Defendant Palozzi requests that this action be transferred to
New York pursuant to 28 U.S.C. § 1404(a).
Also before the Court is the Motion to Dismiss [Doc. No. 15] of Defendants Thomas
Mancuso, Patricia Rohrer, James P. Wells, Robert McAdam, Mary McAdam, David Siracuse,
Christopher Rohrer and Mark Tambe. These defendants also assert the Court lacks in personam
jurisdiction over them. Additionally, they move for dismissal of Plaintiff’s claims on grounds of
lack of standing and failure to state claims for extortion, civil conspiracy and defamation upon which
relief can be granted. Plaintiff has responded to the motions [Doc. Nos. 16 and 17], and Defendants
Mancuso et al. have filed a reply [Doc. No. 18]. The matters are fully briefed and at issue.

Discussion
I.

Standing
The Court first addresses the issue of standing raised by Defendants Mancuso et al. When

evaluating a plaintiff’s standing at the motion to dismiss stage, the court must accept as true all
material allegations of the complaint and must construe the complaint in favor of the plaintiff.
Cressman v. Thompson, 719 F.3d at 1144 (quoting Initiative & Referendum Institute v. Walker, 450
F.3d 1082, 1089 (10th Cir. 2006) (en banc)). To establish Article III standing, a plaintiff must
establish that he has suffered an injury in fact that is fairly traceable to the challenged action of the
defendant and that it is likely that the injury will be redressed by a favorable decision. Cressman,
719 F.3d at 1144. A plaintiff must demonstrate that he has a “concrete private interest in the
outcome of [the] suit,” Lujan v. Defenders of Wildlife, 504 U.S. 555, 573 (1992), and that relief will
“directly and tangibly benefit him.” Lujan, 504 U.S. at 574 (emphasis added).
Defendant Palozzi has not directed her motion to dismiss to the issue of standing. However,
standing is a jurisdictional issue, Cressman v. Thompson, 719 F.3d 1139, 1144 (10th Cir. 2013), and
the Court has an independent duty to inquire into its subject matter jurisdiction and may raise the
issue of standing sua sponte. See United States v. Ramos, 695 F.3d 1035, 1046 (10th Cir. 2012).
Thus, if the Court finds that Plaintiff lacks standing to bring this action, the case must be dismissed
against all defendants for lack of subject matter jurisdiction.
Defendants Mancuso et al. assert that the injuries alleged in the Complaint are not those of
the Plaintiff but those of “his” company, OZ Forms Technologies, Inc. Indeed, they assert that “[t]he
only fair reading of the Complaint, is that OZ Tech’s reputation was damaged by the alleged
defamation, not Plaintiff,” and that it is “OZ Tech that is the purported Plaintiff in this action in
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every way but name.” See Motion to Dismiss [Doc. No. 15] at 5. Defendants point out that alleged
threats to obtain a refund of their investment in Plaintiff’s company, see Complaint at ¶¶ 14 and 17,
which Plaintiff alleges were “intended to prevent the Plaintiff and the company from surviving and
from completing their intended public offering to enable the company to grow and develop into its
intended objective of providing Saferooms to the public,” id., at ¶ 17, would, under Plaintiff’s
allegations, possibly cause harm to OZ Tech, but not to Plaintiff.
Upon the Court’s review of Plaintiff’s Complaint, the Court finds that Plaintiff has not shown
an injury in fact to him or that the relief sought will directly and tangibly benefit him. The alleged
defamation pertains to the sales of OZ Forms Technologies’ private stock and the resulting injury
is alleged to be delay and increased costs of completing the audit of OZ Forms Technologies, Inc.
in preparing for a public offering and in Plaintiff’s ability to raise funds in a private offering of OZ
Forms Technologies’ stock. See Complaint at ¶ 11. Alleged statements that “the plant and inventory
do not exist and that Plaintiff is conducting a Ponzi scheme in his fund raising in connection with
preparation to do a public offering of his company,” id., again relate to actions of OZ Forms
Technologies and could cause injury in fact to that company but do not show injury in fact to
Plaintiff.
In his second cause of action, for alleged extortion, Plaintiff alleges that the group of
defendants demanded the return of their investment together with interest, punitive damages and
administrative fees. See Complaint at ¶ 14. He further alleges that Defendants threatened that if
such moneys were not returned they would inform a CPA, which he alleges they eventually did. Id.
Finally, Plaintiff references verbal threats of “turning the company into the SEC and FBI” and
shutting the company down. Id. Although Plaintiff then alleges that “[s]uch actions have resulted
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in damage to Plaintiff and his reputation,” id., the factual allegations fail to show that Plaintiff
personally suffered any injury in fact as a result of the threats or a report to a CPA. Likewise, the
allegations in Plaintiff’s third cause of action, for civil conspiracy, again referencing the defendants’
demands for refunds of their investments and pressure to obtain the same exerted by inquiries of state
and federal agencies, fail to show that Plaintiff (or even OZ Forms Technologies , Inc.) suffered any
injury in fact.
Accordingly, the Court concludes that Plaintiff lacks standing to bring this action, that the
motion to dismiss of Defendants Mancuso et al. must be granted, and that this case must be
dismissed for lack of subject matter jurisdiction against all defendants.
II.

In Personam Jurisdiction
The defendants also move for dismissal on grounds the Court lacks in personam jurisdiction

over them and the Court addresses this issue in the alternative. The only allegations in Plaintiff’s
Complaint which arguably relate to the defendants’ alleged minimum contacts with the forum state
are the following:
Defendants and each of them have emailed correspondence to
Plaintiff and various third parties in Oklahoma containing statements
that constitute the causes of action stated in this complaint.
Complaint, ¶ 9
On August 12, 2013, Bob and Mary McAdam, representing all
Defendants, sent an e-mail stating in effect, quote that the sales of OZ
Forms Technologies, Inc. private stock, to members, our group in the
year 2010, were clearly illegal. . . .’ The e-mail was directed and
published to persons who are not privy to the information contained
in the e-mail. The defamatory words are false and therefore libelous.
....

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In addition to the foregoing, many other e-mails were sent and
published which contained many other untrue statements.
....
Id. at ¶ 11
Many e-mails have extended the demand [for return of Defendants’
investment] based on the claims of illegal activity. . . .
Id. at ¶ 14.
All of the defendants herein seek dismissal of Plaintiff’s Complaint for lack of personal
jurisdiction over them. Defendant Palozzi has not submitted any affidavits with her motion. See
Doc. No. 14. Defendants Mancuso et al. have submitted affidavits in which they attest to their
residences outside the state of Oklahoma, their lack of contact with the state of Oklahoma and, in
some instances, that their purchases of stock in OZ Saferooms Technologies, Inc. occurred in New
York. See Exhibits to Doc. No. 15. Plaintiff, in response to the motion of Defendants Mancuso et
al., has submitted his affidavit in which he attests, inter alia, that he is the primary target of emails
sent by the defendants “to various people who are not part of Oz Saferooms Technologies, Inc.,”
Affidavit (Exhibit to Doc. No. 17) at ¶ 3; that the defendants “sent a series of emails to inside
persons and to persons not affiliated with [Plaintiff] or with OZ Saferooms Technologies, Inc.
including at least one person in Oklahoma and other[s] not in Oklahoma, . . . each of which
contained inaccurate assertions about [Plaintiff] and about OZ Forms Technologies, Inc., a former
company . . .,” id, at ¶ 6; that Plaintiff was “aware of negative communications of the group [of
Defendants] to banks used by the Company in Oklahoma . . . ,” id., at ¶ 8; and that “[i]n emails, the
group of Defendants demanded of me that I repay them for their claims the sum of $1,500,000,
which I did not do.” Id. at ¶ 10.
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The plaintiff bears the burden of establishing personal jurisdiction and where, as here, the
issue is raised early in the litigation based on pleadings and affidavits, the burden can be met by a
prima facie showing. Shrader v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011) (citing Dudnikov
v. Chalk & Vermilion Fine Arts, Inc. 514 F.3d 1063, 1069-70 (10th Cir. 2008)). In determining
whether a plaintiff has met that burden, only the well pled facts of the plaintiff’s complaint, as
distinguished from mere conclusory allegations, must be accepted as true. Intercon Inc. v. Bell
Atlantic Internet Solutions, Inc. 205 F.3d 1244, 1249 (10th Cir. 2000). Factual disputes must be
resolved in the plaintiff’s favor. Employers Mutual Casualty Co. v. Bartile Roofs, Inc., 618 F.3d
1153, 1159 (10th Cir. 2010).
Under Oklahoma law, where the state long-arm statute provides for personal jurisdiction to
the full extent constitutionally permitted, due process principles govern the personal jurisdiction
inquiry. Shrader, 633 F.3d at 1239. The due process inquiry focuses on the existence of “minimum
contacts” with the forum state which may support either specific jurisdiction or general jurisdiction.
Id. In this case, no party asserts that there is general jurisdiction over the defendants and there are
no allegations or evidence which would support the exercise of general jurisdiction. Thus, the issue
before the Court is whether it has specific jurisdiction over the defendants.
For specific jurisdiction, “the ‘minimum contacts’ standard requires, first, that the out-ofstate defendant must have ‘purposefully directed’ its activities at residents of the forum state, and
second, that the plaintiff’s injuries must ‘arise out of’ the defendant’s forum-related activities.”
Dudnikov, 514 F.3d at 1070 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).
“Purposeful direction” requires: (1) an intentional action; (2) expressly aimed at the forum state; (3)
with knowledge that the brunt of the injury would be felt in the forum state. Dudnikov, 514 F.3d
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at 1072 (citing Calder v. Jones, 465 U.S. 783 (1984), and “[d]istilling Calder to its essence”). In
order for the plaintiff’s injuries to arise out of the purposeful direction of the defendant’s activities,
the defendant’s forum-directed activities must be the proximate cause of the plaintiff’s injuries, or
it must be said that but for the defendant’s forum-directed activities, the plaintiff’s injuries would
not have occurred. Dudnikov, 514 at 1078. Even if the “purposeful direction” and “arising out of”
conditions are met, the court must still consider whether the exercise of personal jurisdiction would
offend traditional notions of fair play and substantial justice. Id. at 1080.
Upon the Court’s review of the allegations of Plaintiff’s Complaint and statements in his
affidavit, quoted above, the Court finds that Plaintiff has failed to sustain his burden of establishing
a prima facie case of specific personal jurisdiction over the defendants. Plaintiff’s allegation in
paragraph 9 of his Complaint is wholly conclusory. Assuming the email referred to in Plaintiff’s
defamation claim, see Complaint at ¶ 11, meets the requirements of purposeful direction, Plaintiff’s
cause of action for defamation does not and cannot arise out of that email because defamation
requires an unprivileged publication to a third party. See Cardtoons, L.C. v. Major League Baseball
Players Ass’n., 335 F.3d 1161, 1166 (10th Cir. 2003). Plaintiff alleges that the email was “directed
to and published to persons who are not privy to the information contained in the email” but he does
not specify who those third persons are or where those third persons were located. Plaintiff,
therefore, has not shown that those emails were expressly aimed at the forum state, a requirement
of purposeful direction. The same can be said about Plaintiff’s later conclusory statement in
paragraph 11 of his Complaint that “other emails were sent and published which contained many
other untrue statements. ...” Emails extending the demand for return of Defendants’ investment, see
Complaint at ¶ 14, have not been alleged to be purposefully directed to residents of Oklahoma, and
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even if it can be inferred that they were directed to Plaintiff in Oklahoma, they cannot form the basis
of a defamation claim and there is no cognizable civil claim for extortion. See discussion, infra.
Plaintiff does not specify to whom the many emails were sent and published and in what state
the intended recipients resided, so he has not met the purposeful direction requirement as to those
emails. See Complaint, ¶ 17. Likewise, Defendants’ alleged communications with unspecified state
and federal agencies do not meet the “purposeful direction” requirement. See id.
As to Plaintiff’s mostly conclusory affidavit, Plaintiff does not consistently indicate that the
persons to whom emails were sent were located in Oklahoma; thus, his statements about those emails
cannot satisfy the purposeful direction requirement. He does attest that Defendants sent an email
containing “inaccurate assertions” about him and about OZ Forms Technologies, Inc. to at least one
person in Oklahoma, and that Defendants sent negative communications to banks in Oklahoma. But
even assuming such email and communications satisfy the purposeful direction requirement, Plaintiff
has not shown that any of his causes of action arise out of these contacts involving mere inaccurate
assertions and negative comments. Thus, Plaintiff has not met his burden of establishing specific
personal jurisdiction exists over the defendants.
III.

Failure to State Claims Upon Which Relief Can Be Granted
The defendants also seek dismissal of Plaintiff’s claims for defamation, extortion and civil

conspiracy pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state claims upon which relief can be
granted. The Court further addresses, in the alternative, these additional grounds for dismissal.
“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[ M]ere labels and
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conclusions, and a formulaic recitation of the elements of a cause of action will not suffice; a
plaintiff must offer specific factual allegations to support each claim.” Kansas Penn Gaming, LLC
v. Collins, 656 F.3d 1210, 1214 (10th Cir.2011) (internal quotation marks omitted). When evaluating
whether a complaint plausibly states a claim, the court must “disregard all conclusory statements of
law and consider whether the remaining specific factual allegations, if assumed to be true, plausibly
suggest the defendant is liable.” Id.
A.

Defamation

To recover for defamation, a private figure must prove: 1) a false and defamatory statement;
2) an unprivileged publication to a third party; 3) fault amounting at least to negligence on the part
of the publisher; and 4) either actionability of the statement irrespective of special damage, or the
existence of special damage caused by the publication. Tanique, Inc. v. State ex rel. Oklahoma
Bureau of Narcotics and Dangerous Drugs, 99 P.3d 1209, 1217 (Okla. Civ. App. 2004); Cardtoons,
L.C. v. Major League Baseball Players Association, 335 F.3d 1161, 1166 (10th Cir. 2003). The
allegedly false and defamatory statement must be “of and concerning” the plaintiff. See McCain v.
KTVY, Inc., 738 P.2d 960, 962 (Okla. Civ. App. 1987).
Even assuming that the August 12, 2013 email that Plaintiff has alleged is the subject of this
claim is false and defamatory, the statement that the “sales of OZ Forms Technologies, Inc. private
stock . . . were illegal” is not “of and concerning” Plaintiff but is of and concerning the entity named.
More importantly, Plaintiff has failed to identify the third parties to whom this allegedly defamatory
email was sent, and has failed to allege that the publication was unprivileged. Likewise, Plaintiff’s
allegations that “many other emails were sent and published which contained many untrue
statements” and his allegation that he “believes that many oral statements that the plant and inventory
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. . . do not exist and that Plaintiff is conducting a Ponzi scheme. . . .” are conclusory. The
allegations fail to identify to whom and when any of the emails and oral statements were sent or
made. Thus, Plaintiff has failed to state a plausible claim for relief for defamation.
B.

Extortion

Plaintiff’s second cause of action purports to be for extortion. All of the defendants have
moved to dismiss this claim on the ground that Oklahoma does not recognize a civil cause of action
for extortion. Defendants are correct. See Chapman v. Chase Manhattan Mortgage Corp., No. 04CV-0859, 2007 WL 2815426 (N.D. Okla. September 24, 2007) (unpublished op. (Oklahoma law
does not recognize either extortion or duress as civil causes of action.), citing Roberts v. Wells Fargo
AG Credit Corp., 990 F.2d 1169, 1174 (10th Cir. 1993)(Oklahoma law does not recognize an
independent tort action for duress). If New York law were applicable, the result would be the same.
See Minnelli v. Soumayah, 839 N.Y.S. 2d 727, 728 (2007) (declining to recognize a private right of
action for extortion or attempted extortion); Niagara Mohawk Power Corp. v. Testone, 708 N.Y.S.
2d 527, 529 (2000)(same). Plaintiff’s extortion claim, therefore, fails to state a claim upon which
relief can be granted.
C.

Civil Conspiracy

All defendants assert that Plaintiff’s allegations are insufficient to support a civil conspiracy
claim. Under Oklahoma law, to state a claim for civil conspiracy, a plaintiff must plead the
following elements: 1) a combination of two or more persons; 2) an object to be accomplished; 3)
a meeting of the minds on the object or course of action; 4) one or more unlawful overt acts; and 5)
damages as a proximate result thereof. See Gaylord Entertainment Co. v. Thompson, 958 P.2d 128,
148 (Okla. 1998); Hitch Enterprises, Inc. v. Cimarex Energy Co., 859 F. Supp. 2d 1249, 1268 (W.D.
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Okla. 2012). The Supreme Court of Oklahoma has said that “unlike its criminal counterpart, civil
conspiracy itself does not create liability.” Brock v. Thompson, 948 P.2d 279, 294 (Okla. 1997).
Rather, “[t]o be liable the conspirators must pursue an independently unlawful purpose or use an
independently unlawful means.” Id. There can be no liability for civil conspiracy where the act
complained of and the means employed are lawful. Id. Moreover, “a conspiracy between two or
more persons to injure another is not enough; an underlying unlawful act is necessary to prevail on
a civil conspiracy claim.” Roberson v. Paine Webber, Inc., 998 P.2d 193, 201 (Okla. Civ. App.
1999).
It may reasonably be inferred from Plaintiff’s allegations that two or more defendants
combined to seek return of their investment and/or $1.5 million. It may also reasonably be inferred
from Plaintiff’s allegations that two or more defendants agreed to a course of action to accomplish
that objective and committed one or more overt acts in pursuance of their objective. Plaintiff alleges
defendants sent an email demanding return of funds and communicated with state and federal
agencies. But seeking return of an investment and/or damages of $1.5 million is not alleged to be,
and is not per se illegal. Nor is communicating with federal or state agencies unlawful. Thus,
Plaintiff’s civil conspiracy claim fails to state a claim upon which relief can be granted under
Oklahoma law.
If New York law were applicable to this claim, the claim would still be subject to dismissal.
New York does not recognize civil conspiracy as an independent cause of action. See McCarthy v.
Weaver, 472 N.Y.S. 2d 64, 65 (1984)(there is no substantive tort of civil conspiracy); Niagara,,708
N.Y.S.2d at 529 (civil conspiracy and attempted extortion are not cognizable in New York).
Accordingly, Plaintiff has failed to allege a civil conspiracy claim upon which relief can be granted.
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IV.

Conclusion
In accordance with the foregoing, Defendants’ Motions to Dismiss [Doc. Nos. 14 and 15] are

GRANTED in their entirety, except to the extent Defendant Palozzi asserts that this case should be
dismissed or transferred based on forum non conveniens. Plaintiff’s Complaint is DISMISSED for
lack of subject matter jurisdiction. Alternatively, Plaintiff’s Complaint is dismissed for lack of in
personam jurisdiction over the defendants and pursuant to Fed. R. Civ. P. 12(b)(6) on grounds that
the Complaint fails to state claims upon which relief can be granted.
IT IS SO ORDERED this 1st day of July, 2014.

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