Heslep et al v. Americans For African Adoptions, Inc. et al
Filing
114
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT: It is ORDERED that Defendants' 109 Motion for Summary Judgment is granted in part as to Counts 1 and 3, and denied in part as to Counts 2, 4 and 6. The case remains on the Court's trial docket for 4/1/13. Signed by District Judge Irene M. Keeley on 3/11/13. (cnd)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
JAMES WILLIAM HESLEP and
CAREY WATERS HESLEP,
Plaintiffs,
v.
//
CIVIL ACTION NO. 1:11CV56
(Judge Keeley)
AMERICANS FOR AFRICAN
ADOPTION, INC. and
CHERYL CARTER-SHOTTS,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING-IN-PART AND DENYING-IN-PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
Pending before the Court is the motion for summary judgment
filed pursuant to Fed. R. Civ. P. 56 by the defendants, Cheryl
Carter-Shotts (“Carter-Shotts”) and Americans for African Adoption,
Inc. (“AFAA”) (collectively “the defendants”). For the reasons that
follow, the Court GRANTS-IN-PART and DENIES-IN-PART the defendants’
motion. (Dkt. No. 109).
I. Factual Background
In 2007, the plaintiffs, James Heslep (“Mr. Heslep”) and his
wife, Carey (“Mrs. Heslep”) (collectively “the plaintiffs” or “the
Hesleps”), decided to adopt a child from a foreign country. After
independently
researching
various
agencies
and
relying
on
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
representations and assurances made by Carter-Shotts, the Hesleps
selected AFAA, an Indiana-registered nonprofit organization led by
Carter-Shotts, to facilitate the adoption process. (Heslep Dep.).1
At the time they began working with AFAA and Carter-Shotts,
the Hesleps understood that AFAA had been operating an orphan
guardianship program in Uganda since 1991 (dkt. no. 110-5 at 2) in
association
with
a
local
social
worker
named
Joseph
Kagimu
(“Kagimu”). Although Kagimu never received what could be called a
salary, AFAA held him out to others as an “employee[]” and a member
of its “staff.” (Dkt. No. 110-19). It also granted him exclusive
possession of AFAA property, including a laptop computer, and
1
Both parties cite to the deposition of James Heslep, which was
recorded nonstenographically, throughout their briefing. To the extent
the Court was able to review portions of the deposition recording, it
provides general citations to the same within this opinion. It notes,
however, that the parties were required to provide the Court with a
transcript in order to use the deposition on a motion for, or a brief in
opposition to, summary judgment. See Fed. R. Civ. P. 32(c) (“Unless the
court orders otherwise, a party must provide a transcript of any
deposition testimony the party offers, but may provide the court with
testimony in nontranscript form as well.”); Fed. R. Civ. P. 32(c),
Advisory Committee’s Notes on 1993 Amendment (“Under this rule a party
may offer deposition testimony in any of the forms authorized under Rule
30(b) but, if offering it in a nonstenographic form, must provide the
court with a transcript of the portions so offered.”); Fed. R. Civ. P.
30(b), Advisory Committee’s Notes on 1993 Amendment (“A party choosing
to record a deposition only by videotape or audiotape should understand
that a transcript will be required by Rule 26(a)(3)(B) and Rule 32(c) if
the deposition is later to be offered as evidence at trial or on a
dispositive motion under Rule 56.”); see also L.R. Civ. P. 7.02(a) (“All
motions . . . shall be accompanied . . . by copies of depositions (or
pertinent portions thereof) . . . upon which the motion relies.”).
2
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
maintained a cooperative relationship with him for approximately
eight years. See (Dkt. No. 111-3 at 19). During this time, Kagimu
and his family personally cared for a number of the children
involved in AFAA’s guardianship program, and AFAA paid them for the
children’s lodging, meals and medical care. Id.
In 2007, Kagimu notified Carter-Shotts that, in a departure
from its past policy, the Ugandan government soon intended to allow
foreigners to adopt Ugandan orphans. (Dkt. No. 110-7 at 1). In
order to take advantage of this new adoption opportunity, CarterShotts directed Kagimu to incorporate AFAA within Uganda. By the
end of 2007, Kagimu had sent Carter-Shotts a “Reservation of Name”
form (dkt. no. 110-10), as well as a certificate of incorporation
issued to AFAA Uganda by the Republic of Uganda. (Dkt. No. 110-12).
Based on these documents, Kagimu advised Carter-Shotts that AFAA
could proceed to conduct adoptions in Uganda. (Dkt. No. 110-7 at
1).
On November 6, 2007, the Hesleps, working with AFAA, agreed to
serve as a test case for its nascent Ugandan adoption program.
(Dkt. No. 110-15, 110-16). According to AFAA’s plan, adoptive
families such as the Hesleps would first obtain guardianship of an
3
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
orphan child from the Ugandan government and then adopt the child
in the United States. (Dkt. No. 110-15).
The parties dispute when and how the Hesleps learned from AFAA
that a young Ugandan boy named James K. was available for adoption.
Relying on a form completed by Kagimu that Carter-Shotts or AFAA
forwarded to the Hesleps (dkt. no. 110-17), the defendants maintain
that the Hesleps first learned about James K. on November 10, 2007.
(Dkt. No. 110 at 4). The Hesleps dispute this, claiming they first
learned
about
James
K.
on
May
10,
2008,
when
Carter-Shotts
telephoned to tell them about him. (Dkt. No. 111 at 3). In any
event, it is undisputed that, after learning about James K., the
Hesleps agreed to adopt and sponsor him pursuant to AFAA’s plan.
That plan obligated them to pay AFAA $200.00 per month to provide
James K. with housing, food, medical care, and schooling. (Heslep
Dep.).
Mr. Heslep contends that, during this process, Carter-Shotts
told him James K. was approximately eighteen months old, his
biological
father
had
been killed
on
military
duty,
and
his
biological mother had died in an accident. (Heslep Dep.). He claims
that Carter-Shotts had not investigated James K.’s background or
4
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
orphan status when she made these representations. (Dkt. Nos. 111
at 3-4, 111-3 at 30-31).
Later, when AFAA provided James K.’s birth certificate to the
Hesleps, they learned for the first time that he was older than the
eighteen months represented by Carter-Shotts. (Dkt. No. 111-4). An
AFAA employee acknowledged the inaccuracy but stated: “[CarterShotts] wanted me to refer you to her 12/16/08 email, where she
posted what Joseph [Kagimu] told her about the [birth certificate].
. . . We know [the age] is not accurate, but once it’s been issued,
it goes.” Id.
Throughout 2008 and 2009, Carter-Shotts traveled to Uganda on
several occasions to investigate the reason for delays in the
Ugandan adoption process. While there, in April 2008, she met with
an attorney retained by Kagimu to assist in the adoption process.
(Dkt. No. 110-7 at 2). Dissatisfied with that attorney’s services,
Carter-Shotts directed Kagimu to replace him. Id. Pursuant to
Carter-Shotts’s directive, Kagimu selected Hamza Sebuta (“Sebuta”),
who later informed Carter-Shotts that Kagimu was the source of the
delays in the adoption process. (Dkt. No. 110-20 at 2).
Nearly two years after first agreeing to adopt a Ugandan child
with the assistance of AFAA, the Hesleps severed their ties with
5
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
the agency on September 8, 2009, giving as their reason CarterShotts’ poor communication and financial mismanagement of AFAA.
(Dkt. No. 110-26 at 1). Mr. Heslep informed Carter-Shotts “we want
no further contact with you or AFAA.” Id.
In an effort to advance their adoption of James K. without the
assistance
of
AFAA,
the
Hesleps
contacted
Kagimu
and
Sebuta
directly (dkt. nos. 110-23, 110-24), and traveled to Uganda on
September 11, 2009, where Kagimu placed James K. in their care. Six
days
later,
on
September
17,
2009,
relying
on
documentation
prepared by Kagimu and Sebuta that purported to establish James
K.’s orphan status, a Ugandan court named the Hesleps as James K.’s
legal guardians. (Dkt. No. 110-31 at 5).
After obtaining legal guardianship, the Hesleps applied to the
United States Embassy in Kampala, Uganda for an IR-4 visa for
James K. (Dkt. No. 110-42 at 1). Alerted by discrepancies in the
paperwork provided by Sebuta and Kagimu, however, the Embassy
investigated James K.’s background and concluded that “Kagimu [had]
forged documents related to the death certificates” of James K.’s
parents. (Dkt. No. 110-38 at 1). Those death certificates indicated
that both parents were “stone minners [sic]” who had died of
natural causes. Id. Mr. Heslep, however, repeating information
6
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
provided by Carter-Shotts, advised the Embassy that James K.’s
father had been killed while serving in the military, and that his
mother had died as the result of an accident. (Heslep Dep.). Given
the discrepancies in James K.’s case history, the Embassy froze all
AFAA-facilitated adoptions in Uganda. Id.
Still intent on adopting James K., the Hesleps turned to the
United States Citizenship and Immigration Services (“USCIS”) to
secure his legal entry into the United States via an I-600 Petition
to Classify Orphan as an Immediate Relative. (Dkt. No. 111-8 at 1).
On February 12, 2010, USCIS issued a Notice of Intent to Deny
(“NOID”) the Hesleps’ I-600 petition because its own investigation
concluded that the Hesleps had failed to establish James K’s status
as a true orphan. Id. at 3.
The NOID concluded that “evidence confirms that AFAA knowingly
and admittedly provided false death certificates for the birth
parents of” James K. Id. Additionally, it stated that AFAA “had no
legal standing in Ugandan Courts, and had no legal authority to
care for, house, or assist in this adoption.” Id. USCIS issued
nearly identical NOIDS to three other families who also had been
attempting to adopt Ugandan children with AFAA’s help. (Dkt. No.
111-9). After their own investigation confirmed that James K. was
7
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
not an orphan, the Hesleps relinquished guardianship and returned
him to the care of his maternal grandmother. (Dkt. No. 111 at 7-8).
Meanwhile, due to the issues regarding AFAA’s corporate status
that
were
raised
by
the
Ugandan
court
during
the
Hesleps’
guardianship hearing, Carter-Shotts inquired of Sebuta and learned
that AFAA’a Ugandan corporate registration was improper. (Dkt. No.
110-32 at 1). Although she flatly denies any prior knowledge about
this issue, Carter-Shotts does acknowledge that Kagimu told Sebuta
she in fact knew of it. Id. Ultimately, on September 30, 2009,
Carter-Shotts properly re-registered AFAA as a Ugandan corporation
(dkt. no. 110-33 at 15), and it continues to operate an orphanage
in Uganda to this day. (Dkt. No. 110 at 10).
II. Procedural Background
The Hesleps sued AFAA, Carter-Shotts, and AFAA’s board of
directors on April 25, 2011. Their complaint asserted nine causes
of action: (1) violations of the Racketeer Influenced and Corrupt
Organizations
(“RICO”)
Act,
18
U.S.C.
§§
1961
and
1962,
(2) fraudulent misrepresentation and inducement, (3) intentional
infliction of emotional distress (“outrage”), (4) negligent hiring,
(5) negligent supervision, (6) negligent retention, (7) negligent
administration of a program, (8) negligent infliction of emotional
8
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
distress (“NIED”), and (9) punitive damages. Earlier in this case,
the Court dismissed AFAA’s board of directors as well as Counts
Five, Seven, and Eight of the complaint. The Hesleps’ claims for
RICO violations, fraud, outrage, and negligent hiring and retention
remain and are the subject of the pending motion for summary
judgment.
III. Legal Standard
Summary
documents,
judgment
is
electronically
declarations,
stipulations
appropriate
stored
.
.
where
the
information,
.,
admissions,
“depositions,
affidavits
or
interrogatory
answers, or other materials” show that “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed R. Civ. P. 56(c)(1)(A), (a). When ruling on
a motion for summary judgment, the Court reviews all the evidence
“in the light most favorable” to the nonmoving party. Providence
Square Assocs., L.L.C. v. G.D.F., Inc., 211 F.3d 846, 850 (4th Cir.
2000). The Court must avoid weighing the evidence or determining
the truth and limit its inquiry solely to a determination of
whether genuine issues of triable fact exist. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986).
The moving party bears the initial burden of informing the
9
HESLEP v. AFAA, INC. ET AL
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MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
Court
of
the
basis
for
the
motion
and
of
establishing
the
nonexistence of genuine issues of fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). Once the moving party has made the
necessary showing, the nonmoving party “must set forth specific
facts showing that there is a genuine issue for trial.” Anderson,
477 U.S. at 256 (internal quotation marks and citation omitted).
The “mere existence of a scintilla of evidence” favoring the
nonmoving party will not prevent the entry of summary judgment; the
evidence
must
be
such
that
a
rational
trier
of
fact
could
reasonably find for the nonmoving party. Id. at 248–52.
IV. Analysis
A. Count One - RICO, 18 U.S.C. § 1962(c)
AFAA
and
Carter-Shotts
contend
that
the
Hesleps’
civil
racketeering claims in Count One of the complaint fail both as a
matter of law and for want of any evidentiary support. Subsections
(a) and (c) of 18 U.S.C. § 1964 of the RICO Act provide civil
remedies for violations of § 1962(c), which provides:
It shall be 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 unlawful debt.
10
HESLEP v. AFAA, INC. ET AL
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MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
Id. § 1962(c). Thus, the Hesleps’ RICO claim requires them to plead
and prove the following four elements: (1) conduct (2) of an
“enterprise”, (3) through a pattern (4) of racketeering activity.
Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985).
The Court turns first to the defendants’ argument that the
Hesleps have failed to establish a “person” distinct from the RICOviolating “enterprise.” “[T]o establish liability under § 1962(c),
one must allege and 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); see also United
States v. Computer Sci. Corp., 689 F.2d 1181, 1190 (4th Cir. 1982),
overruled in part by Busby v. Crown Supply, Inc., 896 F.2d 833 (4th
Cir. 1990) (en banc) (“We conclude that ‘enterprise’ was meant to
refer to a being different from, not the same as or part of, the
person whose behavior the act was designed to prohibit, and,
failing that, to punish.”). An “enterprise” consists of “any
individual, partnership, corporation, association, or other legal
entity, and any union or group of individuals associated in fact
11
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
although not a legal entity.” 18 U.S.C. § 1961(4).2 In other words,
RICO “liability depends on showing that the defendants conducted or
participated in the conduct of the ‘enterprise’s affairs,’ not just
their own affairs.” Myers v. Lee, No. 1:10CV131, 2010 WL 3745632,
at *3 (E.D. Va. Sept. 21, 2010) (quoting Reves v. Ernst & Young,
507 U.S. 170, 185 (1993)) (emphasis in the original).
The Hesleps claim they have established a legally distinct
“enterprise” under Cedric Kushner, arguing that the facts of this
case “are directly analogous to the facts presented” there. (Dkt.
No. 111 at 12). In Cedric Kushner, however, the Supreme Court
considered a claim that a “corporate employee [was] the ‘person’
and the corporation [was] the ‘enterprise,’” 533 U.S. at 164
(emphasis
added),
and
held
that
the
distinctness
element
of
§ 1962(c) is satisfied when a “corporate employee unlawfully
conducts the affairs of the corporation of which he is the sole
owner – whether he conducts those affairs within the scope, or
beyond the scope, of corporate authority.” 533 U.S. at 166. The
Hesleps’ complaint, in contrast, alleges that AFAA is the “person”
2
For RICO purposes, a corporation may constitute a “person.”
Cedric Kushner, 533 U.S. at 163 (“the employee and the corporation are
different ‘persons,’ even where the employee is the corporation’s sole
owner”).
12
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
(i.e., the defendant) for RICO purposes (dkt. no. 3 at ¶ 77), and
that an “association in fact” formed by Carter-Shotts, Kagimu, AFAA
board members, and AFAA is the “enterprise.” Id.
The
Hesleps,
in
short,
misapprehend
Cedric
Kushner’s
applicability in this case. In order to fall squarely within the
four corners of Cedric Kushner, the Hesleps would have had to
allege that Carter-Shotts, or another AFAA employee, was the
“person” and that AFAA was the “enterprise,” which they failed to
do.
Moreover,
the
Supreme
Court
in
Cedric
Kushner
expressed
dubiousness about the sort of RICO relationship alleged here,
distinguishing “earlier Second Circuit precedent concern[ing] a
claim that a corporation was the ‘person’ and the corporation,
together with all its employees and agents, were the ‘enterprise,’”
and stating that “[i]t is less natural to speak of a corporation as
‘employed by’ or ‘associated with’ this latter oddly constructed
entity.” 533 U.S. at 164. Contrary to the plaintiffs’ arguments,
then, the
RICO
relationship
alleged
in
the complaint
is
not
analogous to that in Cedric Kushner. Id.
The
Hesleps
also
have
provided
no
evidence
tending
to
establish that the alleged “association in fact” composed of AFAA,
Carter-Shotts, Kagimu, and AFAA board members acted with a common
13
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
purpose and therefore was distinct from AFAA. See (Dkt. No. 111 at
12). A common purpose is “essential to proof of such an entity’s
‘separate’ existence.” United States v. Griffin, 660 F.2d 996, 999
(4th Cir. 1981). Indeed, the Hesleps’ response cuts against such a
conclusion. They represent that all members of the “association in
fact” acted within the scope of their employment with AFAA, (dkt.
No. 111 at 12), and repeatedly conflate the actions taken by the
alleged
“association
in
fact”
with
those
of
AFAA,
the
RICO
“person.” See generally Arguaga–Collazo v. Oriental Federal Savings
Bank, et al., 913 F.2d 5, 6 (1st Cir. 1990) (Breyer, C.J.) (“[A]n
‘enterprise’ does not ‘conduct and participate . . . in the conduct
of’ that same enterprise’s affairs.”) (emphasis omitted).
Essentially, as the Hesleps have presented an “enterprise”
that is simply AFAA by a different a name, they accuse AFAA of
conducting its own affairs – and not those of a distinct enterprise
– in a RICO-forbidden way. Such an allegation, however, will not
satisfy the statute’s distinctness requirement. See Myers, 2010 WL
3745632, at *3 (quoting Reves, 507 U.S. at 185); see also Whelan v.
Winchester Production Co., 319 F.3d 225, 229 (5th Cir. 2003) (“That
officers or employees of a corporation, in the course of their
employment, associate to commit predicate acts does not establish
14
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
an association-in-fact enterprise distinct from the corporation.”);
In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales
Practices, & Products Liab. Litig., 826 F. Supp. 2d 1180, 1202
(C.D. Cal. 2011) (allegations that “[d]efendants are associated in
a
manner
directly
related
to
their
own
[fraudulent]
primary
business activities” did not satisfy distinctness requirement);
Myers, 2010 WL 3745632, at *4 (distinctness requirement unmet where
there was “complete overlap between the defendants, their alleged
agents, and the enterprise”); cf. Living Designs, Inc. v. E.I.
Dupont de Nemours & Co., 431 F.3d 353, 362 (9th Cir. 2005) (holding
that “association in fact” litigation enterprise formed by the
corporation — the RICO person — and its legal counsel was a
distinct entity).
While the Hesleps’ allegations at the pleading stage may have
been sufficient to withstand an earlier motion to dismiss, they
have wholly failed to meet their burden at summary judgment. Rather
than “set[ting] forth specific facts showing that there is a
genuine issue for trial,” Anderson, 477 U.S. at 256, the Hesleps
merely assert that:
Plaintiffs alleged that multiple individuals acted
through the guise of the corporate defendant to commit
various criminal acts. Testimony elicited from Defendant
Shotts and documents discovered by the Plaintiff support
15
HESLEP v. AFAA, INC. ET AL
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MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
the contention that Shotts, Kagimu, Sebuta, and the
members of the board of directors all acted within the
scope of their employment with AFAA to further a RICO
enterprise.
(Dkt. 111 at 12).
“Unsubstantiated allegations carry no probative weight in
summary judgment proceedings.” Cypert v. Indep. Sch. Dist. No. I050 of Osage County, 661 F.3d 477, 481 (10th Cir. 2011). The
Hesleps may not rest on allegations in their complaint when the
defendants have clearly pointed to the absence of any evidence that
the “association in fact” shared a common purpose distinct from
that of AFAA, the RICO “person.” The plaintiffs have cited to no
statement in Carter-Shotts’ deposition, nor identified any exhibit
in the eleven attached to their response brief, that would tend to
establish that the constituents of the association actually shared
a common purpose and maintained an existence that was in any way
distinct from AFAA itself. See Fed. R. Civ. P. 56(c)(1) (“A party
asserting that a fact cannot be or is genuinely disputed must
support the assertion by [] citing to particular parts of materials
in the record . . . .”).
At bottom, the Hesleps have not raised a genuine issue of
material fact as to the common purpose of the alleged “association
in fact” that would tend to establish an “enterprise” distinct from
16
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
AFAA. Because “[c]ourts are in agreement that for the purposes of
liability under Section 1962(c), a RICO person must be distinct
from the RICO enterprise,” Myers, 2010 WL 3745632, at *3 (citing
Palmetto State Med. Center, Inc. v. Operation Lifeline, 117 F.3d
142, 148 (4th Cir. 1997)), the defendants are entitled to summary
judgment as to Count One, RICO.
B. Count Two - Fraud
As to Count Two of the Complaint, Fraud, the defendants assert
that there is no material fact in dispute concerning the allegedly
fraudulent nature of seven statements made to the Hesleps by
Carter-Shotts and AFAA. The Hesleps contend the factual record
supports their claim.
Under West Virginia law, the essential elements in an action
for fraud are as follows:
(1) that the act claimed to be fraudulent was the act of
the defendant or induced by him; (2) that it was material
and false; that plaintiff relied upon it and was
justified under the circumstances in relying upon it; and
(3) that he was damaged because he relied upon it.
Syl. pt. 1, Lengyel v. Lint, 280 S.E.2d 66, 67 (W. Va. 1981).
“Actual fraud is intentional, and consists of intentional deception
to induce another to part with property or to surrender some legal
17
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MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
right, and which accomplishes the end designed.” Stanley v. Sewell
Coal Co., 285 S.E.2d 679, 683 (W. Va. 1981).
The crux of the defendants’ argument is that Carter-Shotts
acted in reasonable reliance on Kagimu’s misrepresentations and
that she, and therefore AFAA, never intentionally sought to deceive
the Hesleps about James K.’s status as an orphan or AFAA’s ability
to place lawful adoptions in Uganda. The Hesleps, however, point to
more than a scintilla of evidence from which a reasonable jury
could conclude that Carter-Shotts and AFAA intentionally deceived
them. First,
contention
the
that
NOID issued
statements
by
by
USCIS
supports
Carter-Shotts
the
Hesleps’
concerning
AFAA’s
ability and authority to conduct Ugandan adoptions and James K.’s
orphan status were patently false. (Dkt. No. 111-8). Second, AFAA
and
Carter-Shotts’
acceptance
of
James
K.’s
inaccurate
birth
certificate raises a reasonable inference that the defendants may
have been aware of misrepresentations on other important documents
pertaining to the adoption of James K. (Dkt. No. 111-4).
Nor is the Hesleps’ claim doomed by the fact that AFAA never
guaranteed them a successful adoption. Considering the findings in
the NOID regarding AFAA’s legal status and inability to place
lawful adoptions in Uganda, a reasonable jury could conclude that
18
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
Carter-Shotts
and
AFAA
intentionally
deceived
the
Hesleps
by
leading them to believe AFAA could “competently and legally handle
the legal process of a Ugandan adoption.” (Heslep Dep.). In short,
there are genuine issues of material fact about the intentionally
deceptive nature of certain acts and statements by AFAA and CarterShotts. The defendants therefore are not entitled to summary
judgment as to Count Two, Fraud.
C. Count Three - Outrage
As to Count Three, Outrage, the defendants assert that the
Hesleps
have
requisite
no
intent
evidence
to
that
inflict
Carter-Shotts
emotional
acted
distress.
with
They
the
further
contend that the record is replete with evidence of Carter-Shotts’
attempts to assist the Hesleps even after learning of Kagimu’s
deception. The Hesleps’ sole response to this argument is to
narratively describe the depth of their emotional despair following
the loss of James K.
To state a claim of outrage in West Virginia, a plaintiff must
establish the following four elements:
(1) that the defendant’s conduct was atrocious,
intolerable, and so extreme and outrageous as to exceed
the bounds of decency; (2) that the defendant acted with
the intent to inflict emotional distress, or acted
recklessly when it was certain or substantially certain
19
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
emotional distress would result from his conduct; (3)
that the actions of the defendant caused the plaintiff to
suffer emotional distress; and (4) that the emotional
distress suffered by the plaintiff was so severe that no
reasonable person could be expected to endure it.
Travis v. Alcon Labs., Inc., 504 S.E.2d 419, 425 (W. Va. 1998).
The “tort of outrage is a difficult fact pattern to prove.”
Garrett v. Viacom, Inc., No.1:03CV22, 2003 WL 22740917, at *3
(N.D.W. Va. Aug. 27, 2003). West Virginia’s highest court has
characterized the tort as a “slippery beast, which can easily get
out of hand without firm judicial oversight.” Tanner v. Rite Aid of
West Virginia, Inc., 461 S.E.2d 149, 157 (W. Va. 1995) (quoting
Keyes v. Keyes, 392 S.E.2d 693, 696 (W. Va. 1990)).
The Hesleps’ failure to respond to the defendants’ argument is
determinative of the matter. Rather than address the issue of
Carter-Shotts’
intent,
the
Hesleps
elected
to
emphasize
the
severity of their distress at the loss of James K. While one may
certainly sympathize with the Hesleps’ plight, the severity of
their distress is but the last of four separate elements necessary
to prove the tort of outrage. In the absence of any argument or
evidence to the contrary, then, the Court is left with a gap in the
record and the undisputed evidence that, throughout 2008 and 2009,
20
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
Carter-Shotts and AFAA staff traveled to Uganda several times in an
effort to assist Kagimu with the adoption process.
Therefore, the Hesleps have failed to meet their burden as to
the second element of intent, see Anderson, 477 U.S. at 256, and
the defendants are entitled to summary judgment as to Count Three,
Outrage.
D. Counts Four and Six: Negligent Hiring and Retention
Counts Four and Six of the Complaint allege negligent hiring
and retention. According to the defendants, these claims fail
because, under West Virginia’s four-factor test for respondeat
superior, see Syl. pt. 5, Paxton v. Crabtree, 400 S.E.2d 245 (W.
Va. 1990), the Hesleps have failed to establish that Kagimu was an
employee of AFAA. The Hesleps challenge this conclusion, contending
there are material facts in dispute about Kagimu’s employment
status.
West Virginia recognizes a cause of action based on negligent
hiring and retention. McCormick v. W. Va. Dep’t of Pub. Safety, 503
S.E.2d 502, 506–07 (W. Va. 1998); State ex rel. West Virginia State
Police v. Taylor, 499 S.E.2d 283, 289 n. 7 (W. Va. 1997). In order
to determine whether a defendant has negligently hired and retained
an employee, a court should consider the following:
21
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
when the employee was hired or retained, did the employer
conduct a reasonable investigation into the employee’s
background vis a vis the job for which the employee was
hired and the possible risk of harm or injury to
co-workers or third parties that could result from the
conduct of an unfit employee? Should the employer have
reasonably foreseen the risk caused by hiring or
retaining an unfit person?
McCormick,
503
S.E.2d
at
506.
Thus,
an
employer-employee
relationship is a necessary element of both the negligent hiring
and retention causes of action.
Whether an employer-employee relationship exists depends on
several factors: “(1) Selection and engagement of the servant; (2)
Payment of compensation; (3) Power of dismissal; and (4) Power of
control. The first three factors are not essential to the existence
of
the
relationship;
the
fourth,
the
power
of
control,
is
determinative.” Syl. pt. 5, Paxton, 400 S.E.2d at 245. Proof of
such
a
relationship
may
be
“inferred
from
the
facts
and
circumstances, including conduct.” Womack v. Wells Fargo Bank,
N.A., No. 1:11CV104, 2011 U.S. Dist. LEXIS 154324 (N.D.W. Va. Nov.
7, 2011) (quoting General Elec. Credit Corp. v. Fields, 133 S.E.2d
780, 783 (W. Va. 1963)).
(1)
22
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
Regarding the first factor, selection and engagement, the
defendants argue that AFAA never actually selected Kagimu because
he was the one who sought out AFAA. (Dkt. No. 110-6). While there
is evidence that may have been the case initially, AFAA clearly
formed some type of relationship with Kagimu that lasted nearly
eight years. Cf. Cunningham v. Herbert J. Thomas Mem’l. Hosp.
Ass’n, 737 S.E.2d 270 (W. Va. 2012) (per curiam) (finding selection
factor unsatisfied where independent contractors, not defendant
hospital, selected physicians); France v. S. Equip. Co., 689 S.E.2d
1, 7 (W. Va. 2009) (finding selection factor unsatisfied where the
defendant did not select sub-contractor of general contractor).
AFAA not only chose to associate with Kagimu over an extended
period of time, there also is more than a scintilla of evidence
that it held him out to prospective adoptive families, including
the Hesleps, as an AFAA employee. (Dkt. No. 111-1). Thus, a
reasonable jury could conclude that AFAA selected and engaged
Kagimu, despite the fact that it was he who first approached the
organization.
(2)
As to the second factor, compensation, the defendants contend
that AFAA never paid Kagimu a salary. Carter-Shotts, however,
23
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
testified that AFAA gave Kagimu a computer, printer, and travel
money. (Dkt. No. 111-3 at 19, 24). Additionally, AFAA housed foster
children with Kagimu and paid him at least a portion of the
children’s
sponsorship
fees.
Id.
at
19.
Furthermore,
in
its
records, AFAA claimed fifty-one paid, African employees in 2009.
Id. While Carter-Shotts testified that Kagimu was the sole AFAA
country representative who did not receive a salary for his efforts
on behalf on AFAA, the fact that this situation is such an anomaly
among the AFAA’s African affiliates could, when all reasonable
inferences are drawn in favor of the Hesleps, arouse suspicion in
the mind of a reasonable juror. Therefore, a question of material
fact exists about whether the benefits provided to Kagimu by AFAA
served as a compensation.
(3)
With regard to the third factor, power of dismissal, the
defendants’ circular argument that AFAA could not terminate Kagimu
because
it
contention
never
that
employed
AFAA
could
him
not
is
unpersuasive.
terminate
Kagimu
As
to
their
because
he
intimidated Carter-Shotts and controlled the Ugandan orphans who
were placed in AFAA’s care, the Hesleps have offered an effective
rebuttal: Carter-Shotts’s report to an AFAA listserve on November
24
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
16, 2009, that she had “two new people in mind that [she] believe[d
would] do a good job as a country representative and a deputy
assistant.” (Dkt. No. 110-44 at 3). Although her internet post did
not specifically mention Kagimu, when all inferences are drawn in
favor of the Hesleps, a reasonable jury could conclude that CarterShotts not only had the power but also the intent to terminate
AFAA’s relationship with Kagimu and replace him as AFAA’s Uganda
country representative.
(4)
As to the fourth and most important factor, control, the
defendants emphasize that Carter-Shotts exerted no control over
Kagimu’s actions. They focus on his failure to comply with her
directions to register AFAA as an Ugandan organization, to improve
the organization of the AFAA-Uganda operation, and, later, to cease
communicating
directly
with
AFAA-affiliated
families.
The
defendants also offer Carter-Shotts’ testimony that Kagimu told her
he does not work for AFAA, but rather with AFAA. (Dkt. No. 110-43
at 11). In response, the Hesleps argue that AFAA and Carter-Shotts
issued numerous instructions to Kagimu regarding the hiring of
Ugandan staff, identification of orphaned children, preparation of
25
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
documents, and interaction with government officials to pursue
international adoptions.
Despite Kagimu’s alleged statement to the contrary, the power
of attorney that AFAA provided to the Hesleps in 2008 (dkt. no.
111-1) supports the inference that AFAA held Kagimu out as its
employee and staff member. On its face, this document contradicts
Carter-Shotts’ assertion that she lacked the ability to control
Kagimu. Further evidence of control also can be found in the
AFAA/Uganda Program statement that AFAA had worked in Uganda since
1991 “with direction from the US and in-country Ugandan social
worker.” (Dkt. No. 110-5 at 2). While that statement alone might
not be determinative, when considered together with all the other
evidence in the record of AFAA and Kagimu’s relationship, it could
lead a reasonable jury to conclude that AFAA exerted control over
Kagimu’s activities in Uganda. That other evidence includes the
specific instructions Carter-Shotts issued to Kagimu on several
occasions, directing him, for example, to take all Ugandan foster
children for medical tests to determine their ages. (Dkt. No. 11011 at 1). She also instructed him to fire one attorney and hire
another.
(Dkt. No. 110-7 at 2).
26
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
At bottom, the evidence regarding the determinative issue of
whether Kagimu was an employee or independent contractor of AFAA is
in conflict. The Supreme Court of Appeals of West Virginia has held
that a defendant has the “burden of establishing that he neither
controlled nor had the right to control the work, and if there is
a conflict in the evidence and there is sufficient evidence to
support a finding of the jury, the determination of whether an
independent contractor relationship existed is a question for jury
determination.” Syl. Pt. 6, Cunningham, 737 S.E.2d 270 (quoting
Syl. pt. 1, Sanders v. Georgia-Pacific Corp., 225 S.E.2d 218 (W.
Va. 1976)); see also Rawls v. Associated Materials, LLC, No.
1:10CV01272, 2012 WL 3852875, at *4 (S.D.W. Va. Sept. 5, 2012)
(“Whether
an
agency
relationship
exists
is
a
factual
question.”(citing Harper v. Jackson Hewitt, Inc., 706 S.E.2d 63, 76
(W. Va. 2010)).
Here,
the
Hesleps
have
proffered
conflicting
evidence
concerning whether AFAA and Carter-Shotts exercised sufficient
control over Kagimu to satisfy the fourth factor from Paxton.
Accordingly, the defendants are not entitled to summary judgment as
to Counts Four and Six.
27
HESLEP v. AFAA, INC. ET AL
1:11CV56
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]
V. CONCLUSION
In conclusion, for the reasons discussed, the Court:
1.
GRANTS
IN
PART
the
defendants’
motion
for
summary
judgment (dkt. no. 109) as to Counts One and Three;
2.
DENIES
IN
PART
the
defendants’
motion
for
summary
judgment (dkt. no. 109) as to Counts Two, Four, and Six.
This case remains on the Court’s trial docket for Monday, April 1,
2013.
It is so ORDERED.
The Court directs the Clerk of Court to transmit copies of
this Order to counsel of record.
DATED: March 11, 2013.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
28
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