HSBC Bank USA, National Association v. Resh et al
Filing
506
MEMORANDUM OPINION AND ORDER for the foregoing reasons, Lawyer's Title Insurance Corporation, Helen Sullivan, and Realty Concepts, Ltd.'s 423 Joint Motion to Dismiss or Strike Fourth Party Complaint is GRANTED; LubeCenter Sales, Inc.' ;s 456 Motion to Dismiss for Absence of Personal Jurisdiction is GRANTED; Upland Real Estate Group, Inc.'s 460 Motion to Strike Direct Fourth Party Complaint Against Upland Real Estate Group, Inc. Pursuant to Rule 14(a)(3) is DENIED AS MOOT; LubeCenter Sales, Inc.'s 462 Motion to Dismiss the Purported Direct Fourth Party Complaint Filed by Defendants/Third-Party Plaintiffs Ron Resh and Valarie Reynolds-Resh Pursuant to Rule 12(b)(6) is GRANTED IN PART; Upland Real Estate Group, I nc.'s 463 Motion to Dismiss Defendants/Third-Party Plaintiffs' Direct Fourth Party Complaint Against Upland Real Estate Group, Inc. is GRANTED IN PART; Upland Real Estate Group, Inc.'s 466 Motion to Dismiss Fourth Party Complaint o f Realty Concepts, Ltd., Fourth Party Complaint of Lawyer's Title Insurance Corporation and Fourth Party Complaint of Helen Sullivan is GRANTED; LubeCenter Sales, Inc.'s 468 Motion to Dismiss Fourth Party Complaint of Realty Concepts, Ltd ., Fourth Party Complaint of Lawyer's Title Insurance Corporation and Fourth Party Complaint of Helen Sullivan is DENIED AS MOOT; and Upland Real Estate Group, Inc.'s 470 Motion to Reconsider Order Granting Consent Motion to Amend Third-P arty Answer for Sole Purpose of Filing Fourth Party Complaint and to Strike Complaints is DENIED AS MOOT; the 399 , 404 , 405 and 407 fourth-party complaints are STRICKEN and LubeCenter Sales, Inc. and Upland Real Estate Group, Inc. are dismissed from this matter. Signed by Judge Robert C. Chambers on 8/12/2015. (cc: attys; any unrepresented parties) (mkw)
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
HSBC BANK USA,
NATIONAL ASSOCIATION,
Plaintiff and Counter Defendant,
v.
CIVIL ACTION NO. 3:12-cv-00668
RON RESH and
VALARIE REYNOLDS-RESH,
Defendants; Counter Claimants; Counter Defendants;
and Third Party Plaintiffs,
v.
REALTY CONCEPTS, LTD;
HELEN SULLIVAN; and
LAWYER’S TITLE INSURANCE CORPORATION,
Third Party Defendants; Counter Claimants; Cross Claimants; and
Cross Defendants,
and
ANDREW BROSNAC,
Third Party Defendant and Cross Defendant.
REALTY CONCEPTS, LTD.;
HELEN SULLIVAN;
RON RESH; and
VALARIE REYNOLDS-RESH,
Fourth Party Plaintiffs,
v.
UPLAND REAL ESTATE GROUP, INC.;
LUBECENTER SALES, INC.,
Fourth Party Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court are Lawyer’s Title Insurance Corporation, Helen Sullivan, and
Realty Concepts, Ltd.’s Joint Motion to Dismiss or Strike Fourth Party Complaint (ECF No. 423),
LubeCenter Sales, Inc.’s Motion to Dismiss for Absence of Personal Jurisdiction (ECF No. 456),
Upland Real Estate Group, Inc.’s Motion to Strike Direct Fourth Party Complaint Against Upland
Real Estate Group, Inc. Pursuant to Rule 14(a)(3) (ECF No. 460), LubeCenter Sales, Inc.’s Motion
to Dismiss the Purported Direct Fourth Party Complaint Filed by Defendants/Third-Party
Plaintiffs Ron Resh and Valarie Reynolds-Resh Pursuant to Rule 12(b)(6) (ECF No. 462), Upland
Real Estate Group, Inc.’s Motion to Dismiss Defendants/Third-Party Plaintiffs’ Direct Fourth
Party Complaint Against Upland Real Estate Group, Inc. (ECF No. 463), Upland Real Estate
Group, Inc.’s Motion to Dismiss Fourth Party Complaint of Realty Concepts, Ltd., Fourth Party
Complaint of Lawyer’s Title Insurance Corporation and Fourth Party Complaint of Helen Sullivan
(ECF No. 466), LubeCenter Sales, Inc.’s Motion to Dismiss Fourth Party Complaint of Realty
Concepts, Ltd., Fourth Party Complaint of Lawyer’s Title Insurance Corporation and Fourth Party
Complaint of Helen Sullivan (ECF No. 468), and Upland Real Estate Group, Inc.’s Motion to
Reconsider Order Granting Consent Motion to Amend Third-Party Answer for Sole Purpose of
Filing Fourth Party Complaint (ECF No. 470).
I.
Introduction
Defendants Ron Resh and Valerie Reynolds-Resh (“the Reshes”), and Third-Party
Defendants Lawyer’s Title Insurance Corporation, Helen Sullivan, and Realty Concepts, Ltd.,
(“Third-Party Defendants”), have filed fourth-party complaints against LubeCenter Sales, Inc.
2
(“LubeCenter”) and Upland Real Estate Group, Inc. (“Upland”).
All of the claims in the
fourth-party complaints against LubeCenter and Upland arise from a complex transaction between
the Reshes, Peanut Oil, LLC (“Peanut Oil”), and BLX Capital, LLC (“BLX”), the predecessor to
HSBC Bank USA, N.A. (“HSBC”). The basic transaction involved the Reshes, California
residents acting through a trust, purchasing several lube center businesses in West Virginia and
elsewhere from Peanut Oil and then leasing the businesses back to Peanut Oil to operate them,
with financing supplied by BLX. The Reshes personally guaranteed repayment of the amounts
borrowed from BLX. The fourth-party complaints arise from the fact that each party to the
transaction employed at least one other firm to obtain documents and financial materials and
provide advice over the course of the transaction. Further, the transaction itself became more
than a simple sale and lease back, eventually entailing several interrelated transactions to
accomplish the primary deal between the Reshes and Peanut Oil.
Within a few years of the transaction, the lube centers were performing poorly and the
Reshes fell behind on their payments. In 2011, the bank foreclosed on the properties. When the
foreclosure sales did not yield enough proceeds to satisfy the Reshes’ debt, HSBC sued the Reshes
to collect on the personal guaranties that they executed to secure the debt. The Reshes in turn
filed a third-party complaint, impleading entities that they identified as conspiring with Peanut Oil
in a scheme to defraud them. After a lengthy period of discovery, the third-party defendants and
the Reshes filed fourth-party complaints against LubeCenter and Upland, expanding the number of
entities allegedly involved in the conspiracy. Each fourth-party defendant has submitted motions
to dismiss the fourth-party complaints on several grounds. As the issues of personal jurisdiction
and failure to state a claim are closely intertwined, the Court will address both below.
3
II.
Motions to Dismiss for Lack of Personal Jurisdiction
A. Personal Jurisdiction Generally
Where a defendant files a motion to dismiss for lack of personal jurisdiction and the court
decides the “motion without an evidentiary hearing, the plaintiff need prove only a prima facie
case of personal jurisdiction.” Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993).
“[T]he district court must draw all reasonable inferences arising from the proof, and resolve all
factual disputes, in the plaintiff's favor.” Id.
To prove that a court has specific jurisdiction over an out-of-state defendant, a plaintiff
must show that jurisdiction is authorized by the long-arm statute of the state in which the court sits
and that exercise of such jurisdiction is consistent with the Due Process Clause of the Fourteenth
Amendment. Consulting Eng’rs Corp. v. Geometric Ltd., 561 F.3d 273, 277 (4th Cir. 2009).
Where, as here, the state’s long-arm statute is coextensive with the full reach of the Due Process
Clause, the statutory and constitutional questions merge into one inquiry. In re Celotex Corp.,
124 F.3d 619, 627-28 (4th Cir. 1997). Courts in this Circuit have identified a three-part test for
determining whether asserting personal jurisdiction over an out-of-state defendant comports with
the Due Process Clause. The Court must examine “(1) the extent to which the defendant
purposefully availed itself of the privilege of conducting activities in the State; (2) whether the
plaintiffs’ claims arise out of those activities directed at the State; and (3) whether the exercise of
personal jurisdiction would be constitutionally reasonable.” ALS Scan, Inc. v. Digital Serv.
Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002) (internal quotation marks omitted).
The first prong of the test reflects the constitutional requirement that an out-of-state
defendant “have sufficient ‘minimum contacts’ with the forum state such that ‘the maintenance of
the suit does not offend traditional notions of fair play and substantial justice.’” Consulting
4
Eng’rs, 561 F.3d at 277 (quoting Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)). Several
factors are helpful in determining whether this first prong is met with respect to a business:
(1) “whether the defendant maintains offices or agents in the forum state;” (2)
“whether the defendant owns property in the forum state;” (3) “whether the
defendant reached into the forum state to solicit or initiate business;” (4) “whether
the defendant deliberately engaged in significant or long-term business activities in
the forum state;” (5) “whether the parties contractually agreed that the law of the
forum state would govern disputes;” (6) “whether the defendant made in-person
contact with the resident of the forum in the forum state regarding the business
relationship;” (7) “the nature, quality and extent of the parties’ communications
about the business being transacted;” and (8) “whether the performance of
contractual duties was to occur within the forum.”
Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 560 (4th Cir. 2014) (quoting Consulting
Eng’rs, 561 F.3d at 278). Generally, where an out-of-state defendant has “substantially
collaborated with a forum resident and that joint enterprise constituted an integral element of the
dispute,” the defendant has sufficiently availed itself of the privileges of doing business in the
forum. Tire Eng’g and Distrib., LLC v. Shandong Linglong Rubber Co., 682 F.3d 292, 302 (4th
Cir. 2012). Courts in this circuit generally do not find purposeful availment, however, where “the
locus of the parties’ interaction was overwhelmingly abroad.” Id.
As more fully discussed below, one of the fourth-party defendants advertised the lube
centers for sale through a website. Where a defendant’s alleged contacts with the forum state
arise out of the defendant’s operation of a website, the level of interactivity on the website
generally determines whether the defendant’s contacts with the forum are sufficient. Where a
defendant runs an interactive site through which residents of the forum state can transmit files and
communications, the defendant may properly be brought into the courts of the forum state.
Carefirst of Maryland, Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 399 (4th Cir. 2003).
In contrast, if the defendant runs a passive site that “merely makes information available,” the fact
that the website can be accessed by residents in a different state is insufficient to give courts in that
5
state personal jurisdiction over the defendant. Id. Thus a court may, consistent with due process,
exercise jurisdiction over a defendant who “(1) directs electronic activity into the State, (2) with
the manifested intent of engaging in business or other interactions within the State, and (3) that
activity creates, in a person within the State, a potential cause of action cognizable in the State’s
courts.” ALS Scan, 293 F.3d at 714.
Turning to the second prong of the test, it asks whether the claims against an out-of-state
defendant arise from the defendant’s activities in the forum state. Consulting Eng’rs, 561 F.3d at
278-79. To assert specific jurisdiction, the court must find that the claims against the defendant
result from the defendant’s contacts with the forum, not from activities unrelated of the forum. If
a plaintiff successfully demonstrates prongs one and two, the court must assess the third prong.
Id. at 279. The third prong ensures that exercising jurisdiction over the out-of-state defendant is
fair and reasonable within the meaning of the Due Process Clause. Courts may consider:
(1) the burden on the defendant of litigating in the forum; (2) the interest of the
forum state in adjudicating the dispute; (3) the plaintiff's interest in obtaining
convenient and effective relief; (4) the shared interest of the states in obtaining
efficient resolution of disputes; and (5) the interests of the states in furthering
substantive social policies.
Id. If the court finds that asserting jurisdiction is constitutionally reasonable under this final
prong, the court may exercise personal jurisdiction over the out-of-state defendant.
B. Personal Jurisdiction in Conspiracy Cases
The Reshes maintain that this Court may exercise jurisdiction over the fourth-party
defendants because they participated in a conspiracy against the Reshes.
Several courts,
including the Fourth Circuit, recognize a conspiracy-based theory of personal jurisdiction. Under
this theory, a court may exercise jurisdiction over an out-of-state defendant who would otherwise
be beyond the court’s reach if the defendant is part of an alleged conspiracy and the court has
6
personal jurisdiction over one or more of the defendant’s coconspirators.
Lolavar v. de
Santibanes, 430 F.3d 221, 229 (4th Cir. 2001). To prevail using this theory of jurisdiction, a
plaintiff must “make a plausible claim” that (1) a conspiracy existed, (2) the out-of-state defendant
participated in the conspiracy, and (3) a coconspirator’s activity in furtherance of the conspiracy
created sufficient minimum contacts with West Virginia such that the coconspirator is subject to
personal jurisdiction in West Virginia. See Unspam Techs., Inc. v. Chernuk, 716 F.3d 322, 329
(4th Cir. 2013). “To satisfy these requirements, the plaintiffs would have to rely on more than
‘bare allegations.’” Id. (quoting Lolavar, 430 F.3d at 229). A plaintiff must instead make a
prima facie case demonstrating that the out-of-state defendant participated in a conspiracy, and
that at least one coconspirator is subject to personal jurisdiction in the forum.
C. Personal Jurisdiction in RICO Cases
The Reshes’ fourth-party complaint contains a cause of action for violation of the
Racketeer Influenced and Corrupt Organizations Act (“RICO”). RICO provides for nationwide
service of process. 18 U.S.C. § 1965(d). “Where Congress has authorized nationwide service of
process by federal courts under specific federal statutes, so long as the assertion of jurisdiction
over the defendant is compatible with due process, the service of process is sufficient to establish
the jurisdiction of the federal court over the person of the defendant.” Hogue v. Milodon Eng’g,
Inc., 736 F.2d 989, 991 (4th Cir. 1984). Accordingly, if a defendant in a RICO action is properly
served and fails to demonstrate that the assertion of jurisdiction would violate due process, the
court may exercise personal jurisdiction over that defendant. See ESAB Group, Inc. v. Centricut,
Inc., 126 F.3d 617, 628 (4th Cir. 1997).
To succeed under this theory, of course, the plaintiff must have a colorable claim against
the defendant under RICO. Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d
7
935, 941 (11th Cir. 1997). Moreover, even if the plaintiff has a colrable claim and has properly
served the defendant, if the defendant can demonstrate that the exercise of jurisdiction would
violate due process, the court must not assert jurisdiction over the defendant. Id. at 942. In a
case where personal jurisdiction depends on a federal statute authorizing nationwide service of
process, “the constitutional limits of due process derive from the Fifth, rather than the Fourteenth,
Amendment.” Id. The Fifth Amendment looks at a defendant’s contacts with the United States
as a whole, rather than its contacts with the forum state. Id. at 947. “There are circumstances,
although rare, in which a defendant may have sufficient contacts with the United States as a whole
but still will be unduly burdened by the assertion of jurisdiction in a faraway and inconvenient
forum.” Id. The defendant bears the burden of showing that the exercise of jurisdiction will
make litigation so difficult and inconvenient as to place the defendant at a severe disadvantage.
Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985)). “When a defendant
makes a showing of constitutionally significant inconvenience, jurisdiction will comport with due
process only if the federal interest in litigating the dispute in the chosen forum outweighs the
burden imposed on the defendant.” Id. at 948.
D. Pendent Personal Jurisdiction
The Reshes urge this Court to assert pendant personal jurisdiction over the fourth-party
defendants with respect to the state-law claims against them. Pendant jurisdiction permits a
federal court to exercise jurisdiction over state-law claims when the federal and state claims in a
given case “derive from a common nucleus of operative fact.” United Mine Workers of America
v. Gibbs, 383 U.S. 715, 725 (1966). The Fourth Circuit has recognized an analogous theory,
pendent personal jurisdiction, which permits “a district court which has obtained personal
jurisdiction over a defendant by reason of a federal claim to adjudicate state claims properly within
8
the court’s subject matter jurisdiction, even though that state’s long-arm statute could not
authorize service over the defendants with respect to the state claims.” ESAB, 126 F.3d at 628.
Under the theory of pendant personal jurisdiction, once the court has asserted personal jurisdiction
over a defendant with respect to a federal claim the court may, in its discretion, assert personal
jurisdiction over that defendant with respect to any related state claims in the case. Id. If the
federal claim is dismissed prior to trial, the court may refuse to assert jurisdiction over the
defendant with respect to any remaining state claims. See Gibbs, 383 U.S. at 726.
E. Discussion
1. LubeCenter Sales, Inc.
The Reshes’ fourth-party complaint against LubeCenter contains a series of factual
allegations, principally contained in paragraphs fourteen through forty-eight, setting out the
transactions and roles of various parties that form the basis of the Reshes’ claims. These
transactions were complex and are set out more fully in the Court’s order of January 25, 2013
(ECF No. 109). Relevant here are the factual assertions describing LubeCenter’s role in the
transactions, its contacts with the Reshes, and its activities relative to West Virginia, the forum
state.
First, to establish minimum contacts, the Reshes point out LubeCenter’s role in the “first
leg” of the transaction between sellers Spaar Management, Inc. (“Spaar”) and its affiliate
Adventure 2000, LLC (“Adventure”), and Peanut Oil, the purchaser of the West Virginia assets.
ECF No. 483. LubeCenter served as a consultant, hired by Spaar and Adventure. Other than the
fact that assets located in West Virginia were the subject of the transaction, there is no connection
between any of these contracting parties, or LubeCenter, and West Virginia. Furthermore,
LubeCenter did not perform any activities in West Virginia.
9
Next the Reshes contend that LubeCenter’s role in “furthering” the “second leg” of the
transaction, by allegedly providing false financial records and documents used by others in the
transaction, constitutes activity in the forum state. ECF No. 483. Looking at the specific facts
alleged, however, the Reshes do not actually claim that LubeCenter engaged in any activities in
West Virginia. LubeCenter’s role was limited to contacts with the other parties, none of whom
were West Virginia entities.
The Reshes and Third-Party Defendants only assert a few of the business-contact factors to
justify personal jurisdiction, and they are not sustainable. They argue that LubeCenter’s senior
manager proposed the idea for the structure of the transaction, compiled financial information,
created a business plan for Peanut Oil, and “and assisted in setting the rent amounts for the West
Virginia properties.” ECF No. 487. They do not, however, argue that these activities took place
in, or were directed at, West Virginia. Instead, Third-Party Defendants note that these actions
were taken “in the context of” transferring property located in West Virginia. This is not enough
to demonstrate that LubeCenter “reached into the forum” to solicit business. See Consulting
Eng’rs, 561 F.3d at 278.
Moreover, LubeCenter did not make “in-person contact with the resident of the forum in
the forum state.” See Consulting Eng’rs, 561 F.3d at 279. LubeCenter’s client was not a West
Virginia business. LubeCenter merely consulted with a non-West Virginia client about the
client’s West Virginia assets. The Reshes point out that LubeCenter also referred other parties to
the transaction to Upland. Referring non-resident businesses to Upland did not amount to
reaching into the forum, especially considering that Upland is not a West Virginia business either.
Although LubeCenter communicated with the parties and other entities involved in the transaction
extensively, none of the communications involved a West Virginia entity. Communication about
10
West Virginia properties or businesses is not the same as communications with West Virginia
entities. See id. (“We look to the quality and nature of the contacts in evaluating whether they
meet the minimum contacts requirement.”).
Third Party Defendants argue that it would be “hard to imagine a business dispute that this
Court would be more interested in than a dispute over how multiple professional organizations
(including Lube and Upland) and consumers within this state (the Reshes) should conduct
themselves in this state.” As the Court has already noted, neither LubeCenter, Upland, the
Reshes, nor any other party involved in the sale and leaseback transactions, was a West Virginia
resident. Only the property itself was actually in the forum state. LubeCenter undertook no
contractual duties to be performed in West Virginia or for West Virginia entities. Although
Peanut Oil transacted with the Reshes in the second leg of the transaction to sell and lease West
Virginia properties, in order to operate businesses in West Virginia, none of Lube Center’s
activities or contacts took place in West Virginia. In sum, the Reshes and Third-Party Defendants
offer no allegations that LubeCenter actually conducted any business in West Virginia or in any
other way purposefully availed itself of West Virginia law.
Alternatively, the Reshes argue that even if LubeCenter does not have minimum contacts,
LubeCenter was a member of a conspiracy to defraud the Reshes, one or more of its
co-conspirators are within the reach of this Court’s jurisdiction, and thus LubeCenter is also within
the Court’s jurisdiction.
Despite any one conspirator’s absence from the forum, if a
co-conspirator is subject to personal jurisdiction as a result of its contacts with the forum, all of the
other conspirators are also subject to personal jurisdiction. See Lolavar, 430 F.3d at 229. Under
this theory, the acts of one conspirator may be imputed to others, including the conspirator’s
contacts with the forum state. See id. To succeed on this theory, the Reshes must make a
11
thorough showing that the conspiracy existed, that LubeCenter was a member of the conspiracy,
and that a coconspirator undertook acts in West Virginia to further the conspiracy. Unspam, 716
F.3d at 329. The Reshes must rely on more than “bare allegations.” Lolavar, 430 F.3d at 229.
Here, the Reshes’ fourth-party complaint against LubeCenter fails to meet these
requirements. First, although the Reshes specifically allege that certain financial documents and
other data that they used during the transaction were false and misleading, they have not alleged
any specific facts that demonstrate an actual conspiracy or common plan among LubeCenter and
any actors who did business in West Virginia. See Unspam , 716 F.3d at 329-30. Instead, they
state that LubeCenter provided other parties with false information, and then conclude that
LubeCenter was at the “core” of a criminal enterprise to defraud real estate purchasers. See ECF
No. 405. Moreover, the Reshes have not alleged that any specific coconspirator performed acts in
furtherance of the conspiracy in West Virginia. LubeCenter consulted with companies outside of
West Virginia during the first leg of the transaction and provided financial records and documents
that were used by other entities in later transactions with the Reshes. The fraud alleged by the
Reshes occurred in a transaction which took place outside the forum with nonresident parties.
Even if these other entities later made minimum contacts with West Virginia sufficient for the
Court to exercise of personal jurisdiction over them, due process constraints preclude the exercise
of jurisdiction over LubeCenter. The fourth-party complaint alleges that LubeCenter contacted
and worked with Upland, Adventure, Spaar, and Peanut Oil, all of which occurred in other states.
The Reshes’ complaint further states that the financial information alleged to be fraudulent was
provided to the Reshes by Peanut Oil, not by LubeCenter. ECF No. 405. The second leg of the
transaction may have involved activity directed at West Virginia by Peanut Oil and other parties,
but was not directly related to LubeCenter’s actions. At most, the Reshes conspiracy claims show
12
that LubeCenter was involved in a conspiracy outside of the forum, directed at the Reshes in
California. The alleged conspiracy does not involve the terms of the actual contract or the
performance of the contract. Instead, it involves the appraisals, lease terms, and financial
documents that were sent to California, Texas, and other non-forum states for the Reshes to review
before completing any transactions with Peanut Oil.
That the Reshes later purchased the
properties from Peanut Oil in West Virginia and leased the properties back to Peanut Oil in West
Virginia does not mean that they can bring LubeCenter into the courts of West Virginia.
Finally, the Reshes argue that the Court may exercise jurisdiction over LubeCenter on their
RICO claim, and subsequently assert pendent jurisdiction over LubeCenter on their state claims.
They maintain that LubeCenter was one of a number of entities that defrauded the Reshes and
other investors in violation of RICO. RICO provides for nationwide service of process. The
Reshes argue that because they served LubeCenter pursuant to this RICO provision, the Court has
jurisdiction over LubeCenter on their RICO claim.
LubeCenter argues that exercising
jurisdiction would violate the Due Process Clause of the Fifth Amendment.
The Court
acknowledges that LubeCenter is a small company that seemingly had limited involvement in the
transactions at issue in this case. Moreover, LubeCenter was brought into this case two years
after it was filed and eight years after the transactions occurred. The Court does not find,
however, that asserting jurisdiction would so unfairly disadvantage LubeCenter as to offend due
process. The Court therefore has personal jurisdiction over LubeCenter with respect to the
Reshes’ RICO claim found in Count VII of their fourth-party complaint.
Under the theory of pendent jurisdiction, the Court may also assert jurisdiction over
LubeCenter with respect to the Reshes’ and Third Party-Defendants’ state law claims. As
explained in further detail below, however, the Reshes have failed to state a claim under RICO
13
against LubeCenter. Without a federal claim to anchor personal jurisdiction over the LubeCenter,
the Court declines to assert pendent personal jurisdiction over LubeCenter with respect to the state
law claims against it. For these reasons, LubeCenter Sales, Inc.’s Motion to Dismiss for Absence
of Personal Jurisdiction (ECF No. 456) is GRANTED IN PART as to all but Count VII of the
Reshes’ fourth-party complaint.
2. Upland Real Estate Group, Inc.
In their fourth-party complaint, the Reshes allege that Upland advertised the West Virginia
lube center properties, misrepresented that Peanut Oil owned the properties before the first leg of
the transaction, worked on the appraisals for each of the properties, helped prepare the lease
agreements for the properties, provided the Reshes’ broker with false information regarding
Peanut Oil, and received a fee for the transactions. ECF No. 405. The Reshes, and Third-Party
Defendants, argue that these activities constitute sufficient minimum contacts with West Virginia
to give rise to specific personal jurisdiction.
First, the Reshes and Third-Party Defendants allege that Upland advertised West Virginia
properties on a website accessible in West Virginia. ECF No. 486; ECF No. 487. They argue
that by so listing the properties, Upland reached into the forum. Listing properties within West
Virginia for sale is not enough, by itself, to establish minimum contacts. There is no allegation
that Upland specifically directed its website to West Virginia consumers “with the manifested
intent of engaging in business or other interactions within the State.” See Carefirst, 334 F.3d 390,
399. Rather, it appears that the website was directed toward the commercial real estate market
generally. Furthermore, Upland’s actions did not directly create “in a person within the State, a
potential cause of action cognizable in the State’s courts.” See id. If the Reshes’ allegations are
true, Upland’s actions created a cause of action within the Reshes in California, not within any
14
individual or business residing in West Virginia. Thus Upland did not make sufficient contact
with the forum by placing advertisements for West Virginia real estate on its website.
Next, the Reshes state that over the course of the transaction, Upland sent documents and
correspondence to other persons and entities “about the West Virginia transactions” and argue that
“it is likely some of these contacts were received in West Virginia.” ECF No. 486. The Reshes’
complaint does not actually allege, however, that Upland sent any documents into the forum or to
any residents of West Virginia. As the Court explained above, that the properties discussed in the
documents and correspondence were located within West Virginia’s borders is not enough to show
purposeful availment of West Virginia law. See Consulting Eng’rs, 561 F.3d at 279.
The Reshes and Third-Party Defendants also point to Upland’s role as the broker for
Peanut Oil, noting that Upland received a commission on the transaction. Furthermore, they
argue that by working on the property appraisals, helping set the rent prices for the properties, and
working with LubeCenter, Upland purposely availed itself of West Virginia’s laws. ECF No.
487. Neither the Reshes nor Third-Party Defendants allege that these activities occurred in West
Virginia.
Moreover, like LubeCenter, Upland allegedly interacted with individuals and
businesses residing in Minnesota, California, Texas, and Pennsylvania, but not West Virginia.
That Upland was paid for working on a transaction involving West Virginia property is not enough
to demonstrate that Upland performed any contractual duties in West Virginia or purposefully
reached into the state to conduct business. See Consulting Eng’rs, 561 F.3d at 278. The Court
finds that Upland did not have minimum contacts with the forum sufficient to allow the Court to
assert specific personal jurisdiction over the company.
Even if Upland does not have minimum contacts with West Virginia, the Reshes maintain
that the conspiracy theory of jurisdiction supports exercising personal jurisdiction over Upland.
15
As with LubeCenter, the Reshes have not alleged specific facts plausibly indicating that Upland
engaged in a common plan, part of which was furthered in West Virginia. That multiple parties
contributed to the appraisals and other financial documents, which allegedly contain false
information, does not mean that those parties colluded to provide false information for the purpose
of defrauding buyers. Moreover, the activities that took place in West Virginia involved a
transaction between the Reshes and Peanut Oil and the performance of a contract between those
two parties. Based on the allegations in the fourth-party complaints, those activities appear to be
separate from the actions that Upland allegedly took before the transaction ever occurred.
Without a prima facie case indicating the plausible existence of a conspiracy between Upland, and
others, furthered by acts taken in the forum, the Court cannot assert jurisdiction over Upland under
the conspiracy theory of jurisdiction.
Finally, the Reshes reiterate with respect to Upland their argument for personal jurisdiction
pursuant to RICO and pendent pendant jurisdiction over the state law claims. They maintain that
proper service on Upland pursuant to RICO’s provision for nationwide service of process is
sufficient to confer personal jurisdiction over Upland. Upland has not raised a Fifth Amendment
defense to the exercise of personal jurisdiction. Accordingly, the Court has personal jurisdiction
over Upland with respect to the Reshes’ RICO claim in Count VII of their fourth-party complaint.
As it does with LubeCenter, the Court declines to assert pendent personal jurisdiction over
Upland with respect to the state claims against it because, as discussed below, the Court dismisses
the Reshes’ RICO cause of action for failure to state a claim. Without this federal claim, the
Court need not, and will not, assert personal jurisdiction over Upland with respect to the remaining
state claims.
Accordingly, Upland Real Estate Group, Inc.’s Motion to Dismiss Defendants/Third-Party
16
Plaintiffs’ Direct Fourth Party Complaint Against Upland Real Estate Group, Inc. (ECF No. 463)
is GRANTED IN PART as to all but Count VII of the Reshes’ fourth-party complaint and Upland
Real Estate Group, Inc.’s Motion to Dismiss Fourth Party Complaint of Realty Concepts, Ltd.,
Fourth Party Complaint of Lawyer’s Title Insurance Corporation and Fourth Party Complaint of
Helen Sullivan (ECF No. 466) is GRANTED.
III.
Motions to Dismiss for Failure to State a Claim
A. Rule 12(b)(6)
Under Rule 12(b)(6), a federal court must dismiss a claim which “fail[s] to state a claim
upon which relief can be granted.” In Bell Atl. Corp. v. Twombly, the United States Supreme
Court stated that courts must look for “plausibility” in the complaint. 550 U.S. 544, 557-63 (2007).
This standard requires a plaintiff to set forth the “grounds” for an “entitle[ment] to relief” that is
“more than labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do.” Id. at 555 (citation omitted). Accepting the factual allegations in the complaint as
true (even when doubtful), the allegations “must be enough to raise a right to relief above the
speculative level.” Id. (citations omitted). If the allegations in the complaint, assuming their
truth, do “not raise a claim of entitlement to relief, this basic deficiency should . . . be exposed at
the point of minimum expenditure of time and money by the parties and the court.” Id. at 558
(citations omitted) (internal quotation marks omitted).
In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court explained the requirements of
Rule 8 and the “plausibility standard” in more detail. The Supreme Court reiterated that Rule 8
does not demand “detailed factual allegations.” Id. at 678 (citation omitted) (internal quotation
marks omitted). However, a mere “unadorned, the-defendant-unlawfully-harmed-me
accusation” is insufficient.
Id. “To survive a motion to dismiss, a complaint must contain
17
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Id. (quoting Twombly, 550 U.S. at 570). Facial plausibility exists when a claim contains “factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citation omitted). The Court further explained that although factual
allegations in a complaint must be accepted as true for purposes of a motion to dismiss, this tenet
does not apply to legal conclusions. Id. “Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice.” Id. (citation omitted).
Furthermore, “[i]n alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b).
B. Pleading a Claim under RICO
RICO creates a private right of action for a “person injured in his business or property by
reason of a violation of” the statute. 18 U.S.C. § 1964(c) (2012). RICO violations are set out in
Title 18, Section 1962 of the U.S. Code. 18 U.S.C. § 1962 (2012). To make a plausible claim
under RICO, a plaintiff must allege facts that, if accepted as true, demonstrate each element of a
RICO violation. The Reshes have not identified which portion of Section 1962 the fourth-party
defendants allegedly violated, but their claim seems to most closely track Section 1962(c). The
elements of a RICO claim under Section 1962(c) are: “(1) conduct (2) of an enterprise (3) through
a pattern (4) of racketeering activity.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985).
The enterprise must engage in or affect interstate or foreign commerce. 18 U.S.C. § 1962.
RICO defines “racketeering activity” as any one of the predicate offenses enumerated in Section
1961(1) of the statute. Among the possible offenses are mail fraud and wire fraud. 18 U.S.C. §
1961(1)(B) (2012).
A “pattern” of racketeering activity requires at least two predicate racketeering activities.
18
Int’l Data Bank, Ltd. v. Zepkin, 812 F.2d 149, 151 (4th Cir. 1987). Two or more predicate acts are
not enough, however, to demonstrate a pattern. “If the commission of two or more acts to
perpetrate a single fraud were held to satisfy the RICO statute, then every fraud would constitute a
pattern of racketeering activity. It will be the unusual fraud that does not enlist the mails and
wires in its service at least twice.” Id. at 154 (internal quotation marks omitted). To demonstrate
a pattern, a plaintiff must also allege (1) a relationship between the predicate acts and (2) the
existence of a threat that the racketeering activity will continue. H.J. Inc. v. Nw. Bell Tel. Co., 492
U.S. 229, 239 (1989).
A relationship between the acts may be shown where they “have the same or similar
purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by
distinguishing characteristics and are not isolated events.” Id. at 240 (quoting Dangerous Special
Offender Sentencing Act, 18 U.S.C. § 3575(e) (1982) (repealed 1984)). The threat of continuity
is harder to prove. “‘Continuity’ is both a closed- and open-ended concept, referring either to a
closed period of repeated conduct, or to past conduct that by its nature projects into the future with
a threat of repetition.” Id. at 241. To plead closed-ended continuity, a plaintiff may allege “a
series of related predicates extending over a substantial period of time. Predicate acts extending
over a few weeks or months and threatening no future criminal conduct do not satisfy this
requirement: Congress was concerned in RICO with long-term criminal conduct.” Id. at 242.
To sufficiently plead open-ended continuity, a plaintiff must allege that the racketeering activities
will naturally persist into the future. Id. at 241. A plaintiff may demonstrate this by alleging
facts indicating that “the racketeering acts themselves include a specific threat of repetition
extending indefinitely into the future” or “by showing that the predicate acts or offenses are part of
an ongoing entity’s regular way of doing business.” Id.
19
The relationship and continuity requirements “ensure that RICO’s extraordinary remedy
does not threaten the ordinary run of commercial transactions.” Menasco, Inc. v. Wasserman,
886 F.2d 681, 683 (4th Cir. 1989). “In providing a remedy of treble damages . . . Congress
contemplated that only a party engaging in widespread fraud would be subject to such serious
consequences.” Id. “If the pattern requirement has any force whatsoever, it is to
prevent . . . ordinary commercial fraud from being transformed into a federal RICO claim.” Id. at
685. Thus, where a defendant has committed fraud for a limited purpose, against a limited
number victims, its actions will rarely constitute a RICO violation. See id. (holding that plaintiffs
failed to allege RICO violation where defendant only sought to defraud two companies and fraud
took place over one year); GE Inv. Private Placement Partners II v. Parker, 247 F.3d 543, 549 (4th
Cir. 2001) (holding that plaintiffs failed to state RICO claim where defendants used Ponzi scheme
over seventeen months to defraud investors by convincing them that a single business was
financially successful when it was not); Thompson v. Paasche, 950 F.2d 306, 311 (6th Cir. 1991)
(holding that plaintiffs failed to prove either open- or closed-ended continuity where defendant
committed fraud in the sale of nineteen real estate lots over a period of several months). Rather,
“RICO treatment is reserved for conduct ‘whose scope and persistence pose a special threat to
social well-being.’” GE Inv., 247 F.3d at 551 (quoting Menasco, 886 F.2d at 684); see H.J., 492
U.S. at 229 (holding that plaintiffs stated a claim under RICO because predicate acts occurring
over a six-year period involving bribes to five different public utility commissioners “may be
sufficient to satisfy the continuity requirement”).
C. Pleading Mail and Wire Fraud
In order to plead the “racketeering activity” element of a RICO claim, a plaintiff must
sufficiently plead predicate acts. Here, the predicate acts that the Fourth-Party Defendants
20
allegedly committed are instances of mail and wire fraud. To plead mail or wire fraud, a plaintiff
must allege “that the defendant (1) devised or intended to devise a scheme to defraud,” (2) used a
“mail or wire communication in furtherance of the scheme,” United States v. Wynn, 684 F.3d 473,
477 (4th Cir. 2012), and (3) “acted with the specific intent to defraud,” United States v. Goodwin,
272 F.3d 659, 666 (4th Cir. 2001).
To successfully plead a fraud claim in a business transaction, a plaintiff must “show more
than a business deal gone bad for economic and non-fraudulent reasons.” Eclectic Props. E., LLC
v. Marcus & Millichap Co., 751 F.3d 990, 997 (9th Cir. 2014). As the U.S. Court of Appeals for
the Ninth Circuit recently explained:
When companies engage in sale-leaseback transactions that are facially legitimate,
pay rent and operate legitimate businesses for years thereafter, and otherwise act as
routine participants in American commerce, a significant level of factual specificity
is required to allow a court to infer reasonably that such conduct is plausibly part of
a fraudulent scheme.
Id. at 997-98. In Eclectic Properties, the defendants “sold property worth $11.1 million to
Plaintiffs for $30.3 million while spending $8.1 million on rent to maintain the alleged scheme
until all properties were sold.” Id. at 998. Plaintiffs argued that the rapid increase in price and
the defendants’ representation of the properties as “safe” investments demonstrated fraudulent
intent. The court found that the plaintiffs failed to state a claim under RICO predicated on mail
and wire fraud for two reasons. First, although the facts were consistent with fraudulent intent on
the part of the defendants, they were also consistent with an innocent explanation, given “that real
estate values can be variable, and that fluctuations in prices over a period of years are not
necessarily unusual, nor are they conclusive proof of wrong-doing, as changes may reflect market
conditions.” Id. Second, the Court found the plaintiffs’ allegations regarding the actual value of
the property insufficient. Id. at 999. Given these deficiencies, the Court held that the plaintiffs
21
failed to sufficiently allege a specific intent to defraud and affirmed dismissal of their RICO claim.
The court in Eclectic Properties made it clear that a plaintiff must plead sufficient facts to
demonstrate scienter in order to properly state a claim for mail or wire fraud.
D. Discussion
In their fourth-party complaint, the Reshes allege that LubeCenter, Michael Baynes, and
Upland were part of an enterprise “that sought financial gain through the systematic defrauding of
Defendants and similarly situated real estate investors.” The Reshes accuse LubeCenter and
Upland of convincing investors “to purchase real estate at exorbitant prices, based on intentionally
flawed and excessive appraisals, thereby causing financial gain to the enterprises’ participants.”
The Reshes allege that the fourth-party defendants intentionally failed to disclose: defective
appraisals, “[t]he insufficiency of the Peanut Oil leases as bases upon which to value the
properties,” the comparables that the Reshes allege skewed the appraisals, Peanut Oil’s lack of
creditworthiness, conflicts of interest, “[t]he fact that Peanut Oil had no intention of fulfilling its
obligations on the underlying leases,” and the fact that the transaction was a “double-escrow”
transaction through which Peanut Oil would purchase the properties before selling them to the
Reshes and leasing them back.
With respect to LubeCenter, the Reshes allege that it participated in the scheme to defraud
by compiling “false or misleading information about Peanut Oil” and hiding “the fraudulent
natures of the transactions in a pre-closing letter sent via facsimile and/or through the mail.” ECF
No. 405. The Reshes allege that Upland furthered the fraudulent scheme by “obtaining skewed
comparables to submit to the appraiser via e-mail and over state lines” and “submitt[ing] false or
misleading financial information about Pearson, Peanut Oil and the West Virginia properties over
the internet and through the mail.” They also allege that Upland used a referral fee agreement to
22
“contribute[] to the ruse that that Brosnac and Realty Concepters were properly licensed in West
Virginia.” ECF No. 405.
The Reshes maintain that the fourth-party defendants were “motivated by the desire to
facilitate the fraud and reap the gains associated therewith[,] . . . derived income from each of the
three transactions they participated in, and used that income in furtherance of their businesses and
in interstate commerce.” ECF No. 405. The Reshes also allege that “similar schemes have been
perpetrated as part of Defendants’ acquisition of commercial properties in North Carolina,
including a property in Franklin, as well as properties in Sheridan, Wyoming and in the
Pennsylvania transaction.” Finally, the Reshes maintain that the alleged scheme injured their
business and property, including “loss of investment capital; loss of out-of-pocket expenses; lost
profits; loss of goodwill; and loss of creditworthiness.” ECF No. 405.
To make a claim under RICO, the Reshes must allege “(1) conduct (2) of an enterprise (3)
through a pattern (4) of racketeering activity.” Sedima, 473 U.S. at 496. The Reshes have
satisfied the first two elements, alleging that LubeCenter, Upland, and Michael Banes acted in
concert to defraud investors over state lines. The third and fourth elements require a closer
inspection of the Reshes’ allegations regarding the fourth-party defendants’ predicate racketeering
activities.
Although not explicitly cited, the Reshes appear to base their RICO claims on predicate
violations of the mail and wire fraud statutes, U.S. Code Title 18 Sections 1341 and1343. The
Court finds that the Reshes have alleged sufficient facts to satisfy the first two elements of mail
and wire fraud: a scheme to defraud and the use of mail or wire communications to further that
scheme. The Reshes allege that LubeCenter and Upland used mail and e-mail to communicate
false financial information regarding Peanut Oil.
23
They also allege that Upland submitted
misleading comparables “via e-mail and over state lines.” According to the Reshes, this false
information was sent in order to convince them to purchase over-priced properties and rent them at
“unsustainable” rates. These facts, if taken as true, demonstrate a scheme to defraud the Reshes
and the use of mail and e-mail to further the scheme.
Whether the Reshes have sufficiently pleaded the third element—fraudulent intent—is a
closer question. The Reshes allege that the fourth-party defendants collaborated to sell the
properties at fraudulently inflated prices and with inflated rents in order to further their own
financial gain. As the Ninth Circuit explained in Eclectic Properties, however, they must show
that this was more than just an unsuccessful sale-leaseback investment caused by fluctuations in
the market. See Eclectic Props., 751 F.3d at 997. On the one hand, the Reshes have alleged that
Upland and LubeCenter sent all of the financial information at issue to the Reshes’ agent, Brosnac,
who “held back alarming portions of the financial records until after the close of the transaction to
avoid any potential notice to the Defendants that something was wrong.” This allegation can be
interpreted to mean that Upland and LubeCenter made full disclosures of the financial
information, but that Brosnac wrongfully withheld it from his clients. If this is true, Upland and
LubeCenter were innocent in any fraudulent concealment. On the other hand, the Reshes also
allege that the appraiser sent Upland a memorandum expressing concern over the inaccurate data
submitted for the appraisal, and that LubeCenter was aware of this memorandum. The Reshes
also claim that Upland, LubeCenter, and Peanut Oil worked together to prepare the leases and set
the proposed rent prices for the properties. These allegations, if taken as true, are sufficient to
demonstrate that the fourth-party defendants may have had fraudulent intent. The Reshes have
thus alleged enough facts to state a plausible claim under the mail and wire fraud statutes.
Finally, the Court must determine whether the Reshes have adequately alleged a “pattern”
24
of racketeering activity.
The Court finds that they have not.
A pattern requires both a
relationship and continuity. There is clearly a relationship between the alleged predicate acts:
they were all committed in order to convince the Reshes to purchase the properties at specific
prices and lease them back to Peanut Oil at specific rates. The Reshes have failed, however, to
allege continuity. First, the conduct here is not enough to meet the standard for closed-ended
continuity. As the Supreme Court explained in H.J., “Congress was concerned in RICO with
long-term criminal conduct,” not actions spanning just a few months. H.J., 492 U.S. at 242. In
GE Investment, the Fourth Circuit held that a single Ponzi scheme targeting multiple investors and
lasting seventeen months did not meet RICO’s continuity requirement. GE Inv., 247 F.3d at 549.
Likewise, in Menasco, the Fourth Circuit held that the continuity requirement was not satisfied
where a defendant schemed to defraud two victims over the course of one year. Menasco, 886
F.2d at 685. Here, all of the predicate acts that the Reshes allege contributed to the fraudulent
scheme occurred in one year, with respect to three properties sold from the same seller to the same
buyers.1 This is not the kind of “widespread fraud” that indicates closed-ended continuity and
justifies the harsh treble damages available under RICO. See id. at 683.
Moreover, the Reshes have not alleged sufficient facts to demonstrate open-ended
continuity. Nothing indicates that the alleged racketeering activity in this case, by its very nature,
threatens to continue indefinitely. The alleged activity here involves a few discreet acts of
mailing or emailing specific documents. Furthermore, the Reshes have not alleged any specific
facts to indicate that these predicate acts are LubeCenter or Upland’s “regular way of doing
1
The Reshes complaint also states that the fourth-party defendants committed similar schemes
aimed at other investors, and at the Defendants, in North Carolina, Wyoming, and Pennsylvania.
These broad allegations are not specific enough to meet the pleading standards of Rule 9. See
Fed. R. Civ. P. 9(b). The Court looks only to the sufficiently pleaded predicate acts to determine
whether a pattern exists.
25
business.” As the court in Zepkin explained: “It will be the unusual fraud that does not enlist the
mails and wires in its service at least twice.” Zepkin, 812 F.2d at 151. Multiple mailings or
e-mails are simply not enough to show a pattern of racketeering activity, particularly where each of
those actions contribute to a single fraudulent goal: to sell a set of properties from one seller to one
set of buyers at an unjustified price. The Reshes have not specifically alleged any other instances
of fraud.
This case exemplifies the Fourth Circuit’s concern in Manasco that “ordinary
commercial fraud” might be turned into a RICO claim absent an actual pattern of consistent
fraudulent activity. Accordingly, the Court finds that the Reshes have not demonstrated a pattern
and have thus failed state a claim under RICO.
Given this conclusion, the Court need not address the remaining state claims under Rule
12(b)(6). The Court has dismissed the only federal claim in this case, which anchored personal
jurisdiction over the fourth-party defendants. As explained in the preceding section, the Court
has no independent basis to assert personal jurisdiction over the fourth-party defendants with
respect to the state claims and declines to exercise pendant personal jurisdiction over them.
Accordingly, LubeCenter Sales, Inc.’s Motion to Dismiss the Purported Direct Fourth
Party Complaint Filed by Defendants/Third-Party Plaintiffs Ron Resh and Valarie Reynolds-Resh
Pursuant to Rule 12(b)(6) (ECF No. 462) is GRANTED IN PART with respect to Count VII of
the Reshes’ fourth-party complaint and Upland Real Estate Group, Inc.’s Motion to Dismiss
Defendants/Third-Party Plaintiffs’ Direct Fourth Party Complaint Against Upland Real Estate
Group, Inc. (ECF No. 463) is GRANTED IN PART with respect to Count VII of the Reshes’
fourth-party complaint.
IV.
Remaining Motions
As a result of the Court’s holding, the remaining motions by LubeCenter and Upland are
26
DENIED AS MOOT (ECF Nos. 460, 468, & 470). Further, the joint motion by Lawyer’s Title
Insurance Corporation, Helen Sullivan, and Realty Concepts, Ltd. to Dismiss or Strike Fourth
Party Complaint is GRANTED, in so far as it seeks to strike the Reshes’ Fourth-Party Complaint.
The Court finds it unnecessary to determine whether the Reshes’ Fourth-Party Complaint
amended the Third-Party Complaint or was improperly filed without leave. The parties named in
the Fourth-Party Complaint have now been dismissed; as such the Reshes’ Fourth-Party
Complaint (ECF No. 405) is STRICKEN in its entirety. For the same reason, Lawyer’s Title
Insurance Corporation’s Fourth-Party Complaint (ECF No. 404), Helen Sullivan’s Fourth-Party
Complaint (ECF No. 407), and Realty Concepts, Ltd.’s Fourth-Party Complaint (contained within
ECF No. 399) are STRICKEN.
Conclusion
For the foregoing reasons, Lawyer’s Title Insurance Corporation, Helen Sullivan, and
Realty Concepts, Ltd.’s Joint Motion to Dismiss or Strike Fourth Party Complaint (ECF No. 423)
is GRANTED, LubeCenter Sales, Inc.’s Motion to Dismiss for Absence of Personal Jurisdiction
(ECF No. 456) is GRANTED, Upland Real Estate Group, Inc.’s Motion to Strike Direct Fourth
Party Complaint Against Upland Real Estate Group, Inc. Pursuant to Rule 14(a)(3) (ECF No. 460)
is DENIED AS MOOT, LubeCenter Sales, Inc.’s Motion to Dismiss the Purported Direct Fourth
Party Complaint Filed by Defendants/Third-Party Plaintiffs Ron Resh and Valarie Reynolds-Resh
Pursuant to Rule 12(b)(6) (ECF No. 462) is GRANTED IN PART, Upland Real Estate Group,
Inc.’s Motion to Dismiss Defendants/Third-Party Plaintiffs’ Direct Fourth Party Complaint
Against Upland Real Estate Group, Inc. (ECF No. 463) is GRANTED IN PART, Upland Real
Estate Group, Inc.’s Motion to Dismiss Fourth Party Complaint of Realty Concepts, Ltd., Fourth
Party Complaint of Lawyer’s Title Insurance Corporation and Fourth Party Complaint of Helen
27
Sullivan (ECF No. 466) is GRANTED, LubeCenter Sales, Inc.’s Motion to Dismiss Fourth Party
Complaint of Realty Concepts, Ltd., Fourth Party Complaint of Lawyer’s Title Insurance
Corporation and Fourth Party Complaint of Helen Sullivan (ECF No. 468) is DENIED AS
MOOT, and Upland Real Estate Group, Inc.’s Motion to Reconsider Order Granting Consent
Motion to Amend Third-Party Answer for Sole Purpose of Filing Fourth Party Complaint and to
Strike Complaints (ECF No. 470) is DENIED AS MOOT. The fourth-party complaints are
STRICKEN (ECF Nos. 399, 404, 405, & 407) and LubeCenter Sales, Inc. and Upland Real Estate
Group, Inc. are dismissed from this matter.
The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to counsel
of record and any unrepresented parties.
ENTER:
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August 12, 2015
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