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Nuevos Destinos, LLC v. Peck

United States District Court, District of Columbia

January 2, 2019

NUEVOS DESTINOS, LLC, et al., Plaintiffs,
v.
SAMUEL PECK, et al., Defendants.

          MEMORANDUM OPINION

          EMMET G. SULLIVAN UNITED STATES DISTRICT JUDGE

         I. Introduction

         This action arises out of an alleged racketeering scheme spanning about eight years whereby defendants-twenty-two companies and individuals-purportedly used otherwise legitimate business entities to defraud plaintiffs by making false promises to sell agricultural goods. Plaintiffs sue defendants for: (1) violation of 18 U.S.C. § 1962(c)(“RICO”); (2) violation of 18 U.S.C. § 1962(d) (conspiracy to violate RICO); (3) conspiracy to commit fraud; (4) fraud; and (5) breach of contracts. Pending before the Court are several motions: (1) nine defendants' eight motions to dismiss; (2) one defendant's motion to strike certain declarations; (3) plaintiffs' two motions to allow alternate service for seven defendants; (4) plaintiffs' motion for jurisdictional discovery.

         The Court has carefully considered the pending motions, the opposition memoranda, the replies thereto, the entire record herein, and the applicable law. The Court concludes that it lacks personal jurisdiction over the nine defendants and therefore GRANTS the eight pending motions to dismiss. The Court also concludes that jurisdictional discovery is not warranted and DENIES plaintiffs' motion for jurisdictional discovery. Because the Court lacks jurisdiction over the relevant defendants, it DENIES AS MOOT plaintiffs' motions for service and the motion to strike plaintiffs' declarations.

         II. Background

         The Court credits the complaint, which it must at this stage of the proceedings. This matter arises out of an alleged racketeering scheme, largely organized by two defendants, to defraud plaintiffs by making false promises to provide agricultural goods sold to and bought by plaintiffs. See generally Compl., ECF No. 1. The Court first describes the parties and then elaborates on the purported scheme. Because most of the defendants have not entered an appearance in the case, the Court focuses its discussion on the nine defendants with pending motions to dismiss.

         A. The Parties

         Plaintiffs are two corporate entities and one individual. First, Nuevos Destinos, LLC (“NDL”) is a company registered in Florida with its principal place of business in the District of Columbia (at the time of the injury) and Virginia (presently). Id. ¶ 9. It purchases agricultural products from Peru “for export from Peru and delivery to the United States and other countries.” Id. Plaintiff Nuevos Destinos Peru, S.A.C. (“NDP”) is a company organized in Peru with its principal place of business in the District of Columbia (at the time of the injury) and Virginia (presently). Id. ¶ 10. It is the Peruvian “affiliate” of NDL and “serves as the purchasing agent” for NDL in Peru. Id. Finally, plaintiff William P. Cook (“Mr. Cook”) is a United States citizen who lives in the Commonwealth of Virginia. Id. ¶ 11. He and his wife are the principals of NDL, id. ¶ 9, and he “personally financed all of the agricultural transactions by which plaintiffs were defrauded, ” id. ¶ 11.

         Defendants include one United States citizen, one United States corporation, and seven Peruvian citizens and corporations. The “central mastermind” of the scheme is Ignacio Harten Rodriguez Larrain (“Ignacio”). Id. ¶ 13. He is a Peruvian citizen who, “upon information and belief, ” presently lives in the United States. He was the General Manager of Agricola Peruana Del Sol, S.R.L. (“APS”), a Peruvian company that processed and exported agricultural products from Peru to other countries, including the United States. Id. ¶¶ 13, 15. Neither Ignacio, nor APS has entered an appearance in the case. The other central figure, according to plaintiffs, is defendant Samuel Peck (“Mr. Peck”), who was a founder and majority shareholder of APS. Id. ¶ 12. Mr. Peck is a United States citizen residing in Colorado. Id. During the relevant time, Mr. Peck was also the Vice President and chief buyer for defendant SKE Midwestern (“SKE”), a United States corporation registered and located in North Dakota. Id. ¶¶ 12, 17. SKE is a “beans broker, supplier, importer, processor and shipper” with over twenty years' experience in international markets, including Peru. Id. ¶ 17. Defendant Emilio Farah (“Mr. Farah”) is a citizen of Peru and an alleged principal of two other defendant Peruvian corporations, Convalor, S.A.C. (“Convalor”) and Confactor, S.A.C. (“Confactor”). Id. ¶ 16. Mr. Farah sought to buy, process, and sell agricultural products with NDL and introduced plaintiffs to Ignacio. Id.

         Defendant Jorge Harten Costa, Sr. (“Jorge, Sr.”) is Ignacio's father and is also a Peruvian citizen. Id. ¶ 20. He was a designated agent of APS. Id. Defendant Jorge Emilio Harten Rodriguez Larrain, Jr. (“Jorge, Jr.”) is also a Peruvian citizen and Ignacio's brother (and Jorge, Sr.'s son). Id. ¶ 21. He was also a designated agent of APS. Id. Defendant Ofelia Maria Rodriguez Larrain Salinas de Harten (“Ofelia”) is also a Peruvian citizen. Id. ¶ 22. She is Jorge, Sr.'s wife and Ignacio's mother. Id. Ofelia also became the “nominal public head of” Peruvian Organic International Trading, S.A.C. (“POIT”), another defendant Peruvian company that became the “successor in interest” to APS. Id. POIT has been “continu[ing] the fraudulent schemes of APS and [Ignacio].” Id. ¶ 23. POIT has not entered an appearance in the case. Finally, defendant Javier Rodriguez Larrain Salinas (“Javier”) is a Peruvian citizen and Ignacio's uncle (Ofelia's brother). Id. ¶ 24. When discussing these four defendants collectively, the Court will refer to Jorge, Sr.; Jorge, Jr.; Ofelia; and Javier as the “Harten family.”[1]

         B. The Scheme

         According to plaintiffs, the racketeering organization essentially functioned as a Ponzi scheme, id. ¶ 96, whereby individual defendants-including the Harten family, Mr. Peck, SKE, Convalor, Confactor, and Mr. Farah-would “vouch” for Ignacio and APS, posing as uninterested parties, see Id. ¶¶ 12-30. In reality, these individual defendants had been defrauded by Ignacio and APS and were seeking to recoup their losses by recruiting new investors to defraud. See Id. The new investors' funds would not be used to purchase agricultural products, as the investors intended and Ignacio and APS promised, but would rather be used to pay off the debts. See id.

         In 2007, Ignacio and Mr. Peck, on behalf of SKE, created APS, which sold agricultural products internationally. Id. ¶ 67. At some point, SKE and Mr. Peck purchased significant amounts of products from APS. APS began “defaulting” on its promises to provide SKE with its agricultural products. Id. ¶ 70, see Id. ¶¶ 71-74. By 2011, APS owed SKE $3.6 million. Id. ¶ 74. Accordingly, SKE's President told Mr. Peck that “his job was on the line” and he had to do “whatever it took to get the Company's money back from APS and [Ignacio].” Id. ¶ 74. At that point, Mr. Peck and Ignacio devised a scheme “whereby [Mr.] Peck would issue facially valid purchase orders on behalf of SKE and then [Ignacio] would shop them around to financing sources in Lima and abroad.” Id. ¶ 76. Mr. Peck and Ignacio then sold the purchasing orders to investors, including the Harten family and Mr. Farah. Id. ¶¶ 79-82. By 2012, Mr. Peck and Ignacio owed the other defendants millions of dollars. See Id. According to plaintiffs, these defendants sought to recover their lost investments by vouching for Ignacio and APS with the aim to recruit new investors. See Id. ¶ 96.

         While this scheme was ongoing, NDL was looking to expand its business beyond financing exporting companies in Peru. In 2012, it sought to buy products directly from Peruvian agricultural producers to sell and export. Id. ¶ 31. In April 2012, Mr. Farah introduced plaintiffs to Ignacio in Peru. Id. ¶¶ 32, 103 (meeting in Bujama, Peru). Mr. Farah said that Ignacio was “one of the largest exporters of bean products in Peru” and was “honest [and] well-connected.” Id. ¶ 31. In May 2012, plaintiffs met Mr. Peck at a lunch organized by Ignacio in Peru. Id. ¶ 88. In an effort to retain plaintiffs' business, Mr. Peck told plaintiffs that “he had worked for a long time with [Ignacio]” and that he was “very pleased with the relationship.” Id. He also emphasized that APS was a “top exporter” and confirmed that the purchase order NDL was considering financing was “for real, ” and that SKE had “committed to purchase” the products at issue. Id. ¶ 89. Mr. Peck did not disclose the debt that APS owed SKE, nor did he mention his ownership stake in APS. Id. ¶ 91. A month later, plaintiffs also met with Jorge, Sr. in Peru. Id. ¶ 106. Jorge, Sr. also recommended his son's company and did not disclose APS' debts. Id. In August 2012, Ignacio and his wife traveled to the District of Columbia to meet with plaintiffs in person. Id. ¶ 33.

         On those recommendations and references, NDL began transacting with APS in May 2012. Id. ¶¶ 36, 100-102 (stressing the importance of the recommendations to plaintiffs' decision to work with Ignacio and APS). NDL entered into several contracts with APS for various agricultural products. Ultimately, it provided over $1.5 million for about 1, 500 metric tons of products. Id. ¶¶ 36, 37. Ultimately, APS only delivered about 64 of the 1, 500 tons of products. Id. The amounts “disbursed by NDL to APS for [agricultural] products . . . were solely for the benefit of NDL or its customers; or for customers for whom [Ignacio] led NDL to believe APS had specific purchaser orders, including SKE (which NDL later found out to be largely false).” Id. ¶ 37. Despite its many efforts, plaintiffs have been unable to “get a full and complete accounting of where its money went.” Id. ¶ 128. Plaintiffs have also been unsuccessful in recovering the money that they allege they are owed. See, e.g., id. ¶ 145 (alleging to have received $48, 540 of the $1.7 million owed).

         After plaintiffs uncovered the defendants' scheme, the Harten family created POIT, the company that succeeded APS, in 2014. Id. ¶ 144. According to plaintiffs, defendants have continued the same racketeering activity through POIT. See Id. ¶¶ 83-84, 136-141.

         III. Analysis

         In their eight pending motions to dismiss, the nine defendants challenge the complaint on several grounds. See Defs.' Mots. to Dismiss (“Defs.' Mots.”), ECF Nos. 35, 36, 37, 38, 45, 50, 52, 54. All nine defendants argue that the Court lacks personal jurisdiction over them pursuant to Federal Rule of Civil Procedure 12(b)(2). See Id. Five of the defendants challenge the plaintiffs' choice of forum pursuant to Federal Rule of Civil Procedure 12(b)(3) and the forum non conveniens doctrine. See Defs.' Mots., ECF Nos. 45, 50, 52, 54. Seven of the defendants also argue that they were improperly served pursuant to Federal Rule of Civil Procedure 12(b)(5). See Defs.' Mots., ECF Nos. 35, 36, 37, 38, 50, 52. Finally, five of the defendants argue that plaintiffs failed to state a RICO claim pursuant to Federal Rule of Civil Procedure 12(b)(6). See Defs.' Mots., ECF Nos. 45, 50, 52, 54. Because the Court agrees that it lacks personal jurisdiction over all nine defendants, it need not reach their other arguments. See Galvan v. Fed. Prison Indus., Inc., 199 F.3d 461, 463 (D.C. Cir. 1999)(“Jurisdiction must be established before a federal court may proceed to any other question.”)(citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998)).

         A. The Court Lacks Personal Jurisdiction Over the Defendants

         The nine defendants submit similar arguments in their eight motions to dismiss. See Defs.' Mots., ECF Nos. 35, 36, 37, 38, 45, 50, 52, 54. Essentially, the defendants argue-and the Court agrees-that this case is a Peruvian dispute about activities that occurred in Peru and injuries that were caused in Peru. See, e.g., Def.'s Mot., ECF No. 54-1 at 1-2 (“The complaint . . . describes an ordinary business dispute between two Peruvian companies . . . . [t]he conduct described in the complaint takes place almost entirely in Peru”). First, because none of the defendants reside here, all argue that the Court lacks general jurisdiction as they are not essentially “at home” in the District of Columbia (American defendants) or in the United States (Peruvian defendants). See Defs.' Mots., ECF Nos. 35, 36, 37, 38, 45, 50, 52, 54. The Peruvian defendants, including the Harten family, Confactor, Convalor, and Mr. Farah, also argue that the Court cannot establish jurisdiction over them by way of the RICO statute because it only provides for nationwide service of process on domestic defendants. Defs.' Mots., ECF Nos. 35, 36, 37, 38, 50, 52. The American defendants, SKE and Mr. Peck, also argue that the Court cannot acquire jurisdiction over them via the RICO statute because the Court does not have jurisdiction over at least one of the defendants in the enterprise, as it must. See Defs.' Mots., ECF Nos. 45, 54. Finally, all of the defendants contend that the purportedly unlawful conduct occurred in Peru, and thus, the Court cannot acquire specific jurisdiction over them pursuant to the District of Columbia's long arm statute or Federal Rule of Civil Procedure 4(k)(2) because there is no “substantial connection” between the defendants and the forum. See Defs.' Mots., ECF Nos. 35, 36, 37, 38, 45, 50, 52, 54. As such, the defendants conclude that exercising jurisdiction would violate due process. See id.

         Much of plaintiffs' briefing regarding personal jurisdiction focuses on each defendant's role in the RICO scheme and is therefore largely irrelevant to the Court's jurisdictional analysis. Pls.' Opp'n, ECF No. 64 at 8-43.[2] That said, plaintiffs respond that personal jurisdiction lies in this Court pursuant to Federal Rule of Civil Procedure 4(k)(2), known as the “federal long arm statute.” Id. at 9-15. Plaintiffs contend that jurisdiction is proper because “each of the defendants herein, had more than fair warning that the activities of APS and POIT would subject them to the jurisdiction of the U.S” because all the defendants had “personal knowledge” of the purported “business plan”: to defraud “U.S.-based customers.” Id. at 12.[3] Moreover, plaintiffs argue that the defendants purposefully directed their activities at the forum by soliciting plaintiffs, citizens of the forum at the time, and encouraging investment in APS. See Id. at 13-14.

         “Under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of establishing a factual basis for personal jurisdiction.” Canuto v. Mattis, No. 16-2282, 2018 WL 3213318, at *4 (D.D.C. June 30, 2018)(citing Okolie v. Future Servs. Gen. Trading & Contracting Co., W.L.L., 102 F.Supp.3d 172, 175 (D.D.C. 2015); Crane v. N.Y.Zoological Soc'y, 894 F.2d 454, 456 (D.C. Cir. 1990)). To meet that burden, the plaintiff “‘must allege specific acts connecting [the] defendant with the forum.'” Okolie, 102 F.Supp.3d at 175 (quoting Second Amendment Found. v. U.S. Conf. of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001)). “In assessing whether this showing has been made, facts asserted by the plaintiff . . . [are] presumed to be true unless directly contradicted by affidavit, ” AGS Int'l Servs. S.A. v. Newmont USA Ltd., 346 F.Supp.2d 64, 81 (D.D.C. 2004)(quotations and citations omitted), but a Court “‘may receive and weigh affidavits and other relevant matter to assist it in determining the jurisdictional facts, '” Okolie, 102 F.Supp.3d at 175 (quoting Buesgens v. Brown, 567 F.Supp.2d 26, 31 (D.D.C. 2008)).

         The Court assumes, for the purposes of resolving personal jurisdiction only, that defendants were properly served.[4]However, “service of process does not alone establish personal jurisdiction.” Mwani v. bin Laden, 417 F.3d 1, 8 (D.C. Cir. 2005). “Before a court may exercise personal jurisdiction over a defendant, there must be more than notice to the defendant.” Omni Capital Intern., Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987). There must also be “authorization for service of summons on the defendant, ” and a “constitutionally sufficient relationship between the defendant and the forum.” Id. Thus, “[t]wo requirements must be met for a District of Columbia court to exercise personal jurisdiction over a defendant.” Bradley v. DeWine, 55 F.Supp.3d 31, 39 (D.D.C. 2014). “First, the defendant must qualify for either general or specific jurisdiction under the relevant . . . statutes.” Id. “Second, the exercise of jurisdiction over the defendant must comply with the Due Process Clause . . . .” Id. at 39-40 (citations omitted).

         Assessing whether a court may exercise personal jurisdiction over a defendant “typically implicates a state's jurisdictional statute or rule.” Alkanani v. Aegis Def. Servs., LLC, 976 F.Supp.2d 13, 21 (D.D.C. 2014) (quotations and alterations omitted). Therefore, this Court has personal jurisdiction over the defendants if a District of Columbia court could exercise personal jurisdiction over them. See Fed. R. Civ. P. 4(k)(1)(A); see also Daimler AG v. Bauman, 571 U.S. 117, 125 (2014)(“Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.”).

         However, the Court may also exercise personal jurisdiction if it is authorized by a federal statute or rule. See, e.g., Fed.R.Civ.P. 4(k)(1)(C). Plaintiffs contend that the Court has jurisdiction over the defendants because it is authorized by the RICO statute, by Federal Rule of Civil Procedure 4(k)(2), and by the District of Columbia long arm statute. See Pls.' ...


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