EFTA00187391

404 27 FEDERAL SUPPLEMENT, 2d SERIES process, messenger service, transportation, building. Government moved for partial sum- and deposition transcripts). The Second Cir- mary judgment. The District Court, Chin, J., cuit, however, has disallowed reimbursement held that: (1) lease unambiguously provided for computer research on the grounds that it that written consent to sublease was re- "is merely a substitute for an attorney's time quired, precluding claim that government that is compensable under an application for orally consented to sublease; (2) court could attorneys' fees and is not`a separately tax- apply federal common law to question of able cost." United Stalest Merritt Meridi- whether landlord's consent to sublease was an Const. Corp, 95 F.3d 153, 173 (2d Cir. subject to requirement that it not be unrea- 1996); see also LeBlanc—Sternben I Fletch- sonably withheld; (3) court would apply law er, 143 F.34 748, 763 (2d Cir.I998). There- of New York, as there was no federal com- fore, I will not allow plaintiffs attorney to be mon law on question and no need to create reimbursed $125.13 for her computer re- any; and (4) under New York law there was search time. no requirement that consent not be unrea- Accordingly, plaintiffs attorney is entitled sonably withheld. to an award of costs in this case in the amount of $3,525.86. Motion granted. CONCLUSION For the foregoing reasons, plaintiffs mo- 1. Contracts e=147(2) tion for attorney's fees and costs, pursuant to If an agreement sets forth the parties' 42 U.S.C. § 1988, is granted in part, and intent clearly and unambiguously, a court plaintiffs attorney, Margaret Somerset, is need look no further. awarded $94,738.16. That sum shall be paid within forty-fwe (45) days of the entry of this 2. Contracts e=,176(2) order. Whether the text of an agreement is IT IS SO ORDERED. ambiguous or unambiguous is a matter of law to be decided by the court. 3. Contracts e=443(2) A contract is not deemed ambiguous un- less it is reasonably susceptible of more than UNITED STATES of America, Plaintiff, one interpretation, and the court makes this I determination by reference to the contract Jeffrey E. EPSTEIN, Ivan S. Fisher, Ellyn alone. Bank, Debra Elise Cohen, Diane Fisher d/b/a the Fisher Group Fisher & Softer 4. United States 4=70(7) a/k/a Fisher & Sophir, D. Ger- Provision of lease with United States as zog, Robert lleilbrun, Suzanne McDer- landlord, that "Tenant may sublet...with the mott, Christopher II. Martin, Jesse Sie- advance written permission of Landlord," gel a/k/a Jessie Siegel, Siegel, Martin & precluded any oral sublease agreement Ileilbrun, Ron Softer, and Carmen Tau- sik, Defendants. 5. Landlord and Tenant e=76(3) No. 96 CIV. 8307(DC). Generally, under New York law, when a United States District Court, lease requires a tenant to obtain the prior S.D. New York. written consent of the landlord to sublet or assign leased premises, a landlord may re- March 31, 1998. fuse consent arbitrarily, unless the lease con- tains a clause specifically stating that the Federal government, as landlord, landlord may not unreasonably withhold such brought proceeding to evict tenants from consent. EFTA00187391 U.S. I. EPSTEIN 405 ale ss27 F.Suppld 404 (S.D.N.Y. 1918) 6. Federal Courts ea413 Suzanne McDermott, New York City, pro Federal court could apply federal com- se. mon law, as opposed to state law, to determi- Christopher H. Martin, New York Defend- nation of rights under real property lease ers Service, New York City, pro se. with government as landlord. Jessie Siegel, New York City, pro se. 7. Federal Courts ea413 Siegel, Martin & Heilbrun, by Robert Heil- Law of New York, rather than federal brun, New York City, pro se. common law, would be applied to question Ron Softer, New York City, pro se. whether consent of government, as landlord, Carmen Tausik, New York City, pro se. to tenant's sublease of premises was subject to requirement that it not be unreasonably OPINION withheld; there was no body of federal com- mon law governing question and no pressing CHIN, District Judge. need for national uniformity calling for cre- In this case, the United States (the "Gov- ation of such law, while state law of landlord ernment") seeks to evict defendants from a and tenant was well developed and parties building formerly used as a residence by the probably entered into lease believing state Deputy Consul General of the Islamic Re- law would apply. public of Iran ("Iran"). After diplomatic and 8. United States ea70(7) consular relations with Iran were severed in Under New York law, there was no re- 1980, the Office of Foreign Missions ("0FM") quirement that consent of federal govern- of the United States Department of State ment, as landlord, to sublease not be unrea- took poas.ssion of the budding pursuant to sonably withheld; there was no provision to the Foreign Missions Act, 22 U.S.C. § 4301 that effect in lease, and under those circum- of seq. 0FM leased the building to defen- stances consent could be withheld for any dant Jeffrey E. Epstein in 1992. Epstein reason or no reason. sublet the building to defendant Ivan S. Fish- er in 1996, purportedly without the Govern- ment's consent. Fisher, in turn, sublet a Mary Jo White, United States Attorney, portion of the building to several subtenants. by Serene K. Nakano, Assistant United In 1996, the Government purported to ter- States Attorney, New York City, for the minate Epstein's lease and brought this ac- United States. tion to eject Epstein and Fisher from the Wachtel & Masyr, LLP, by Steven J. Co- building. The Government later amended its hen, New York City, for Jeffrey E. Epstein. complaint to assert a claim for ejectment against the subtenants as well.' The Gov- Gage & PayRs, by G. Robert Gage, Jr, ernment also sought to recover back rent Ellen J. Casey, New York City, for Ivan S. from Epstein and Fisher. Fisher, Diane Fisher, Fisher & Softer. Epstein and Fisher oppose ejectment on Ellyn Bank, New York City, pro se. numerous grounds, some of which were re- Debra Elise Cohen, New York City, pro jected when I heard oral argument in this se. case on December 17, 1997. Defendants' sole remaining defenses are that (1) 0FM D. Gerzog, New York City, pro orally consented to Epstein's proposed sublet se. of the premises to Fisher, and (2) 0FM did Robert Heilbrun, New York City, pro se. not properly terminate Epstein's lease be- I. The additional defendants are Ellyn Bank. De- Ron Soifer, and Carmen Tausik (collectively, the bra Elisa Cohen• Diane Fisher dAda The Fisher -Subtenants"). The Subtenants were added as sher & Soifer a4/a Fisher & Sophir, defendants after the Government learned that Ma D. Gerzog, Robert Heilbrun. Suzanne McDermott, Christopher H. Martin. Jesse Siegel Fisher had sublet to them without consent of OFM. wlr/a Jessie Siegel, Siegel• Martin & Heilbrun, EFTA00187392 406 27 FEDERAL SUPPLEMENT, 2d SERIES cause it breached an implied covenant of signment and Sublease Clause. Epstein was good faith and fair dealing by unreasonably granted, however, a right of rust refusal to withholding written consent to Epstein's re- renew the lease upon its expiration at the quest to sublet to Fisher. end of January, 1997. Because I fmd as a matter of law that (1) Epstein and his family continued to reside the lease unambiguously required the prior at the Premises until January of 1996, at written consent of OFM for Epstein to sublet which time Epstein abandoned. OFM did or assign the premises, thereby rendering not discover that Epstein had abandoned the any alleged oral consent invalid, and (2) OFM Premises, however, until several months la- was entitled under the lease to unreasonably ter. In March of 1996, Epstein commenced withhold its written consent to Epstein's re- negotiations with Xenophon Galinas for a quest to sublet to Fisher, the Government's possible sublease or assignment of the Prem- motion for partial summary judgment on its ises. The proposed arrangement between claim for ejectment is granted as against all Epstein and Galinas included payment by defendants. Galinas to Epstein of $100,000 for improve- ments to the Premises made by Epstein dur- BACKGROUND ing his tenancy. At the same time, Epstein also commenced negotiations to sublet the A. The Facts Premises to Fisher. Fisher informed Ep- The premises at 34 East 69th Street in stein, however, that he would not enter into a Manhattan (the "Premise?) were once the sublease unless it was approved by the State residence of the former Deputy General Con- Department and Fisher could be assured sul of Iran. When the United States severed that he could remain in the Premises beyond diplomatic ties with Iran in 1980, the Deputy January 31, 1997. Epstein told Fisher that General Consul vacated, but the Premises he had a right of first refusal under the lease remained the property of Iran. The Govern- amendment, and that pursuant to this right, ment, through the Secretary of State, was he would take all necessary steps to renew at entrusted with the care and maintenance of the end of the lease term. the Premises under the Foreign Missions Act In the meantime, Galinas contacted OFM ("FMA"), 22 U.S.C. § 4305(c), and the Vien- directly about a new lease for the Premises na Convention on Consular Relations, Apr. beginning in February of 1997. Negotiations 24, 1963, art. 27(1)(a), 21 U.S.T. 77, 596 between Galinas and OFM culminated in a U.N.T.S. 261, a multilateral treaty entered "letter agreement" dated April 12, 1996 by into by the United States and Iran, among which Galinas agreed to rent the Premises other nations. for a five-year term beginning February 1, In 1992, OFM entered into a two-year 1997 for $16,000 per month, with yearly in- lease with Epstein, to run from February 1, creases, up to $18,000 per month for the last 1992 through January 31, 1994. The agreed year of the lease term. This agreement was rent was $15,000 per month. Pursuant to expressly made subject to Epstein exercising the lease's Use Clause, only Epstein, his his right of first refusal and renewing his family, servants, or approved subtenants or lease for personal use only. In other words, assignees could occupy the premises, Under OFM told Galinas that it would not consent the Assignment and Sublease Clause, Ep- to any request by Epstein for a sublet be- stein was required to obtain prior written yond January 31, 1997, and that it would consent of OFM to assign or sublet the permit Epstein to renew the lease beyond Premises. The lease contained no clause that date only if he occupied the premises prohibiting OFM from unreasonably with- personally. holding its consent to a sublet or assignment. On April 16, 1996, Epstein notified OFM On August 28, 1992, OFM and Epstein by letter that he intended to exercise his extended the lease for three more years, to right of first refusal and renew the lease. January 31, 1997. The lease amendment did Epstein contends that in a telephone confer- not alter either the Use Clause or the As- ence between Richard Massey of OFM and EFTA00187393 U.S. 1 EPSTEIN 407 Cites, 27 PSupp.2.41 41111 (S.D.N.Y. 1990 Jeffrey Schantz, Epstein's transaction coun- May 10, 1996, OFM again wrote to Epstein sel, on April 19, 1996, OFM orally consented reiterating that the exercise of his right of to Epstein's request to sublet the Premises first refusal was premature, and explaining to Fisher. The same day, Epstein wrote that the prior arrangement with Gaines was back, requesting "written confirmation" of not a binding contract, but rather merely an OFM's alleged approval. By letter dated "expression of interest: Then, on May 16, April 26, 1996, OFM formally responded to 1996, OFM officials visited the Premises and Epstein's request, In this letter, Thomas E. discovered that Fisher, not Epstein, was in Burns, a representative of OFM, informed possession. Epstein of OFM's intention to lease the Throughout this period, Epstein continued Premises to Galines beginning February 1, to pay, and OFM continued to accept, rent 1997 in the event that Epstein decided not to for the Premises, despite its knowledge that renew the lease and occupy the premises Fisher was in possession. OFM accepted personally, and denied Epstein's request to and deposited Epstein's May 1996 rent check sublet the Premises to Fisher. OFM's stat- on May 28, 1996. On June 3, 1996, OFM ed reasons for the denial were to (1) "mini- sent Epstein a notice of default, as required mize any difficulties in turning over the by the lease, stating that he was in violation house to the tenant we have selected should of (1) the Use Clause, because he was no Mr. Epstein decide not to reoccupy the longer personally occupying the premises, premises under the new lease," and (2) "mini- and (2) the Assignment and Sublease Clause, mize the potential for damage to the premis- because he had sublet to Fisher without prior es from a short-term tenant occupancy." written consent of OFM. Consistent with the (Schantz Aft, Exh. D). OFM did, however, terms of the Lease, Epstein was given 30 grant Epstein permission to sublet the Prem- days to cure the default. On June 28, 1996, ises to Calines for the remainder of 1996. OFM accepted Epstein's June rent check. On May 3, 1996, Epstein again wrote to The cure period then expired on July 10, OFM, formally exercising his right of first 1996. Epstein had not cured by this time, refusal, believing such right to have been but rather than terminating the lease, OFM triggered by the April 12, 1996 letter agree- served Epstein with a 10-day notice to cure ment between OFM and Cannes. Thereaf and demanded the July rent. OFM then ter, on May 7, 1996, Epstein and Fisher accepted Epstein's check for the July rent. entered into a sublease agreement at a rental Finally, on August 7, 1996, OFM notified price of $20,000 per month, despite OFM's Epstein that the amended lease would be express denial of Epstein's request for per- terminated as of August 23, 1996 for failure mission to sublet to Fisher. Fisher claims to to cure the defaults. OFM demanded that have entered into the sublease agreement Epstein vacate the Premises and return the based on Epstein's representations that the keys on o• before that date. sublease was approved by the State Depart- Despite OFM's notice of termination, Ep- ment and that Epstein had properly exer- stein tendered August rent on August 30, cised his right of first refusal to renew the 1996. On September 18, 1996, OFM wrote to lease. The original sublease was to com- Epstein stating that rent was being accepted mence May 7, 1996 and terminate on January only through August 23, 1996, and refunded 31, 1997. In the event that Epstein's lease the balance to Epstein. On September 16, with OFM was extended, and the new rent 1996, OFM wrote to Fisher advising that the under that lease did not exceed $20,000 per lease agreement between OFM and Epstein month, the sublease would be automatically had been terminated, that he was occupying extended for an additional five-year period. the premises illegally, and demanded that the On May 8, 1996, OFM wrote to Epstein Premises be vacated immediately. Fisher informing him that his attempt to exercise met with an Assistant United States Attor- his right of first refusal was premature be- ney on September 23, 1996, who informed cause OFM had not yet made a formal offer Fisher that Richard Massey, the OFM repre- to lease the Premises to someone else. On sentative with whom Epstein dealt, would EFTA00187394 408 27 FEDERAL SUPPLEMENT, 2d SERIES swear under oath that he never orally ap- I heard oral argument on the motions on proved the sublet to Fisher. Fisher con- December 17, 1997. Collectively, Epstein tends that he offered to continue paying rent and Fisher asserted four arguments in oppo- directly to OFM rather than to Epstein, an sition to the Government's motion for sum- offer to which the Government never re- mary judgmenta They contend that there sponded. At that time, Fisher stopped pay- are genuine issues of material fact as to ing rent to Epstein pursuant to the sublease. whether the Government properly terminat- ed the lease entered into between OFM and B. Prior Proceedings Epstein. Specifically, they argue, factual questions exists as to (1) whether the Gov- 1. The Original Actions ernment waived Epstein's alleged default of the lease by accepting rent after the Govern- The Government commenced this action ment became aware that Fisher was occupy- against Epstein and Fisher in October of ing the premises; (2) whether the OFM- 1996. It seeks a declaration by the Court Epstein lease permitted oral approval of an that it is entitled to exclusive possession of assignment or sublease (ie., whether the As- the Premises and that it is entitled to have signment and Sublet Clause is ambiguous on Epstein and Fisher ejected therefrom be- the issue of whether an assignment or sublet cause Epstein's lease was properly terminat- could be approved orally); (3) whether OFM ed as of August 23, 1996. In addition, the in fact orally approved the sublease to Fish- Government seeks dismissal of Fisher's first er; and (4) whether the Government breach- and second counterclaims, which seek equita- ed an obligation of good faith and fair dealing ble relief against the Government.' Finally, inherent in its lease with Epstein by unrea- the Government demands back rent from sonably withholding written approval of a Epstein and/or Fisher. sublet to Fisher, assuming the Court holds as In February of 1997, Epstein commenced a a matter of law that oral approval was, not holdover proceeding in the Civil Court of the permitted by the lease. City of New York against Fisher for nonpay- At the conclusion of the argument, I re- ment of rent under the terms of the sublease. solved several of the issues pertaining to Fisher removed the state court action to this these motions on the record. As an initial Court. matter, I denied Epstein's motion to remand The Government moved for partial sum- and granted Fisher's motion to consolidate. mary judgment on its claim for ejectment of I then addressed the Government's motion Epstein and Fisher. In addition, it sought for summary judgment and its application an order requiring Epstein and Fisher to pay concerning the creation of an escrow fund. into an escrow fund $15,000 per month from I granted summary judgment in favor of August 23, 1996 to the date this action is the Government on Epstein's and Fisher's finally decided. Epstein cross-moved against waiver argument, holding that "no reason- Fisher to remand its holdover action to state able fact finder could conclude from [the) court, and Fisher cross-moved against Ep- undisputed facts and the sequence of events, stein for consolidation of the holdover action including the acceptance of rent after the with the pending federal action. cure period but before the actual termination 2. In its first counterclaim, Fisher seeks a declara- still has an interest in the Court's decision as to tion that the sublease is valid and that Fisher is whether OFM properly terminated its lease with lawfully entitled to full possession and use of the Epstein. Moreover, Fisher's rights as subtenant premises. In its second counterclaim, Fisher derive from Epstein's rights as overtenant. for if I seeks a declaration that the sublease was auto- decide as a matter of law that the lease was matically renewed for a five-year term. com- properly terminated on August 23, 1996. neither mencing January 31, 1997, because Epstein Epstein nor Fisher has any right to occupy the properly exercised his right of first refusal. Premises beyond that date. Thus, I will treat all 3. Technically. Epstein asserted only the first ar- four arguments in opposition to the Govern. gument, and Fisher asserted all four arguments. ment's motion as though they were asserted by Epstein is no longer occupying the Premises, but Epstein and Fisher jointly. EFTA00187395 U.S. I EPSTEIN 409 CI144027 F.3059.241 404 (S.D.N.Y. 1991) of the lease, that that could constitute a Group and Ron Softer, agreed to be bound waiver in light of the very clear nonwaiver by any order I entered with respect to Fish- clause in the lease." (Tr. at 39). I reserved er's right to occupy the Premises. On March decision, however, on the following issues: 13, 1998, after the Government submitted its (1) whether the lease unambiguously re- motion, Diane Fisher executed the stipula- quired that OFM's consent to an assignment tion and order, also agreeing to be bound. or sublet be in writing, in which case Massey To date, Soifer still has not executed the could not have orally consented, as a matter stipulation. Hence, the Government's motion of law, to Epstein's sublet of the Premises to for summary judgment against the Subten- Fisher, (2) whether OFM was permitted un- ants is still pending with respect to Softer der the lease to unreasonably withhold con- only. sent to Epstein's consent to a sublet to Fish- er, or whether it was bound by an implied DISCUSSION obligation of good faith and fair dealing, and (3) whether, assuming the latter, OFM in fact A. Standards for Summary Judgment withheld its consent unreasonably. The standards applicable to motions for Finally, I ordered Epstein to pay into an summary judgment are well-settled. A court escrow fund eight days worth of the $15,000 may grant summary judgment only where rent for the month of August 1996 and an there is no genuine issue of material fact and additional $15,000 for September 1996 (be- the moving party is therefore entitled to cause OFM had already accepted his tender judgment as a matter of law. See Fed. of rent through August 23, 1996, and Epstein R.Civ.P. 56(c). Accordingly, the court's task had collected rent from Fisher through Sep- is not to "weigh the evidence and determine tember 30, 1996). Additionally, I ordered the truth of the matter but to determine Fisher to pay into the fund $15,000 per whether thre is a genuine issue for trial." month, beginning October 1, 1996 to date, Anderson I Liberty Lobby, Inc, 477 U.S. and continuing for each month thereafter. 242, 249, 106 S.Ct. 2605, 91 L.Ed.2d 202 (1986). Summary judgment is inappropriate 2. The Government's Addition of the if, resolving all ambiguities and drawing all Subtenants as Defendants inferences against the moving party,id. at In the course of discovery on its claims for 255, 106 S.Ct. 2505 (citing Adickes I S.H. relief against Epstein and Fisher, the Gov- Kress & Ca, 398 U.S. 144, 158-59, 90 S.Ct. ernment learned that Fisher had further sub- 1598, 26 L.Ed.2d 142 (1970)), there exists a let the Premises to the Subtenants, also with- dispute about a material fact "such that a out the prior written consent of OFM. The reasonable jury could return a verdict for the Government then sought leave to amend the nonmoving party." Anderson, 477 U.S. at complaint pursuant to Federal Rule of Civil 248 106 S.Ct. 2606. Procedure 15 to name the Subtenants as Once the moving party meets its initial additional defendants in the action. I grant- burden of production, the burden shifts to ed the Government's motion on the record at the nonmoving party to demonstrate that the December 17, 1997 oral argument. The there exist genuine issues I material fact. Government thereafter filed a second amend- Matsushita Elec. Indus. Ca Zenith Radio ed complaint and served a copy on each of Corp., 476 U.S. 574, 585-86, 106 S.Ct. 1348, the Subtenants. 89 L.Ed2d 638 (1986). To defeat a motion In an effort to settle the case, I held a for summary judgment, however, the non- conference on January 28, 1998. At the con- moving party "must do more than simply clusion of that conference, the Government show that there is some metaphysical doubt requested permission to file a motion seeking as to the material facts." Id. at 586, 106 partial summary judgment against the Sub- S.Ct. 1348. There is no issue for trial unless tenants. By stipulation and order dated there exists sufficient evidence in the record March 6, 1998, all of the named Subtenants, favoring the party opposing summary judg- except for Diane Fisher &Wa The Fisher ment to support a jury verdict in that party's EFTA00187396 410 27 FEDERAL SUPPLEMENT, 2d SERIES favor. Anderson, 477 U.S. at 249, 106 S.Ct. ises to Fisher. The Assignment and Sublet 2506. As the Supreme Court stated in Clause expressly states that "Tenant may Anderson, "If the evidence is merely color- sublet all or part of the Premises, or assign able, or is not significantly probative, sum- this lease or permit any other person to use mary judgment may be granted." Id at the Premises with the advance written per- 249-50, 106 S.CL 2506 (citations omitted). mission of Landlord" (Massey Decl., Exh. With these standards in mind, I turn to the B at 4) (emphasis added). Epstein's and Government's motions for partial summary Fisher's argument that the word "may" sug- judgment. gests that OFM could approve a sublease or assignment in writing or orally is tortured. B. The Government's Motion for Partial Only one interpretation of this clause is tena- Summary Judgment against Epstein ble: prior written consent of OFM was re- and Fisher quired for a sublet. Epstein's and Fisher's argument would render the language of the 1. Whether the Lease Permitted Oral clause meaningless, and I am obliged to read Consent to a Proposed Sublet or As- the lease in a manner that gives full force signment and effect to all clauses contained therein. Epstein and Fisher contend that summary See Lloyds Bank PIC Republic of Ecua- judgment should be denied because there dor, No. 96 Civ. 1789 ( ), 1998 WL 118170, exists a genuine issue of material fact as to at •8 (S.D.N.Y. Mar. 16, 1998). Accordingly, whether OFM orally consented to Epstein's OFM could not have orally consented to Ep- request to sublet the Premises to Fisher. stein's proposed sublet to Fisher, as a matter The Government, on the other hand, argues of law, and, therefore, I need not reach the that the lease unambiguously required that a question of whether OFM actually gave oral sublet or assignment of the Premises be ap- consent. proved in advance in writing, and that, there- fore, even if OFM did orally consent, such 2. Whether the Lease Permitted OFM consent was invalid as a matter of law. to Unreasonably Withhold Written 11-31 In contract disputes, the Court be- Consent to a Proposed Sublet gins by examining the language of the con- The last issue to be decided on this motion tract itself to determine the parties' intent. is whether OFM was entitled to refuse Ep- Stroll I Epstein 818 F.Supp. 640, 643 stein's proposed sublet to Fisher arbitrarily, (S.D.N.Y.), affd, 9 FM 1637 (2d Cir.1993). or whether it breached a duty of good faith If the agreement sets forth the parties' in- and fair dealing implicit in the lease agree- tent clearly and unambiguously, the Court ment by unreasonably refusing to grant such need look no further. See Sterling Drug Inc. consent in writing. Resolution of this issue Bayer AG, 792 F.Supp. 1357, 1366-66 turns on whether federal contract law or (S.D.N.Y.1992), red in part, remanded in New York landlord-tenant law applies. part, 14 F.3d 738 (2d Cir.1994). Whether the [51 Generally, under New York law, text of an agreement is ambiguous or unam- where a lease requires a tenant to obtain the biguous is a matter of law to be decided by prior written consent of the landlord to sub- the Court. Sterling Drug, 792 F.Supp. at let or assign leased premises, a landlord may 1366. A contract is not deemed ambiguous refuse consent arbitrarily, unless the lease unless it is reasonably susceptible of more contains a clause specifically stating that the than one interpretation, and the Court makes landlord may not unreasonably withhold such this determination by reference to the con- consent See Dress Shirt Sales, Inc., Hotel tract alone. Banque Ambe et Internationale Martinique Assocs., 12 N.Y2d 339, 239 D'Investissement I. Maryland Nat'l Bank, N.Y.S.2d 660, 662, 190 N.E2d 10 (Ct.App. 67 F.3d 146, 162 (2d Cir.1995). 1963). The Assignment and Sublet Clause in 141 The lease clearly provides that Ep- the lease between OFM and Epstein re- stein was required to obtain the advance quired Epstein to obtain prior written con- written consent of OFM to sublet the Prem- sent of OFM to a proposed sublet, but it EFTA00187397 U.S. EPSTEIN 411 ch.. 27 F.Suppld 404 (5.D.N.Y. 1991) contained no provision prohibiting OFM from of landlord and tenant. Powers t United unreasonably withholding such written con- Skates Postal Seru, 671 F.2d 1041, f042, 1046 sent. (7th Cir.1982); Reed United States Postal The Government, relying on New York Sera., 660 F.Supp. 178, 181 (D.Mass-1987). landlord-tenant law, asserts that it was enti- The question remains, therefore, what law tled to withhold its consent to Epstein's pro- applies in the absence of a federal rule on posed sublet to Fisher for any reason, or for point. no reason at all. Epstein and Fisher, howev- As the Supreme Court has made clear, my er, disagree. They contend that, because the power to create federal common law in the Government is a party to the lease, interpre- absence of federal landlord-tenant law is lim- tation of the lease is governed by principles ited. Several recent Supreme Court deci- of federal common law, not New York State sions have reaffirmed the principle that the law. Pursuant to federal common law of con- power of the federal courts to fashion princi- tracts, Epstein and Fisher continue, the lease ples of federal common law is limited. See, between OFM and Epstein contains an im- e.g., O'Melveny & Myers FDIC, 512 U.S. plied covenant of good faith and fair dealing, 79, 87-88, 114 S.Ct. 20487 129 L.Ed.2d 67 citing Neal & Co. !t United States, 36 Fed. (1994) (noting that cases where the formula- Cl. 600 (1996), re 121 F.3d 683 (Fed.Cir. tion of a "special federal rule" are "few and 1997). The requirement of good faith and restricted"); Kamen I Kemper Fin. Servs., fair dealing, they argue, prohibits OFM from Inc., 500 U.S. 90, sir, 111 S.Ct. 1711, 114 withholding consent unreasonably. OFM's L.Ed.2d 152 (1991) (noting that a federal refusal to consent to Epstein's proposed sub- court "should endeavor to fdl the interstices let of the Premises to Fisher, they contend, of federal remedial schemes with uniform was motivated by its desire to enter into a federal rules only when the scheme in ques- lease with Galinas at a higher rent beginning tion evidences a distinct need for nationwide February 1, 1997. Such conduct was unrea- legal standards or when express provisions in sonable, they argue, and, therefore, OFM analogous statutory schemes embody con- breached the implied covenant of good faith gressional policy choices readily applicable to and fair dealing in the lease. the matter at hand") (citations omitted). (6,7) I conclude that New York landlord- While this recent Supreme Court authority tenant law rather than general federal con- leaves room for federal courts to create prin- tract principles should apply. As a threshold ciples of federal common law in certain nar- matter, although I agree as a policy matter row circumstances, generally a "significant that federal law should apply, there is no conflict between some federal policy or inter- federal statutory or common law governing est and the use of state law" is required landlord-tenant relations. Federal law before "judicial creation of a special federal should apply because the United States is a rule (is) justified." O'Melveny, 512 U.S. at party. I have jurisdiction over this action 87, 114 S.Ct. 2048. While few courts have based on 28 U.S.C. § 1345 and the FMA 22 addressed the precise issue of whether leases U.S.C. § 4301 et seq. The subject matter of to which the Government is a party are this action is a landlord-tenant dispute, how- governed by general federal common law of ever, and while application of federal law is contracts or state landlord-tenant law, there appropriate in federal question cases where is some case law on point. The Second Cir- applicable federal substantive law exists, cuit has not yet spoken definitively on this there is no federal statutory or common law issue,4 but recently noted the existence of a 4. In United Stales! Bedford Associates, 657 Ii.2d to apply federal law in disputes between the 1300 (2d Cir.1981 , cert. denied, 456 U.S. 914. United States and its lessors?' Id. at 1309 n. 7. 102 S.Ct. 1767, 72 L.Ed.2d 173 (1982). the Sec. The court in Kerin I. United States Postal Sera., and Circuit upheld the district court's applies• 116 F.3d 988 (2d ir.1997), acknowledged the tion of federal contract law to determine whether Bedford Associates decision, but implied that Bed. the United States and a potential lessor of a ford Associates involved the issue of creation of a commercial building had in fact made a contract, lease only, stating that there is "room for fair stating that "tilhis court undoubtedly has power debate" as to whether federal or state law ap. EFTA00187398 412 27 FEDERAL SUPPLEMENT, 2d SERIES conflict between the Federal Circuit and the termined under state law, even when the Seventh Circuit concerning "whether federal United States is a party." United States 1 common law or state law applies to the inter- O'Block, 788 F.2d 1423, 1435 (10th Cir.198M pretation of Postal Service Leases?' Kerin (citing Oregon ex rel. State Land lid United States Postal Sera, 116 F2d 988, Corvallis Sand & Gravel Co., 429 U.S. 363, 990 (2d Cir.1997). On the one hand, the 378-81, 97 S.Ct. 582, 60 L.Ed.2d 650 (1977)).7 Federal Circuit has held that federal law Second, application of state substantive applies to resolve disputes between the Unit- law directly on point is eminently more logi- ed States and its lessors or tenants. See. cal than application of general principles of e.g., Forman I United States, 767 F.2d 875, federal contract law. While application of 879-80 (Fed. ir.1985); 6 Kelley United general federal contract law to Government State* 19 CI.Ct. 155, 162 (1989). On the contracts may be appropriate in certain in- other hand, the Seventh Circuit has held that stances, where, as here, the particular gov- state substantive law governs in landlord- ernment contract is a lease for the use of tenant disputes involving the Government. real property, the adoption of state common See Powers United States Postal Sett, 671 law of landlord-tenant relations, a body of F.2d 1041,1043-46 (7th Cir.1982).. law that has developed precisely to address The Second Circuit in Kerin did not reach the rights and duties of individuals in the the issue of whether federal common law or unique relationship of landlord and tenant, state law applied because, in that case, feder- makes sense. Application of the state rule, al law and state law led to the same result. which permits a landlord to refuse consent to See Kerin, 116 F.3d at 991. I agree with the a sublet or assignment arbitrarily in the ab- Seventh Circuit's conclusion, for two reasons. sence of a clause to the contrary, better serves the interests of the Government as a First, although Epstein and Fisher argue landlord because it permits the Government that a federal rule should be created to pro- mote the creation of a uniform body of law in to have unfettered discretion in deciding who occupies its property. Given the sensitive landlord-tenant disputes involving the Gov- political considerations that often come into ernment, there is no "distinct need" for a play when governmental property, such as nationwide legal standard or a uniform na- the property here in issue owned by Iran, is tional rule. See Kamen, 500 U.S. at 98 Ill S.Ct, 1711. Landlord-tenant law traditional- involved, the Government should have as much discretion as possible. ly has been a matter of state law. There is no compelling reason to disrupt expectations Noting that federal landlord-tenant law that tenants and landlords may have under does not exist, Judge Posner stated in Pow- state law merely because they are entering into a lease with the federal government. The Federal Courts could of course create Courts have long held that, "[albsent control- that law, picking and choosing among ex- ling federal legislation or rule of law, ques- isting state laws and proposed reforms in tions involving real property rights are de- accordance with the recommendations of plies to the interpretation of a lease to which the kited by the Government must pay the Govern- Government is a party. Id. at 990-91. ment a reasonable rent for the period of his occupancy); Reed. 660 F.Supp. at 181 (holding 5. While the Forman court stated that federal law that Massachusetts law governs the rights of the governs in landlord-tenant disputes involving the parties under a Postal Service lease). Government, it nevertheless relied on state law cases in interpreting the particular provision of the Postal Service lease at issue. See 767 P.M at 7. Indeed, the Supreme Court has articulated that 88041. the normal federal disposition where no substan- tive federal provision Is relevant to the legal issue 6. Other courts, too, have applied state substan- at hand is for "federal courts [to) 'Incorporatk) tive law as the rule of decision In landlord-tenant [state law] as the federal rule of decision.'" disputes involving the Government. See, e.g., Kamen, 500 U.S. at 98, III S.Ct. 1711 (emphasis Braxton'. United States, 858 F.2d 650. 655 (11th added) (quoting United States I. Kimbell Foods, Cir.19881 (holding that Florida law applies to Inc., 440 U.S. 715, 728, 99- S.M. 1448, 59 determine whether one who occupies land for- L.Ed.2d 711 (1979)). EFTA00187399 U.S. ■ EPSTEIN 413 CIO: as 27 F.Survad 404 (S.D.N.Y. 1998) eminent scholars and practitioners. It is like cases to landlord-tenant disputes. A not to be expected that the federal courts construction contract does not implicate the would do a very good job of devising a Government's rights, as a possessor of a model code of landlord-tenant law, since valuable leasehold, to regulate the possession they have very little experience in land- and use of real property under its control. lord-tenant matters; and though eventual- Thus, as between general federal contract ly some body of law would emerge it would principles and specific state landlord-tenant not in all likelihood be a uniform body, law, the latter should be applied. Land is because there are [thirteen] federal cir- unique. It is logical, therefore, that a land- cuits and the Supreme Court could be lord should have virtually complete say in expected to intervene only sporadically who occupies its property. See Mann The- atres Corp. I Mid-Island Shopping Plaza • • (Vie do not have to balance compet- Ca, 94 A.D.2d 466, 464 N.Y.S.2d 793, 798 (2d ing federal and state interests in this case Dep't 1983) (noting that landlords have a after all. The overriding federal interest "substantial interest in controlling the as- here is in certainty of right and obligation signability of leases"), eV, 62 N.Y.2d 930, flowing from conformity to known law; the 479 N.Y.S.2d 213, 468 N.E2cl 51 (CLApp. state interest is in offering its landlords a 1984). It makes sense for the law to permit like certainty. These interests converge in a landlord to unreasonably withhold consent favor of adopting . .. state law rather than to a proposed sublet unless the parties spe- federal common law. cifically bargain otherwise. See Alex M. Powers, 671 F.2d at 1045-46. This reasoning Johnson, Jr., Correctly Interpreting Long- is quite convincing, particularly in a case Term Leases Pursuant to Modern Contract such as this, where the Government and Law: Toward a Theory of Relational Leases, Epstein, in all likelihood, "entered [a) legal 74 Va. L.Rev. 751, 758 (1988) (discussing the relationship with the expectation that their majority view that absent contractual agree- rights and obligations would be governed by ment to the contrary landlords are permitted state-law standards." Kamen, 600 U.S. at to unreasonably withhold consent to a sublet 98, 111 S.Ct. 1711. or assignment, and noting that the rule Finally, Er Win's and Fisher's reliance on stems from the "paramount importance of Neal & Ca United States, 36 Fed. Cl. 600 the lessor's ability to control the selection of (1996), alrd 121 F.3d 683 (Fed.Cir.1997), is his tenants so as to protect the value of his therefore misplaced. There, the United reversionary interest" in the leasehold). States Court of Federal Claims stated that [SI I therefore adopt the relevant rule of lelvery contract, including those in which New York landlord-tenant law for purposes the Government is a party, contains an im- of deciding the remaining issue in this dis- plied covenant of good faith and fair dealing," pute, and hold that, consistent with New id at 631, and from this statement, Epstein York law, OFM was entitled to arbitrarily and Fisher extrapolate that there exists an withhold its consent to Epstein's request to implied covenant of good faith and fair deal- sublet the Premises to Fisher. Even assum- ing in the lease agreement between Epstein ing OFM had a hidden agenda in refusing and the Government at issue here. Epstein's request to sublet to Fisher, specifi- The facts of Neal & Co. are distinguish- cally, that it preferred to enter into a new able, however. Neal & Co. involved a con- lease with Galinas at a higher rental price, it struction contract to build a housing project was, entitled to withhold its consent to a entered into between the Government and a sublet for a good reason, a bad reason, or no contractor, not a lease for occupancy of real reason at all. There existed no implied cove- property. While a lease is a type of contract, nant of good faith and fair dealing in its lease the considerations surrounding a lease of real with Epstein requiring OFM to act reason- property are sufficiently different from those ably in deciding whether to approve Ep- involved in a conventional contract as to mili- stein's proposed sublet, and, therefore, OFM tate against the extension of Neal & Co. and cannot be held liable for a breach thereof. EFTA00187400 414 27 FEDERAL SUPPLEMENT, 2d SERIES • Thus, I need not reach the issue of whether OFM in fact unreasonably withheld consent. UNION CARBIDE CORPORATION, indi• And, as Fisher was occupying the Premises vidually and on behalf of and as the suc- pursuant to an illegal sublet, OFM was with- cessor in interest of Seadrift Polypropy- in its rights to terminate Epstein's lease. lene Company, Plaintiff, Accordingly, the Government's motion for partial summary judgment on its claim for I ejectment of Epstein and Fisher from the MONTELL Montell Polyolefins; Premises is hereby granted. Montell North America Incorporated; Montell USA Incorporated; Technipol S.r.l.; Montedison SpA.; Montell Fi- C. The Government's Motion for Partial nance USA, Inc.; Royal Dutch Petrole- Summary Judgment Against the Sub- um Company, p.l.c.; The Shell Transport tenants and Tradi ompany, p.l.c.; Shell Pe- Eleven of the twelve Subtenants signed a troleum ;The Shell Petroleum stipulation agreeing to be bound by the Company Limited; Shell Petroleum Court's decision on the Government's claim Inc.; Shell Oil Company; Shell Polypro- for ejectment against Epstein and Fisher. I pylene Company; Shell Canada Limited; now grant the Government's motion for par- Shell International Chemical Company tial summary judgment against Epstein and Limited; and Shell Iglanationale Re- Fisher; hence, the motion is also granted search Maatschappij M, Defendants. with respect to these eleven Subtenants. No. 95 Civ. 0134(SAS). The remaining Subtenant, Ron Softer, did United States District Court, not sign the stipulation. He has not respond- S.D. New York. ed to the Government's motion because the motion is not returnable until April 20, 1998. Aug. 4, 1998. Softer, however, can have no greater rights than Fisher. Hence, the Government's mo- tion is granted as to Softer as well. Of Producer of polypropylene resin brought course, if Soifer believes he has some basis antitrust action against alleged conspirators, for arguing that he has greater rights than arising out of one conspirator's termination Fisher has, he may make a motion for recon- of negotiation to construct new resin manu- sideration within ten days hereof. facturing plants. Following settlement with one alleged conspirator, remaining conspira- tor moved for summary judgment. The Dis- CONCLUSION trict Court, Scheindlin, J., held that: (1) there For the foregoing reasons, the Govern- was fact issue whether conspiracy existed to ment's motion for summary judgment on its limit trade in resin; (2) termination was ancil- claim for ejectment is granted as to Epstein, lary restraint of trade, precluding determina- Fisher, and all of the Subtenants. tion that it was per se violation of Sherman Act § 1; and (3) there was no unreasonable SO ORDERED. restraint of trade, under rule of reason stan- dard. Summary judgment granted in part 1. Federal Civil Procedure o=2484 Due to the potential chilling effect of prolonged antitrust litigation on competition, parties that forward economically implausible antitrust claims must come forward with more persuasive evidence to support them EFTA00187401 Page I of 2 VVestiaw. Page 1 Maria Tankenson Hodge Current Firm Information Unknown hodgfranOislands.vi Position: Member Education: University of California at Berkeley, Boalt Hall School of Law, Berkeley, CA, 1971 J.D., Doctor of Jurisprudence University of California, Santa Cruz, California, 1989 B.A.Govt., Bachelor of Arts in Government Admitted: California, 1972 Virgin Islands, 1974 U.S. Court of Appeals 3rd Circuit U.S. Supreme Court, 1983 Affiliations: The West Indian Company, Limited, Director, 1989 - Present Representative Clients: Public Services Commission The West Indian Company, Limited Virgin Islands Port Authority References: Chase Manhattan Bank, N.A., St. Thomas, Virgin Islands Kodak Corporation, Hato Rey, Puerto Rico Prudential Securities, St. Thomas, Virgin Islands West Practice Categories: Estate Planning Family Law Litigation & Appeals Real Estate Law Land Use & Zoning 2007 Thomson/west. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.com/print/printstream.aspx?prft=HTMLE&destination=atp&sv=Full... 5/22/2007 EFTA00187402 Page 2 of 2 Page 2 Areas of Practice: General Civil Litigation Appellate Practice Real Estate Civil Practice END OP DOCUMENT 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.com/print/printstream.aspx?prft=HTMLE&destination=atp&sv—Full... 5/22/2007 EFTA00187403 EFTA00187404 Entity Information Page 1 of 1 NYS Department of State Division of Corporations Entity Information Selected Entity Name: J. EPSTEIN & COMPANY, INC. Selected Entity Status Information Current Entity Name: J. EPSTEIN & COMPANY, INC. Initial DOS Filing Date: NOVEMBER 18, 1988 County: NEW YORK Jurisdiction: NEW YORK Entity Type: DOMESTIC BUSINESS CORPORATION Current Entity Status: INACTIVE Selected Entity Address Information DOS Process (Address to which DOS will mail process if accepted on behalf of the entity) GOLD & WACHTEL, ESQS 10 EAST 53RD STREET NEW YORK, NEW YORK, 10022 Registered Agent NONE NOTE: New York State does not issue organizational identification numbers. Search Results New Search Division of Corporations. State Records and UCC Home Page NYS Department of State Home Page http://appsext8.dos.state.ny.us/corp_public/CORPSEARCH.ENTITYJNFORMATION?p nameid=1423231&p_corpid=13073... 5/14/2007 EFTA00187405 Entity Information Page 1 of 1 NYS Department of State Division of Corporations Entity Information Selected Entity Name: JEFFREY E. EPSTEIN, INC. Selected Entity Status Information Current Entity Name: J. EPSTEIN & COMPANY, INC. Initial DOS Filing Date: NOVEMBER 18, 1988 County: NEW YORK Jurisdiction: NEW YORK Entity Type: DOMESTIC BUSINESS CORPORATION Current Entity Status: INACTIVE Selected Entity Address Information DOS Process (Address to which DOS will mail process if accepted on behalf of the entity) GOLD & WACHTEL, ESQS 10 EAST 53RD STREET NEW YORK, NEW YORK, 10022 Registered Agent NONE NOTE: New York State does not issue organizational identification numbers. Search Results New Search Division of Corporations, State Records and UCC Home Page NYS Department of State Home Page http://appsezt8.dos.state.ny.us/corp_public/CORPSEARCH.ENTITY INFORMATION?p_nameid=1423230&p_corpid=13073... 5/14/2007 United States District Court Eastern District of Pennsylvania - Docket Report Page 1 of 7 CLOSED, STANDARD United States District Court Eastern District of Pennsylvania (Philadelphia) CIVIL DOCKET FOR CASE #: 2:02-cv-07671-CN SHANKS'. WEXNER et al Date Filed: 10/02/2002 Assigned to: HONORABLE CLARENCE C. NEWCOMER Date Terminated: 10/21/2003 Cause: 28:1332 Diversity-Breach of Contract Jury Demand: None Nature of Suit 195 Contract Product Liability Jurisdiction: Diversity Plaintiff NELSON SHANKS represented by JEFFREY D. HOFFERMAN GOLLATZ GRIFFIN & EWING PC 4 PENN CENTER PLAZA SUITE 200 1600 JOHN FITZGERALD KENNEDY BOULEVARD PHILADELPHIA, PA 19103-2813 215-563-9400 Fax: 215-665-9988 Email: jhofferman®ggelaw.com LEAD ATTORNEY ATTORNEY TO BE NOTICED I Defendant LESLIE WEXNER represented by CHRISTOPHER J. GUITON DRINKER BIDDLE & REATH ONE LOGAN SQ 18TH & CHERRY STS PHILA, PA 19103 215-988-2546 LEAD ATTORNEY ATTORNEY TO BE NOTICED J. FOX DRINKER BIDDLE & REATH LLP ONE LOGAN SQ 18TH & CHERRY STS PHILA, PA 19106-6996 215-988-2714 Fax: 215-988-2757 Email: foxlj@dbr.com LEAD ATTORNEY https://ecfpaed.uscourts.gov/cgi-bin/DictRpt.p19.261521028494284-L_353_0-1 5/22/2007 EFTA00187406 • United States District Court Eastern District of Pennsylvania - Docket Report Page 2 of 7 ATTORNEY TO BE NOTICED Defendant ABIGAIL WEXNER represented by CHRISTOPHER J. GUITON H/W (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED J. FOX (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED Defendant JEFFREY E. EPSTEIN represented by CHRISTOPHER J. GUITON INDIVIDUALLY (See above for address) doing business as LEAD ATTORNEY J. EPSTEIN AND COMPANY, INC. ATTORNEY TO BE NOTICED J. FOX (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED Defendant GHISLAINE MAXWELL represented by CHRISTOPHER J. GUITON (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED J. FOX (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED Date Filed # Docket Text 10/02/2002 1 COMPLAINT against JEFFREY E. EPSTEIN, GHISLAINE MAXWELL, ABIGAIL WEXNER, LESLIE WEXNER ( Filing fee $ 150 receipt number 803892.), filed by NELSON SHANICS.(ti, ) Additional attachment(s) added on 2/13/2003 (1db, ). (Entered: 10/03/2002) 10/02/2002 Summons Issued as to JEFFREY E. EPSTEIN, GHISLAINE MAXWELL, ABIGAIL WEXNER, LESLIE WEXNER.Four Forwarded To: Counsel on 10/3/02 (ti, ) (Entered: 10/03/2002) 12/16/2002 2 ORDER THAT JEFFREY E. EPSTEIN ; GHISLAINE MAXWELL ; ABIGAIL WEXNER ; LESLIE WEXNER HAVE UNTIL 12/31/02 TO ANSWER, MOVE, OR OTHERWISE PLEAD TO THE COMPLAINT; https://ecf.paed.uscourts.gov/cgi-bin/DktRpt.p17261521028494284-L_353_0-1 5/22/2007 EFTA00187407 United States District Court Eastern District of Pennsylvania - Docket Report Page 3 of 7 J. FOX WILL ACCEPT SERVICE ON BEHALF OF ALL DEFENDANTS ETC. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 12/16/02. 12/17/02 ENTERED AND COPIES MAILED (ph, ) (Entered: 12/17/2002) 12/30/2002 3 MOTION FOR DISMISSAL PURSUANT TO FRCP 12(b)(2), MEMORANDUM, CERTIFICATE OF SERVICE FILED BY EPSTEIN, GHISLAINE MAXWELL, ABIGAIL WEXNER, LESLIE WEXNER..(ph, ) Additional attachment(s) added on 2/13/2003 (ldb, ). (Entered: 12J31/2002) 01/15/2003 4 STIPULATION & ORDER THAT PLAINTIFF SHALL HAVE UNTIL 1/31/03 TO FILE A RESPONSE TO DEFENDANTS MOTION TO DISMISS. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 1/15/03. 1/15/03 ENTERED AND COPIES MAILED.(rv, ) (Entered: 01/15/2003) 02/07/2003 5 STIPULATION AND ORDER THAT PLAINTIFF SHALL HAVE UNTIL 2/14/03 TO FILE A RESPONSE TO DEFENDANT'S MOTION TO DISMISS FILED IN THIS MATTER ON 12/30/02. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 2/7/03.2/10/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 02/10/2003) 02/14/2003 6 REPLY filed by NELSON SHANKS to Defendant's Motion to Dismiss pursuant to F.R.C.P. 12(b)(2), Certificate of Service. (rv, ) (Entered: 02/18/2003) 02/27/2003 7 REPLY to Plaintiffs Response to Defendants' Motion to Dismiss filed by JEFFREY E. EPSTEIN, GHISLAINE MAXWELL, ABIGAIL WEXNER, LESLIE WEXNER, Certificate of Service. (ar, ) (Entered: 02/28/2003) 03/18/2003 8 OPINION AND ORDER DENYING DEFENDANTS' MOTION FOR DISMISSAL. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 3/18/03.3/19/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 03/19/2003) 04/07/2003 9 STIPULATION AND ORDER THAT JEFFREY E. EPSTEIN, GHISLAINE MAXWELL,ABIGAIL WEXNER, LESLIE WEXNER'S ANSWER IS EXTENDED TO 4/18/03. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 4/7/03.4/8/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 04/08/2003) 04/24/2003 10 STIPULATION AND ORDER THAT ABIGAIL WEXNER AND LESLIE WEXNER'S ANSWER IS DUE 4/30/03. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 4/24/03.4/25/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 04/25/2003) 04/30/2003 II ANSWER, affirmative defenses to Complaint by JEFFREY E. EPSTEIN, GHISLAINE MAXWELL, ABIGAIL WEXNER, LESLIE WEXNER, Certificate of service.(ph, ) Additional attachments) added on 5/16/2003 (ph, ). (Entered: 05/01/2003) https://ecf.paed.uscourts.gov/cgi-bin/DktRpt.pl?261521028494284-L 353_0-1 5/22/2007 EFTA00187408 • United States District Court Eastern District of Pennsylvania - Docket Report Page 4 of 7 04/30/2003 Issue Joined (ph, ) (Entered: 05/01/2003) 05/05/2003 12 NOTICE of Hearing: Pretrial Conference set for 5/13/2003 03:15 PM in Judge's Chambers, Room 13614 (13th Floor) before HONORABLE CLARENCE C. NEWCOMER. (mf) (Entered: 05/05/2003) 05/19/2003 13 STIPULATION AND ORDER THAT PLAINTIFF SHALL HAVE UNTIL 5/30/03 TO RESPOND TO DEFENDANTS' ANSWER AND COUNTERCLAIMS FILED ON 4/30/03. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 5/19/03.5/19/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 05/19/2003) 05/22/2003 14 ORDER THAT DISCOVERY IS DUE 8/13/03; DISPOSITIVE MOTIONS BY 8/13/03; RESPONSES TO DISPOSITIVE MOTIONS BY 8/25/03; FINAL PRETRIAUSETTLEMENT CONFERENCE BY 9/24/03 AT 11:15 A.M.; PRETRIAL MEMORANDA BY 9/17/03; COUNSEL SHALL BE PREPARED FOR TRIAL BY 9/23/03. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 5/22/03.5/22/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 05/22/2003) 05/29/2003 15 MOTION TO DISMISS COUNTERCLAIM FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED, MEMORANDUM, CERTIFICATE OF SERVICE FILED BY NELSON SHANKS.(ph, ) Modified on 5/29/2003 (ph, ). Additional attachments) added on 6/16/2003 (vw, ). Additional attachment(s) added on 6/16/2003 (vw, ). Additional attachment(s) added on 6/16/2003 (vw, ). Additional attachment(s) added on 6/16/2003 (vw, ). (Entered: 05/29/2003) 06/19/2003 16 STIPULATION AND ORDER THAT THE TIME IN WHICH THE DEFENDANTS MUST SUBMIT A REPLY TO PLAINTIFFS MOTION TO DISMISS COUNT II OF DEFENDANTS' COUNTERCLAIM, IS EXTENDED UNTIL AND INCLUDING 6/30/03 . SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 6/19/03. 6/19/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 06/19/2003) 07/08/2003 17 STIPULATION AND ORDER THAT DEFENDANTS MUST SUBMIT A REPLY TO PLAINTIFF'S MOTION TO DISMISS COUNT II OF DEFENDANTS' COUNTERCLAIM BY 7/14/03 ETC . SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 7/8/03.7/9/03 ENTERED AND COPIES MAILED AND FAXED 7/8/03(ph, ) Additional attachments) added on 7/9/2003 (Idb, ). (Entered: 07/09/2003) 07/14/2003 a Reply to plaintiff's motion to dismiss pursuant to FRCP 12(b)(6), Certificate of service filed by ABIGAIL WEXNER, LESLIE WEXNER. (ph, ) Additional attachment(s) added on 7/17/2003 (ph, ). (Entered: 07/15/2003) 07/18/2003 19 Response to defendants' reply to motion to dismiss counterclaim for failure to state a claim upon which relief can be granted, Certificate of service filed by NELSON SHANKS. (ph, ) (Entered: 07/21/2003) 08/13/2003 24 MOTION FOR JUDGMENT ON THE PLEADINGS AGAINST https://ecf.paed.uscourts.gov/cgi-bin/DktRpt.pl?261521028494284-L_353_0-1 5/22/2007 EFTA00187409 United States District Court Eastern District of Pennsylvania - Docket Report Page 5 of 7 JEFFREY EPSTEIN WITH RESPECT TO COUNT I OF THE COMPLAINT (BREACH OF CONTRACT), CERTIFICATE OF SERVICE FILED BY NELSON SHANKS..(ph, ) (Entered: 08/13/2003) 08/21/2003 21 ORDER THAT UPON CONSIDERATION OF PLAINTIFF'S MOTION TO DISMISS AND DEFENDANTS' RESPONSE, IT IS ORDERED THAT SAID MOTION IS DENIED ETC.. SIGNED BY JUDGE JAMES R. MELINSON ON 8/21/03.8/22/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 08/22/2003) 08/26/2003 22 PLAINTIFFS MOTION TO COMPEL FILED BY NELSON SHANICS,CERTIFICATE OF COUNSEL, CERTIFICATE OF SERVICE.(ar, ) (Entered: 08/26/2003) 08/26/2003 22 ANSWER AND AFFIRMATIVE DEFENSES OF PLAINTIFF TO COUNTERCLAIMS OF DEFENDANTS LESLIE AND ABIGAIL WEXNER BY NELSON SHANKS, CERTIFICATE OF SERVICE.(ar, ) (Entered: 08/26/2003) 08/26/2003 24 Supplement to Plaintiffs Motion for Judgment on the Pleadings Against Defendant Jeffrey Epstein with Respect to Count I of Plaintiffs Complaint (Breach of Contract) filed by NELSON SHANKS, Certificate of Service. (ar, ) (Entered: 08/26/2003) 08/27/2003 25 Memorandum in opposition to plaintiffs motion for judgment on the pleadings as to count one - breach of contract, Certificate of service filed by JEFFREY E. EPSTEIN. (ph, ) Additional attachment(s) added on 9/4/2003 (ph, ). (Entered: 08/28/2003) 08/28/2003 2¢ Reply to EPSTEIN'S memorandum in opposition to plaintiffs motion for judgment on the pleadings, Certificate of service by NELSON SHANKS. (ph, ) (Entered: 08/29/2003) 08/28/2003 27 MOTION TO STRIKE DEFENDANT'S MEMORANDUM IN OPPOSITION FOR VIOLATION OF COURT ORDER, CERTIFICATE OF SERVICE filed by NELSON SHANKS. (SEE #26).(ph, ) (Entered: 08/29/2003) 09/04/2003 28 ORDER DENYING PLAINTIFFS MOTION FOR JUDGMENT ON THE PLEADINGS WITH RESPECT TO COUNT I, THE COURT FINDS THAT THERE ARE FACTUAL ISSUES IN THIS CASE AS TO WHETHER A CONTRACT WAS FORMED BETWEEN THE PARTIES AND THE TERMS OF ANY SUCH CONTRACT.. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 9/4/03.9/4/03 ENTERED AND COPIES MAILED AND FAXED. (ph, ) (Entered: 09/04/2003) 09/05/2003 29 RESPONSE to plaintiff NELSON SHANKS' motion to compel, Certificate of service filed by JEFFREY E. EPSTEIN, GHISLAINE MAXWELL, ABIGAIL WEXNER, LESLIE WEXNER. (ph, ) (Entered: 09/08/2003) 09/05/2003 3S) MOTION FOR PROTECTIVE ORDER TO QUASH NOTICE OF https://ecf.paed.uscourts.gov/cgi-bin/DktRpt.p17261521028494284-L_353_0-1 5/22/2007 EFTA00187410 United States District Court Eastern District of Pennsylvania - Docket Report Page 6 of 7 DEPOSITIONS, MEMORANDUM, CERTIFICATION OF COUNSEL, CERTIFICATE OF SERVICE filed by JEFFREY E. EPSTEIN, GHISLAINE MAXWELL, ABIGAIL WEXNER, LESLIE WEXNER.. (ph, ) Additional attachments) added on 10/1/2003 (ph, ). Additional attachment(s) added on 10/10/2003 (ph, ). (Entered: 09/08/2003) 09/09/2003 31 ORDER MOOTING PLAINTIFFS' MOTION TO COMPEL THE PRODUCTION OF DOCUMENTS AND RESPONSES TO INTERROGATORIES ETC.. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 9/9/03.9/10/03 ENTERED AND COPIES MAILED AND FAXED 9/9/03(ph, ) (Entered: 09/10/2003) 09/10/2003 32 Reply to defendants' motion for a protective order to quash notice of depositions and supplemental memorandum of law in connection with plaintiff's motion to compel discovery responses, Certification of counsel, Certificate of service filed by NELSON SHANKS. (ph, ) Additional attachment(s) added on 9/18/2003 (fh, ). (Entered: 09/11/2003) 09/18/2003 3 ORDER DENYING AS MOOT DEFENDANTS MOTION TO QUASH NOTICE OF DEPOSITIONS, UPON REPRESENTATION THAT THE PARTIES HAVE AGREED UPON THE LOCATIONS OF THE NOTICED DEPOSITIONS ETC.. SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 9/18/03.9/18/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 09/18/2003) 09/23/2003 34 ORDER THAT THE COURTS PRETRIAL SCHEDULING ORDER IS AMENDED AS FOLLOWS: DISCOVERY BY 10/10/03, SETTLEMENT/FINAL PRETRIAL CONFERENCE ON 10/20/03 AT 11:15; PRETRIAL MEMORANDA AND JOINT PROPOSED JURY INSTRUCTIONS 10/15/03; COUNSEL SHALL BE PREPARED FOR TRIAL ON 10/20/03 . SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 9/23/03.9/24/03 ENTERED AND COPIES MAILED (ph, ) (Entered: 09/24/2003) 09/23/2003 SETTLEMENT CONFERENCE SET FOR 10/20/2003 11:15 AM BEFORE HONORABLE CLARENCE C. NEWCOMER. (ph, ) (Entered: 09/24/2003) 10/21/2003 35 STIPULATION AND ORDER THAT THE COURT DISMISS THE CAPTIONED MATTER, INCLUDING ALL CLAIMS AND COUNTERCLAIMS, WITH PREJUDICE. . SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 10/21/03. 10/21/03 ENTERED AND COPIES MAILED AND FAXED.(ph, ) (Entered: 10/21/2003) 10/24/2003 36 STIPULATION AND ORDER THAT PURSUANT TO FRCP 41(a)(1) (ii) AND THE SETTLEMENT AGREEMENT, THAT THE PARTIES REQUEST THE COURT DISMISS THE CAPTIONED MATTER, INCLUDING ALL CLAIMS AND COUNTERCLAIMS, WITH PREJUDICE. . SIGNED BY JUDGE CLARENCE C. NEWCOMER ON 10/24/03. 10/24/03 ENTERED AND COPIES MAILED AND FAXED BY CHAMBERS(ph, ) (Entered: 10/24/2003) https://ecf.paed.uscourts.gov/cgi-bin/DktRpt.pl?'261521028494284-L_353_0-1 5/22/2007 EFTA00187411 United States District Court Eastern District of Pennsylvania - Docket Report Page 7 of 7 PACER Service Center Transaction Receipt 05/22/2007 18:33:24 PACER Login: du4480 Client Code: Description: Docket Report Search Criteria: 2:02-cv-07671-CN Billable Pages: 4 Cost: 0.32 https://ecIpaed.uscourts.gov/egi-bin/DktRpt.pl?261521028494284-L_353_0-1 5/22/2007 EFTA00187412 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA NELSON SHANKS CIVIL ACTION Plaintiff, • I • • • LESLIE and ABIGAIL WEXNER, et al. Defendants. NO. 02-7671 ORDER AND NOW, this day of September, 2003, upon consideration of Defendants' Motion For A Protective Order to reschedule and relocate the depositions of each Defendant, IT IS HEREBY ORDERED that Defendants' Motion is GRANTED and the Notices of Deposition issued are quashed without prejudice to have them rescheduled by agreement of the parties. BY THE COURT: Clarence C. Newcomer, S.J. PIILIT45448611 EFTA00187413 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA NELSON SHANKS CIVIL ACTION Plaintiff, 1. LESLIE and ABIGAIL WEXNER, et al. Defendants. NO. 02-7671 DEFENDANTS' MOTION FOR A PROTECTIVE ORDER TO OUASH NOTICE OF DEPOSITIONS Defendants, by and through their counsel, hereby move this Court, pursuant to Fed. R. Civ. P. 26(c)(2), for a protective order to reschedule and relocate the depositions of Jeffrey Epstein, Ghislaine Maxwell, and Abigail and Leslie Wexner, who received notices of oral deposition to be taken in the offices of Plaintiff's counsel, Gollatz, Griffin & Ewing, located in Philadelphia, Pa.: Jeffrey Epstein and Ghislaine Maxwell, noticed for September 9, 2003; Abigail and Leslie Wexner, noticed for September 10, 2003. In support of this motion, Defendants submit the accompanying Memorandum of Law. MILITA54486 EFTA00187414 Dated: September 5, 2003 J. Fox Attorney Identification No. 15261 Christopher J. Guiton Attorney Identification No. 89866 DRINKER BIDDLE & REATH LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103-6996 Counsel for Defendants PHLI1145448611 EFTA00187415 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA NELSON SHANKS CIVIL ACTION Plaintiff, LESLIE and ABIGAIL WEXNER, et al. Defendants. : NO. 02-7671 MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION FOR A PROTECTIVE ORDER TO QUASH NOTICE OF DEPOSITIONS Without any consultation with counsel for Defendants to find mutually acceptable dates and times, on August 27, 2003, Plaintiff Nelson Shanks provided notices to Defendants' counsel of the oral depositions of Defendants Jeffrey Epstein, Ghislaine Maxwell, Abigail Wexner and Leslie Wexner to be taken on September 9th and 10th, 2003 in the offices of Gollatz, Griffin & Ewing, P.C., in Philadelphia, Pa. As Plaintiff well knows, defendants Jeffrey Epstein and Ghislaine Maxwell reside in the U.S. Virgin Islands, and defendants Abigail and Leslie Wexner reside in New Albany, Ohio. While Plaintiff may be permitted to designate his location of choice for the depositions, this Court has the power and duty under Fed. R. Civ. P. 26(c) to determine the most appropriate location for each deposition. See e.g., O'Connor.. Trans Union Corp., 1998 U.S. Dist. LEXIS 6774 (E.D. Pa. May 11, 1998). This Court has previously determined "that as a general rule, if a deponent lives a substantial distance from the deposing party's residence, the deposing party should be required to take the deposition at PIII.M4544801 EFTA00187416 a location in the vicinity in which the deponent resides." First Fidelity Bancorporation!". National Union Fire Ins. Co. 1992 U.S. Dist. LEXIS 3367 (E.D. Pa. Mar. 5, 1992). Pursuant to Fed. R. Civ. P. 26(e)(2), defendants seek an order that would protect them from the undue burden and expense of traveling to Philadelphia for these depositions; defendants Jeffrey Epstein and Ghislaine Mawell will submit to a deposition in the Virgin Islands; and defendants Abigail and Leslie Wexner seek an order that would protect them from being forced to travel from New Albany, Ohio to Philadelphia for their depositions. Under the circumstances, the Notice served on August 27, 2003 requiring each of the defendants to fly to Philadelphia is unreasonable and unduly burdensome. As the Court well knows, the basis for asserting jurisdiction over these defendants does not include any instance when any of them visited Pennsylvania. It was Plaintiff who traveled to New York and Ohio in connection with this matter. Accordingly, if these depositions are to proceed, they should occur at the locations of the defendants. It is far less dislocating for Plaintiff's lawyer to travel to take these depositions in the Virgin Islands and Ohio than it would be to force four people to take the time required to travel to Philadelphia. Although Plaintiff had earlier expressed a commitment to working out a schedule that is convenient to all parties, Plaintiff has unilaterally scheduled the depositions with no regard to the inconvenience it may impose on the parties to be deposed. Such conduct is in direct contrast with the manner in which Defendants have attempted to depose Plaintiff. PEILM454486 EFTA00187417 For example, Defendants noticed the deposition of Plaintiff Nelson Shanks for June 9, 2003. Immediately thereafter, Defendants agreed with Plaintiff to postpone that date so that the parties could come to a mutually agreeable date for the deposition. Plaintiff still, nearly three months later, has yet to agree to a date in which Shanks can be deposed, but has instead unilaterally designated September 9th and 10th in Philadelphia as the time and place for Defendants' depositions. Defendants object to these depositions being taken in Philadelphia given the difficulty for these individuals to make arrangements to be deposed miles away from their respective residences. Based upon Plaintiff's recent reluctance to discuss, much less honor, any mutual agreements, Defendants ask this Court to quash Plaintiff's Notice of Depositions and grant this protective order, rescheduling the depositions for a date and time that is suitable for both the Defendants and Plaintiff, and relocating the depositions from Philadelphia to the U.S. Virgin Islands for Mr. Epstein and Ms. Maxwell; and New Albany, Ohio for the Wexners. Accordingly, this Court should grant Defendants' motion for a protective order and quash the depositions of Jeffrey Epstein, Ghislaine Maxwell, and Abigail and Leslie Wexner, without prejudice to have them rescheduled at a convenient location. CONCLUSION For all of the foregoing reasons, Defendants respectfully request that the Court grant its Motion for a Protective Order or such other relief as the Court deems appropriate. PFILM45448611 EFTA00187418 Dated: September 5, 2003 J. Fox AttorneyIdentification No. 15261 Christopher J. Guiton Attorney Identification No. 89866 DRINKER BIDDLE & REATH LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103-6996 Attorneys for Defendants PHLM45448611 EFTA00187419 CERTIFICATE OF SERVICE I, Christopher J. Guiton, hereby certify that on this 51h day of September 2003, I caused a true and correct copy of the foregoing Defendants' Motion for a Protective Order and accompanying Memorandum ofLaw to be served as follows: VIA HAND DELIVERY Jeffrey Hofferman, Esquire Gollatz, Griffin & Ewing, P.C. Four Penn Center, Suite 200 Philadelphia, PA 19103 (Attorney for Plaintiff) Dated: September 5, 2003 By: Christopher J. Guiton PFILITS4544861I EFTA00187420 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA NELSON SHANKS CIVIL ACTION Plaintiff; LESLIE and ABIGAIL WEXNER, et al. Defendants. NO. 02-7671 CERTIFICATION OF GOOD FAITH EFFORTS TO RESOLVE DISCOVERY DISPUTES BEFORE FILING MOTION J. Fox, Esquire, hereby certifies that he is counsel for Defendants and that prior to filing Defendants' Motion for a Protective Order to reschedule and relocate the depositions of Jeffrey Epstein, Ghislaine Maxwell, and Abigail and Leslie Wexner, he engaged in good-faith efforts with Plaintiff's counsel, Jeffrey Hofferman, to resolve this dispute. He wrote Mr. Hofferman a letter requesting rescheduling. Mr. Hofferman did not bother to respond to the letter. J. Fox Counsel for Defendants, Dated: September 5, 2003 PFILIT1454486\ I EFTA00187421 Department of Licensing and Consumer Affairs Page 1 of 2 I/II.CA 11OIIIC BUCille“ LICCIISC Operalers License Business License Search Gote1a) Roc Iiumtl CerMlextions Business Name Search CategoaA,2 New Business istings Chr Cro Commoner Minim Phone: (: Fax: (3' Commisshmer Robertson Records per page: Ahem the DIA 'A Image for Premium Listings rir-3 'business Starch Found 34 Records Adminish St. Joh Phone: (: Reco12 rd!14 tli c)180 Fax 0' Enter Business Name (use fewer letters for more results) 'financial Search --Bookkeeping Services-- - •i Prop. & Po DEPAUL FINANCIAL SERVICES I Sub P Thon 340492-1829 Phone: (: FREDERIKSTED, St. Croix Fax(3' License #: 2-2020117-2006 WINSLOW & WINSLOW FINANCIAL SERVICES, INC. 940-713-9713 FREDERIKSTED, St. Croix License #: 2-2025606-2006 --Business & Management Consulting-- BARRY FINANCIAL SERVICES INC St. Thomas License #: 1-2025931-2007 EMAX FINANCIAL GROUP 340 719-4600 Christiansted, St. Croix License #: 2-2030892-2007 FINANCIAL TRUST COMPANY, INC. 340-775-2525 St. Thomas http://www.dlca.gov.vi/bussearch.asp?norecs=10&name=financial 5/14/2007 EFTA00187422 Department of Licensing and Consumer Affairs Page 2 of 2 License #: 1-2021802-2006 GLOBAL FINANCIAL STRATEGIES, LLC St. Thomas License #: 1-1004878-2007 GOLDEN EAGLE FINANCIAL, LLLP 340-774-2273 St. Thomas License #:1-2013600-2006 GULFSTREAM FINANCIAL, LLC St. Thomas License #: 1-2028797-2007 HORIZON FUEL AND FINANCIAL MANAGEMENT 340-719-7915 Christiansted, St. Croix License #: 2-2030321-2007 HORIZON FUEL AND FINANCIAL MANAGEMENT, LIMITED LIABILITY LIMITED PARTNERSHIP 340-719-7915 CHRISTIANSTED, St. Croix License #: 2-2020644-2006 Found 34 Records 1234 Next Records ] to 10 Official Website of the USVI Department of Licensing and Consumer Affairs Webmastering by Vastimaging Site Last Updated May 19, 2003 http://www.dlca.gov.vi/bussearch.asp?norecs=10&name=financial 5/14/2007 EFTA00187423 Page I of 2 Westlaw. Not Reported in F.Supp. Page I Not Reported in F.Supp., 1998 WL 67676 (S.D.N.Y.) (Cite as: Not Reported in F.Supp.) H During discovery, the Government requested U.S.!. Epstein production of Fisher's 1996 tax return to verify the S.D. .Y.,1998. amount of rent that he had collected from his Only the Westlaw citation is currently available. subtenants. Fisher objected to the request. At a United States District Court, S.D. New York. conference on December 10, 1997, I overruled the UNITED STATES OF AMERICA, Plaintiff, objection on the condition that the return be 1. Jeffrey E. EPSTEIN and Ivan S. Fisher, protected by an appropriate confidentiality order, which the parties were to negotiate. Fisher and the Defendants. Government, however, were unable to agree on the No. 96 Civ. 8307(DC). terms of a protective order. Hence, they submitted separate proposed protective orders for my Feb. 19, 1998. consideration. The Government's proposed order contains a Mary Jo White, United States Attorney for the provision ("Proposed Paragraph 7(c)") that would Southern District of New York, by Serene Nakano, permit the United States Attorney's Office for the Assistant United States Attorney, New York City, Southern District of New York to disclose any for the United States. confidential information governed by the protective Gage & Pavlis, by G. Robert Gage, Jr., Ellen J. order to other government agencies for the purpose Casey, New York City, for Ivan S. Fisher. of enforcing the criminal or civil laws of the United States. Thus, the Government seeks to reserve the MEMORANDUM DECISION right to use confidential information produced by CHIN, J. Fisher in this case in unrelated civil or criminal *I In this case, the United States (the "Government" matters. The Government contends that Proposed ) seeks to evict defendants Jeffrey E. Epstein and Paragraph 7(c) is necessary because the U.S. Ivan S. Fisher from a building formerly used as a Attorney's Office has a statutory duty to enforce the residence by the Deputy Consul General of the laws, citing 28 U.S.C. § 547(c), and that it therefore Islamic Republic of Iran ("Iran"). After diplomatic cannot ignore any evidence of a violation of and consular relations with Iran were severed in law-even evidence that comes to its attention only 1980, the Office of Foreign Missions ("OFM") of because it is produced pursuant to a protective order the United States Department of State took in discovery in a civil case. Fisher objects to possession of the building pursuant to the Foreign Proposed Paragraph 7(c). He contends that use of Missions Act, 22 U.S.C. § 4301 et seq. OFM any confidential documents produced in this case leased the building to Epstein in 1992. Epstein should be limited to this lawsuit. eventually sublet the premises to Fisher, purportedly without the Governments consent. Fisher's objection is sustained, for three reasons. Fisher, in turn, sublet a portion of the premises to several other lawyers. First, confidentiality orders arc intended "to 'secure the just, speedy, and inexpensive determination' of In 1996, the Government purported to terminate civil disputes by encouraging full disclosure of all Epstein's lease and brought this action to evict evidence that might conceivably be relevant" Epstein and Fisher. The other sub-tenants were g Martindell International TeL & Tel. Corp.. 594 later added as defendants. The Government also F.2d 291, 295 (2d Cir.1979). Unless protective seeks to recover back rent from Epstein and Fisher. orders are "fully and fairly enforceable," persons O 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.com/print/printstream.aspx?sv=Full&rIti=1&prft—HTMLE&En=_top... 5/22/2007 EFTA00187424 Page 2 of 2 Not Reported in F.Supp. Pagc 2 Not Reported in F.Supp., 1998 WL 67676 (S.D.N.Y.) (Cite as: Not Reported In F.Supp.) relying upon such orders will be inhibited from protection from disclosure by the Government in providing essential testimony and information in this action. See Richards I Stephens. 118 F.R.D. civil litigation, "thus undermining a procedural 338, 339 (S.D.N.Y.1988) § 6103 is intended to system that has been successfully developed over protect the confidentiality of taxpayers' returns by " the years for disposition of civil differences." Id. A regulat[ing] ... disclosure of tax returns by people provision that would permit the use of confidential having access to tax returns in their official capacity information outside of this lawsuit would defeat the "). Fisher should not become the subject of an IRS very purpose of the protective order. tax investigation merely because of documents he produced in what is essentially a landlord-tenant *2 Second, although the Court recognizes the strong suit. public interest in obtaining all relevant evidence required for law enforcement purposes, the For these reasons, I will enter a protective order that Government as investigator " 'has awesome does not contain Proposed Paragraph 7(c). The powers' [that] render unnecessary its exploitation of Government may not use confidential information the friuts of private litigation." Id. (quoting GAF produced in discovery pursuant to the protective Corp. I. Eastman Kodak Co., 415 F.Supp. 129, 132 order for any purpose other than prosecuting this (S.D.N.Y.1976)). Proposed Paragraph 7(c) should lawsuit, absent further order of the Court. not be included in the protective order "merely to accommodate the Government's desire to inspect SO ORDERED. protected [information] for possible use in a criminal [or civil] investigation." MartindeR 594 S.D.N.Y.,1998. F.2d at 296; cf. id. (denying Government's order to U.S.I. Epstein modify or vacate protective order to permit it access Not Reported in F.Supp., 1998 WL 67676 to witnesses' deposition transcripts protected by the (S.D.N.Y.) order). The Government will still be able to fulfill its statutory obligation to enforce the law through END OF DOCUMENT ordinary criminal and civil process and by taking advantage of the substantial resources available to the Government to investigate suspected violations of the law. Third, tax information has traditionally been treated as private and confidential information. Section 6103 of the Internal Revenue Code, for example, specifically prohibits any person, including an officer or employee of the United States, from " disclos[ing] any return or return information obtained ... in any manner in connection with his [or her] service as such an officer or employee." 26 U.S.C. § 6103(a). Section 6103 also spells out the limited situations when an officer or employee may disclose return information. See, e.g., § 6103(hX2) (disclosure of returns and return information to Department of Justice employees), § 6103(hX4) (disclosure of returns or return information in judicial or administrative proceedings). This section provides specific limits on the disclosure of returns and return information and bolsters the conclusion that Fisher's tax return is entitled to O 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.com/print/printstream.aspx?sv=Full&rIti=18cprft—HTMLE5cfn=_top... 5/22/2007 EFTA00187425 640 818 FEDERAL SUPPLEMENT tered trade dress, in violation of 2 43(a) of Moreover, Hargen also claims that FT's plas- the Lanham Act. Hargen contends that FT tic boxes are functional because they allow cannot obtain relief under the Lanham Act for easy shipping, allow for shelf display and because FT's trade dress is Ilinetionall stacking, protect the crystals from chipping, protect the crystals from dissolving in moist IN, 111 A trade dress is functional when places, and are designed to hold the crystal the trade dress "is essential to the uses or deodorant in the same way that a soap dish purposes of the article or if it affects the cost holds soap. Memo in Support of Summary or quality of the article." Inwmxl Labs., Inc- Judgment at 11-13. See Rosenblatt dep. at Ives Lobs., Inc.. 456 U.S. 844, 850 n. 10, 95; vol. IV at 19. As is apparent, disputed 102 S.Ct. 2182, 2187 n. 10, 72 L.Ed.2d 606 issues of material fact remain about the func- (1982). A product's trade dress must be tionality or non-functionality of the plaintiffs viewed in its totality. te Sportsac, Ina'. K trade dress. Therefore, Hargen's motion for Mart Corp., 754 F.2d 71, 75 (2d Cir.1985). summary judgment on FT's trade dress However, if a trade dress is found to be claims is denied. functional, its features may be copied even if conibsion would result. American Greetings III. Causes of Action Under New York Corp.'. Dan-Dee Onportit Ina, 807 F.2d Law 1136, 1141 (3d Cir.1986). Because Hargen has undertaken no inde- FT states that its packaging design was pendent analysis of FT's New York causes of chosen because the design was pretty, so- action, Hargen's motion for summary judg- phisticated, and showed off the novelty value ment on these causes of action is denied. of the deodorant stone. Rosenblatt dep. at 520-522. FT also states that FT colored the Conclusion package blue because it liked that color, not Hargen's motion for summary judgment is because blue was a common color used in denied. cosmetic packaging. Id. at 378. Moreover, SO ORDERED. the evidence before us indicates FT and at least one other producer of deodorant stones pack their deodorant products in other pack- aging besides plastic boxes. For example, plaintiff also packs its deodorant stone in a soft plastic pouch, a triangular cardboard box, a shrink-wrapped soap dish and satin pouches of various colors. Rosenblatt aff. 92 5, 9, 13. Moreover, another company, Michael R. STROLL Plaintiff, whose name Rosenblatt could not recall at his deposition, distributes a similar product I in a velvet, drawstring pouch. Rosenblatt Jeffrey EPSTEIN, Defendant. dep. at 379-380. This evidence suggests that No. 92 Civ. 1021 (EC). plaintiffs packaging in this case may not be functional. United States District Court, Defendant claims that FT's packaging is S.D. New York. functional because the packaging is allegedly April 15, 1993. efficient and compact, because the packaging allows consumers to see the product, and because the packaging is commonly used in Second joint venturer brought suit the stick and roll-on deodorant industry. against first venturer, seeking to recover un- 4. Defendant alternatively claims that even if the however, is not claiming exclusive rights to the packaging is not functional, plaintiff cannot use of blue in its packaging. Memo in Opp. to claim that the color blue is distinctive of its Summary Judgment at B. Rather, plaintiff product and therefore protectable. Memo in claims a proprietary interest in the entirety of Its Support of Summary Judgment at 16. Plaintiff. packaging. Id at 12. EFTA00187426 STROLL I EPSTEIN 641 Cite as /118 F.Supp. MO (S.D.N.Y. Ms) der contract in which second venturer re- apply. N.Y.McKinney's Uniform Commer- leased his interest in venture. First ventur- cial Code §§ 3-104(1)(4 3-403, 3-403(2)(b). er moved to dismiss or for summary judg- See publication Words and Phrases ment, and second venturer cross-moved for for other Judicial constructions and def- initions. summary judgment. The District Court, Conboy, J., held that: (1) agreement under 5. Contracts 0:0176(2) which first joint venturer agreed to return Whether contract is ambiguous is matter capital contribution to second joint venturer of law to be determined by court. upon return of all interests in venture by second venturer unambiguously indicated 6. Contracts 0=443(2) that first venturer was acting solely in repre- Contract is "ambiguous" If it is reason- sentative capacity, not personal capacity, and ably susceptible of more than one interpreta- (2) modification of original joint venture tion. agreement making first joint venturer per- See publication Words and Phrases sonally liable for managing affairs of joint for other judicial constructions and def- initions. venture could not be construed as imposing personal liability on first joint venturer in 1. Contracts 4=143(2) event joint venture subsequently bought out Unambiguous contract language is not second venturer's interest. rendered ambiguous simply because parties Motions granted in part and denied in urge different interpretations in litigation. part. & Contracts G=.143.6 Whether contract is ambiguous is to be I. Federal Courts .3=409 determined by considering contract as whole, In diversity action, federal court sitting under New York law. in New York must apply New York law, 9. Joint Adventures l=04(1) including New York's choice-of-law rules. Agreement under which first joint ven- 2. Contracts e=s144 turer agreed to return capital contribution to Under New York's choice-of-law rules, second joint venturer upon return of all in- when court is construing meaning of con- terests in venture by second venturer unam- tract, court should apply local law of state biguously indicated that first venturer was which has greatest interest in or most signifi- acting solely in representative capacity, not cant relationship to transaction and parties. personal capacity, when he agreed to return second venturer's contribution, under New 3. Joint Adventures (1.4(1) York law; agreement indicated that first New York was state with most signifi- venturer was acting both as officer of ven- cant relationship to agreement in which one ture and as agent for venture, although first joint venturer agreed to return capital contri- joint venturer did not sign contract expressly bution to another venturer, and thus, New In representative capacity. York law governed meaning of agreement, in diversity action; contract was executed in 10. Contracts u=179 New York and one party was New York Contract which demonstrates on its face citizen. that defendant was acting solely in represen- tative capacity will not be rendered ambigu- 4. Bills and Notes o=,I47 ous under New York law simply because Contract under which one joint venturer defendant failed to sign contract in represen- agreed to return capital contribution to an- tative capacity. other venturer was not "negotiable instru- and Agent <2,136(1) ment" as it was not payable to order or 11. Principal bearer, and thus, provision of New York Under New York law, agent for dis- Uniform Commercial Code governing inter- closed principal will not be held personally pretation of negotiable instruments did not liable unless there is clear and explicit evi- EFTA00187427 642 818 FEDERAL SUPPLEMENT dence of agent's intent to substitute or add execution of agreement under which second his ovm personal liability for, or to, that of joint venturer's capital contribution was to be principal. returned by venture could not make first venturer personally liable under such con- 12. Evidence e=384 tract. If contract is unambiguous on its face, extrinsic evidence may not be presented to IS. Contracts ea170(1) create ambiguity, under New York law. Where contract is unambiguous on its face, evidence of conduct occurring subse- 13. Joint Adventures d=.4(1) quent to execution of contract may not be Modification of original joint venture introduced to create ambiguity. agreement making first joint venturer per- sonally responsible for managing affairs of joint venture could not be construed as im- Arthur M. Handler, Whitman & Ransom, posing personal liability on first joint ventur- New York City, for plaintiff. er in event of joint venture subsequently Elliot Silverman, Cold & Wachtel, New buying out second venturer's interest in ven- York City, for defendant. ture. 14. Evidence ca384 ORDER Where parties have expressed their CONBOY, District Judge: agreement in unambiguous and integrated writing, New York's parol-evidence rule op- We have before us an action for breach of erates to exclude evidence of all prior and contract. Plaintiff Michael R. Stroll contemporaneous negotiations or agreements ("Stroll") seeks to recover from defendant offered to contradict or modify terms of writ- Jeffrey Epstein ("Epstein") money allegedly ing. owed pursuant to a contract in which Stroll relinquished his interest in a joint venture. 15. Evidence ca397(2) Epstein asserts that he executed the contract Writing is "integrated" for purpose of in a representative capacity, as an agent for New York's parol-evidence rule if it com- the venture and as an officer of the Intercon- pletely and accurately embodies all mutual tinental Asset Group ("IAA.'), and that, rights and obligations of parties. therefore, he is not personally liable under See publication Words and Phrases the contract. for other judicial constructions and def- initions. Pending before the Court are two motions: (1) defendant Epstein's motion to dismiss the 16. Evidence c=.397(1) complaint for failure to state a claim upon Evidence that first joint venturer orally which relief can be granted, or, in the alter- promised to personally repay second ventur- native, for summary judgment: I and (2) er's capital contribution contradicted unam- plaintiff Stroll's cross-motion for summary biguous terms of integrated written agree- judgment. For the reasons that follow, Ep- ment entered by first venturer in his repre- stein's motion for summary judgment is sentative capacity, and thus was inadmissible granted, and Stroll's cross-motion is denied. under New York's parol-evidence rule. Discussion 2 17. Joint Adventures e=.4(1) A. The November 1984 Contract Alleged partial payment or promise to (1-31 Defendant Epstein moves for sum- pay personally by first joint venturer after mary judgment on the ground that the No- 1. As this Court will consider matters extrinsic to 2. This Court has diversity jurisdiction over the the complaint. we will treat defendant Epstein's present action pursuant to 28 U.S.C. § 1332(a). motion to dismiss as a motion for summary judg- as plaintiff Stroll is a citizen of Florida. defen- ment. See Fcd.R.Civ.P. 12(b). dant Epstein is a citizen of New York. and the sum in controversy is 5440.000. EFTA00187428 STROLL I EPSTEIN 643 carnets F.Supp. 440 (00N.Y. 19931 vember 1984 contract unambiguously indi- F.Supp. at 1366. A contract is ambiguous if cams the parties' intention that Epstein was it is reasonably susceptible of more than one acting solely in a representative capacity interpretation. Chimart, 498 N.Y.S2d at when he agreed to return Stroll's capital 346, 489 N.E.2d at 233. Unambiguous con- contribution in the joint venture.3 tractual language is not rendered ambiguous I.4-8) "Under New York law,' . . . the "simply because the parties urge different Court must look r fi st to the parties' written interpretation s in litigation." Sterling, 792 agreement to determine the parties' intent F.Supp. at 1366. Moreover, whether a con- and [must' limit its inquiry to the words of tract is ambiguous is to be determined by the agreement itself if the agreement sets considering the contract as a whole. Wing forth the parties' intent clearly and unambig- Wing, 112 A.D.2d 932, 492 N.Y.S.2d 450, 452 uously? Sterling Drug Inc. Bayer AG, (2d Dep't 1985). 792 F.Supp. 1357, 1365 (S.D.NN.1992). See also Chimart Associates I Paul, 66 N.Y.2d 191 Applying the above-mentioned princi- 570, 498 N.Y.S2d 344, 34, 489 N.E.2d 231, ples, this Court concludes that the November 233 (Ct.App.1986) (Where a contract is un- 1984 contract, when read as a whole, unam- ambiguous on its face, the Court may not biguously indicates the parties' intention that consider evidence extrinsic to the contract to Epstein was acting solely in a representative determine the parties' intent). Whether a capacity when he agreed to return Stroll's contract is ambiguous is a matter of law to be capital contribution. The body of the con- determined by the Court. Sterling, 792 tract makes clear that Epstein executed the In a diversity action, a federal court sitting in the creditor can show that the payment "was • New York must apply New York law, Including payment of a portion of the admitted debt .. . New York's choice of law rules. I & B Schoen- accompanied by circumstances amounting to an feld Fur Merchants. Inc I Kilbourne & Donahue, absolute and unqualified acknowledgment by the Inc.. 704 F.Supp. 466, 4.68 (S.D.N.Y.1989). See debtor of more being due, from which a promise Klaxon Co. Ste for Electric Mfg. Co., 313 U.S. may be inferred to pay the remainder."). Ep- 487. 496, 6 S.Ct. 1020. 1021. 85 L.Ed. 1477 stein asserts that he paid Stroll 510,080 because (1941): see also Erie R. Co.)! Tompkins, 304 U.S. Stroll had purchased • horse for him. Epstein 64. 78. 58 SO. 817, 822. LEd. 1188 (1938). presents no evidence of this purchase, though. Under New York's choice of law rules, when a Because all reasonable inferences on a summary court Is construing the meaning of a contract. Judgment motion are to be drawn in favor of the the Court should "apply the local law of that non-moving party. Knight US. Fire Ins. Co., state which has the greatest interest in or the 804 F.2d V. 11 12d Cir.1981), we hold that the most significant relationship to the transaction present action is not time-barred for the pur- and the parties." See Thar Fund. Inc. !Ins. Co. poses of this motion. of N. Am., 580 Kid 1158. 1162 (2d i, 1978). cat denied, 440 U.S. 912, 99 S.Ct. 1226. 59 4. Stroll contends that § 3-403(2Xb) of the New L.Ed.2d 461 (1979). In the present action, the York Uniform Commercial Code should govern state with the most significant relationship to the our interpretation of the November 1984 con- transaction is New York: the contract being sued tract. See N.Y.U.C.C. § 3-403(21(b) (McKinney upon was executed in Ncw York. defendant Ep- 1991). We disagree. Section 3-403 governs ne- stein Is a New York citizen. and I.A.G. is a New gotiable Instruments. Finnish Fur Sales Co. I York corporation. Moreover, both parties agree Juliette Shutoff Furs. Inc., 770 F.Supp. 139. Ian that New York law applies in this case. Accord- (S.D.N.Y.1991): Rotuba Extruders, Inc. I Ceppos. ingly, we look to New York law to construe the 46 N.Y.2d 223, 413 N.Y.S.2d 141. 43. 385 meaning of the November 1984 contract. N.E.2d 1068, 1070 (Ct.App.1978). As Stroll con- cedes. the present contract Is not a negotiable 3. Initially, we note that Epstein contends that Instrument because It is not "payable to order or this action is time-barred pursuant to N.Y. to bearer." See N.Y. U.C.C. § 3-104(11(d) C.P.L.R. § 213(2) (McKinney 1990). which pro- (McKinney 1991). We have found no case which vides • six.year statute of limitations for breach of contract claims. Stroll contends that the stat- applies § 3-403(21(b) to a non-negotiable instru- ment. Moreover, at least one New York court ute of limitations was tolled as he received a $10,000 personal check from Epstein in May of has specifically held that if the contract being 1988. accompankd by Epstein's promise to pay sued upon is a not a negotiable instrument, § 3- more of the debt upon his receipt of personal 403 cannot be applied to determine whether an funds. See Commissioners of the State Ins. Fund agent executed the contract in an individual ca- I Warner. 156 A.D.2d 131, 548 N.Y.S.2d 883, pacity. Pepsi-Cola Buffalo Bottling Corp. 883 (1st Dept 1989) (stating the common law Wehrle Drive Supermarkets. 123 A.D.2d 515. 5 rule that the statute of limitations will be tolled if N.Y.S.2d 107. 108 14th Dept 1986). EFTA00187429 644 818 FEDERAL SUPPLEMENT contract in a representative capacity. In one set Group and as agent for the joint venture sentence, the contract states that the Novem- you . . . agreed to accept my rescission of my ber 1984 contract shall consist of terms and acquisition . .. and my tender to you of all conditions verbally agreed upon on Septem- my interests in the venture and you are to ber 10, 1984. In an adjacent sentence, the return all amounts contributed by me to the contract states that the following agreement venture...." (emphasis added). This sen- was reached on September 10, 1984: "in tence indicates that when the contract, after your capacity as both an officer of Intercon- this sentence, uses only personal pronouns to tinental Asset Group and as agent for the refer to Epstein, it is referring to Epstein in joint venture you verbally agreed to accept a representative capacity. my rescission of my acquisition of the joint venture ab initio, and my tender to you of all (10, 11) Finally, Stroll argues that Ep- my interests in the venture and you are to stein's signature on the contract reveals the return all amounts contributed by me to the parties' intention to hold Epstein personally venture. . . ." (emphasis added). Read to- liable because Epstein did not sign the con- gether, these two sentences clearly indicate tract as an agent or as a corporate officer. that the November 1984 contract was execut- Epstein signed the contract as follows: /s/ ed by Epstein in his representative capacity. Jeffery Epstein 1AG. Under New York law, a signature in a representative capacity Stroll asserts that the above-quoted sen- would have been "Jeffrey Epstein for I.A.G." tence demonstrates that Epstein acted in a or "I.A.G., by Jeffrey Epstein". 2 N.Y.Jur. representative capacity only when he agreed 2d, Agency. 5 181. However, under New to accept Stroll's demand for rescission, and York common law principles of agency, which that Epstein personally agreed to buy out govern this contract.' a contract which dem- Stroll's interest in the venture. We find onstrates on its face that the defendant was Stroll's interpretation of this sentence acting solely in a representative capacity will strained and unreasonable as there is noth- not be rendered ambiguous simply because ing in the sentence to indicate that the the defendant failed to sign the contract in a phrase "in your capacity as .. . an officer . . . and as agent. . . ." does not apply to the representative capacity. See Stylianides • De tartan Motor Ca, 115 Misc.2d 861, 454 entire sentence. N.Y.S.2d 799, 800 (N.Y.Sup.Ct.1982); 2 In an attempt to establish Epstein's per- N.Y.Jur.2d 55 180, 182. See generally Ell sonal liability, Stroll points to selected phras- Dee Clothing Co, Inc. Marsh, 247 N.Y. es of the contract which use personal pro- 392, 395, 160 N.E. 651 (Ct.App.1928) nouns to refer to Epstein (e.g.. "I hereby ("[Wlhere one party to a written contract is accept your demand for rescission and tender known to the other party to be in fact acting upon the terms and conditions contained as agent for some known principal, he does herein."). However, the very first time the not become personally liable whether he contract uses a personal pronoun to refer to signs individually or as (an) agent"). Ac- Epstein, the contract states, "in your capaci- cordingly, because the body of the contract ty as both an officer of Intercontinental As- clearly indicates that Stroll knew, or should S. Under New York 1:O111ITIOll law. an agent for u in allowing a single sentence In a long contract disclosed principal will not be held personally to bind individually a person who sign(edl only liable "'unless there is clear and explicit e‘ as a corporate officer." Other cases have ap- (fence of the agent's intention to substitute or plied this presumption even where the contract superadd his own personal liability for. or tg. was only a page or two long and where the agent that of his principal. Paribas Properties. tow.' signed in an individual capacity. See. e.g.. Brown. 146 A.D.Til 522. 536 N/S.2d 1007. ShoeniliallBenistein, 276 A.D. 200.93 N.Y.S.2d 1008 (1st Dept) igurnow Member F Weiss. 306 187. 188— (1949). Accordingly, we hold that N.Y. 1, 4, 114 N.E.2d 177 1Ct.App.19531). As New York common law governs the present case. stated in Salzman Sign Co.l Beck, 10 N.Y.2d 63. where the contract was only one and a half pages 217 N.YS 24 55. 57, 176 6,11.2d 74. 76 (Ct.App. long, and where the defendant signed in an indi- 1961), the rational underlying this presumption against personal liability %%US the "great danger vidual capacity. EFTA00187430 STROLL I EPSTEIN 645 Cite asaii F.Supp. 640 (S.D.N.Y. It93/ have known" Epstein was acting in a repre- The following will constitute our agree- sentative capacity, the failure of Epstein's ment signature to meet the technical requirements 1. For all purposes hereof and in respect of a representative signature is insufficient to of the management of the affairs of the render the contract ambiguous as to the par- Joint Venture as hereinafter provided Jef- ties' intent. frey E. Epstein ("Epstein") shall act on behalf of LAG. and notwithstanding the Based on the above analysis, the Court separate legal existence of I.A.C., as be- concludes that the November 1984 contract, tween the parties hereto, LA-G. and Ep- when read as a whole, is unambiguous on its stein shall be treated as one and the sane. face and indicates the parties' intention that (emphasis added). The definition of "hereof' Epstein was acting in a representative capac- is "of this" (i.e., of this agreement). See ity when he agreed to return Stroll's capital THE RANDOM HOUSE DICTIONARY OF contribution. THE ENGLISH LANGUAGE 664 (1st ed. Stroll, however, seeks to introduce extrin- 1966). Therefore, the June 1922 contract, sic evidence to generate ambiguity in the when read in the light most favorable to contract. Specifically, Stroll seeks to intro- Stroll, merely makes Epstein liable for the duce a prior written contract executed by purposes of the modified joint venture agree- Stroll. I.A.G., and Epstein on June 18, 1982. ment. A buy out was not a purpose of the Stroll argues that an interpretation of the modified joint venture agreement. There- November 1984 contract as imposing person- fore, the June 1982 contract cannot be con- al liability on Epstein would be consistent strued as imposing personal liability on Ep- with Epstein's assumption of personal liabili- stein in the event of LAG. buying out Stroll's ty under the June 1982 contract. interest in the joint venture. (121 As noted above, if a contract is un- B. Parole Evidence ambiguous on its face, extrinsic evidence may (14,151 Where the parties have ex• not be presented to create an ambiguity in pressed their agreement in an unambiguous the contract. Therefore, Stroll cannot intro- and integrated writing, "the parole evidence duce the June 1982 contract to create an rule operates to exclude evidence of all prior ambiguity in the November 1984 contract. and contemporaneous negotiations or agree- ments offered to contradict or modify the (131 However, even if we consider the terms of their writing." Adler & Shaykin I June 1982 contract, our conclusion that the Wachner, 721 F.Supp. 472, 476, 4 November 1984 contract is unambiguous and (S.D.N.Y.1988). A writing is integrated if It does not establish personal liability remains "completely and accurately embodies all the unchanged. The June 1982 contract is a mutual rights and obligations of the parties." modification of Stroll and I.A.G.'s original a at 476. New York law provides that a joint venture agreement, with one of the "'contract which appears complete on its face modifications making Epstein personally re- is an integrated agreement as a matter of sponsible for managing the affairs of the law." floppy Dock Trading Co., Ltd. joint venture. The contract makes no men- Argo Industries, Inc., 602 F.Supp. 986, 941 tion of any future refund of Stroll's capital (quoting Battery S.S. Corp. Refineria Pan- contribution, or of a buy out in the event of a ama S.A, 513 F.24 735, 738 n. 3 (2d Cir. rescission. 1975)). The parole evidence rule serves to The relevant provisions of the June 1982 protect a party to a written contract from contract are: infirmity of memory, perjury, or the death of witnesses. Adler, 721 F.Supp. at 476. The purpose of this letter is to .. . modify certain provisions of the Joint Venture 1181 We have examined the November agreement which will continue to be opera- 1984 contract and find it to be a complete tive. integration of the parties' agreement. See 6. The Court observes that the November 1984 contract was drafted by Stroll's attorneys. EFTA00187431 646 818 FEDERAL SUPPLEMENT Id. at 476-478. Moreover, even the plaintiff that he paid Stroll $10,000, but claims that he does not contest that the November 1984 paid this money to Stroll because Stroll had contract is a complete integration. purchased a horse for him. Moreover, Ep- Stroll seeks to introduce evidence that dur- stein asserts that at no time subsequent to ing the September 10, 1984 meeting at the the execution of the November 1984 contract office of Stroll's attorney. Epstein orally did he ever promise to personally repay promised to personally repay Stroll's capital Stroll's capital contribution. contribution. In addition, Stroll seeks to in- (181 Where a contract is unambiguous on troduce evidence that at the November 15, its face, evidence of conduct occurring subse- 1984 meeting, Epstein took Stroll aside and quent to the execution of the contract may orally reiterated his personal promise to re- not be introduced to create ambiguity in the turn Stroll's capital contribution. However, contract See Allied Chemical Corporation the evidence Stroll seeks to present directly Alpha Portland Industries, 68 A.D.2d 975, contradicts the unambiguous terms of the 397 N.Y.S.2d 480, 482 (4th Dept 1977). November 1984 contract. The contract Therefore, even if we view the evidence in states that, "loin September 10, 1984, you the light most favorable to Stroll, a partial [Epstein] and I (Stroll) met in the law office payment or a promise to pay personally of Henry M. Grannan. . . . During the made by Epstein subsequent to the execution course of this meeting, in your capacity as of the November 1984 contract cannot make both an officer of Intercontinental Asset Epstein personally liable under the Novem- Croup and as an agent for the joint venture ber 1984 contract. you verbally agreed to accept my rescission . . . and my tender to you of all my interests Because Epstein has established that he is not personally liable under the November . . . and you are to return all amounts con- tributed by me. . .." (emphasis added). 1984 contract, he has met his burden of Moreover, the November 1984 contract establishing that there is no genuine issue of states that the terms of the November 1984 material fact! contract are the same as those agreed upon Conclusion at the September 10, 1984 meeting. There- The Court finds that the November 1984 fore, because the evidence Stroll seeks to contract unambiguously indicates that defen- present contradicts the unambiguous terms dant Epstein was acting solely in a represen- of the integrated November 1984 contract, tative, and not in a personal, capacity. Ac- this evidence is inadmissible under the parole cordingly, Epstein's motion for summary evidence rule. judgment is granted, and Stroll's motion for summary judgment is denied. The Clerk of C. Subsequent Conduct the Court is directed to enter judgment in (171 Stroll asserts that in May 1988, Ep- favor of the defendant stein made a part payment on the debt of SO ORDERED. $10,000. by personal check. Stroll also as- serts that in September 1991, Epstein prom- ised to pay him $75,000 from a fee Epstein was expecting to receive. Epstein concedes 7. In order to establish that there is a genuine .. is beneficial to him." Karl Elmer Forest issue of material fact. Stroll may introduce eve. Hills Corp. Gonzalez. IS9 A.D.2d 613. 553 dente of conduct subsequent to the November N.Y.S.2d 22. 23 (2d Dept 1990). We hold that 1984 contract either to establish that a nation Epstein's check does not constitute a written occurred, or to show that. at some time subse- promise to guarantee the remainder of I.A.G.'s quent to the November 1984 contract, Epstein debt because the check was for only S10,000, and agreed to personally guarantee 1 A.G.'s debt. had no other written notation on it. Therefore, A nation is not enforceable absent consider- even viewing the evidence in the light most fa- ation. Kasper I. Roberts. 119 Misc.2d 829, 464 vorable to Stroll, he has presented no evidence N.Y.S.2d 642. 644 (N.T.Cit-.O.1983). Moreover, that Epstein received consideration for his part an oral promise to guarantee the debt of another payment. or for his promise subsequent to the is not enforceable if the party making the guar- November 1984 contract to personally refund the amee did not receive "new consideration which remainder of Stroll's capital contribution. EFTA00187432 Page 1 of 5 VVestlaw. Not Reported in F.Supp.2d Page I Not Reported in F.Supp.2d, 2003 WL 1343018 (E.D.Pa.) (Cite as: Not Reported in F.Supp.2d) C jurisdiction over these Defendants satisfies the Due Shanks ! Wexner Process Clause of the Constitution. Vetrotex E.D.Pa., 003. Certainteed Corp. Consolidated Fiber and Glass Only the Westlaw citation is currently available. Products Co., 25 -F.3d 147, 151 (3d Cir.1996). United States District CourtE.D. Pennsylvania. Because the Pennsylvania Long Arm Statute is Nelson SHANKS, Plaintiff, coextensive with the Due Process Clause, however, the decisive issue is whether exercising personal Leslie and Abigail WACNER, h/w, Jeffery E. jurisdiction over the Defendants offends due Espstein, individually, and cl/b/a .1. Epstein and process. 42 Pa. Cons.Stat. Ann. § 5322(b) (West Company, inc., and Ghislaine Maxwell, Defendants. 2003). No. Civ.A. 02-7671. There are two requirements to satisfy due process in March 18, 2003. the personal jurisdiction context. First a party must have minimum contacts with Pennsylvania sufficient to show that the party has purposely OPINION availed itself to the laws of this forum. IMO Indus. NEWCOMER, I. Kiekert AG, 155 F.3d 254 (3d Cir.1998). When determining whether these minimum contacts are I. Introduction present, it is the quality and not necessarily the quantity of contacts that is determinative. Hanson' *1 This case arises out of a contract dispute?" Denclda, 357 U.S. 235, 253 (1958). Further, The Plaintiff claims that the Defendants contracted because the Plaintiff claims that specific jurisdiction with him to paint a family portrait of Abigail exists in this case, the relevant contacts are those Wexner and her three children. The Plaintiff alleges that gave rise to the cause of action.R42 If that the Defendants breached this contract by minimum contacts exist, the Court must decide refusing to pay for the portrait after it was whether forcing the out-of-state defendants to delivered. Currently before the Court is the submit to jurisdiction in Pennsylvania conforms Defendants' Motion to Dismiss for Lack of Personal with traditional notions of fair play and substantial Jurisdiction. For the following reasons the Motion justice. Grand Entertainment Group, Ltd. I Star will be denied. Media Sales, Inc., 988 F.2d 476, 481 (3d C11993) (citing International Shoe Co. I Washington, 326 U.S. 310, 316 (1945)). In making this determination FN1. The Defendants deny that a contract we should consider the following: 1) the interests of was ever formed. For purposes of this the forum state; 2) the plaintiffs interest in Motion only we will accept that there was obtaining relief; 3) the interstate judicial system's a contract between the two parties. interest in obtaining the most efficient resolution of controversies; and 4) the shared interest of the II. Legal Standardfor Personal Jurisdiction enig fundamental substantive several States in furth ' social policies. Mesalic i Fiberfloat Corp., 897 As a federal court sitting in diversity, our personal F.2d 696, 701 (3d Cr. 90) (citing Asahi Metal jurisdiction inquiry is two-fold. First, we must Industry Co. I. Superior Court, 480 U.S. 102, 113 decide whether the Pennsylvania Long Arm Statute (1987)). authorizes jurisdiction over the Defendants, and second, we must decide whether exercising 4) 2007 Thomson/West. No Claim to Orig. U.S. Govt Works. https://web2.westlaw.com/print/printstreantaspx?sv=Full&fiti=l&prt1=HTMLE&fir_top... 5/22/2007 EFTA00187433 Page 2 of 5 Not Reported in F.Supp.2d Page 2 Not Reported in F.Supp.2d, 2003 WL 1343018 (E.D.Pa.) (Cite as: Not Reported in F.Supp.2d) FN2. The Plaintiff makes two claims in particularity sufficient contacts through sworn this case, breach of contract and affidavits or oily competent evidence. Time Share promissory estoppel. The Court will not Vacation Club I. Atlantic Resorts, Ltd., 735 F.2d engage in a specific jurisdiction analysis 61, 66 and n. 9 (3d Cir.1984); National Paintball for each of the Plaintiffs two claims. Both Supply, inc. I. Gusto, 996 F.Supp. 459 claims center on essentially the same (E.D.Pa.1998); Rose'. Granite City Police Dept, events and circumstances, and therefore, 813 F.Supp. 319, 321 (E.D.Pa.1993). Following the considerations for jurisdictional these cases, a court would not accept the allegations purposes are identical. See Remick of jurisdictional facts in a complaint as true without Manferdy, 238 F.3d 248, 255 (200 some affirmative proof. See Time Share Vacation (claim specific analysis is only required Club, 735 F.2d 61, 66 at nt. 9. ("Once [a Rule when there are different jurisdictional 12(bX2) motion] is made, plaintiff must respond considerations). with actual proofs, not mere allegations.") However, several other cases have held the iI. Procedurefor Determining Minimum Contacts contrary, finding that a court should accept the allegations in a complaint as true. Carteret Saving When a Defendant moves for dismissal under Bank • Shushan, 954 F.2d 141, 142 at nt. 1(3d 12(6)(2) for lack of personal jurisdiction the burden Cir.1992); Oxford First Corp. PNC Liquidating shifts to the party sr king to impose jurisdiction. Corp., 372 F.Supp. 191, 192-9 & n. 2(E.D .Pa. Provident Nat. Bank California Fed. Say. &Loan 174); See, also, Behagen I. Amateur Basketball Ass'n, 819 F.2d 434 3d Cir.1987). In response to a Asa of U.S.A., 744 F.2d 731, 733 (10th Cir.1984). 12(6)(2) motion, a party must make a prima facie F144 showing that minimum contacts warranting personal jurisdiction exist.FN3 Mellon Bank (East) PSFS Nat. Ass'n I. Farina, 960 F.2d 1217, 1223 (3d FN4. Despite the apparent contradictory Cir.1992). nature of these precedents, several cases have claimed that a District Court should both require proof of jurisdictional facts, FN3. The Court notes that although a and accept all factual allegations in the Plaintiff need only make a prima facie complaint as true. See Feinberg I. showing of jurisdiction to defeat a motion Centeral Asia Caplan! Corp., 936 F.Supp. under Fed.R.Civ.P. 12(bX2), a Plaintiff 250, 254 (E.D.Pa.1996) (stating that " has to establish personal jurisdiction by a Plaintiff must go beyond the pleadings and preponderance of the evidence at trial. make an affirmative proof' and later citing Carteret Saving Bank I. Shushan, 954 Carteret for the proposition that the Court F.2d 141, 146 (3d Cir.1992). The should acceps Plaintiffs allegations as Defendants need not do anything to true); Poole I. Sasson, 122 Fed.Supp.2d preserve their right to raise personal 556, 557 (E.D.Pa.2000) ( "Although all jurisdiction again at trial. allegations in the Complaint are taken as true, a plaintiff may not solely rely on bare iq The law in the Third Circuit, however, is not pleadings to satisfy his jurisdictional clear as to what a Court should consider in deciding burden"). This Court will decline to follow whether the Plaintiff has met this burden. Two lines this approach because of its contradictory of cases differ as to whether affirmative proof of nature and the lack of guidance it will give minimum contacts is required, or if the Plaintiff can to future litigants. merely rely on contacts alleged in his pleadings. Several cases have stated that a plaintiff cannot rely These precedents give little guidance in a case, such on the bare pleadings alone, but must sustain his as this one, where the exhibits submitted by the burden of proof by establishing with reasonable Plaintiff may not be sufficient to support O 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.com/print/printstream.aspx?sv=Full8alti=18Trft=HTMLE&fn=_top... 5/22/2007 EFTA00187434 Page 3 of 5 Not Reported in F.Supp.2d Page 3 Not Reported in F.Supp.2d, 2003 WL 1343018 (E.D.Pa.) (Cite as: Not Reported in F.Supp.2d) jurisdiction on their own, but if considered in challenged. It also gives the substantial deference to conjunction with assertions made in the Complaint pleadings that is required by other 12(b) motions would satisfy the minimum contacts requirement. If and was advocated bi the Carteret line of cases. See the Court were to follow the Time Share approach Oxford First Corp. PNC Liquidating Corp., 372 of requiring competent evidence of all jurisdictional F.Supp. 191, 192-93 & n. 2 (E.D.Pa.1974) (relying facts, this Court would have to dismiss the on the case law in other 12(b) motions to support Plaintiffs case. If the Court followed the procedure the procedure of accepting as true all jurisdictional of Carteret of accepting factual allegations in the facts). Complaint, than jurisdiction has been established. Because the Defendants did not attempt to HI. Jurisdictional Facts controvert any of the allegations in the Plaintiffs Complaint, this Court finds that the most fair .*3 Considering the above analysis the Court will procedure is to accept them as true for the purpose accept the facts as pleaded in the Plaintiffs of this Motion. This aparoach is followed in several Complaint and accompanying exhibits.FN5 These other circuits. Brown Flowers Industrir, Inc., allegations show that the Defendant has the 688 F.2d 328, 332 (5th Cir.1982); Turnock Cope following relevant contacts with Pennsylvania: I) a 816 F.2d 332, 333 (7th Cir.1987); Dowless fax sent from the Defendants to the Plaintiff seeking Warren-Rupp Houdailles Inc., 800 F.2d 131 to set up a meeting between Mrs. Wexner and the 1307 (4th Cir.I986); Behagen I. Amateur Plaintiff in New York City; 2) a fax sent from the Basketball AssW of U.S.A., 744 F.2d 731, 733 (10th Defendants to the Plaintiff detailing his itinerary for Cir.1984); Jet Charter Service, Inc. I. Koeck, 907 his trip to Ohio to meet with and photograph the F.2d 1110, 1111 (11th Cir.1990). While this subjects of the portrait; 3) a letter from the Plaintiff procedure places a burden on the party challenging to Ms. Wexner thanking her for her hospitality jurisdiction to at least question the allegations of during his stay in Ohio; 4) a fax from the jurisdictional facts, this burden is consistent with Defendants to the Plaintiff including the the other requirements placed on Defendants measurements of Ms. Wexner and her children, bringing a 12(bX2) motion. When a complaint is which were to be used to make mannequins in filed there is no affirmative duty to plead personal preparation for the portrait; 5) a letter from jurisdiction because it is assumed that personal Defendant Maxwell to the Plaintiff confirming the jurisdiction exists. Stirling Homex Corp. I. price of the portrait; 6) a letter to Defendant Homasote Co., 437 F.2d 87, 88 (2d Cir.1971). It is Maxwell from the Plaintiff regarding a proposed incumbent on a party to raise the lack of personal frame for the painting; 7) a courier hired by the jurisdiction. See Zelson Thomforde, 412 F.2d 56 Defendants who traveled to Pennsylvania and (3d Cir.1969) (district court cannot raise personal picked up the painting; and, 8) an invoice sent from jurisdiction seta sponte ). Further, if a party wishes the Plaintiff to the Wexners. The Defendants also to challenge personal jurisdiction of a Court he admit that the Defendants initiated the relationship must do so at the responsive pleading stage or he by contacting the Plaintiff in Pennsylvania. will have waived his objection. Fed. R. Civ. P. 12(hX1) (personal jurisdiction is waived if not raised). It logically follows that a party must FNS. Some of the contacts asserted in the respond to the allegations upon which the power of Plaintiffs brief were not made by the a court is premised and that any failure to do so will Defendants personally but by other parties. result in the party admitting those facts for the The Plaintiff has alleged in his complaint purpose of the 12(bX2) Motion. This procedure that these parties were acting as the agents also strikes a balance between the two contradictory of the Defendants. Accordingly, these lines of cases cited above. It still requires the contacts will be imp ted to the Defendants. Plaintiff to do more than simply rely on bare Wells Fargo &Co. I. Wells Fargo Express pleadings, albeit only when those pleadings are Co., 556 F.2d 406, 419 (9th Cir. I 977). O 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.com/print/printstream.aspx?sv=Full&rIti=1&prft=HTMLE8cfn=_top... 5/22/2007 EFTA00187435 Page 4 of 5 Not Reported in F.Supp.2d Page 4 Not Reported in F.Supp.2d, 2003 WL 1343018 (E.D.Pa.) (Cite as: Not Reported in F.Supp.2d) IV. Analysis ofminimum contacts purposeful sailment has been established. Papachristou Turbines, Inc., 902 F.2d 685, 685 Based on the above facts it is clear that the (8th Cir.I990); see Carney I. Bill Head Trucking, Defendants did have sufficient minimum contacts to Inc., 83 F.Supp.2d 554, 557 (E.D.Pa.2000) justify personal jurisdiction. The Defendants (drawing a distinction between merely passing reached out to a Pennsylvania resident to have him through a state and stopping and making a delivery). paint the portrait. Jurisdiction is proper when parties "reach out beyond one state and create *4 The Defendants argue that they are not amenable continuing relationships and obligations with the to personal jurisdiction in Pennsylvania because citizens of another state." Burger King Corp. I. they never physically entered the state. They Rudzewicz, 471 U.S. 462, 256 (1985). In cases attempt to support this argument with the fact that where a out-of-state resident contracts with a forum the only two face-to-face meetings between the resident, whether the out-of-state resident initiated parties occurred in New York and Ohio. As noted the rel onship is crucial. See Vetrotex Certainteed above, however, for jurisdictional purposes the Corp. Consolidated Fiber, 75 F.3d 147 (3d courier pickup of the painting was a physical Cir.199 ). contact with the state because the courier was an agent of the Defendants. See note 5 supra. Simply initiating a contractual relationship with a Moreover, the lack of any physical contacts with the Pennsylvania resident, however, is not the only state would not bar this Court from exercising contact in this case which goes towards establishing personal jurisdiction over the Defendants. Burger personal jurisdiction. Indeed, the Defendants also King Corp. I. Rudzewlcz, 471 U.S. 462, 476 (1985) engaged in crucial communications about the . The Court is also not troubled by the Defendants' performance of the contract directed at the state of assertions that the majority of negotiations for the Pennsylvania. See Grand Entm't Group, Ltd. I. Star contract occurred in New York. Nothing in due Media Sales, Inc., 988 F.2d 476, 482 (3d Cir.1993) process restricts more than one state from having (mail and telephone contacts may support personal jurisdiction over a party to a given jurisdiction). These contacts cannot be dismissed as transaction. The contacts the Defendants may have mere informational contacts, rather some of them go had with New York are not relevant to whether to the heart of the transaction. Specifically, the May there are sufficient contacts with Pennsylvania. As 16, 2000, letter from the Defendants finalized the discussed above, the initiation of the relationship price of the portrait. These contacts evidence a with the Pennsylvania Plaintiff, the entangling conscious decision by the Defendants to do business contacts with Pennsylvania during the painting of with a Pennsylvania resident operating in the the portrait, and the final delivery of the portrait to Commonwealth of Pennsylvania. the Defendants at the Pennsylvania Plaintiffs business, satisfy the minimum contacts requirement Perhaps the most meaningful contact occurred when regardless of the fact that significant negotiations the portrait was delivered to the Defendants' agent may have taken place in New York. within the state of Pennsylvania. This delivery is crucial to the breach of contract claim because delivery of the portrait was necessarily an implied g Thaditional Notions ofFair Play andSubstantial condition of the contract. Not only is it significant Justice to the contract, but by sending a courier to drive on Pennsylvania roads, make a pick up at a Because the Court concludes that the Defendants Pennsylvania business, and then return to Ohio, the had sufficient minimum contacts to warrant Defendants purposely availed themselves to the jurisdiction, we must now nun to the second part of benefits of doing business in the Commonwealth. our due process inquiry, whether this Court's While merely passing through a state is not a exercise of jurisdiction over the Plaintiff comports sufficient contact to warrant jurisdiction, when a with traditional notions of fair play and substantial party makes a business delivery in the state justice. At this point in the analysis, the burden falls O 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.com/print/printstream.aspx7sv=Full8crIti=1&prft=HTMLE&fri=_top... 5/22/2007 EFTA00187436 Page 5 of 5 Not Reported in F.Supp.2d Page 5 Not Reported in F.Supp.2d, 2003 WL 1343018 (E.D.Pa.) (Cite as: Not Reported in F.Supp.2d) on the Defendants to convince the Court that these principles will be offended by this Court's exercise of jurisdiction. Mesalic Fiberfloai Corp., 897 F.2d 696, 701 (3d Cir.I ). We conclude that the Defendants cannot meet this burden. The interests of both the Commonwealth of Pennsylvania and the Plaintiff are substantially forwarded by hearing the case in this Court. The Plaintiff, a Pennsylvania resident, should be able to seek a remedy in his home state. It is certainly no more unfair for the Plaintiff to bring the Defendants into a Pennsylvania court, than it would be to force the Plaintiff to travel to Ohio in search of a remedy. Moreover, Pennsylvania has an interest in assuring that its residents have a convenient forum to remedy breaches of contracts, particularly when it appears that the vast majority of the contract was performed within the Commonwealth. Accordingly, the Court sees no reason why exercising jurisdiction over the Defendants would violate traditional notions of fair play and substantial justice. VI. Conclusion For the foregoing reasons, the Defendants Motion to Dismiss for Lack of Personal Jurisdiction is denied. An appropriate order will follow. E.D.Pa.a003. Shanks I. Wexner Not Reported in F.Supp.2d, 2003 WL 1343018 (E.D.Pa.) END OF DOCUMENT O 2007 Thomson/West. No Claim to Orig. U.S. Govt. Works. https://web2.westlaw.corn/print/printstream.aspx?sv=Fullkiti=1&prft=HTMLE&fn=_top... 5/22/2007 EFTA00187437 Department of Licensing and Consumer Affairs Page I of 2 DLCA Home Ousiness License fax' Operators License Business License Search Bum' Certifications Business Name Search Category A-Z New Business Listings Consumer Affairs About Commissioner Robertson linaefelidl'iblititifli Listings Records per page: ricr About the OLCA Business Search Found 34 Records Ercy 12 4 Next Records 21 to 30 Phor4c (. Enter Business Name (use fewer letters for more results) Fax: (34 'financial Search --Collection Agency-- PROGRESSIVE FINANCIAL SERVICES, INC. Prop & Pn 866-484-0204 I Sub a St 'Mon St. Thomas, USVI 00803, St. Thomas Phone: C License #:0-1002135-2006 Fax:01 —Consultant - Tax-- WINSLOW & WINSLOW FINANCIAL SERVICES, INC. 940-713-9713 FREDERIKSTED, St. Croix License #: 2-2025606-2006 --Development & Sale of Own Property-- CARB3BANK FINANCIAL GROUP St. Croix License #: 2-2006639-2005 --Fiduciary Service— ANTILLES FINANCIAL GROUP, LLLP St. Croix License #:2-2022028-2006 FINANCIAL TRUST COMPANY, INC. 340-775-2525 http://www.dlca.gov.vi/bussearch.asp?a=name&name=financial&norecs=10&dir=3&islan... 5/14/2007 EFTA00187438 Department of Licensing and Consumer Affairs Page 2 of 2 St. Thomas License ti: 1-2021802-2006 --Gasoline Station-- GREEN CAY MARINA St. Croix License #: 2-2024637-2006 --Holding Company-- PARTICLE FINANCIAL, LLLP St. Thomas License #: 1-1003805-2006 --Hotel & Guest House B 40-99 beds-- TAMARIND REEF HOTEL CSTED, St. Croix License #: 2-2024547-2006 --Marinas-- GREEN CAY MARINA St. Croix License #: 2-2024637-2006 --Rental of Commercial Space-- GREEN CAY MARINA St. Croix License #: 2-2024637-2006 Found 34 Records Prey 12 3 4 Next Records 21 to 30 Official Website of the USVI Department of Licensing and Consumer Affairs Webmastering by Vattimaging Site Last Updated May 19, 2003 http://www.dlca.gov.vi/bussearch.asp?a=name&name=financial&norecs=108tdir=3&islan... 5/14/2007 EFTA00187439 $DNY CM/ECF Version 3.0L - Docket Report Page 1 of 5 CLOSED U.S. District Court United States District Court for the Southern District of New York (Foley Square) CIVIL DOCKET FOR CASE #: 1:02-cv-05332-SITS Citibank, N.A.I Epstein, et al Date Filed: 07/11/2002 Assigned to: Judge Sidney H. Stein Date Terminated: 07/26/2005 Demand: $0 Jury Demand: None Cause: 28:1391 Personal Injury Nature of Suit: 190 Contract Other Jurisdiction: Diversity Plaintiff Citibank, N.A. represented by Marshall H. Fishman Kramer, Levin, Naftalis & Frankel, L.L.P. 919 Third Avenue New York, NY 10022 WIRty Defendant Jeffrey IC Epstein represented by Gerald B. Lefcourt Law Office Gerald B. Lefcourt 148 East 78th Street New York, NY 10021 I...o®lefcourtlaw.com ma LEAD ATTORNEY Defendant Financial Trust Company, Inc. represented by Gerald B. Lefcourt (See above for address) LEAD ATTORNEY Date Filed # Docket Text 07/11/2002 1 COMPLAINT filed. Summons issued and Notice pursuant to 28 U.S.C. 636(c). FILING FEE $ 150.00 RECEIPT # 444722. (jol) (Entered: 07/16/2002) 07/11/2002 Magistrate Judge Theodore H. Katz is so designated. (jol) (Entered: 07/16/2002) 07/11/2002 2 RULE 1.9 CERTIFICATE filed by Citibank, N.A. . (jol) (Entered: 07/16/2002) https://ecf.nysd.uscourts.gov/egi-bin/DIctRpt.pl?273504181304452-L_353_0-1 5/22/2007 EFTA00187440 SDNY CMifiCF Version 3.0L - Docket Report Page 2 of 5 07/17/2002 3 AFFIDAVIT OF SERVICE of summons, complaint & rule 1.9 statement as to Jeffrey E. Epstein by first class mail on 7/15/02 . Answer due on 8/5/02 for Jeffrey E. Epstein . (db) (Entered: 07/19/2002) 07/17/2002 3 AFFIDAVIT OF SERVICE of summons, complaint & rule 1.9 statement as to Financial Trust by Helen Kim on 7/15/02 . Answer due on 8/5/02 for Financial Trust . (db) (Entered: 07/19/2002) 07/17/2002 3 AFFIDAVIT OF SERVICE of summons, complaint & rule 1.9 as to Jeffrey E. Epstein by Helen Kim on 7/15/02 . Answer due on 8/5/02 for Jeffrey E. Epstein . (db) (Entered: 07/19/2002) 08/02/2002 4 ORDER, Counsel are directed to appear in courtroom 23A on 9/13/02, at 10:30 a.m. for an initial case management conference purs. to FRCP 16 . ( signed by Judge Sidney H. Stein ); Copies mailed. (sb) (Entered: 08/05/2002) 08/16/2002 5 STIPULATION and ORDER, that defendants' time to answer, move or otherwise respond to the complaint in the above-captioned action is hereby extended to and including 9/3/02 . ( signed by Judge Sidney H. Stein ) (dle) (Entered: 08/19/2002) 09/03/2002 7 NOTICE OF MOTION (Filed on Service Date) by Jeffrey E. Epstein, Financial Trust for an order, purs. to Rules 1, 12 and 13(a) of the FRCP, dismissing the Complaint ; or, in the alternative, for an order, the proceedings should be stayed pending the adjudication of the first-filed action ; Return Date 9/26/02. (reed in the night deposit box on 10/9/02 at 5:07 p.m.) (sac) (Entered: 10/16/2002) 09/20/2002 16 NOTICE OF MOTION (FILED ON SERVICE DATE) by Citibank, N.A., for summary judgment pursuant to Rule 56 of the FRCP on each of the first and second claims for relief asserted in the complaint in this action . Return Date 10/11/02. Annexed affidavit of Vita Cusumano and the statement pursuant to Local Civil Rule 56.1. (kw) Modified on 10/28/2002 (Entered: 10/28/2002) 09/30/2002 6 STIPULATION; defendants shall serve their reply submission in further support of their motion to dismiss or stay, and their submission in opposition to plaintiffs motion for summary judgment, on 10/8/02; plaintiff shall serve its reply submission in further support of its motion for summary judgment on 10/22/02 ; both defendant's motion to dismiss or stay and plaintiffs motion for summary judgment shall be returnable before the Court on 10/24/02; each party shall file its respective motion papers, and provide the Court with courtesy copies, in accordance with Judge Stein's individual rules of practice; the parties jointly request that oral argument be held with respect to both motions at the Court's earliest available time . ( signed by Judge Sidney H. Stein ) (kkc) (Entered: 10/03/2002) 10/09/2002 8 MEMORANDUM OF LAW by Jeffrey E. Epstein, Financial Trust in support of [7-1] motion for an order, purs. to Rules 1, 12 and 13(a) of the FRCP, dismissing the Complaint, [7-2] motion for an order, the proceedings should be stayed pending the adjudication of the first-filed https://e,cf.nysd.uscourts.gov/cgi-bin/DktRpt.p17273504181304452-L 353_0-1 5/22/2007 EFTA00187441 , SDNY CM/ECF Version 3.0L - Docket Report Page 3 of 5 action. (rec'd in the night deposit box on 10/9/02 at 5:07 p.m.) (sac) (Entered: 10/16/2002) 10/09/2002 9 RULE 1.9 CERTIFICATE filed by Jeffrey E. Epstein, Financial Trust. (rec'd in the night deposit box on 10/9/02 at 5:06 p.m.) (sac) (Entered: 10/16/2002) 10/09/2002 10 DECLARATION of Edward S. Feig by Jeffrey E. Epstein, Financial Trust in support Re: [7-1] motion for an order, puns. to Rules 1, 12 and 13 (a) of the FRCP, dismissing the Complaint, [7-2] motion for an order, the proceedings should be stayed pending the adjudication of the first-filed action. (reed in the night deposit box on 10/9/02 at 5:07 p.m.) (sac) (Entered: 10/16/2002) 10/09/2002 11 MEMORANDUM OF LAW by Citibank, N.A. in opposition to [7-1] motion for an order, pun. to Rules 1, 12 and 13(a) of the FRCP, dismissing the Complaint, [7-2] motion for an order, the proceedings should be stayed pending the adjudication of the first-filed action. (sac) (Entered: 10/16/2002) 10/09/2002 12 AFFIDAVIT of Marshall H. Fishman by Citibank, N.A. in opposition to [7-1] motion for an order, purl. to Rules 1, 12 and 13(a) of the FRCP, dismissing the Complaint, [7-2] motion for an order, the proceedings should be stayed pending the adjudication of the first-filed action. (sac) (Entered: 10/16/2002) 10/09/2002 13 AFFIDAVIT of Dayle Davison by Citibank, N.A. in opposition to [7-1] motion for an order, pun. to Rules 1, 12 and 13(a) of the FRCP, dismissing the Complaint, [7-2] motion for an order, the proceedings should be stayed pending the adjudication of the first-filed action. (sac) (Entered: 10/16/2002) 10/09/2002 14 REPLY MEMORANDUM by Jeffrey E. Epstein, Financial Trust in support re: [7-1] motion for an order, pun. to Rules 1, 12 and 13(a) of the FRCP, dismissing the Complaint, [7-2] motion for an order, the proceedings should be stayed pending the adjudication of the first-filed action. (reed in the night deposit box on 10/9/02 at 5:07 p.m.) (sac) (Entered: 10/16/2002) 10/09/2002 15 REPLY DECLARATION of Edward S. Feig by Jeffrey E. Epstein, Financial Trust in support re: [7-1] motion for an order, pun. to Rules 1, 12 and 13(a) of the FRCP, dismissing the Complaint, [7-2] motion for an order, the proceedings should be stayed pending the adjudication of the first-filed action (reed in the night deposit box on 10/9/02 at 5:07 p.m.) (sac) (Entered: 10/16/2002) 10/22/2002 17 MEMORANDUM OF LAW by Citibank, N.A. in support of [16-1] motion for summary judgment pursuant to Rule 56 of the FRCP on each of the first and second claims for relief asserted in the complaint in this action. (kw) (Entered: 10/28/2002) 10/22/2002 18 MEMORANDUM OF LAW by Jeffrey E. Epstein, Financial Trust in opposition to [16-1] motion for summary judgment pursuant to Rule 56 https://ecf.nysd.uscourts.gov/cgi-bin/DktRptpl?273504181304452-L 353_0-1 5/22/2007 EFTA00187442 SDNY CM/ECF Version 3.0L - Docket Report Page 4 of 5 of the FRCP on each of the first and second claims for relief asserted in the complaint in this action. (Rec. in the night deposit box). (kw) (Entered: 10/28/2002) 10/22/2002 19 RULE 56.1 STATEMENT filed by Jeffrey E. Epstein, Financial Trust. (Rec. in the night deposit box). (kw) (Entered: 10/28/2002) 10/22/2002 20 REPLY MEMORANDUM by Citibank, N.A. re: [16-1] motion for summary judgment pursuant to Rule 56 of the FRCP on each of the first and second claims for relief asserted in the complaint in this action. (kw) (Entered: 10/28/2002) 10/24/2002 21 SUPPLEMENTAL DECCLARATION of EDWARD S. FEIG by Jeffrey E. Epstein, Financial Trust Re: . in response to the latest mudslinging tactic by Citibank. (vb) (Entered: 10/29/2002) 09/17/2003 22 NOTICE of attorney appearance for Jeffrey E. Epstein, Financial Trust by Gerald B. Lefcourt. (cd) (Entered: 09/19/2003) 09/17/2003 23 STIPULATION and ORDER; that the counsel representing defendants in this matter Gerald B. Lefcourt, P.C., in the place of Arent Fox Kinter Plotkin & Kahn, PLLC . ( signed by Judge Sidney H. Stein ) (p1) (Entered: 09/22/2003) 09/17/2003 24 ORDER; dismissing [16-1] motion for summary judgment pursuant to Rule 56 of the FRCP on each of the first and second claims for relief asserted in the complaint in this action without prejudice as moot; granting [7-1] motion for an order, pun. to Rules 1, 12 and 13(a) of the FRCP, dismissing the Complaint, granting [7-2] motion for an order, the proceedings should be stayed pending the adjudication of the first-filed action and this action is stayed; the Clerk of Court is directed to place this action on the suspense calendar . ( signed by Judge Sidney H. Stein ); (p1) (Entered: 09/22/2003) 12/18/2003 25 TRANSCRIPT of proceedings held on 9/17/03 before Judge Sidney H. Stein.(ml, ) Modified on 1/6/2004 (kkc, ). (Entered: 12/18/2003) 07/26/2005 26 STIPULATION AND ORDER OF DISMISSAL, IT IS HEREBY STIPULATED AND AGREED by the parties to this action, by their respective undersigned counsel of record, that the above enttitled action be, and the same hereby is, dismissed with prejudice and without costs to any of the parties as against the other. (Signed by Judge John G. Koeld on 7/25/05) (dt, ) (Entered: 07/27/2005) PACER Service Center Transaction Receipt 05/22/2007 18:17:02 PACER Login: du4480 Client Code: Description: Docket Report Search Criteria: 1:02-cv-05332-SHS 11 https://ecf.nysd.uscourts.gov/cgi-bin/D1ctRpt.pl?273504181304452-L 353_0-1 5/22/2007 EFTA00187443 SDNY CM/ECF Version 3.0L - Docket Report Page 5 of 5 l iBillable Pages: 113 Ilast: 0.24 II https://eclnysd.uscourts.gov/cgi-bin/DktRpt.pl?273504181304452-L_353_0-1 5/22/2007 EFTA00187444 SDNY CM/ECF Version 3.0L - Docket Report Pagel of 14 CLOSED U.S. District Court United States District Court for the Southern District of New York (Foley Square) CIVIL DOCKET FOR CASE #: 1:96-cv-08307-DC USA I Epstein, et al Date Filed: 11/04/1996 Assigned to: Judge Denny Chin Date Terminated: 03/17/1999 Demand: $0 Jury Demand: Defendant Cause: 28:1345 USA Plaintiff Nature of Suit: 230 Rent Lease & Ejectment Jurisdiction: U.S. Government Plaintiff Plaintiff United States of America represented by M. Chinta Gaston MARY JO WHITE U.S. Attorney for SDNY 100 Church Street 19th Floor New York, NY 10007 MIL I Defendant Jeffrey E. Epstein represented by Steven J Cohen Wachtel & Masyr, LLP 110 East 59th Street New York, NY 10022 .11111., Defendant Ivan Fisher represented by Eileen J. Casey Gage Buschman & Pavlis 120 West 45th Street New York, NY 10036 L EY G. Robert Gage, Jr. Gage Buschmann & Pavlis 120 West 45th Street New York, NY 10036 https://ecf.nysd.uscourts.gov/cgi-bin/DktRpt.p17321462322339233-L_353_0-1 5/22/2007 EFTA00187445 SDNY CM/ECF Version 3.0L - Docket Report Page 2 of 14 Counter Claimant Ivan Fisher represented by G. Robert Gage, Jr. (See above for address) LEAD ATTORNEY Counter Defendant United States of America represented by M. Chinta Gaston (See above for address) LEAD ATTORNEY Cross Claimant Ivan Fisher represented by G. Robert Gage, Jr. (See above for address) LEAD ATTORNEY Cross Defendant Jeffrey E. Epstein represented by Steven J Cohen (See above for address) LEAD ATTORNEY Defendant Ellyn Bank Defendant Debra Elisa Cohen represented by Ellen Yaroshefsky Clayman & Rosenberg 305 Madison Avenue, Ste. 1301 New York. NY 10165 Fax: Email: ellen@elayro.com LEAD ATTORNEY Defendant Diane Fisher doing business as The Fisher Group Defendant Fisher & Soifer represented by Eileen J. Casey also known as (See above for address) Fisher & Sophir LEAD ATTORNEY Defendant https://ecf.nysd.uscourts.gov/cgi-bin/DktRpt.pl7321462322339233-L 353_0-1 5/22/2007 EFTA00187446 SDNY CM/ECF Version 3.0L - Docket Report Page 3 of 14 Gerzog Defendant Robert Heilbrun represented by Robert Heilbrun Siegel & Heilbrun 575 Madison Avenue New York, NY 10022 RR IMEY Defendant Suzanne McDermott Defendant Christopher H. Martin represented by Robert Heilbrun (See above for address) LEAD ATTORNEY Defendant Jessie Siegel represented by Robed Heilbrun also known as (See above for address) Jesse Siegel LEAD ATTORNEY Defendant Siegel, Martin & Heilbrun represented by Robert Heilbrun (See above for address) LEAD ATTORNEY Defendant Ron Soifer Defendant Carmen Tausik TERMINATED: 08/06/1998 Defendant John Does 1 through 10 Defendant X Corporations 1 throught 10 Cross_Claintant Jeffrey E. Epstein represented by Steven J Cohen (See above for address) LEAD ATTORNEY Cross Defendant https://ectnysd.uscourts.gov/cgi-bin/DktRpt.p17321462322339233-L_353_0-1 5/22/2007 EFTA00187447 SDNY CM/ECF Version 3.0L - Docket Report Page 4 of 14 Ivan Fisher represented by G. Robert Gage, Jr. (See above for address) LEAD ATTORNEY Date Filed # Docket Text 11/04/1996 1 COMPLAINT filed; Summons issued and Notice pursuant to 28 U.S.C. 636(c); FILING FEE $ WAIVED (USA). (ricm) (Entered: 11/06/1996) 11/04/1996 Magistrate Judge Ellis is so Designated. (ricm) (Entered: 11/06/1996) 01/24/1997 2 STIPULATION and ORDER, by and between parties reset answer due for 2/3/97 for Ivan Fisher .. So Ordered.... ( signed by Judge Denny Chin ). (p1) (Entered: 01/27/1997) 01/31/1997 3 WAIVER OF SERVICE Returned Executed as to Ivan Fisher mailed on 12/3/96 Answer due on 2/3/97 for Ivan Fisher Os) (Entered: 02/05/1997) 02/11/1997 4 Affidavit of service as to Jeffrey E. Epstein by Walter Doulin, co-worker on 1/31/97 Answer due on 2/20/97 for Jeffrey E. Epstein (Is) (Entered: 02/13/1997) 02/11/1997 4 Affidavit of service as to Jeffrey E. Epstein by mail on 2/1/97 Answer due on 2/21/97 for Jeffrey E. Epstein (1s) (Entered: 02/13/1997) 02/11/1997 5 AMENDED COMPLAINT by USA , (Answer due 2/24/97 for Ivan Fisher, for Jeffrey E. Epstein ) amending [1-1] complaint ; Summons issued. (Is) (Entered: 02/13/1997) 02/24/1997 6 Affidavit of service of Amended Complt. and Amended Summons as to Ivan Fisher by Federal Express on 2/11/97 Answer due on 3/3/97 for Ivan Fisher (Is) (Entered: 02/24/1997) 02/26/1997 7 Affidavit of service of the amended s/c as to Jeffrey E. Epstein by Federal Express to Steven Cohen, Esq. on 2/13/97. Answer due on 3/5/97 for Jeffrey E. Epstein. (lam) Modified on 02/26/1997 (Entered: 02/26/1997) 03/07/1997 8 STIPULATION, extending time for deft Ivan Fisher to answer the Amended Complaint is extended from 2/28/97 to 4/7/97 , reset answer due for 4/7/97 for Ivan Fisher ( signed by Judge Denny Chin ). (kg) (Entered: 03/07/1997) 03/07/1997 9 STIPULATION and ORDER, Extending defendant's time to answer, move or otherwise respond to the Amended Complaint , Reset answer due for 3/26/97 for Jeffrey E. Epstein. SO ORDERED: ( signed by Judge Denny Chin ). (ae) (Entered: 03/11/1997) 03/10/1997 10 Affidavit of service as to Jeffrey E. Epstein by Michelle Heapy on 2/27/97 and by mail on 2/28/97. (kw) (Entered: 03/11/1997) 04/03/1997 11 STIPULATION and ORDER, extending time for deft Jeffrey E. Epstein to answer to the Amended Complaint is extended to 4/7/97 , reset answer https://ecfnysd.uscourts.gov/cgi-bin/DktRpt.pl?321462322339233-L_353_0-1 5/22/2007 EFTA00187448 SDNY CM/ECF Version 3.0L - Docket Report Page 5 of 14 due for 4/7/97 for Jeffrey E. Epstein ( signed by Judge Denny Chin ). (kg) (Entered: 04/03/1997) 04/08/1997 12 ANSWER to Complaint by Jeffrey E. Epstein (Attorney Steven J. Cohen) (pi) (Entered: 04/09/1997) 04/08/1997 13 ANSWER by Ivan Fisher (Attorney G. Robert Gage Jr.) to amended complaint; jury demand ; Firm of: Gage Buschman & Pavlis by attorney G. Robert Gage Jr. for defendant Ivan Fisher (Is) (Entered: 04/09/1997) 04/09/1997 13 COUNTERCLAIM by Ivan Fisher against USA (Is) (Entered: 04/09/1997) 04/09/1997 13 CROSSCLAIM by Ivan Fisher against Jeffrey E. Epstein (Is) (Entered: 04/09/1997) 05/01/1997 14 STIPULATION and ORDER, extending time for deft Jeffrey E. Epstein to respond to deft Ivan S. Fisher's cross-claim , Response to crossclaim deadline set for 5/13/97 ( signed by Judge Chin ). (kg) (Entered: 05/01/1997) 05/14/1997 15 ANSWER by Jeffrey E. Epstein to [13-1] cross claim of defendant Ivan S. Fisher. (ae) (Entered: 05/15/1997) 06/28/1997 24 REPLY MEMORANDUM of LAW by USA re: in Support of its Motion for Partial Summary Judgment and for other Relief (djc) (Entered: 07/31/1997) 07/14/1997 16 Rule 56.1(a) statement filed by Jeffrey E. Epstein (p1) (Entered: 07/16/1997) 07/14/1997 17 MEMORANDUM by Jeffrey E. Epstein in opposition to the Government? motion for partial summary judgment (p1) (Entered: 07/16/1997) 07/14/1997 18 AFFIDAVIT in opposition of Jeffrey A. Schantz Re: Plaintiffs' motion for partial summary judgment (p1) (Entered: 07/16/1997) 07/14/1997 19 MEMORANDUM by Ivan Fisher in opposition to Governments' motion for Partial Summary Judgement (p1) (Entered: 07/16/1997) 07/14/1997 20 Rule 56.1(b) statement filed by Ivan Fisher (p1) (Entered: 07/16/1997) ,07/14/1997 21 AFFIDAVIT in opposition of Ivan S. Fisher (p1) (Entered: 07/16/1997) 07/28/1997 22 MEMORANDUM of LAW by USA in support of its Motion for Partial Summary Judgment and other Relief (djc) (Entered: 07/31/1997) 07/28/1997 23 SUPPLEMENTAL DECLARATION of Serene K. Nakano (djc) (Entered: 07/31/1997) 07/28/1997 25 NOTICE OF MOTION by USA for summary judgment , purs to Rule 56 (b) of the FRCP dismissing the counterclaims of defendant Ivan S. Fisher against the Government for declaratory relief and purs to Rule 65 of the FRCP directing defendants Jeffrey E. Epstein and Fisher to pay into a https://ecf.nysd.uscourts.gov/cgi-bin/DktRpt.pl?321462322339233-L_353_0-1 5/22/2007 EFTA00187449 SDNY CM/ECF Version 3.0L - Docket Report Page 6 of 14 Court fund within thirty days of decision on this motion monies for the use and benefits of the premises known as 34 East 69th Street, NY, in the amount of $15,000.00 per month from August 23, 1996 until the date that this action is fmally determined , Return date 7/28/97; w. Rule 5 6.1 Statement and Declarations (djc) Modified on 07/31/1997 (Entered: 07/31/1997) 10/10/1997 26 ORDER, reset discovery due for 12/5/97 ; reset pretrial conference for 10:00 12/5/97 ( signed by Judge Denny Chin ); Copies mailed (al) (Entered: 10/14/1997) 11/12/1997 27 Filed Memo-Endorsement on letter to Judge Chin from Steven J. Cohen dated 11/10/97; the objection to production of the entire lease is overruled; Mr. Epstein shall produce the entire lease; if he wants, production of the lease can be subject to a reasonable confidentiality stipulation and order ; ( signed by Judge Denny Chin ) (Is) (Entered: 11/12/1997) 12/23/1997 28 SECOND AMENDED COMPLAINT by USA (Answer due 1/5/98 for Ivan Fisher, for Jeffrey E. Epstein) amending [5-1] amended complaint apa ainst lEllyn Bank, Debra Elisa Cohen, Diane Fisher, Fisher & Soffer, D. Gerzog, Robert Heilbrun, Suzanne McDermott, Christopher . artm, Jessie Siegel, Siegel, Martin, Ron Soifer, Carmen Talsig, John Does 1 - 10, X Corporations 1-10; Summons issued. (sac) (Entered: 12/30/1997) 01/05/1998 29 Filed Memo-Endorsement on letter dated 12/30/97 from Ellen J. Casey, granting parties request for additional time, until 1/7/98 to submit the additional legal authorities and discovery materials ( signed by Judge Denny Chin ) (kw) Modified on 01/07/1998 (Entered: 01/06/1998) 01/13/1998 30 STIPULATION and ORDER, reset answer to Second Amended Complaint due for 2/2/98 for Jeffrey E. Epstein ( signed by Judge Denny Chin ). (emil) (Entered: 01/14/1998) 01/20/1998 31 Affidavit of service of Second Amended Complaint as to Ellyn Bank by personal service on 1/10/98; Answer to Second Amended Complaint due on 1/30/98 for Ellyn Bank (ae) (Entered: 01/22/1998) 01/20/1998 31 Affidavit of service of Second Amended Complaint as to Debra Elisa Cohen by Mr. Searson, Doorman on 1/2/98; Answer to Second Amended Complaint due on 1/22/98 for Debra Elisa Cohen (ae) (Entered: 01/22/1998) 01/20/1998 31 Affidavit of service of Second Amended Complaint as to D. Gerzog by Pat Bowles, Secretary, authorized to accept service on /5/98; Answer to Second Amended Complaint due on 1/26/98 for D. Gerzog (ae) (Entered: 01/22/1998) 01/20/1998 31 Affidavit of service of Second Amended Complaint as to Robert Heilbrun by Pat Bowles, Secretary, authorized to accept service on 1/5/98; Answer to Second Amended Complaint due on 1/26/98 for Robert Heilbrun (ae) (Entered: 01/22/1998) https://ectnysd.uscourts.gov/cgi-bin/DIctRpt.p17321462322339233-L_353_0-1 5/22/2007 EFTA00187450 SDNY CM/ECF Version 3.0L - Docket Report Page 7 of 14 01/20/1998 31 Affidavit of service of Second Amended Complaint as to Suzanne McDermott by personal service on 1/10/98; Answer to Second Amended Complaint due on 1/30/98 for Suzanne McDermott (ae) (Entered: 01/22/1998) 01/20/1998 31 Affidavit of service as to Jessie Siegel by Pat Bowles, Secretary, authorized to accept service on 1/5/98; Answer to Second Amended Complaint due on 1/26/98 for Jessie Siegel (ae) (Entered: 01/22/1998) 01/20/1998 31 Affidavit of service of Second Amended Complaint as to Siegel, Martin by Pat Bowles, Secretary, authorized to accept service on 1/5/98; Answer to Second Amended Complaint due on 1/26/98 for Siegel, Martin (ae) (Entered: 01/22/1998) 01/20/1998 31 Affidavit of service of Second Amended Complaint as to Ron Soifer by Pat Bowles, Secretary, authorized to accept on 1/5/98; Answer to Second Amended Complaint due on 1/26/98 for Ron Soffer (ae) (Entered: 01/22/1998) 01/20/1998 31 Affidavit of service of Second Amended Complaint as to Carmen Talsig by Pat Bowles, Secretary, authorized to accept service on 1/5/98; Answer to Second Amended Complaint due on 1/26/98 for Carmen Talsig (ae) (Entered: 01/22/1998) 01/22/1998 32 STIPULATION and ORDER, reset answer to second amended complaint due for 1/30/98 for Fisher & Soffer, for Diane Fisher, for Ivan Fisher (signed by Judge Denny Chin). (djc) Modified on 01/23/1998 (Entered: 01/23/1998) 02/04/1998 35 ORDER, that the Clerk of the Court shall establish an interest-bearing account (the "account") and that payment of any funds tendered pursuant to or in accord with this order shall be deposited by the Clerk of the Court into the account and that the Clerk of the Court shall maintain the account until such further order of this Court. Send $225,000.00 to Texas Chris acct. (signed by Judge Denny Chin); Copies mailed; copy of docmt sent to Cashiers office (djc) (Entered: 02/23/1998) 02/06/1998 33 Transcript of record ofproceedings before Judge Chin filed for dates of December 17, 1997 (bm) (Entered: 02/06/1998) 02/19/1998 34 MEMORANDUM DECISION, I will enter a protective order that does not contain Proposed Paragraph 7(c). The Government may not use confidential information produced in discovery pursuant to the protective order for any purpose other than prosecuting this lawsuit, absent further order of the Court ( signed by Judge Denny Chin ); Copies mailed (ae) Modified on 02/23/1998 (Entered: 02/20/1998) 02/24/1998 36 PROTECTIVE ORDER, regarding procedures that will govern the handling of confidential information ( signed by Judge Denny Chin ); Copies mailed (also docketed in 97cv1489) (cd) Modified on 02/25/1998 (Entered: 02/25/1998) 03/05/1998 37 ANSWER by Jeffrey E. Epstein (Attorney Steven J. Cohen) to second https://ecf.nysd.uscourts.gov/cgi-bin/DktRpt.pl?321462322339233-L_353_0-1 5/22/2007 EFTA00187451 SDNY CM/ECF Version 3.0L - Docket Report Page 8 of 14 amended complaint (ae) (Entered: 03/09/1998) 03/05/1998 37 CROSSCLAIMS by Jeffrey E. Epstein against Ivan Fisher (ae) (Entered: 03/09/1998) 03/09/1998 38 STIPULATION and ORDER, reset answer to second amended complaint due for 2/27/98 for Jeffrey E. Epstein, for Ivan Fisher, for Ellyn Bank, for Debra Elisa Cohen, for Diane Fisher, for Fisher & Soffer, for Robert Heilbrun, for Suzanne McDermott, for Christopher H. Martin, for Jessie Siegel, for Siegel, Martin, for Ron Soffer, for Carmen Talsig, for John Does 1 - 10, for X Corporations 1-10 ( signed by Judge Denny Chin ). (ae) (Entered: 03/10/1998) 03/09/1998 39 Filed Memo-Endorsement on letter by Serene K. Nakano to Judge Chin dated 2/24/98, reset Government's motion for summary judgment filing deadline for 3/13/98 ( signed by Judge Denny Chin ) (ae) (Entered: 03/10/1998) 03/16/1998 40 ANSWER by Ivan Fisher, Fisher & Soifer (Attorney Eileen J. Casey) to amended complaint; by attorney Eileen J. Casey for defendant Fisher & Soifer (djc) (Entered: 03/20/1998) 03/16/1998 40 AMENDED COUNTERCLAIM by Ivan Fisher: amending [13-1] counter claim (djc) (Entered: 03/20/1998) 03/16/1998 40 AMENDED CROSSCLAIM by Ivan Fisher, Jeffrey E. Epstein [37-1] cross claim (djc) (Entered: 03/20/1998) 03/20/1998 41 ANSWER by Ivan Fisher to [37-1] cross claim; Finn of: Gage & Pavlis (cd) (Entered: 03/24/1998) 03/24/1998 42 STIPULATION and ORDER, answer to the second amended complaint due for 3/16/98 for Fisher & Soffer, for Diane Fisher ( signed by Judge Denny Chin ). (cd) (Entered: 03/25/1998) 04/01/1998 43 NOTICE OF MOTION by USA for an order, purs. to Rule 56(a), granting summary judgment on the second cause of action of the second amended complaint as against defts Diane Fischer d/b/a The Fischer Group and Rom Safer ; Return date 4/20/98. Declaration in support attached. (sac) (Entered: 04/02/1998) 04/01/1998 44 MEMORANDUM by USA in support of [43-1] motion for an order, pun. to Rule 56(a), granting summary judgment on the second cause of action of the second amended complaint as against defts Diane Fischer d/b/a The Fischer Group and Rom Softer (sac) (Entered: 04/02/1998) 04/01/1998 45 ANSWER by Jeffrey E. Epstein to [13-1] cross claim ; by attorney Steven J. Cohen for cross-defendant Jeffrey E. Epstein (sac) (Entered: 04/02/1998) 04/01/1998 46 MEMORANDUM OPINION #80385, the Government's motion for summary judgment on its claim for ejectment is granted as to Epstein, Fisher, and all of the Subtenants ( Signed by Judge Denny Chin ); Copies mailed. (emil) (Entered: 04/03/1998) https://ecf.nysd.uscourts.gov/cgi-bin/DktRpt.p17321462322339233-L_353_0-1 5/22/2007 EFTA00187452 SDNY CM/ECF Version 3.0L - Docket Report Page 9 of 14 04/09/1998 47 Filed Memo-Endorsement on letter to Judge Chin front Serene K. Nakano dated 04/02/98, the Court having already found in its March 31, 1998 decision that (a) the rights of deendant Ron Soffer to poscnsion and occupancy of the premises known as 34 East 69th Street, NY, NY, can be no greater than those of defendant Ivan S. Fisher and (b) good and valid reasons exist for the Softer ejectment motion to be decided prior to the April 20, 1998 return date of the motion, defendant Ron Soffer shall appear before the Hon. Denny Chin, United States District Judge, United States Courthouse, 500 Pearl Street, Courtroom 11A on April 10, 1998 at 9:30 a.m., to show cause why summary judgment should not be granted on the Governments second claim alleged against him in the second amended complaint, which seeks an order (a)declaring that he is not entitled to occupy the premises; and (b) ejecting him from the premises ; service of a copy of this memorandum endorsement shall be made by the Govenune on Softer by telecopying a copy to his attention S and by sending a copy by Federal Express or overnight mail to the attention of Mr. Soffer at 34 East 69th Street, NY, NY as soon as it is received by counsel for the Government (signed by Judge Denny Chin) (djc) (Entered: 04/13/1998) 04/09/1998 49 CERTIFICATE OF SERVICE by USA re 4/7/98, memorandum endorsement (cd) (Entered: 04/14/1998) 04/10/1998 48 ORDER that the prior orders of this Court dated 12/17/97 and 12/31/97 ordering an interest-bearing escrow account for the deposit of certain monies by dells Jeffrey E. Epstein and Ivan S. Fisher are modified to the extent that Fisher is ordered to deposit the sum of $15,000.00 per month to the Clerk of the Court by the 10th day of each month until the date that this action is finally determined ( signed by Judge Denny Chin ); Copies mailed. Sent to Cashier's Office on 4/14/98. (emil) (Entered: 04/14/1998) 05/21/1998 50 ORDER, Fisher seeks a stay of entry of judgment pending appeal of my ruling to the United States Court of Appeals for the Second Circuit. Considering the factors set forth in this order in light of the facts of this case I conclude that a stay is not warranted here, for Fisher has not met the "difficult burden" of proving that a stay is warranted. Accordingly, the Court wiil enter judgment against Fisher today, and the request for a stay pending appeal to the Second Circuit is hereby denied, except that the Government must give Fisher until July 15, 1998 to vacate the premises. Any request for a further stay must be made to the Second Circuit. Although I had set a trial date of August 24, 1998, the trial is adjourned without date. The parties shall submit letters addressing whether they prefer to try the issue of valuation and the claims betw. Fisher and Epstein now or whether they prefer to await resolution of the appeal of my March 31, 1998 decision. In addition, the parties shall address the issue of whether the cross claims betw. Epstein and Fisher should be severed from the Governments claims. (signed by Judge Denny Chin); Copies mailed (djc) Modified on 05/26/1998 (Entered: 05/22/1998) 05/22/1998 51 ORDER & JUDGMENT; it is ordered, adjudged and decreed that the https://ecEnysd.uscourts.gov/cgi-bin/DktRptp1B21462322339233-L_353_0-1 5/22/2007 EFTA00187453 SDNY CM/ECF Version 3.0L - Docket Report Page 10 of 14 Government's motion for partial summary judgment as to (a) its first claim alleged in its second amended complaint and (b) the counterclaims of clefts Ivan S. Fisher and Fisher & Soffer a/k/a Fisher & Sophir alleged in their answer to the second amended complaint (the "Fisher counterclaim"), is granted in all respects. The Soffer ejectment motion is granted as against deft Ron Soffer. Defls Jeffrey E. Epstein, Ivan S. Fisher, Ellyn Bank, Debra Elisa Cohen, Dianeataga?/a The Fisher Group, Fisher & Soffer a/k/a Fisher & Sophir, D. Gerzog, Robert Heilbum, Suzanne McDermot t, Christophe r H. Martin, Jessie Siegel a/k/a Jesse Siegel, Siegel, Martin & Heilbrun, Ron Soffer, and Carmen Tausig are not entitled to occupy the premises known as East 34 69th, N.Y., N.Y. 10021. The Government is hereby awarded exclusive possession of the premises purs. to the Foreign Missions Act, 22 U.S.C. 4301 et seq. The occupants shall vacate the premises on or before 7/15/98 at 5:00 p.m. and deliever all keys to the premises on or before 7/15/98 at 5:00 p.m., to the U.S. Atty's Office. The foregoing constitutes the order of the court purs. to Rule 54(b) of the FRCP partially adjudicating the claims of the parties before this Court. The Court finds that there is no just reason for delay in entering judgment on the Government's claims for ejectment and with respect to the issues of possession of the premises, for these claims and issues are separate and distinct from the issues remaining in the case (although there would be some overlap in the proof). Specifically, I fmd that a delay in the the entry of judgment could result in possible injustice, as defts right to have the ability now to appeal from my 3/31/98 decision, for their right to possession of the promises is at stake. As they are being ejected from their home (in Fisher's case) and office, they should have the right to seek review promptly. The remaining claims involve money damages only. ( signed by Judge Denny Chin ); Mailed copies and notice of right to appeal. (sac) Modified on 05/27/1998 (Entered: 05/26/1998) 05/22/1998 Case closed (sac) (Entered: 05/26/1998) 05/22/1998 Memo endorsed on motion; granting, per opinion dated 3/31/98, [43-1] motion for an order, purs. to Rule 56(a), granting summary judgment on second cause of action of the second amended complaint as against defls Diane Fischer d/b/a The Fischer Group and Rom Soffer (signed by Judge Denny Chin); Copies mailed. (djc) Modified on 05/29/1998 (Entered: 05/27/1998) 05/22/1998 Memo endorsed on motion, doe. #25; motion granted per opinion dated 3/31/98 ( signed by Judge Denny Chin ); Copies mailed. (kw) (Entered: 05/27/1998) 05/22/1998 Case reopened. CASE CLOSED IN ERROR. (dcap) (Entered: 08/28/1998) 05/29/1998 52 Letter filed by USA to Judge Chin dated 12/31/97, re: in response to (a) the citations by defendants Jeffrey E. Epstein and Ivan S. Fisher to the testimony of witnesses whose depositions were taken after the submission of the Government's motion for partial summary judgment; and (b) the Court's invitation to the parties to supplement the record and https://ecf.nysd.uscourts.gov/cgi-bin/DktRpt.p17321462322339233-L 353_0-1 5/22/2007 EFTA00187454 SDNY CM/ECF Version 3.0L - Docket Report Page 11 of 14 their memorandum of law concerning any further legal authorities (ae) (Entered: 06/01/1998) 05/29/1998 53 Letter filed by Ellen J. Casey o/b/o Ivan Fisher to Judge Chin dated 117/98, re: in response to the government's motion for partial summary judgment (ae) (Entered: 06/01/1998) 06/05/1998 54 NOTICE OF APPEAL by Ivan Fisher ; from [51-1] judgment order . Copies of notice of appeal mailed to Attorney(s) of Record: Serene K. Nakano, Esq., fee pd., $105.00, rec # 317761 . (as) (Entered: 06/08/1998) 07/06/1998 55 ORDER, pltff shall file and serve any opposition by 7/10/98; and deft shall file and serve her reply, if any, by 7/15/98 (signed by Judge Denny Chin); Copies mailed. (kg) (Entered: 07/07/1998) 07/08/1998 56 Filed Memo-Endorsement on letter by David Wikstrom to Judge Chin dated 7/5/98, counsel for defendant Ivan Fisher, requests a conference before the Court some time this week in connection with this case, and in particular with the 7/15 deadline for ejection set forth in the Court's judgment of 5/20; Fisher may file a Rule 60(b) motion w/out a pre- motion conference. He shall do so as soon as possible. The Government need not respond until directed to by the Court ; In addition, if Mr. Wikstrom is substituting for Gage & Parlis, he should submit the proper papers. If he is appearing as co-counsel, he should file a notice of apperance ( signed by Judge Denny Chin ) (ae) Modified on 07/09/1998 (Entered: 07/09/1998) 07/10/1998 57 DECLARATION in opposition by Serene K. Nakano for OtteUSA re the motion by deft Suzanne McDermott for summary jdgmt. (Is) (Entered: 07/10/1998) 07/10/1998 58 GOVT'S MEMORANDUM OF LAW by USA in opposition to motion of deft Suzanne McDermott for partial summary jdgmt. (Is) (Entered: 07/10/1998) 07/27/1998 59 RETURN OF SERVICE executed as to Forcible eviction on 7/16/98. Order left at residence. Tenants moved out & took their personal belongings. (sac) (Entered: 07/28/1998) 08/04/1998 60 NOTICE OF MOTION by D. Gerzog for an order granting summary judgment, pursuant to Rule 56 of the FRCP ; affirmation in support is attached. (kw) (Entered: 08/05/1998) 08/04/1998 61 MEMORANDUM by D. Gerzog in support of [60-1] motion for an order granting summary judgment, pursuant to Rule 56 of the FRCP. (kw) (Entered: 08/05/1998) 08/06/1998 62 NOTICE of dismissal of complaint against defendant Carmen Tausik, pun to Rule 41(a)(1) of the FRCP; Plaintiff United States of America hereby dismisses the second amended complaint as against defendant Carmen Tausik (signed by Judge Denny Chin) (djc) (Entered: 08/06/1998) 08/11/1998 63 ANSWER to Complaint by Robert Heilbrun, Christopher H. Martin, https://ecf.nysd.uscourts.gov/cgi-bin/DIctRpt.pl?321462322339233-L_3530-1 5/22/2007 EFTA00187455 SDNY CM/ECF Version 3.0L - Docket Report Page 12 of 14 Jessie Siegel, Siegel, and Martin. (Attorney Robert Heilbrun) (kw) (Entered: 08/11/1998) 08/26/1998 64 ORDER, set pretrial conference for 10:00 a.m. on 10/23/98 ; The parties shall have 60 days from the date of this order to complete discovery. The deadline for submission of the joint pretrial order is adjourned. A new deadline for submission of the joint pretrial order will be set at the October 23, 1998 conference. The Governments request for an adjournment of the trial on damages until after the resolution of Fisher's appeal to the Second Circuit will be decided at the October 23, 1998 conference ; The Governments response to motion reset to 9/14/98 for [60-1] motion for an order granting summary judgment, pursuant to Rule 56 of the FRCP. Gerzog may submit his reply, if any, within 10 days thereafter ; Upon consent, the Court's escrow order is hereby amended as set forth in the Governments August 13, 1998 letter. (signed by Judge Denny Chin); Copies mailed (djc) (Entered: 08/27/1998) 09/15/1998 65 Rule 56.1 statement filed by USA (djc) (Entered: 09/16/1998) 09/15/1998 66 MEMORANDUM of LAW by USA in opposition to [60-1] motion for an order granting summary judgment, pursuant to Rule 56 of the FRCP (djc) (Entered: 09/16/1998) 09/18/1998 67 SEALED DOCUMENT placed in vault (kb) (Entered: 09/18/1998) 09/22/1998 68 Certificate of service of Second Amended S&C as to Ivan Fisher, Diane Fisher, Fisher & Soffer by Ellen J. Casey, atty, on 12/23/97 (sac) (Entered: 09/23/1998) 09/22/1998 68 Certificate of service of Second Amended S&C as to Jeffrey E. Epstein by Steven Cohen, atty, on 12/23/97 (sac) (Entered: 09/23/1998) 09/24/1998 69 NOTICE of attorney appearance for Debra Elisa Cohen by Ellen Yaroshefsky (Is) (Entered: 09/28/1998) 10/09/1998 70 Notice that the record on appeal has been certified and transmitted to the U.S. Court of Appeals: [54-1] appeal by Ivan Fisher on October 9, 1998. (dt) (Entered: 10/09/1998) 10/14/1998 71 Filed Memo-Endorsement on letter to Judge Chin from Ellen Yaroshefsky dated 10/8/98; counsel for Den Cohen requests that the Court permit the adjournment of Ms. Cohen's deposition beyond the current discovery cutoff date. I have reviewed this letter; the Govt's letter of today; and Ms. Yarostefsky's 2d letter of today, the request for an adjournment of Ms. Cohen's deposition is denied ; ( signed by Judge Denny Chin ) (Is) (Entered: 10/15/1998) 10/19/1998 72 ORDER, the Court has received Ron Soffer's letter of 9/24/98. Mr. Soffer is a named defendant in this action. If he wishes to be dismissed from the case, he may make either a motion to dismiss or a motion for summary judgment, w/out a premotion conference ( signed by Judge Denny Chin ); Copies mailed (ae) (Entered: 10/19/1998) 10/22/1998 73 ANSWER by Debra Elisa Cohen to the Second amended complaint; by https://eclnysd.uscourts.govkgi-bin/DktRpt.p17321462322339233-L_353_0-1 5/22/2007 EFTA00187456 SDNY CM/ECF Version 3.0L - Docket Report Page 13 of 14 attorney Ellen Yaroshefsky. (bw) (Entered: 10/23/1998) 11/09/1998 74 MANDATE OF USCA (certified copy) Re: Dismissed [54-1] appeal by Ivan Fisher. It is ordered that the appeal be, and it hereby is dismissed. (98-6133) Carolyn Clark Campbell, Cler, USCA. (as) (Entered: 11/09/1998) 02/03/1999 75 STIPULATION and ORDER, the parties agree to settle and compromise this action on the terms indicated herein. All monies deposited by the defendants with the Cashier's Office of the USDC for the SDNY in this action, including all principal and interest accrued thereon are released to the Government. The Cashier's office shall issue a check for the full amount of the escrowed monies made payable to U.S. Attorney and shall deliver the check to the U.S. Attorney's Office, do AUSA Serene IC Nakano. The United States Dept of State shall keep the security deposit of Jeffrey E. Epstein in the principal amount of $12,000.00, plus all interest accrued thereon ; Upon the release of the escrowed monies set forth in this order and the delivery of the certified check set forth herein, the Government will file an order of dismissal with the Court dismissing the action against all defendants except Diane Fisher dTh/a The Fisher Group with prejudice and without costs, disbursement or attorney's fees. (signed by Judge Denny Chin). On page 8 of order remark from cashiers' office states: Received check no. 492385 dated 01/29/99 in the amount of $335,526.17 payable to USA by Manuel Bermadez; Also received check no. 492386 dated 01/29/99 in the amount of $19,844.35 payable to USA by Manuel Mermadez. (djc) Modified on 02/04/1999 (Entered: 02/04/1999) 03/09/1999 76 Transcript of record of proceedings before Judge Chin filed for dates of 1/12/99 (Is) (Entered: 03/15/1999) 03/17/1999 77 Order of dismissal; that this action is hereby dismissed with prejudice against all defendants, except defendant Diane Fisher d/b/a/ the Fisher Group ("Ms. Fisher"), and without costs, disbursements or attorney's fees. Upon the application of plaintiff United States of America, its claims against Ms. Fisher are dismissed without prejudice. ( signed by Judge Denny Chin ) (p1) (Entered: 03/18/1999) 03/17/1999 Case closed (p1) (Entered: 03/18/1999) 08/12/1999 78 SEALED DOCUMENT placed in vault (kb) (Entered: 08/12/1999) PACER Service Center Transaction Receipt 05/22/2007 18:18:00 PACER Login: du4480 Client Code: Description: Docket Report Search Criteria: 1:96-cv-08307-DC Billable Pages: 8 'Cost: 0.64 httos://ecfnysd.uscourts.gov/cgi-bin/DktRpt.pl?321462322339233-L_353_0-1 5/22/2007 EFTA00187457 SDNY CM/ECF Version 3.0L - Docket Report Page 14 of 14 https://ecfnysd.uscourts.gov/cgi-bin/DktRpt.pl?321462322339233-L 353_0-1 5/22/2007 EFTA00187458 SDNY CM/ECF Version 3.0L - Docket Report Page 1 of 3 CLOSED U.S. District Court United States District Court for the Southern District of New York (Foley Square) CIVIL DOCKET FOR CASE #: 1:97-cv-01489-DC Epstein i Fisher, et al Date Filed: 03/05/1997 Assigned to: Judge Denny Chin Date Terminated: 03/31/2000 Demand: $0 Jury Demand: None Cause: 28:1443(1) Rent, Lease & Ejectment Nature of Suit: 230 Rent Lease & Ejectment Jurisdiction: Federal Question Petitioner Jeffrey E. Epstein represented by William B. Wachtel Wachtel & Masyr, LLP 110 East 59th Street 10022 Fax: Email: wachtel®wmllp.com LEAD ATTORNEY I Respondent Ivan Fisher represented by Eileen J. Casey Gage Buschmann & Pavlis 120 West 45th Street 10036 mail LEAD ATTORNEY Respondent John Doe represented by Eileen J. Casey (See above for address) LEAD ATTORNEY Respondent X Corp represented by Eileen J. Casey (See above for address) LEAD ATTORNEY Date Filed Docket Text 03/05/1997 1 NOTICE OF REMOVAL from New York Civil Court County of New York; FILING FEE $ 150.00 RECEIPT # 282380 Index # 058689/97. https://ecf.nysd.uscourts.gov/cgi-bin/DIctRpt.pl?569396355749046-L_353_0-1 5/22/2007 EFTA00187459 SDNY CM/ECF Version 3.0L - Docket Report Page 2 of 3 (sac) (Entered: 03/06/1997) 03/05/1997 CASE REFERRED TO Judge Chin (sac) (Entered: 03/06/1997) 03/05/1997 2 NOTICE of Notice of Filing of Notice of Removal by Ivan Fisher. (kg) (Entered: 03/06/1997) 03/14/1997 3 NOTICE OF MOTION by Jeffrey E. Epstein to remand to the Civil Court, City of NY, County of NY , Return date 4/11/97 (cd) (Entered: 03/17/1997) 03/14/1997 4 MEMORANDUM by Jeffrey E. Epstein in support of [3-1] motion to remand to the Civil Court, City of NY, County of NY (cd) (Entered: 03/17/1997) 03/21/1997 Case accepted as related to 96 CV 8307. Notice of assignment to follow. (ricm) (Entered: 03/24/1997) 03/21/1997 5 Notice of asgmnt to Judge Denny Chin Copy of notice and judge's rules mailed to Attomey—(s) of record: Eileen J. Casey, William B. Wachtel . (ricm) (Entered: 03/24/1997) 03/24/1997 6 Case Information Statement Addendum and Case Designation to a Magistrate Judge filed. Case is designated to Magistrate Judge Pitman. (em) (Entered: 03/24/1997) 03/28/1997 7 NOTICE OF CROSS MOTION by Ivan Fisher to consolidate is action with the action pending in the Court entitled U.S. of America a Jeffrey E. Epstein and Ivan S. Fisher, #96cv8307 , Return date 4/14/97 (p1) (Entered: 03/31/1997) 03/28/1997 8 MEMORANDUM by Ivan Fisher in opposition to [3-1] motion to remand to the Civil Court, City of NY, County of NY, in support [7-1] cross motion to consolidate thiuction with the action pending in the Court entitled U.S. of America 5 Jeffrey E. Epstein and Ivan S. Fisher, #96cv8307 (p1) (Entered: 03/31/1997) 04/07/1997 9 REPLY MEMORANDUM OF LAW by Jeffrey E. Epstein in support of re: [3-1] motion to remand to the Civil Court, City of NY, County of NY (ae) (Entered: 04/08/1997) 02/24/1998 PROTECTIVE ORDER, regarding procedures that will govern the handling of confidential information ( signed by Judge Denny Chin ); Copies mailed (original in 96cv8307, doe #36) (cd) (Entered: 02/25/1998) 03/09/1998 STIPULATION and ORDER, reset answer to second amended complaint due for 2/27/98 for X Corp, for John Doe, for Ivan Fisher ( signed by Judge Chin ) (orig. doc. filed in case #96 civ. 8307, doc. #38) (ae) (Entered: 03/10/1998) 03/09/1998 Filed Memo-Endorsement on letter by Serene K. Nakano to Judge Chin dated 2/24/98, reset The Government's motion for summary judgment filing deadline for 3/13/98 ( signed by Judge Denny Chin ) (orig. doe. https://ecf.nysd.uscourts.gov/cgi-bin/DktRpt.p17569396355749046-L_353_0-1 5/22/2007 EFTA00187460 SDNY CM/ECF Version 3.0L - Docket Report Page 3 of 3 filed in case #96 civ. 8307, doc. #39) (ae) (Entered: 03/11/1998) 03/09/1998 Terminated documents 3-1 and 7-1 as per instruction of Judge Chin dated 3/9/98 (emil) (Entered: 03/11/1998) 03/24/1998 STIPULATION and ORDER, reset answer to the second amended complaint due for 2/27/98 for Ms. Fisher and Fisher & Soffer ( signed by Judge Denny Chin ). (original fld in 96cv8307, doc #42) (cd) (Entered: 03/25/1998) 04/09/1998 Filed Memo-Endorsement on letter to Judge Chin from Serene K. Nakano dated 04/02/98, the Court having already found in its March 31, 1998 decision that (a) the rights of defendant Ron Soifer to possession and occupancy of the premises known as 34 East 69th Street, NY, NY, can be no greater than those of defendant Ivan S. Fisher and (b) good and valid reasons exist for the Soifer ejectment motion to be decided prior to the April 20, 1998 return date of the motion, defendant Ron Softer shall appear before the Honorable Denny Chin, United States District Judge, United States Courthouse, 500 Pearl Street, Courtroom 11A, NY, NY on April 10, 1998, 9:30 a.m., to show cause why summary judgment should not be granted on the Government's second claim alleged against him in the second amended complaint, which seeks an order (a) declaring that he is not entitled to occupy the premises; and (b) ejecting him from the premises ; and service of a copy of this memorandum endorsement shall be made by the Government on defendant Ron Soffer by telecopying a copy to his attention at lill . and by sending a copy by Federal Express or overnight mat to ea ntion of Mr. Soffer at 34 East 69th Street, NY, NY, as soon as it is received by counsel for the Government (signed by Judge Denny Chin); original document docketed in case no. 96cv 8307, document #47. (djc) Modified on 04/13/1998 (Entered: 04/13/1998) 03/31/2000 10 ORDER; this action is hereby dismissed. ( signed by Judge Denny Chin ); Copies mailed. (sac) (Entered: 04/03/2000) 03/31/2000 Case closed. (sac) (Entered: 04/03/2000) PACER Service Center Transaction Receipt 05/22/2007 18:19:02 PACER Login: du4480 Client Code: Description: Docket Report Search Criteria: 1:97-cv-01489-DC Billable Pages: 2 Cost: 0.16 https://ecf.nysd.uscourts.gov/cgi-bin/DktRpt.p17569396355749046-L_353_0-1 5/22/2007 EFTA00187461 FINANCIAL TRUST CO., INC. CITIBANK N.A. 561 Clle as 261 F.Supp.24 561 ID.VIren Wend. 2003) of time, constitute irreparable harm. De- ing enforcement of ARIN's Religious Affil- ng/1y, 309 F.3d at 178, quoting, inter alio, iations policy pending disposition of her Elrod. Burns, 427 U.S. 347, 373, 96 S.Ct. request for a permanent injunction (hear- 2673, 49 L.Ed2d 547 (1976). ing scheduled for August 28, 2003), and ordering defendants to reinstate her to her IX. Balance of Hann to Plaintiff former position with full back pay and Venus Harm to Defendants benefits. For all of the foregoing reasons, (331 Defendants will suffer• little or no the Court also will deny defendants' mo- harm if the Court grants this preliminary tion to dismiss.' injunction. They are not subject to crimi- Defendants agreed at the hearing that nal prosecution under the Garb Statute, they would not demand a bond in the event there is no showing of actual or threatened the Court ruled in plaintiffs favor, and disruption, disturbance or other danger at accordingly, bond will be waived. Penns Manor in permitting plaintiff to wear her cross during the remainder of this litigation, and as we have seen, there is no likelihood that defendants' permitting plaintiff to wear her cross visibly while at work would violate the Establishment Clause. FINANCIAL TRUST COMPANY, INC. and Jeffrey E. Epstein, Plaintiffs, X. Public Interests [34) Where there is no compelling CITIBANK, N.A. and Citigroup, Inc. state interest to justify a burden on reli- d/b/a "Citigroup," Defendants. gious freedom, "the public interest dearly No. CIV.2002-108. favors the protection of constitutional rights." Tenafly, 309 F.3d at 178, quoting District Court, Virgin Islands, Council of Alternative Political Parties I D. St. Thomas and St. John. Hooks, 121 F.3d 876, 884 (3d Cir.1997). June 19, 2003. XI. Conclusion [351 The Court will grant plaintiffs re- Borrowers brought action alleging quest for a preliminary injunction enjoin- that bank officials misrepresented facts I. Plaintiffs complaint also challenges the The Pennsylvania Religious Freedom Pro- Garb Statute and the Religious Affiliations tection Act of 2002 has not been Judicially policy under the free exercise of religion interpreted and this Court is hesitant to sail clauses of the Pennsylvania Constitution and the uncharted waters within its reach. In any the newly enacted Pennsylvania Religious event, as defendants contend, it does not ap- Freedom Protection Act. 71 Pa. Stat. Ann. pear that plaintiff provided proper notice to § 2401, et seq., Act of December 9. 2002, P.L. the agency imposing the alleged substantial 1701, No. 214, § 1, et seq., effective immedi• burden on the free exercise of religion (i.e., to ately. The 1895 predecessor to the current AR1N), as required by section 5(b) of that Act, Garb Statute was upheld against a similar 71 Pa. Stat. Ann. § 2405, and defendants do not suggest that the Court should address this state constitutional challenge by the Supreme state statutory claim first, in order to avoid Court of Pennsylvania in Commonwealth I. the First Amendment issues. Accordingly, the Herr, 229 Pa. 132. 78 A. 68 (1910). and this Court does not address plaintiffs claim under Court is not at liberty to reconsider that vin- Pennsylvania's Religious Freedom Protection tage ruling. Act. EFTA00187462 562 268 FEDERAL SUPPLEMENT, 2d SERIES and fraudulently induced them to borrow and officers initiated contact with borrow- funds to invest in collateralized bond obli- ers in Virgin Islands for loans that were gation transaction managed by entity with subject of litigation. 6 § 4903. which bank's subsidiary had investment banking relationship. On bank's motions to 4. Federal Courts 4=1023 dismiss and to transfer, the District Court, Virgin Islands was proper venue for Moore, J., held that: (1) bank was subject Virgin Islands borrowers' action against to general personal jurisdiction in Virgin New York bank for fraudulently inducing Islands; (2) fact issues remained as to it to participate in transaction, even whether there was fiduciary relationship though borrowers agreed to submit to jur- between bank and borrowers; and (3) bor- isdiction of New York courts and to waive rowers failed to plead fraud with sufficient defense of inconvenient forum, where bor- particularity. rowers did not agree to sue or be sued Motions granted in part, and denied in exclusively in New York, bank was subject part. to general personal jurisdiction in Virgin Islands, and bank officials solicited bor- rowers while they were in Virgin Islands. 1. Federal Courts o=036 28 U.S.C.A. § 1391(a). When defendant moves to dismiss for lack of personal jurisdiction, plaintiff must 5. Federal Courts exv143, 144 make prima facie showing of sufficient con- Party seeking transfer of venue for tacts between defendant and forum territo- convenience of parties and witnesses and ry to support in personam jurisdiction. in interest of justice bears burden of estab- Fed.Rules Civ.Proc.Rule 12(b)(2), 28 lishing by preponderance of evidence that U.S.C.A. transfer is necessary. 28 U.S.C.A. 2. Federal Courts 6=96 § 1404(a). In evaluating motion to dismiss for 6. Federal Courts 6=101, 103, 105 lack of personal jurisdiction, court must accept all of plaintiff's allegations as true Although trial judge is afforded great and construe disputed facts in favor of discretion in deciding motion to transfer plaintiff. Fed.Rules Civ.Proc.Rule for convenience of parties and witnesses, 12(b)(2), 28 U.S.C.A. he or she should not disturb plaintiffs choice of forum unless balance of factors 3. Federal Courts 4=1023 strongly weighs in favor of transfer. 28 Bank and its parent company were U.S.C.A. § 1404(a). subject to general personal jurisdiction in Virgin Islands in borrowers' action alleg- 7. Federal Courts 4=4023 ing that bank officials fraudulently induced Transfer of venue for convenience of them to borrow funds to invest in transac- parties and witnesses from Virgin Islands tion, even if bank had closed all of its to Southern District of New York was not operations in Virgin Islands, where bank warranted in Virgin Islands borrowers' operated bank branches and marketed and fraud action against New York bank, provided banking services in Virgin Is- where borrowers resided in Virgin Islands, lands before litigation commenced, contin- most of documents needed to try case had ued to process its outstanding loans in already been filed in Virgin Islands court, Virgin Islands via its Puerto Rican offices, bank was currently litigating other cases and initiated litigation in Virgin Islands, in Virgin Islands, and there was no evi- EFTA00187463 FINANCIAL TRUST CO., INC. ' CITIBANK N.A. 563 Clio u168 F.Suppld 561 (D.VIrgin Islands 2103) dence that key witnesses were unable to rowers' claim against lender for breach of travel to Virgin Islands. 28 U.S.C.A. fiduciary duty by failing to disclose conflict 1404(a). of interest in connection with investment. 8. Contracts €206 12. Banks and Banking 4P0100 Choice of law provision in promissory Under Virgin Islands law, subscrip- note did not govern borrowers' claims tion agreement between fund manager and against lender for fraud, misrepresenta- investors did not bar investors' claim tion, misinformation, and breach of fidu- against its bank for breach of fiduciary ciary duty in advising borrowers to invest duty as result of bank's failure to inform in collateralized bond obligation transac- investors of manager's relationship with its tion managed by entity with which bank's subsidiary, even though agreement ac- subsidiary had investment banking rela- knowledged that investors did not rely on tionship, where borrowers' claims did not bank's advice in making investment, where involve construction, validity, or perfor- bank was not party to agreement, and did mance of note. not speak to long-term relationship be- 9. Federal Civil Procedure e=t1.831 tween bank and investors. Issue of whether bank adequately dis- closed to investors its relationship with 13. Banks and Banking 4=400 fund manager presented fact questions Under Virgin Islands law, borrowers' that could not be resolved on motion to allegation that bank negligently failed to dismiss investors' action alleging that bank disclose that they or their affiliates had misrepresented facts and fraudulently in- pecuniary interest in investment and that duced them to borrow funds to invest in borrowers relied upon information and ad- collateralized bond obligation transaction vice provided by bank officials to their managed by fund manager with which detriment adequately stated claim of negli- bank's subsidiary had investment banking gent misrepresentation. Restatement relationship. (Second) of Torts § 652. 10. Banks and Banking e=t100 14. Federal Civil Procedure e=.636 Under Virgin Islands law, borrowers' allegation that lenders failed to disclose Borrowers's allegation that bank offi- their relationship with fund manager and cials did not disclose bank's relationship did not promptly assist them in under- with fund manager before advising bor- standing how to remove it as fund manag- rowers to invest with manager failed to er adequately alleged that lenders' fraudu- plead fraud claims against bank with suffi- lent conduct caused their financial losses, cient particularity, where complaint did where borrowers claimed that they could not state who made alleged misrepresenta- have obtained new fund manager or re- tions to borrowers, or exactly what false duced their losses in some other fashion if statement or representation was made. they had known of conflict of interest. Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. 11. Federal Civil Procedure c3=>1.831 Issue of whether lender had substan- tial control over borrowers' business af- fairs presented fact questions that could Maria Tankenson Hodge, Hodge & not be resolved on motion to dismiss bor- Francois, St. Thomas, VI, for the plaintiffs. EFTA00187464 564 268 FEDERAL SUPPLEMENT, 2d SERIES Gregory H. Hodges, Dudley, Topper and In April 1999, Dayle Davison ["Davi- Feuerzeig, LLP, St. Thomas, VI, for the son"], Vice President of Citibank in New defendants. York and Epstein's private banker, and other Citibank employees telephoned Ep- MEMORANDUM OPINION stein while he was in the Virgin Islands and recommended that the plaintiffs invest MOORE, District Judge. through placement agent Salomon Smith After careful consideration of the par- Barney i"SSB"), a "subsidiary or affiliate" ties' written and oral arguments, I will of the defendants, in a collateralized bond deny the defendants' motions to dismiss obligation transaction managed by MG. for lack of personal jurisdiction and to (Compl. 1112, 24; Epstein Decl. 118-10; transfer this case to New York. Further, I Davison Aft 11 1, 102-18.) According to find that the amended complaint adequate- the plaintiffs, during the negotiations of ly states claims of breach of fiduciary duty this deal Davison represented to Epstein and negligent misrepresentation. Finally, that he was "virtually assured of receiving I will grant the defendants' motion to dis- an 18-20% return on [his] investment, with miss Counts I, II, III, and VI for failure to a possible return of as much as 80%" and meet Federal Rule of Civil Procedure assured him that Citibank was going to 9(b)'s heightened pleading requirement for remain actively involved in the investment fraud, but I will grant leave for the plain- (Epstein Decl. 1 11.) tiffs to amend their pleadings. After further discussion between Ep- stein and Davison, Citibank offered to loan I. FACTUAL AND PROCEDURAL Epstein $10 million on the express condi- BACKGROUND tion that the money be used exclusively to In their amended complaint, Jeffrey E. fund FTC's investment in the AIG-man- Epstein ("Epsteinn and Financial Trust aged venture. (Id. 1112-18.) On August Company, Inc. ("Fr) (collectively "plain- 2, 1999, Epstein executed a promissory tiffs") allege that Citibank, N.A. ("Citi- note in favor of Citibank in the amount of bank") and Citigroup, Inc. ("Citigroup"I $10 million [the "1999 Note"]. (Pls.' Mem. [collectively "defendants"] misrepresented Of Law in Opp'n to Mot. To Dismiss, Ep- facts and fraudulently induced them to stein Decl. 115; Mem. Of Law in Support borrow $10 million to invest in a venture of Deft' Mot. To Dismiss, Ex. A.) In addi- managed by MG Global Investment Cor- tion, Citibank and FTC entered into a poration ("MG"). The plaintiffs allege that hypothecation agreement (Mem. Of Law the defendants failed to disclose informa- in Support of Defs.' Mot, to Dismiss, Ex. B tion and negligently and fraudulently mis- at 7.) represented facts concerning their rela- On June 15, 2000, Epstein executed and tionship with MG (Counts I, II, III, IV delivered to Citibank an amended and re- and VI), that the plaintiffs detrimentally stated promissory note ("the Amended relied on these misrepresentations (Counts 1999 Note") that superseded the 1999 I, II, III, and VI), and that the defendants Note. The Amended 1999 Note extended breached their fiduciary duty to the plain- the maturity date of the 1999 Note to tiffs (Count p. The plaintiffs seek rescis- August 2, 2001. (Id Ex. D.) In connection sion of the promissory note and punitive with the Amended 1999 Note, Epstein and damages (Counts VI and VII). (Am. FTC also signed an agreement entitled Compl.11 46-68.) "First Amendment to Note and Affirms- EFTA00187465 FINANCIAL TRUST CO., INC. I. CITIBANK N.A. 565 Cite as 268 F.Supp.2d 561 (1).VIrsla Island* 2003) Lion of Hypothecation Agreement and Cer- mation from Chase Manhattan, the Trust- tain Documents Referred to Therein" (the ee of the fund. (Pls.' Mem. Of Law in "first Extension Agreement"l in which Opp'n to Mot. To Dismiss, Schantz Decl. they reaffirmed the Amended 1999 Note in 116-8. ) Chase Manhattan, however, re- its entirety, the Hypothecation Agreement, ferred the plaintiffs back to Citigroup. In and each document and term thereunder. June, the plaintiffs learned for the first (hd Ex. E.) Each of these documents—the time that AIG itself owned twenty-eight original 1999 Note, the 1999 hypothecation percent (28%) of the income notes of the agreement, the Amended 1999 Note, and AIG investment. Thus, plaintiffs would the first Extension Agreement—contains not need other income note holders with as clauses stating that New York law would much of an investment in the income notes govern the "construction, validity, and per- as they originally had believed because formance" of the 1999 Note and the AIG's interest would not count toward any Amended 1999 Note. (Id Ex. A at 8-9; vote to remove it as manager. In July Ex. B at 7-8; Ex. D at 10; Ex. E at 2-3.) 2001, the plaintiffs finally received the in- Sometime in the spring of 2001, Epstein formation they had requested from Citi- and FTC discovered that the MG Invest- bank. (M. 119-10.) ment was "suddenly and rapidly deterio- At this time, Davison and SSB repre- rating." (Pls.' Mem. Of Law in Opp'n to sentatives urged the plaintiffs not to at- Mot. To Dismiss, Epstein Decl. 1 20.) Ac- tempt to seek to remove MG as the fund cording to the plaintiffs, FTC's advisors manager. In August 2001, FTC's attor- contacted Davison and other employees of ney arranged a telephone conference with Citibank, and requested Citibank's help in representatives from Citibank and SSB. coordinating the replacement of the MG Plaintiffs contend that during this confer- fund's manager. (Id 121; Schantz Decl. ence they learned for the first time that 1 5.) In May 2001, Davison informed the Citibank could not assist them in seeking plaintiffs that, in order to remove MG as to remove AIG because SSB had an in- the fund manager, FTC would need sixty- vestment banking relationship with MG six and two-thirds percent (66% LI) of the that might be adversely affected by such votes of income note holders. Because the an action. (Id. at 11 11-13.) plaintiffs did not know the identities or respective percentages of ownership of the On June 11, 2002, the plaintiffs filed other income note holders, they requested their complaint in this Court. One month that Davison provide them with that infor- later on July 11, 2002, Citibank sued the mation. The plaintiffs claim that Davison plaintiffs in the Southern District of New initially assured them that she would pro- York, alleging that they had defaulted on vide such information promptly, but later both the loan at issue here and a second informed them that she was having diffi- $10 million loan.' See Citibank N.A. I culty obtaining the information from SSB, Epstein, Index No. 02-CV-5332-SHS and recommended that they seek the infor- (S.D.N.Y.2002). On November 27, 2002, 1 I. Sometime in 2000, Davison informed Ep- of Defs.' Mot. To Dismiss, Ex. D.) Although stein about a second, similar investment fund the plaintiffs have stated an intent to seek to to be managed by Mass Mutual Ithe "Mass amend the complaint to include claims relat- Mutual Fund"). On June 15, 2000. Epstein ed to the Mass Mutual Fund, they have not yet borrowed an additional $10 million from Citi- done so. (Sec Pis: Mem. Of Law in Opp'n to bank, that Epstein agreed to invest in the Mot. To Dismiss at 12 n. 12.) Mass Mutual Fund. (Mem. Of Law in Support EFTA00187466 566 268 FEDERAL SUPPLEMENT, 2d SERIES issued an order restraining Citibank and the defendants are currently doing busi- Citigroup from pursuing their New York ness in the Virgin Islands and that this lawsuit pending decisions on these mo- Court has jurisdiction over the defendants tions. Financial That Ca, Inc Citi- under the Virgin Islands' Long—Arm Stat- N.A., Order, Civ. No2002-108 ute. The plaintiffs insist that the defen- a Nov. 27, 2002). In light of subse- dants' depiction of Citigroup as a "holding quent events, however, I sue sponte vacat- company" is belied by Citigroup's public ed this prohibition. Financial That Ca, disclosures that the plaintiffs claim do not Inc I. Citibank, NA, Order, Civ. identify Citibank as a separate subsidiary No.2002-108 (M. Dec. 13, 2002). or affiliate of Citigroup. (Pls.' Mem. Of The defendants charge that plaintiffs' Law in Opp'n to Mot. to Dismiss at 16-24.) suit in the Virgin Islands is merely "a (1, 2) I agree with the plaintiffs and transparent attempt to launch a preemp- find that this Court has personal jurisdic- tive strike to hamper Citibank's efforts to tion over the defendants under the Virgin recover the $20 million in promissory notes Islands Long-Arm Statute and that, under . .. upon which Epstein has defaulted." the United States Constitution, the defen- (Mem. Of Law in Support of Def.'s Mot. dants have had enough "minimum con- To Dismiss at 2.) The defendants move to tacts" with the Virgin Islands to require dismiss this action under Federal Rule of them to defend a lawsuit in this jurisdic- Civil Procedure 12(:4(2) for lack of person- tion. This Court sitting in diversity exer- al jurisdiction, or alternatively, to transfer cises personal jurisdiction over a non-resi- this case to the Southern District of New dent defendant pursuant to the forum's York under 28 U.S.C. § 1404(a). Finally, long-sum statute and in compliance with the defendants aver that the amended the Due Process Clause of the Fourteenth complaint fails to state a cause of action Amendment's "minimum contacts" re- upon which relief may be granted under quirement. See In it Tutu Wells Contam- Federal Rule of Civil Procedure 12(b)(6) ination Litig., 846 F.Supp. 1243, 1264 and does not allege fraud with the requi- iD.Vi.1993) (citing International Shoe Ca site particularity as required by Federal Washington, 826 U.S. 810, 66 S.Ct. 154, Rule of Civil Procedure 9(b). 1 address 90 L.Ed. 95 (1545)). When a defendant each argument in turn. moves under Rule I2(bX2) to dismiss for II. DISCUSSION lack of personal jurisdiction, the plaintiff must make a prima facie showing of suffi- A. This Court has Personal Jurisdic- cient contacts between the defendant and tion over Citibank and Citigroup the forum territory to support in person- The defendants maintain that Citibank ant jurisdiction, see Mellon Bank (East) discontinued its presence in the Virgin Is- PSFS Nat't Assn Farino, 960 F2d lands in 1999 and that Citigroup is merely 1217, 1223 (3d Cir.1992), and the court a holding company that "does not have and must accept all of the plaintiff's allegations never has had any assets, offices or em- as true and construe disputed facts in fa- ployees in the Virgin Islands." In addi- vor of the plaintiff, see Carteret Salt Bank, tion, the defendants insist that the events FA I Shushan, 954 F.2d 141, 143 n. 1 (3d giving rise to this cause of action have no Cir.1992). The nature of these contacts connection with the Virgin Islands. (Mem. must be such that the defendant should be of Law in Support of Deft' Mot. to Dis- reasonably able to anticipate being haled miss at 6-9.) The plaintiffs counter that into court in the forum state. See World- EFTA00187467 FINANCIAL TRUST CO., INC. I CITIBANK N.A. 567 Gni% F.Suppld 561 (D.VIITIn Isliands WO/ Wide Volkswagen Corp. 1 Woodson, 444 tionship between the defendants and the U.S. 286, 297, 100 S.Ct. 659, 62 L.Ed2c1 plaintiffs, I find that the plaintiffs have 490 (1980). established that Citibank and Citigroup are sufficiently linked. For example, Gill- 1. This Court has Personal Jurisdic- group's website plainly states that it does tion over the Defendants under the business through Citibank and other units Virgin Islands Long-Ann Statute throughout the world. Indeed, during oral The Virgin Islands long-arm statute, 6 argument on these motions, the defendants § 4903, provides, in relevant part: presented a letter sent to Epstein concern- (a) A court may exercise personal juris- ing the loans, identifying the two as linked diction over a person, who acts directly together as "Citigroup, private bank" and or by an agent, as to a claim for relief "The Citigroup Private Bank, Citibank, arising from the person's N.A." At least at this preliminary stage, I find that Citibank and Citigroup are in- (1) transacting any business in this volved in the subject matter of this litiga- territory; tion. Accordingly, I conclude that this • • • • Court has jurisdiction under the Virgin (3) causing tortious injury by an act Islands Long-Arm Statute over both the or omission in this territory; defendants. (4) causing tortious injury in this ter- ritory by an act or omission outside this 2. The Defendants' "Minimum Con- territory if he regularly does or solicits tacts" in the Virgin Islands Meet business, or engages in any other per- the Constitution's Due Process Re- sistent course of conduct, or derives quirements substantial revenue from goods used or In addition to finding jurisdiction under consumed or services rendered, in this this forum's long-arm statute, I must also territory .. . . determine whether the defendants' con- 6M. $ 4903. Under subsection (aX1), duct here in the Virgin Islands rises to the the term "transacting any business" can be level of "minimum contacts" as required satisfied by "only a single act which in fact by the Constitution. The Due Process amounts to the transaction of business Clause of the Fourteenth Amendment re- within a state or territory." Guardian quires that a court determine whether a Ins. Co. I Bain Hogg Intl Ltd., Civ. defendant had the "minimum contacts" No.1996-180, 2000 WL 1690315, "2-3, with the forum necessary for the defen- 2000 U.S. Dist LEXIS 17184 at *8 ( dant to have "reasonably anticipated being October 26, 2000) (quoting Godfrey In- haled into court there." World-Wide ternational Moving Consultants, Ina, 18 Volkswagen, 444 U.S. at 297, 100 S.Ct. 669. IS 60, 66-67 (-.1980)). It is suffi- A finding of minimum contacts demands cient, therefore, that Citibank entered into the demonstration of "'some act by which a contract with a Virgin Islands resident, the defendant purposely availed itself of and that the defendants solicited the plain- the privilege of conducting business within tiffs—while they were in the Virgin Is- the forum State, thus invoking the protec- lands—to borrow $10 million to invest in tion and benefits of its laws.'" Pennzoil the AIG-managed fund. Prods. Co. F Colelli & Assocs., Inc., 149 [3] With respect to the relationship be- F.3d 197, 203 (3d Cir.1998). A plaintiff tween Citibank and Citigroup and the vela- can meet this burden in one of two ways: EFTA00187468 568 268 FEDERAL SUPPLEMENT, 2d SERIES by establishing specific or general jurisdic- Having found that minimum contacts ex- tion over a defendant. Mesalic Fiberf- ist, I must decide whether compelling toot Corp, 897 F.2d 696, 699 (3d Cir.1990). these out-of-territory defendants to submit A court's general jurisdiction "is based on to jurisdiction in the Virgin Islands com- the defendant's general business contacts ports with traditional notions of fair play with the forum (territory) and permits a and substantial justice. Grand Entin't court to exercise its power in a case where Group, Ltd'. Star Media Sales, Inc., 988 the subject matter of the suit is unrelated F.2d 476, 481 (3d Cir.1993) (citing interna- at 316, 66 S.Ct. to those contacts." Metropolitan Life Ins. tional Shoe, 826 U.S. 810 164). Applying these considerations here, Co. I Robertson—Ceco Corp., 84 F.3d 660, I find it reasonable to assert jurisdiction 668 (2d Cir.1996). Under this test, the over Citibank and Citigroup. The burden plaintiff must establish that the defen- on the defendants to defend this lawsuit in dant's contacts with the forum jurisdiction the Virgin Islands is not severe, most of are "continuous and systematic." Id. the relevant documents have already been I find that this Court has general juris- filed in this Court and several airlines diction over the defendants. Citibank op- make daily flights connecting New York erated bank branches and marketed and and St. Thomas. The Virgin Islands obvi- provided banking services in the Virgin ously has a valid interest in protecting its Islands for years before and after April residents from out-of-state financial insti- 1999 and until 2002, just months before the tutions. Resolving the case in this Court commencement of this litigation. On Jan- is just as efficient as trying it in New York and there is no evidence that the interests uary 31, 2002, Citibank closed its last re- of New York or the Virgin Islands would maining bank branch in the U.S. Virgin be better served if this matter were not Islands, and Citibank no longer makes real litigated in this jurisdiction. See, e.g., estate-related loans in the Virgin Islands. Mesalic, 897 F.2d at 701 (citing Asahi (Malin Aff. 113-4.) Citibank, however, Wild indua. Co. Superior Ct., 480 U.S. continues to process its outstanding loans 102, 113, 107 &Ct. 1026, 94 L.Ed2d 92 here via its Puerto Rican offices, and initi- (1987)). Accordingly, I find that this ates litigation in this Court. (Id. 16.) All Court has general jurisdiction over the of the foregoing plainly demonstrates that defendants and that litigating this matter Citibank, and Citigroup through Citibank, in this forum comports with the Constitu- have continuously and systematically con- tion's due process requirements. ducted business in the Virgin Islands— including initiating contact with the plain- B. Venue in this Court is Proper un- tiffs for the loans that are the subject of der 28 US.C. 4 1391(a) this litigation—and therefore, are subject (41 Defendants also argue that this is to this Court's general jurisdiction. See, an improper venue in which to litigate this e.g., Metropolitan Life In Co., 84 F.3d at dispute. (Mem. in Supp. of Deft' Mot. to 669 (finding that "our review of general Dismiss at 20-21.) I agree with the plain- jurisdiction cases reveals that contacts are tiffs, however, that the Virgin Islands is a commonly assessed over a period of years proper choice of venue. (Pls.' Mem. of prior to the plaintiff's filing of the com- Law in Opp'n to Mot. to Dismiss at 24--20.) plaint" and listing cases). Accordingly, I Although the plaintiffs agreed to submit to will deny the motion to dismiss for lack of the jurisdiction of New York courts and to personal jurisdiction. waive the defense of an inconvenient fo- EFTA00187469 FINANCIAL TRUST CO., INC. CITIBANK N.A. 569 ale 268 F.Suppid $61 (D.V1rg Islands 2003) rum, they did not agree to sue or be sued proper under section 1391(a)(2). Accord- exclusively in New York. The Amended ingly, I will deny the defendants' request 1999 Note states that to dismiss this matter for improper venue. the undersigned (Epstein) hereby irre- C. This Case Need Not Be Trans- vocably submits to the jurisdiction of ferred to New York any New York state or federal court sitting in New York City, and the under- Anticipating that I might find that juris- signed hereby irrevocably agrees that diction and venue are proper in this Court, any action may be heard and determined the defendants have requested that I in such New York state court or in such transfer this case to the United States federal court. The undersigned hereby District Court for the Southern District of irrevocably waives, to the fullest extent New York. They aver that this claim actu- he may effectively do so, the defense of ally arose in New York and that the claus- an inconvenient forum to the mainte- es in the agreements stipulating to the nance of any action in any jurisdiction. application of New York Law and the (Mem. In Support of Defs.' Mot. To Dis- plaintiffs' agreement to submit to the juris- miss, Ex. D at 10.) The Amended 1999 diction of New York courts require that Note, however, does not limit "the under- this matter be litigated in New York. signed" to a specific forum or bar the (Mem. Of Law in Support of Defs.' Mot.. to plaintiffs from suing the defendants in any Dismiss at 22-32.) forum having personal jurisdiction over the defendants. Moreover, under the fed- (5, 6) Transfer to a new forum under eral venue statute, a diversity case such as the federal venue statute requires that the this can be brought in a "district where transfer be "(f)or the convenience of the any defendant resides, if all defendants parties and witnesses [and] in the interest reside in the same State." 28 U.S.C. ofjustice." 28 U.S.C. § 1404(a). Citibank § 1391(a). This statute further provides and Citigroup bear the burden of estab- that "(nor purposes of venue . . ., a defen- lishing by a preponderance of the evidence dant that is a corporation shall be deemed that transfer is necessary. In re Charles to reside in any judicial district in which it Schwab & Co. Sec. Litig., 69 F.Supp.2d is subject to personal jurisdiction at the 734,735 (D.Vi.1999) (citing Shupe'. Arm- time the action is commenced." 28 U.S.C. co Steel Corp., 431 F.2d 22, 26 (3d Cir. 1391(c). Because I have found that both 1970)). Although a trial judge is afforded Citibank and Citigroup are subject to this great discretion in deciding this motion, he Court's personal jurisdiction and are thus or• she should not disturb a plaintiffs deemed residents of the Territory for ven- choice of forum unless the balance of fac- ue purposes, venue is proper in the Virgin tors strorsly weighs in favor of transfer. Islands under section 1391(4(1). In addi- Jackson I. Executive Airlines, Ina, Civ. tion, these claims may be litigated in a No2000-121, 2001 WL 664673, '2, 2001 "district in which a substantial part of the U.S. Dist. 8004 LEXIS at •7 (M. June events or omissions giving rise to the claim 7, 2001). A defendant seeking a transfer occurred." 28 U.S.C. § 1391(a)(2). The will not overcome this presumption unless solicitation of the plaintiffs while they were the defendant can prove that the "balance in the Virgin Islands and the mailing of of convenience of the parties is strongly in documents to the plaintiffs constitute a favor of defendant" Sheltie, 431 F2d at sufficiently substantial part of the events 25. Among the factors to be considered in giving rise to this action to render venue making this determination are: EFTA00187470 570 268 FEDERAL SUPPLEMENT, 2d SERIES (1) plaintiff's choice of forum; (2) defen- stated that their key witnesses are unable dant's preference; (3) where the claim to travel to the Virgin Islands. See Jtt- arose; (4) convenience to the parties; mato, 56 F.3d at 879. Finally, it is not at (5) convenience to witnesses—but only all clear that New York law must be ap- to the extent that the witnesses may plied to determine the causes of action actually be unavailable for trial in one of raised by plaintiffs, but to the extent that the fora; (6) location of books and rec- another jurisdiction's jurisprudence does ords; (7) practical considerations that apply, this Court is fully capable of apply- could make the trial easier, more expedi- ing such law. For the foregoing reasons, I tious, or less expensive; (8) congestion find that the requisite factors weigh in of the possible fora; and (9) the familiar- favor of litigating this matter in the Virgin ity of the trial judge with the applicable Islands, and thus I will deny the motion to state law in diversity cases. transfer. See generally Junwre I State Farm Ins. D. The Amended Complaint Ade- Co., 55 F.3d 873, 879-80 (3d Cir.1995). quately States Claims upon 171 Considering the totality of the cir- Which Relief May be Granted Un- cumstances surrounding this case, I make der Federal Rule of Civil Proce- the following findings. First, Epstein and dure 12(b)(6) Financial Trust have selected this forum, The defendants aver that I should dis- and they are residents of the Virgin Is- miss this action pursuant to Federal Rule lands with strong ties to this community. of Civil Procedure 12(bX6) because the Epstein owns a seventy-acre island, and he amended complaint fails to state a claim and Financial Trust employ some twenty upon which relief may be granted. In people. (Pls' Mem. Of Law in Opp'n to considering a Rule 12(b)(6) motion, I ac- Mot. To Dismiss, Epstein Decl. 1A 2, 4—5.) cept all allegations in the complaint as It is important that local plaintiffs with true, and draw all reasonable inferences in grievances against defendants subject to favor of the non-moving party. In re this Court's jurisdiction be permitted to Rockefeller Ctr. Props., Int, 311 F.3d 198, seek redress here in the Virgin Islands. 215 (3d Cir.2002). "The inquiry is not As already noted, no forum selection whether plaintiffs will ultimately prevail in clause binds the parties to bring suit in a trial on the merits, but whether they any particular jurisdiction. The defen- should be afforded an opportunity to offer dants contacted the plaintiffs and entered evidence in support of their claims." /d. into negotiations concerning the MG in- (citing Scheuer I Rhodes, 416 U.S. 232, vestment while they were in the Virgin 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), Islands, and at least one agreement was overruled on other grounds, Harlow addressed to the plaintiffs through trans- Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 mission to the plaintiffs' attorneys in New L.Ed.2d 396 (1982)). The defendants raise York, intending that it be sent to the Vir- several arguments in support of their mo- gin Islands. I do not find that the defen- tion, each of which I address in turn. dants will suffer any great inconvenience (Mem. of Law in Support of Defs.' Motion by litigating this matter here. As the to Dismiss at 36—52.) plaintiffs point out, most of the documents needed to try the case have already been 1. Virgin Islands Law Governs this filed in this Court, and the defendants are Lawsuit currently litigating other cases in this 131 Throughout their brief, the defen- Court. Moreover, the defendants have not dants rely on New York law to support EFTA00187471 FINANCIAL TRUST CO., INC. I. CITIBANK N.A. 571 cot as 266 F.Supp.2d 561 11).VIngla Islands 2003) their 120:0(6) motion. Their reliance on or negotiation of any securities or com- New York law, however, is misplaced. In modities, and that there is no private right the Amended 1999 Note, the parties stipu- of action. (Deft' Mem. Of Law in Support lated only that of Mot. To Dismiss at 44-46.) The plain- IOUs note shall be governed by, and tiffs counter that New York's Martin Act construed in accordance with, the laws does not apply to nor bar their claims. of the State of New York, including (Pls.' Mem. Of Law in Opp'n to Mot. To matters of construction, validity and per- Dismiss at 48—O.) formance, without giving effect to princi- The plaintiffs correctly assert that New ples of conflicts of law .... York law does not govern their claims. In (Mem. Of Law in Support of Defs.' Mot. Count IV of the amended complaint, the To Dismiss, Ex. I) at 10.) The issues plaintiffs allege that the defendants failed raised by the plaintiffs, however, do not to disclose that they or their affiliates had involve the "construction, validity and per- a pecuniary interest in the AIG Invest- formance" of the note; rather, they involve ment "despite mismanagement" of the MG allegations of fraud, misrepresentation, mi- fund. The plaintiffs contend that they re- sinformation, and breach of a fiduciary lied on the information and advice given by duty of the defendants in advising the defendants, and suffered a substantial pe- plaintiffs about the AIG-managed fund. cuniary loss as a result. (Am. Accordingly, I find that New York law Compl.11 56-57.) In Count', the plain- does not govern these claims, and instead tiffs accuse the defendants of breaching a shall look to Virgin Islands law to deter- fiduciary duty owed to them. (Id. 1159- mine whether the plaintiffs have stated 61.) Neither of these claims involves the claims cognizable in this jurisdiction. "construction, validity and performance" of the Amended 1999 Note, and therefore, 2. New York's Martin Act Does Not they are not governed by New York law.2 Apply to this Lawsuit The defendants aver that the Martin 3. The Amended Complaint's Nondis- Act, New York General Business section closure Allegations are Factual Is- 352 et seq., bars the plaintiffs' claims for sues to be Determined at Trial negligent misrepresentation (Count IV) Citibank and Citigroup claim that every and breach of fiduciary duty (Count l) count in the amended complaint is prem- because, under the Act, only New York ised upon their alleged failure to disclose a State's Attorney General has the power to conflict of interest. They aver, however, bring such claims resulting from the sale that SSB's relationship with MG was dis- 2. The Martin Act is New York's blue sky law. lished that there exists no private right of General Business Law section 352-c prohibits action for claims that are within the purview various fraudulent and deceitful practices in of the [Martin] Act.); Granite Partners, L.P. the distribution, exchange, sale and purchase Bear, Stearns, & Co., Inc., 17 F.Supp.2d 275, of securities. The Marlin Act vests exclusive 291 (S.D.N.Y.1998) (same); Deutsch I Inte- authority in the New York Attorney General grated Barter Ina Inc. 700 F.Supp. 194 to investigate and prosecute violations of the (S.D.N.Y.I988); CPC Ina Inc.'. McKesson Act. The Martin Act does not, however, pro- Corp., 70 N.Y.2d 268, 276, 519 N.Y.S.2d 804, vide for a private cause of action. See Nairo- 514 N.E.2d 116 (N.Y.I987) (noting that "(al bi Holdings Ltd. Brown Bros. Harriman & majority of this court now holds that there is Co., Civ. No.2002-1230. 2002 WL 31027550, no cause of action impliedly created under •4, 2002 U.S. Dist. LEXIS 16995 at •10 (S.D.N.Y. Sept. 10, 2002) ("flit is well estab- (the Martin Actl"). EFTA00187472 572 268 FEDERAL SUPPLEMENT, 2d SERIES closed to the plaintiffs both in the "pitch the plaintiffs' losses under New York law. book" and in the Offering Circular used to (Mem. Of Law in Supp. of Defs' Mot. to market the AIG investment. Accordingly, Dismiss at 40-44.) As noted above, Virgin therefore, the defendants assert that each Islands law governs these claims. The count of the amended complaint should be plaintiffs maintain that they have ade- dismissed to the extent that it is premised quately stated causation by alleging that on the defendants' alleged failure to dis- the defendants did not disclose their rela- close the relationship between MG and tionship with MG and did not promptly SSB. (Mem. Of Law in Support of Defs.' assist them in understanding how to re- Mot. To Dismiss at 3649.) The plaintiffs move AIG as fund manager—presumably challenge the defendants' reliance on these because of a conflict of interest or loyalty documents and the propriety of consider- owed to AIG. But for this delay, the plain- ing them under Rule 12(b)(6). Alterna- tiffs complain that they could have ob- tively, they claim that these documents tained a new fund manager or reduced confirm the defendants' failure to disclose their losses in some other fashion. Ac- the existence of a continuing investment cordingly, the amended complaint ade- banking relationship with AIG that would quately alleges that the defendants' render the defendants unable to advise the wrongful conduct caused their financial plaintiffs in an impartial, objective manner. losses. (Pls.' Mem. Of Law in Opp'n to Mot. To Dismiss at 32-36.) 5. Plaintiffs' Claims of Breach of Fi- (9) Although generally, a district court duciary Duty and Negligent Mis- may not consider matters extraneous to representation Need Not Be Dis- the pleadings, I may consider "a docu- missed ment integral to or explicitly relied upon Citibank and Citigroup argue that the in the complaint . . . without converting claim of breach of fiduciary duty should be the motion to dismiss into one for sum- dismissed because the Subscription Agree- mary judgment" U.S. Express Lines ment between AIG and the plaintiffs ex- Ltd I. Higgins, 281 F.3d 383, 388 (3d plicitly states that they did not owe the Cir.2002) (emphasis added) (quoting in re plaintiffs such a duty. Moreover, they as- Burlington Coat Factory Litig., 114 FM sert that New York law does not recognize 1410, 1426 (3d Cir.1991)). Because the a fiduciary duty owed by a bank to its parties dispute whether the document in customer or by a broker to its customer. question is the actual "pitch book" refer- Finally, the defendants argue that the enced in the amended complaint, however, plaintiffs' negligent misrepresentation I find that whether the defendants dis- claim must also be dismissed because the closed SSB's relationship to MG to the defendants owed the plaintiffs no fiduciary plaintiffs is a disputed fact that precludes duty. (Mem. Of Law in Supp. of Defs.' a Rule 12(bX6) dismissal. Mot. to Dismiss at 46-50.) The plaintiffs counter that, even under New York law, 4. The Complaint Adequately Alleges the issue whether a fiduciary duty exists that the Defendants' Wrongful Con- requires a fact-specific analysis of the to- dud Caused the Plaintiffs' Losses tality of the circumstances surrounding the (10) Citibank and Citigroup argue that relationship between the plaintiffs and the the plaintiffs have failed to allege ade- defendants. The plaintiffs contend, how- quately that the defendants' actions caused ever, that under the controlling Virgin Is- EFTA00187473 FINANCIAL TRUST CO., INC., CITIBANK N.A. 573 clic as 268 F.Supp.2d 561 11/V1r Islands 2003) lands law, they have stated claims for arms-length banking relationship. They breach of fiduciary duty and negligent mis- claim that they and the defendants have a representation. They argue that the de- fifteen-year relationship and that the de- fendants owed them a fiduciary duty be- fendants acted as their financial advisor. I cause they "cultivated a relationship of find that, for purposes of surviving a Rule trust over a fifteen-year span as their pri- 12(b)(6) motion, the amended complaint vate banker" and then used this trust to adequately states a claim for breach of market new and inherently risky invest- fiduciary duty. ment opportunities which became even [121 In addition, I find that the defen- more risky because of defendants' tortious dants' argument that the Subscription conduct. (Pls.' Mem. Of Law in Opp'n to Agreement between MG and the plaintiffs Mot. To Dismiss at 41-46.) bars these claims against them is without merit. A fair reading of the Subscription a. The Amended Complaint Adequate- Agreement compels the conclusion that its ly States a Claim for Breach of Fi- main purpose is to protect AIG's interests duciary Duty in its dealing with Epstein and FTC. The In Count, of the amended complaint, agreement discusses at length the process the plaintiffs allege that the defendants by which AIG, through its agent, Citibank, cultivated a relationship of trust with the will deliver income notes to Epstein, the plaintiffs over fifteen-years as their private purchaser. The Subscription Agreement banker, and that the defendants breached contains a clause stating that neither AIG, their fiduciary duty owed to the plaintiffs SSB, nor Citibank by failing to disclose a conflict of interest is acting as a fiduciary or financial or and effectively "forced" the plaintiffs to investment adviser for the Purchaser keep their funds in a failing investment. and the Purchaser is not relying on any The plaintiffs claim that the defendants written or oral advice, counsel or repre- "served as [their] financial investment ad- sentations of the Company, the Invest- visor and broker, as well as providing oth- ment Manager, the Placement Agent er financial and banking services to [SSB), the Agent or any of their respec- [p]laintiffs, and thereby formed a fiduciary tive affiliates . . . [and that] [t]he Pur- relationship with [p]laintiffs and other in- chaser has consulted with its own legal, vestors." (Am.Compl.11 10, 59-60.) regulatory, tax, business investment fi- till In typical lender-borrower rela- nancial, and accounting advisers to the tionships, there is a presumption that the extent it has deemed necessary, and has parties operate at arms-length and in their made its own investment decisions based own interest. Jo-Ann's Launder Ctr., upon its own judgments and upon any Inc.'. Chase Manhattan Bank, N.A., 854 advice from such advisers as it has F.Supp. 387, 392 (D.Vi.1994). A fiduciary deemed necessary and not upon any relationship may arise, however, depend- view expressed by the Company, the ing upon the particular circumstances of Investment Manager, the Placement the financial relationship. This may occur, Agent, the Agent or any of their respec- for example, when a lender has substantial tive affiliates. control over the borrower's business af- (Mem. In Supp. of Deis.' Mot. To Dismiss, fairs. Id. Here, the plaintiffs have alleged Ex C. at 10-11, 9 i.) Although this docu- that their relationship with Citibank and ment alludes to Citibank's role in this one Citigroup was not the "garden-variety" at transaction, the agreement does not speak EFTA00187474 574 268 FEDERAL SUPPLEMENT, 2d SERIES to the fifteen-year relationship between Mot. to Dismiss at 51-52.) Whereas the the defendants and the plaintiffs that is plaintiffs, in their amended complaint, have the gravamen of the amended complaint. set out their request for rescission of the Moreover, Citibank is not a party to nor Amended 1999 Note and punitive damages did it sign the Subscription Agreement. I in the form of additional causes of action, I find, therefore, that the Subscription will require them to reframe them as part Agreement does not dispose of the plain- of the ad damnum clause. tiffs' breach of fiduciary duty claim as a matter of law. D. Counts 1, II, III, and VI of the Plaintiffs' Amended Complaint b. The Amended Complaint Adequate- ly States a Claim of Negligent Mis- Fail to Meet Federal Rule of Civil Procedure 9(b)'s Heightened representation Pleading Standard for Claims of 1131 In the Virgin Islands, the ele- Fraud ments of negligent misrepresentation are: (o]ne who, in the course of his business, Finally, the defendants argue that profession or employment, or in any oth- Counts 1, II, III, and VI should be dis- er transaction in which he has a pecuni- missed due to the plaintiffs' failure to ary interest, supplies false information plead fraud with the requisite particularity for the guidance of others in their busi- as required under Federal Rule of Civil ness transactions, is subject to liability Procedure 9(b). They aver that the for pecuniary loss caused to them by amended complaint is "rife with sweeping their justifiable reliance upon the infor- conclusory allegations but fatally short on mation, if he fails to exercise reasonable detail" and that the fraud claims fail to care or competence in obtaining or com- explicitly reference Citigroup, do not state municating the information. any dates on which the alleged conduct occurred, and do not name any specific RESTATEMENT (SECOND) OF TORTS § 552 (1977). Count IV of the amended com- employees of the defendants. The defen- plaint alleges that the defendants negli- dants contend that the complaint simply gently failed to disclose that they or their does not put them on notice of what exact- ly each is accused. (Mem. of Law in Supp. affiliates had a pecuniary interest in the MG investment and that the plaintiffs re- of Mot. to Dismiss at 32-35.) The plain- tiffs counter that, although the amended lied upon the information and advice pro• complaint does not specify who within Citi- vided by the defendants to their detriment- (Am.Compl.11 55-56.) I find that Count group or Citibank recommended the AIG investment, the defendants are aware of IV thus adequately states a claim of negli- which of their employees are implicated in gent misrepresentation. this matter. Moreover, the plaintiffs sub- 6. The Rescission and Punitive Dam- mit that the defendants are responsible for ages Counts are not Causes of Ac- the "universal fungibility" of the Citigroup tion and Citibank names. The plaintiffs ask The defendants contend that this Court that this Court find that the amended com- should dismiss Counts VI and VII—for plaint meets Rule 9(b)'s requirements, or, rescission of the note and for punitive alternatively, permit them to replead their damages—because each claim seeks specif- allegations of fraud under Federal Rule ic relief without asserting any claim for 15(a). (Pls.' Mem. Of Law in Opp'n to relief. (Mem. Of Law in Supp. of Defs.' Mot. To Dismiss at 30-32, 39-41.) EFTA00187475 FINANCIAL TRUST CO., INC. CITIBANK N.A. 575 Cite es 268 F.Suppld 561 (13.VIrsin Islands 2003) Federal Rule of Civil Procedure 9(b) [the defendants] did not, in fact, truthfully requires parties alleging fraud to describe hold." (Id. A 50.) Count III claims that the circumstances constituting fraud "with the defendants are liable to the plaintiffs particularity." Rule 9(b) requires that the for their failure to disclose this informa- plaintiff "give[ J defendants notice of the tion, "because they knew that their non- claims against them, provide( ) an in- disclosure would justifiably induce the creased measure of protection for their Plaintiffs to proceed with the proposed in- reputations, and reduce() the number of vestment" (Id 152.) Finally, Count VI frivolous suits brought solely to extract again claims that the defendants' conduct settlements." in re Rockefeller Ctr. "constituted the making of fraudulent mis- Props., Inc., 311 F.3d at 215 (quoting In re representations to, and/or fraudulent con- Burlington Coat Factory Sea Litig., 114 cealment and non-disclosure of material F.3d at 1418). "Rule 9(b) requires a plain- facts." (M. 1 63.) tiff to plead (1) a specific false representa- tion of material fact; (2) knowledge by the (14) I agree with the defendants' as- person who made it that it was false; (3) sertions that Counts 1, II, III, and VI do ignorance of its falsity by the person to not meet Rule 9(b)'s heightened pleading whom it was made; (4) the intention that it requirements. First, nowhere does the should be acted upon; and (5) that the complaint state who made the alleged mis- plaintiff acted upon it to his damage." representations to the plaintiffs. See In it Shapiro I UJB Fin. Corp., 964 F.2d 272, Rockefeller Ctr. Props., Inc., 311 F.3d at 284 (3d Cir.1992). Although the rule does 218 (finding that complaint failed to com- not require a recitation of "every material ply with Rule 9(b) because the allegation detail" of the alleged fraud, it does require, failed to identify the speaker, and "there is at a minimum, "that plaintiffs support no indication that the speaker had the their allegations of fraud with all of the authority to speak on behalf of [the defen- essential factual background that would dant) or that the employee was in regular accompany 'the first paragraph of any contact with the klefendantr'). Second, newspaper story'—that is, the who, what, the complaint fails to allege exactly what when, where and how' of the events at false statement or representation was issue." In re Rockefeller Ctr. Props., inc., made. Instead, it claims that the defen- 311 F.3d at 217 (quoting in re Burlington, dants' failure to inform them of SSB's 114 F.34 at 1422). relationship with MG was fraudulent. This In Count I, plaintiffs allege that the does not meet Rule 9(b)'s requirement that defendants' conduct "constituted the mak- there be a false statement that the defen- ing of fraudulent misrepresentations . . . dants knew was false. In addition, the regarding the AIG Investment" that the plaintiffs' allegation that the defendants defendants knew were materially mislead- misrepresented their claims that they as- ing "because of their failure to state or pired to "the highest standards of moral disclose the additional or qualifying infor- and ethical conduct" is vague. According- mation regarding the investment banking ly, I find that Counts I, II, III, and VI do relationship" of SSB with AIG. (Id. 1 46.) not meet Rule 9(b)'s heightened pleading Count II vaguely states that the defen- requirement, and, therefore, 1 will dismiss dants' "statements and conducts .. . in- them. I shall, however, grant the plain- cluded the expression of opinions which tiffs thirty days within which to amend the EFTA00187476 576 263 FEDERAL SUPPLEMENT, 2d SERIES complaint to comport with Rule 9(b).2 See TY DAYS within which to file an amended In n Burlington Coat Factory Sec. Lilly., complaint with respect to these counts. 114 F.3d at 1434 (noting that ordinarily, when a complaint is dismissed under Rule 9(b) for failure to plead fraud with the requisite particularity, leave to amend the complaint is granted). III. CONCLUSION For the foregoing reasons, I will deny Elizabeth A. REEVES, et al., Plaintiff, Citibank's and Citigroup's motions to dis- miss for lack of personal jurisdiction, to I dismiss for improper venue, and to trans- ST. MARY'S COUNTY fer this matter to the United States Dis- COMMISSIONERS, et trict Court for the Southern District of al., Defendants. New York. I find that the amended com- No. CIV.A.AW—02-2449. plaint adequately states claims of breach of fiduciary duty and negligent misrepresen- United States District Court, tation, and therefore, will deny the defen- D. Maryland, dants' Rule 12(b)(6) motion to dismiss for Southern Division. failure to state a claim. Finally, because I June 13, 2003. find that Counts I, II, III, and VI fail to meet Federal Rule of Civil Procedure 9(b)'s heightened pleading standard for Landowner brought action against claims of fraud, I will dismiss these claims county commissioners and individuals for and grant the plaintiffs leave to amend the violations of due process rights and a tak- complaint. ing under the Fifth Amendment related to county's denial of her application for a ORDER conditional use permit to construct an Al- For the reasons given in the Memoran- zheimer's facility on her land. On cross dum Opinion of even date, it is HEREBY motions for summary judgment, the Dis- ORDERED that the defendants' motion to trict Court, Williams, J., held that: (1) dismiss for lack of personal jurisdiction takings claims were not ripe for adjudica- under Federal Rule 12(b)(2), motion to tion, and (2) even if claims were ripe, they dismiss under Federal Rule of Civil Proce- were barred by res judicata. dure 12(b)(6), and motion to transfer this Motion granted. matter are DENIED. Counts I, II, III, and VI fail to meet Federal Rule of Civil Procedure 9(b)'s heightened pleading stan- 1. Eminent Domain e ,277 dard for claims of fraud and are hereby Federal courts cannot adjudicate tak- DISMISSED WITHOUT PREJUDICE. ings claims premised on use restrictions The plaintiffs, however, shall have THIR- until the relevant state or state agency has 3. Citibank and Citigroup also argue that Law in Supp. of Deis/ Mot. to Dismiss at SO- Count II, alleging fraud, is impermissibly S I.) Because I will dismiss this claim under based on the defendant? unspecified alleged Rule 9(b), I need not address this issue at this false "expression of opinions." (Mem. Of time. EFTA00187477 FINANCIAL TRUST CO., INC..CITIBANK, NA. 329 Cite as331 F.5upp.2d 329 (D.VI Islands 2004) 2. Federal Civil Procedure e=636 FINANCIAL TRUST COMPANY, INC. Courts should apply heightened plead- and Jeffrey E. Epstein, Plaintiffs, ing requirement for fraud with some flexi- bility and should not require plaintiffs to I plead issues that may have been concealed CITIBANK, NA. and Citigroup, Inc. by the defendants. Fed.Rules Civ.Proc. d/b/a "Citigroup," Defendants. Rule 9(b), 28 U.S.C.A. No. CIV.2002-108. 3. Federal Civil Procedure .3=636 District Court, Virgin Islands, Although heightened pleading re- Appellate Division, quirement for fraud does not require a D. St. Thomas and St. John. recitation of every material detail of the alleged fraud, it does require that plaintiffs Dec. 30, 2004. support their allegations of fraud with all Background: Borrowers brought action of the essential factual background that against bank, alleging that false state- would accompany the first paragraph of ments or statements where material facts any newspaper story—that is the "who, were omitted were made by bank pursuant what, when, where and how" of the events to a course of conduct to fraudulently in- at issue; requirements may be satisfied if duce them into a series of investments and the complaint describes the circumstances related loans. Bank moved to dismiss the of the alleged fraud with precise allega- complaint for failure to meet heightened tions of date, time or place or by using pleading requirement for fraud and for some means of injecting precision and failure to state a claim upon which relief some means of substantiation into their could be granted. allegations of fraud. Fed.Rules Civ.Proc. Holdings: The District Court, Moore, J., Rule 9(b), 28 U.S.C.A. held that 4. Federal Civil Procedure e=636 (1) borrowers' specific factual allegations Borrowers' specific factual allegations were sufficient to plead fraud claim were sufficient to plead fraud claim against with the requisite particularity, and bank with the requisite particularity; bor- (2) borrowers stated fraud claim against rowers, who alleged that false statements bank. or statements where material facts were Motion denied. omitted were made by bank pursuant to a course of conduct to fraudulently induce them into a series of investments and re- 1. Fraud e.,41. lated loans, alleged that bank vice presi- In order to state a viable fraud claim, dent made specific false representation plaintiff is required to plead (1) a specific and omissions of material facts of the rela- false representation or omission of materi- tionship between investment corporation al fact (2) knowledge by the person who and bank in April and May of 1999, that made it of its falsity; (3) ignorance of its vice president and others at bank knew of falsity by the person to whom it was made; the relationship between bank and invest- (4) the intention that it should be acted ment corporation and that borrower was upon; and (6) that the plaintiff acted upon unaware of that relationship, and that bor- it to his damages. Fed.Rules Civ.Proc. rower acted upon the information and but Rule 9(b), 28 U.S.C.A. for bank's actions he would not have been EFTA00187478 330 351 FEDERAL SUPPLEMENT, 2d SERIES injured. Fed.Rules Civ.Proc.Rule 9(b), 28 which relief can be granted pursuant to U.S.C.A. Federal Rule of Civil Procedure 12(bX6). 5. Banks and Banking z=a228 I. Factual and Procedural History Jury question was presented as to In their second amended complaint, Jef- whether preliminary offering circular frey E. Epstein and Financial Trust Com- ("pitch book"), which was allegedly given pany, Inc. ['FTC") allege that Citibank, to investor, disclosed ongoing business re- N.A. and Citigroup, Inc. [collectively "Citi- lationships between bank and company in bank") misrepresented facts and fraudu- which investor invested funds borrowed lently induced them to borrow $ 10 million from bank, and therefore whether "be- to invest in a venture managed by AIG speaks caution" doctrine precluded inves- Global Investment Corporation ["AIG") tor from stating fraud claim against bank. and another $10 million to invest in a venture managed by Mass Mutual. The 6. Banks and Banking .3=126 plaintiffs allege that the defendants failed Borrowers stated fraud claim against to disclose information and negligently and bank based on allegations that false state- fraudulently misrepresented facts concern- ments or statements where material facts ing their relationship with MG, that the were omitted were made by bank pursu- plaintiffs detrimentally relied on these mis- ant to a course of conduct to fraudulently representations and omission, and that the induce them into a series of investments defendants breached their fiduciary duty and related loans; claims alleging fraud re- to the plaintiffs. The plaintiffs seek re- lating to each investment would not be scission of the promissory notes and puni- treated separately since such claims were tive damages. predicated on allegations that bank fraud- Previously, I ruled that this court has ulently induced borrowers into believing personal jurisdiction over Citibank and Ci- they had a preferred relationship with tigroup, venue in this court is proper un- bank where bank was acting in borrowers' der 28 U.S.C. 1391(a), this case need not best interest in all of their transactions. be transferred to New York, the amended complaint adequately states claims upon which relief may be granted under Federal Rule of Civil Procedure 12(bX6) for the breach of fiduciary duty and negligent mis- Maria Tankenson Hodge, Esq., Hodge & representation claims, and counts I, II, HI Francois St. Thomas, VI, for plaintiffs. and VI of the first amended complaint Gregory H. Hodges, Esq., Dudley, Top- failed to meet Federal Rule of Civil Proce- per and Feuerzeig, LLP, St Thomas, VI, dure 9(b)'s heightened pleading standard. for defendants. I did, however, grant the plaintiffs leave to amend the complaint Financial Trust MEMORANDUM OPINION Co.' Citibank, 268 F.Supp.2d 661 (D.Vir- gin Islands 2003). MOORE, District Judge. H. LEGAL ANALYSIS Defendants have moved to dismiss the second amended complaint for failure to A. Federal Rule of Civil Procedure meet Federal Rule of Civil Procedure 9(b) 9(bYs heightened pleading requirement for (1-31 In order to state a viable fraud fraud and for failure to state a claim upon claim, Rule 9(b) requires a plaintiff to EFTA00187479 FINANCIAL TRUST CO., INC. I. CITIBANK, N.A. 331 cacas all F.Suppad 329 (D.Vbitin Wands 2004) plead (1) a specific false representation or interests. For example, it is alleged that omission of material fact; (2) knowledge in conversations between April 29, 1999 by the person who made it of its falsity; and May 2, 1999, Dayle Davison, a Vice (3) ignorance of its falsity by the person to President of Citibank in the Private whom it was made; (4) the intention that it Banking Division, called Epstein to intro- should be acted upon; and (5) that the duce him to an "exceptional investment plaintiff acted upon it to his damages." in opportunity." (Compl.1 13.) In follow-up re Rockefeller Ctr. Props., Inc., 311 F.3d telephone conversations during that same 198, 215 (3d Cir.2002). Courts should ap- two week period, Davison and her associ- ply Rule 9(b) with some flexibility and ates made additional specific representa- should not require plaintiffs to plead issues tions about the AIG Investment, without that may have been concealed by the de- disclosing Citibank and AIG's relation- fendants. Rolo I. City Investing Co. Liq- ship. Davison also during that period uidating Trust, 155 F.3d 644 (3d Cir.1998). represented that Citibank had "done Although the rule does not require a reci- their due diligence" and would remain ac- tation of "every material detail" of the tively involved in the deal. (Comp1.1 14.) alleged fraud, it does require "that plain- In August 2001, in an effort to dissuade tiffs support their allegations of fraud with Epstein from seeking to remove AIG as all of the essential factual background that the manager of the AIG Investment, would accompany 'the first paragraph of John Purcell, a Citibank representative, any newspaper story'—that is the 'who, told Jeffrey Schantz, a lawyer for Ep- what, when, where and how' of the events stein, that Citibank was acting in Ep- at issue." in re Rockefeller Ctr. Props., stein's interests and that Epstein should Inc, 311 FM at 217 (quoting in re Bur- trust Citibank rather than talk about ac- lington, 114 F.3d at 1422). However, the tions which would run counter to Citi- Third Circuit Court of Appeals has held bank's undisclosed interests. that the "requirements of Rule 9(b) may (Comp1.1 37.) These facts all allege that be satisfied if the complaint describes the defendants failed to state or disclose "ad- circumstances of the alleged fraud with ditional or qualifying information regard- 'precise allegations of date, time or place' ing" their relationship with AIG. or by using some means of 'injecting preci- These specific facts are enough to plead sion and some means of substantiation into fraud with the particularity required by their allegations of fraud.'" Board of Rule 9(b). The plaintiffs have alleged that Trustees of Teamsters Local 868 Pension Davison, Epstein's primary contact at Citi- Fund. Foodtown, Inc., 296 F.3d 164, 173 bank, made specific false representation n. 10 (3d Cir.2002) (internal citations omit- and omissions of material facts of the rela- ted). tionship between AIG and Citibank in 141 Plaintiffs allege that false state- April and May of 1999. The complaint has ments or statements where material facts also alleged that Davison, and others at were omitted were made pursuant to a Citibank, knew of the relationship between course of conduct to fraudulently induce Citibank and MG and that they knew plaintiffs into a series of investments and Epstein was unaware of this relationship. related loans. Plaintiffs allege that Citi- Finally, as I had previously ruled, the com- bank's actions did not conform to the plaint also alleges that Epstein acted upon representations in the statements, that this information and but for Citibank's ac- defendants were acting in plaintiffs' best tions he would not have been injured. EFTA00187480 332 351 FEDERAL SUPPLEMENT, 2d SERIES The basic purpose of Rule 9(b) has been edge by the person who made it that it was fulfilled—plaintiff has alleged enough in- false; (3) ignorance of its falsity by the formation, including specific names and person to whom it was made; (4) the dates, to put Citibank on notice of the intention that it should be acted upon; and fraudulent actions it has alleged to have (5) that the plaintiff acted upon it to his committed. Moreover, since some of the damage." Financial Trust Co., 268 misrepresentations were alleged to be F.Supp.2d at 675 (quoting Shapiro'. t1.111 omissions, Rule 9 does not require specifi- Fin. Corp., 964 F.2d 272, 284 (3d Cir. cation of time, place, and nature of misrep- 1992)). resentation for these statements; rather, it requires only that the plaintiff identify the (51 The defendants base their argu- facts not communicated. See Golden ment that plaintiffs have failed to state a Trade, S.r.L. I Jordache, 143 F.R.D. 504 claim upon which relief can be granted for (S.D.N.Y.1992); Coltman Transmission fraud on their allegation that the alleged Sys Inc. Dubinsky, 95 F.R.D. 351, 353 omission of the relationship between AIG (E.D.Pa.1982) ("Conduct which never oc- and defendants was disclosed and thus the curred cannot be described with greater "bespeaks caution" doctrine applies to the particularity other than to state that it did case. Under this theory, when some risks not occur.") are disclosed in documents, the documents The information contained in the second "bespeak caution" to the investor and the amended complaint is enough for counts I, investor cannot later premise a fraud claim II, III, and VI to survive this motion to on the events of which he has been dismiss for failure to plead fraud with par- warned. Kline I First Western Gov't ticularity pursuant to Federal Rule of Civil Sec., Inc., 24 F.3d 480, 482 (3d Cir.1994). Procedure 9(b). The defendants' claim that the Preliminary Offering Circular (the "pitch bookl, which B. Federal Rule of Civil Procedure was allegedly given to Epstein, disclosed I2(b)(6) ongoing business relationships between Ci- The defendants also argue that 12(b)(6) tibank and MG and should invoke the mandates dismissal of the complaint for "bespeaks caution" doctrine. failure to state a claim upon which relief can be granted. To the extent that plain- I have previously ruled that whether the tiffs are attempting to reargue their previ- "pitch book" referenced in the amended ous motion to dismiss, I reiterate my rul- complaint is the document that plaintiffs ing that Virgin Islands law governs this rely on is a disputed fact that precludes a case, that the complaint adequately alleges Rule 12(bX6) dismissal. Financial Trust that the defendants' wrongful conduct Co., 268 F.Supp.2d at 572. Nothing in any caused the plaintiffs' loses, and that plain- of the briefs have convinced me that the tiffs' claims of breach of fiduciary duty and parties do not dispute which pitch book negligent misrepresentation should not be Epstein received, what disclosures were dismissed. Financial Trust Co., 268 made in any such pitch book, and whether F.Supp.2d at 576. The only claims left to those disclosures revealed the alleged con- be decided are the fraud claims. flict. As such, a ruling on the "bespeaks In order to state a claim for fraud, the caution" doctrine is not appropriate at this plaintiff must prove "(1) a specific false juncture in the case because it involves representation of material fact; (2) knowl- deciding issues of disputed fact. EFTA00187481 FINANCIAL TRUST CO., INC. I. CITIBANK, NA. 333 cue al 331 F,Supp.241 329 (D.VIrrn Istinds 2004) [6] Plaintiffs have alleged all necessary Defendants essentially argue that plain- elements of fraud. They have alleged that tiffs loans and investment in the AIG and defendants intentionally misrepresented Mass Mutual funds should be viewed as material facts, through omissions and two separate transactions. This view, statements assuring the plaintiffs that they however, belies the alleged conduct of Citi- were acting in Epstein's personal best in- bank. The underlying conduct alleged in terest. They have also alleged that the the second amended complaint is that Citi- person who made these misrepresenta- bank fraudulently induced plaintiffs into tions, Davison, knew of the relationship believing they had a preferred relationship between MG and Citibank and that Ep- with Citibank where Citibank was acting stein and FTC did not know of this rela- in Epstein's best interest in all of their tionship: Finally, plaintiffs have also al- transactions, including investing in the leged that "but for" defendants misleading MG and the Mass Mutual funds. Essen- statements and omissions, plaintiff would tially, plaintiffs argue they were induced not have proceeded with their loan and into a high stakes relationship with Citi- investment programs and would not have bank based on fraudulent statements and suffered these damages. Plaintiffs have omissions, and but for these statements, thus alleged enough information to survive they would not have enjoyed the type of a Rule 12(b)(6) motion on their fraud relationship with Citibank to be in the claims. position either for Citibank to present them an offer to loan them large sums of C. The Mass Mutual Investment money to invest in the Mass Mutual fund Claims or for plaintiffs to trust Citibank's invest- Although it is unclear from the second ment advice. I believe that whether the amended complaint which counts concern underlying complained about conduct was the Mass Mutual Fund, it is clear that at two separate transactions or whether the least some of the causes of actions allege conduct should be viewed as Citibank's re- that Citibank defrauded Epstein in rela- lationship as a whole with Epstein is a tion to his loans and investment in the matter of fact that goes to the issue of Mass Mutual Fund. Separately, defendants damages and is not appropriate for a Rule argue that the court should dismiss the 12(b)(6) motion.' Therefore, I rule that claims alleging fraud relating to the Mass the fraud claims should not be separated Mutual Fund for failure to plead fraud into two different types—AIG and Mass specifically under Rule 9(b) and failure to Mutual—and thus my previous analysis of state a claim upon which relief can be the applicability of Rule 9(b) and Rule granted under Rule 12(b)(6). The plain- 12(b)(6) apply equally to all claims for tiffs basic allegation is that "because of damages alleged to occur because of Ep- Defendants' false assurances and omis- stein's investments in the AIG and Mass sions of true statements concerning their Mutual funds. relationship with AIG and the AIG Invest- ment, Plaintiffs made the investment in III. CONCLUSION the Mass Mutual Fund and suffered signif- For the foregoing reasons, I will deny icant losses." (Comp1.1 65.) defendants' motion to dismiss. 1. This opinion is supported by the structure of Mutual and MG funds as defendant attempts the second amended complaint which does to do. not differentiate the counts between the Mass EFTA00187482 334 351 FEDERAL SUPPLEMENT, 2d SERIES ORDER (4) plaintiffs failed to state securities fraud For the reasons given in the accompany- claim against auditors. ing memorandum of even date, it is hereby So ordered. ORDERED that the defendant's motion to dismiss is hereby DENIED. 1. Federal Courts e=.7I Personal jurisdiction extends to the limits of the due process clause of the Fifth Amendment. U.S.C.A. Const. Amend. 5. 2. Constitutional Law e=305(5) In re ROYAL AHOLD There are two primary factors to con- SECURITIES & ERISA sider in evaluating personal jurisdiction LITIGATION. under the due process clause of the Fifth Amendment: (I) whether the defendant No. CIV.1:03-MD-01539. has sufficient minimum contacts with the United States District Court, United States and (2) whether the exer- D. Maryland. cise of jurisdiction over the defendant would offend traditional notions of fair Dec. 21, 2004. play and substantial justice. U.S.C.A. Background: Investors brought consoli- Const.Amend. 5. dated securities fraud actions arising out of an approximately $ 1.1 billion restate- 3. Federal Courts (1=86 ment of earnings, together with a $24.8 To satisfy the minimum contacts test billion reduction in revenue, announced by for personal jurisdiction over a foreign de- Netherlands company involved in super- fendant, a plaintiff must demonstrate that market and food service business in the the defendant either: (1) engages in sys- United States. Named as defendants were tematic or continuous activities in the the company, its American subsidiaries, United States, and thus general jurisdic- auditors, underwriters, and individual ex- tion exists: or (2) purposefully directs his ecutives. Defendants filed multiple motions actions at the United States and the litiga- to dismiss. tion arises from or is related to those Holdings: The District Court, Blake, J., actions, and thus specific jurisdiction exits. held that: 4. Federal Courts e=76.10 (1) subject matter jurisdiction existed over In determining whether specific per- securities fraud claims asserted by for- sonal jurisdiction exists, district court con- eign purchasers of shares on foreign siders: (1) the extent to which the defen- exchanges; dant has purposefully availed himself of (2) plaintiffs stated securities fraud claims the privilege of conducting activities in the against chief officers of Dutch compa- state; (2) whether the plaintiffs claims ny; arise out of those activities directed at the (3) allegation in complaint were sufficient state; and (3) whether the exercise of per- to state market manipulation claims sonal jurisdiction would be constitutionally against chief officers; and reasonable. EFTA00187483