Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-01001/USCOURTS-azd-2_11-cv-01001-0/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1961 Racketeering (RICO) Act

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

91 Magnolia LLC, et al., 

Plaintiffs, 

vs.

Countrywide Financial Corp., et al.,

Defendants. 

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No. CV-11-1001-PHX-SMM

MEMORANDUM OF DECISION AND

ORDER

Before the Court are the Motion to Dismiss for Lack of Personal Jurisdiction and

Improper Venue, or in the Alternative, Motion to Transfer Venue of Defendants Jackson

Demarco Tidus Peckenpaugh, Roger M. Franks, Jeffrey Jackson Astarabadi, William

Hensley, John D. Hayashi, Daniel A. Friedlander, and Carel William (Doc. 57), and

Plaintiffs’ Motion for Leave to File Second Amended Complaint (Doc. 62.) The matter is

fully briefed. (Doc. 57, Doc. 58, Doc. 59, Doc. 60, Doc. 61, Doc. 62.)

BACKGROUND

91 Magnolia, LLC, a California limited liability company; 92 Magnolia, LLC, a

California limited liability company; 4837 Beverly Blvd., LLC, a California limited liability

company; 624 Orange, LLC, a California limited liability company; 264 E. Glenarm, LLC,

a California limited liability company; N. Verdugo 127, LLC, a California limited liability

company; 4004 Via Lucero, LLC, a California limited liability company; 417-421 Ocean

Park Blvd., LLC, a California limited liability company; and Altura 96, LLC, a California

limited liability company (collectively “Plaintiffs”), allege the following. (Doc. 25.)

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Beginning in or around 2001 and continuing through the present, Defendants violated 18

U.S.C. § 1962(c) by forming, directing, managing, and operating an association-in-fact

whose common purpose was to carry out a scheme to defraud Plaintiffs through a pattern of

racketeering. (Doc. 25.) Plaintiffs filed their complaint in the District of Arizona, asserting

that this Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331. (Doc. 1.)

Plaintiffs further allege that: Defendant Jackson Demarco Tidus Peckenpaugh is a

California corporation whose principle place of business is located in Orange County,

California; Defendant Roger M. Franks is a member of the California State Bar and is a

resident of Miami-Dade County, Florida; Defendant William Hensley is a member of the

California State Bar and is a resident of Orange County, California; Defendant John D.

Hayashi is a member of the California State Bar and is a resident of Orange County,

California; Defendant Daniel A. Friedlander is a member of the California State Bar and is

a resident of Los Angeles County, California; and Defendant Carel Willem Van Heerden is

a member of the California State Bar and is a resident of Orange County, California. (Doc.

25 at 4.)

Defendants Jackson Demarco Tidus Peckenpaugh, Roger M. Franks, Jeffrey Jackson

Astarabadi, William Hensley, John D. Hayashi, Daniel A. Friedlander, and Carel Willem

Van Heerden (collectively,“JDTP Defendants”) responded to Plaintiffs’ First Amended

Complaint with their motion to dismiss, arguing that this Court is without personal

jurisdiction over JDTP Defendants. (Doc. 57.)

Plaintiffs thereafter filed their Motion for Leave to File Second Amended Complaint.

(Doc. 62.)

STANDARD OF REVIEW

I. Personal Jurisdiction

A federal court may exercise personal jurisdiction over a non-resident defendant if

jurisdiction is proper under the state’s long-arm statute and if the exercise of jurisdiction is

consistent with the due process requirements of the Constitution. See, e.g., Fireman’s Fund

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Ins. Co. v. National Bank of Coops., 103 F.3d 888, 893 (9th Cir. 1996). Arizona’s long-arm

statute permits jurisdiction over a non-resident defendant to the limits of the United States

Constitution. See Davis v. Metro Prod., Inc., 885 F.2d 515, 520 (9th Cir. 1989). The

statutory and constitutional considerations “therefore merge into a single due process test.”

Fireman’s Fund, 103 F.3d at 893.

The Fifth Amendment Due Process Clause of the Constitution requires that a defendant

have minimum contacts with the forum state so that the exercise of jurisdiction does not

offend traditional notions of fair play and substantial justice. See International Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945). A defendant who has substantial or continuous and

systematic contacts with a state can be subject to the general personal jurisdiction of that

state. See, e.g., Fields v. Sedgwick Assoc. Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986).

Alternatively, a defendant may consent to personal jurisdiction in a particular state. See

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14 (1985). 

A state may also exert specific personal jurisdiction over a defendant in certain

circumstances. Specific jurisdiction is acceptable under the Due Process Clause if: (1) the

defendant has done some act by which he purposely availed himself of the privileges of

acting in that state and so invoked the benefits and protections of its laws; (2) the claim arises

out of the Defendants’ forum-related activities; and (3) the exercise of personal jurisdiction

would be reasonable. See, e.g., Fireman’s Fund, 103 F.3d at 894. 

II. Personal Jurisdiction in RICO Cases

Civil RICO claims against any person “may be instituted in the district court of the

United States for any district in which such person resides, is found, has an agent, or

transacts his affairs.” 18 U.S.C. §1965(a)(2011). In such an action, the national service-ofprocess provision of the RICO statute, Section 1965(b), allows a district court to exercise

jurisdiction over all other defendant co-conspirators – even those who would not normally

be subject to the court’s jurisdiction – if “it is shown that the ends of justice require that other

parties residing in any other district be brought before the court.” Id..§ 1965(b).

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This provision was intended by Congress to enable plaintiffs to bring “all members of

a nationwide RICO conspiracy before a court in a single trial.” Butcher’s Union Local No.

498, United Food and Commercial Workers v. SDC Investment, Inc., 788 F.2d 535, 538 (9th

Cir. 1986). The right to nationwide service of process in RICO cases is limited, however;

before a court can exercise jurisdiction over non-resident defendants under Section 1965(b),

“the court must have personal jurisdiction over at least one of the participants in the alleged

multidistrict conspiracy and the plaintiff must show that there is no other district in which

a court will have personal jurisdiction over all of the alleged co-conspirators.” Id. at 539

(emphasis added).

III. Motion to Dismiss

A district court deciding aFED.R.CIV.P. 12(b)(2) motion to dismiss for lack of personal

jurisdiction without first holding an evidentiary hearing must determine whether the plaintiff

presents a prima facie showing of jurisdictional facts. Omeluk v. Langsten Slip &

Batbyggeri A/S, 52 F.3d 267, 268 (9th Cir. 1995). Plaintiff “need only demonstrate facts that

if true would support jurisdiction over the defendant.” Harris Rutsky & Co. Ins. Services,

Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003). A plaintiff’s version of

the facts is taken as true unless directly contravened, and conflicts between the facts

contained in the parties’ affidavits must be resolved in the plaintiff’s favor. Id.

IV. Leave to File Amended Complaint

Leave to amend may be denied where there is “undue delay, bad faith or dilatory

motive on the part of the movant, repeated failure to cure deficiencies by amendments

previously allowed, undue prejudice to the opposing party by virtue of allowance of the

amendment, [or] futility of amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962). The

Ninth Circuit has summarized these factors to include the following: (1) undue delay; (2) bad

faith; (3) prejudice to the opponent; and (4) futility of amendment. Loehr v. Ventura County

Cmty. Coll. Dist., 743 F.2d 1310, 1319 (9th Cir. 1984). Granting or denial of leave to amend

rests in the sound discretion of the trial court. Swanson v. United States Forest Serv., 87

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F.3d 339, 343 (9th Cir. 1996). 

Despite the policy favoring amendment under Rule 15, leave to amend may be denied

if the proposed amendment is futile or would be subject to dismissal. Saul v. United States,

928 F.2d 829, 843 (9th Cir. 1991). “Leave to amend need not be given if a complaint, as

amended, is subject to dismissal.” Moore v. Kayport Package Express, Inc., 885 F.2d 531,

538 (9th Cir.1989). However, delay alone is insufficient grounds for denial of leave to

amend. Hurn v. Retirement Fund Trust of Plumbing, Heating & Piping Indus., 648 F.2d

1252, 1254 (9th Cir. 1981). 

DISCUSSION

Plaintiffs bring a RICO claim against JDTP Defendants and nine other Defendants.

Plaintiffs make no attempt to argue that this Court has either specific or general personal

jurisdiction over JDTP Defendants. Rather, Plaintiffs’ claim relies on the theory that this

Court has personal jurisdiction over all Defendants through the national service of process

mechanism of 18 U.S.C. § 1965(b). However, Plaintiffs fail to make the necessary showing

that the ends of justice require this Court to exercise personal jurisdiction over JDTP

Defendants through Section 1965(b). While Plaintiffs allege facts showing that at least one

non-JDTP Defendant is subject to process in Arizona (Bank of America Corporation, through

its transactions and agents in Arizona (Doc. 59 at 8)), Plaintiffs do not meet their burden of

showing that no other district would have personal jurisdiction over all Defendants. 

Indeed, it appears from Defendants’ reply (Doc. 60) that the Central District of

California would have personal jurisdiction over all Defendants. The Court notes that it is

the Plaintiffs’ burden to show the non-availability of another district with jurisdiction, and

not the Defendants’ burden; however, the Court takes judicial notice of the fact that Plaintiffs

have previously filed two similar suits against nearly identical defendants, including JDTP

Defendants, in the Superior Court of the State of California, County of Los Angeles. (Doc.

58-1, Doc. 58-3.) The history of this case as evidenced by the prior filings thus indicates that

California is overwhelmingly at the center of this case; therefore, this Court finds that the

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ends of justice require that Plaintiffs’ choice of Arizona as a forum not be honored. 

Plaintiffs respond by postulating that Defendant Roger M. Franks alone among all

Defendants could not have been served in the Central District of California at the time this

suit was filed, and thus that at the relevant time there was no other district in which all

Defendants could have been served. (Doc. 59 at 8-9.) The Court finds that Plaintiffs fail to

make a prima facie showing that Defendant Franks could not have been served, and the Court

disagrees with Plaintiffs’ assertion that Defendant Franks’s consent to personal jurisdiction

in California amounts to “a judicial admission by the Attorney Defendants” that Defendant

Franks could not have been served there. (Doc. 59 at 8.)

Thus, this Court is without personal jurisdiction over JDTP Defendants. Consequently,

Plaintiffs’ Motion for Leave to File Second Amended Complaint (Doc. 62) is deemed futile.

Although Plaintiffs assert that if amended their complaint could allege sufficient facts to

support this Court’s jurisdiction over all Defendants, the Court notes that Plaintiffs have

failed to allege sufficient facts to establish personal jurisdiction in their original complaint

(Doc. 1), their First Amended Complaint (Doc. 25), and their Response to Defendants’

Motion to Dismiss (Doc. 59).

Furthermore, no amendments to Plaintiffs’ complaint could serve to overcome this

Court’s lack of personal jurisdiction over JDTP Defendants. As discussed above, Plaintiffs

have repeatedly failed to make a showing of facts sufficient to trigger the national service

provision of the RICO statute. Moreover, no amendment to the complaint would serve to

negate the overwhelming indications that California is the proper forum for this suit: all

Plaintiffs are located in California (Doc. 1, 2-3); the vast majority of Defendants, if not all,

are plainly subject to jurisdiction in California (including Defendant Franks as a result of his

consent to jurisdiction in California (Doc. 57 at 44)); and all of the alleged acts giving rise

to Plaintiffs’ claims occurred in California (Doc. 1).

As a result, this Court is not the proper forum for this suit, and Plaintiffs’ proposed

Second Amended Complaint would be futile and subject to dismissal.

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Plaintiffs ask that in the interest of justice this Court transfer the case to the Central

District of California rather than dismiss, cursorily stating that dismissal “would raise statute

of limitations issues.” (Doc. 59 at 14.) The Court notes that pursuant to FED.R.CIV.P.3, this

action was commenced on May 20, 2011, from which time the applicable statute of

limitations on Plantiffs’ RICO claim has been tolled. See West v. Conrail, 481 U.S. 35, 38-40

(1987). Furthermore, the Court notes that any statute of limitations concerns voiced by

Plaintiff are undermined by Plaintiffs’ previous filing of the two similar claims against nearly

identical defendants, including JDTP Defendants, in the Superior Court of the State of

California, County of Los Angeles. (Doc. 58-1, Doc. 58-3.)

CONCLUSION

IT IS HEREBY ORDERED GRANTING Defendants’ Motion to Dismiss for Lack

of Personal Jurisdiction and Improper Venue, or in the alternative, Motion to Transfer Venue

(Doc. 57), and DISMISSING Plaintiffs’ claims as to Defendants Jackson Demarco Tidus

Peckenpaugh, Roger M. Franks, Jeffrey Jackson Astarabadi, William Hensley, John D.

Hayashi, Daniel A. Friedlander, and Carel Willem Van Heerden. 

IT IS FURTHER ORDERED DENYING Plaintiffs’ Motion for Leave to File Second

Amended Complaint. (Doc. 62.)

DATED this 21st day of September, 2012.

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