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SOPER v. SIMMONS INTL.

December 21, 1983

PAUL C. SOPER and DAVID N. DAOUD, Plaintiffs,
v.
SIMMONS INTERNATIONAL, LTD., THONET INDUSTRIES, INC., and XENEL INDUSTRIES, LTD., all Corporations and JAMES A. RIDDERING, JOHN E. RIEDERER, DENNIS P. FITZGERALD, MANFRED J. SOBEK, HISHAM A. ALIREZA and ABDULLAH A. ALIREZA, Individually, Defendants; PAUL C. SOPER and DAVID N. DAOUD, Plaintiffs, v. SIMMONS CO., SIMMONS U.S.A. CORP., and SIMMONS UNIVERSAL CORP., Defendants.



The opinion of the court was delivered by: MUNSON

HOWARD G. MUNSON, C.J.

MEMORANDUM-DECISION AND ORDER

 Paul C. Soper and David N. Daoud filed the instant lawsuit against various defendants charging them with conspiracy to defraud and violations of the federal racketeering laws, 18 U.S.C. § 1961 et seq. (1976 & Supp. III 1979). Jurisdiction is predicated upon 28 U.S.C. § 1331, 1332(a) and (c), and 18 U.S.C. § 1964. On September 12, 1983 this court granted defendants' motion to consolidate the three actions pending before the court. Fed. R. Civ. P. 42(a).

 Presently before the court is defendants' motion to dismiss the complaint pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure. Alternatively, defendants seek an order pursuant to Rules 9(b) and 12(e) of the Federal Rules of Civil Procedure compelling the plaintiff to file a more definite statement. Additionally, various defendants challenge venue in the Northern District of New York and seek dismissal of the action pursuant to Rule 12(b)(3) of the Federal rules of Civil Procedure. Finally, various defendants seek dismisal of the action pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure for want of personal jurisdiction.

 These motions were orally argued on September 12, 1983.Following the hearing the court took the matter under advisement and has since reviewed the memoranda of counsel, submitted affidavits, and pertinent cited authority. Based upon the foregoing the court concludes that plaintiffs have properly pleaded a cause of action under the Racketeer Influenced and Corrupt Organizations Act [RICO]. Accordingly, defendants' motion to dismiss plaintiff's second cause of action for failure to state a claim upon which relief can be granted is hereby denied. *fn1" With respect to defendant's motion pursuant to Rule 12(b)(3), the court declines to dismiss the action, but instead exercises its discretion and directs that the action be transferred to the Southern District of New York. Because of the transfer defendants' motions to dismiss for lack of personal jurisdiction and for a more definite statement are denied without prejudice. *fn2"

 FACTS

 The plaintiffs, Paul C. Soper [Soper] and David N. Daoud [Daoud], are New York State residents who allege in their various complaints that they are entitled to commissions, pursuant to an oral contract, for arranging a business deal whereby defendant Simmons International, Ltd. would manufacture and sell institutional furnishings to defendant Xenel, a Saudi Arabian family corporation. The defendants, Simmons International, Ltd. [Simmons] and its wholly-owned subsidiary, Thonet Industries, Inc. [Thonet], are Delaware corporations engaged, at least in part, in exporting goods to Saudi Arabia. The individual defendants, Riddering, Riederer, Fitzgerald and Sobek, are officers, employees or agents of Simmons or Thonet. The defendant Xenel Industries, Ltd. [Xenel] is a Saudi Arabian corporation engaged, at least in part, in the business of importing goods in Saudi Arabia. Defendants Hisham A. Alireza and Abdullah A. Alireza are Saudi Arabian citizens and principals of Xenel.

 It appears that on February 2, 1977 a representative of Xenel approached Daoud and asked him to locate a possible joint venturer as a source for institutinal furnishings to be imported into Saudi Arabia. Daoud contacted Soper, and they targeted Simmons and Thonet as potential prospects for the transaction. A preliminary meeting between Soper and Thonet was held on February 16, 1977 in York, Pennsylvania. The plaintiffs proposed to introduce simmons and Thonet to Xenel. In return for their services Simmons and Thonet allegedly orally agreed to pay the plaintiffs a commission of 10% on gross sales generated over a ten-year period.

 On February 21, 1977 the plaintiffs introduced Simmons and Thonet to Xenel in New York City. Simmons and Thonet proposed to manufacture the institutional furnishings and sell them to Xenel. No agreement was reached, however, because the Xenel defendants requested additional information from Simmons and Thonet. On February 25, 1977 the plaintiffs again met with the Xenel defendants in New York City and Xenel agreed "in principal" to enter into a joint venture with Simmons and Thonet.

 Subsequent to February 25, 1977 Simmons, Thonet and Xenel allegedly entered into a written contract whereby Xenel agreed to purchase the institutional furnishings manufactured by Simmons and Thonet. In addition, Simmons, Thonet and Xenel allegedly agreed that Xenel would receive the 10% commission generated on gross sales. Plaintiffs allege that, in furtherance of a conspiracy to defraud plaintiffs of their sales commissions, Simmons, Thonet and Xenel entered into an agreement whereby defendants agreed to eliminate plaintiffs from the deal. The plaintiffs were never paid any commissions.

 DISCUSSION

 A. The Sufficiency of the RICO Claim

 All the defendants contend that the plaintiffs' RICO claim is fatally defective and fails to set forth the requisite factual allegations and legal elements. The court finds these challenges without merit.

 To state a claim for damages under RICO, a plaintiff has two threshhold pleading burdens. First, he must allege that the defendant violated a substantive criminal provision of the RICO statute. See 18 U.S.C. § 1962 (1976). Second, he must allege facts which establish the existence of seven constituent RICO elements: (1) that the defendant (2) through the commission of two or more acts (3) constituting a pattern of (4) racketeering activity (5) directly or indirectly invests in, or maintains an interest in (6) an enterprise (7) the activities of which affect interstate commerce. See Moss v. Morgan Stanley Inc., 719 F.2d 5 (2d Cir. 1983). Despite the fact that RICO was enacted in a multifaceted campaign against the pervasive presence of ...


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