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PARKINS v. ST. JOHN

July 16, 2004.

LAURA PARKINS, Plaintiff,
v.
BRAD R. ST. JOHN and SHADOW GOLD MALI, SARL, Defendants.



The opinion of the court was delivered by: RICHARD CASEY, District Judge

MEMORANDUM OPINION & ORDER

Laura Parkins ("Plaintiff") sues Brad St. John ("St. John") and Shadow Gold Mali, SARL ("Shadow Gold") (collectively, "Defendants") for securities fraud, common law fraud, and breach of fiduciary duty. Defendants move to dismiss the Complaint pursuant to Rules 12(b)(4) and (5) of the Federal Rules of Civil Procedure alleging: (1) Plaintiff failed to properly serve them and (2) Kenneth Lapatine ("Lapatine"), Plaintiff's counsel who initiated this suit, should be disqualified from the case.*fn1 For the reasons set forth below, Defendants' motion is DENIED.

I. BACKGROUND

  In June 1999, Plaintiff attended an art opening in New York, where she met St. John, an officer, director, and shareholder of Shadow Gold. At this initial meeting and over the course of several months, St. John encouraged Plaintiff to invest in Shadow Gold, a Malian corporation that purportedly conducted gold mining activities in Korindji, Mali. Plaintiff, however, alleges that she later learned that Shadow Gold served as a vehicle through which St. John defrauded investors to support his lavish lifestyle. In November 1999, Plaintiff became one of those investors, tendering $500,000 to Shadow Gold for a 20% interest in the company. Plaintiff informed Lapatine of the investment agreement for the first time in April 2000.*fn2 In the months thereafter, Lapatine, as Plaintiff's attorney, interacted with Defendants on the following occasions.

  On May 24, 2000, Lapatine wrote to Shadow Gold's Malian counsel, requesting that Shadow Gold's by-laws be amended to incorporate provisions related to Plaintiff's investments in the company. In one provision, Lapatine earmarked a portion of Plaintiff's investment for the purchase of a 6% interest in Shadow Gold, payable to Lapatine. Another provision provided that Lapatine would act as a "consultant" to Shadow Gold for two years without compensation.

  On June 27, 2000, Lapatine wrote to St. John on Plaintiff's behalf requesting information about Shadow Gold's mining permits. He also drafted a note and Pledge Agreement (subsequently executed on August 9, 2000) which secured a $1 million loan Plaintiff made to Shadow Gold.

  In August 2000 and December 2000, Lapatine met with Shadow Gold representatives in Bamako, Mali. Specifically, in August 2000, Lapatine attended Shadow Gold's General Assembly meeting. At that meeting, Shadow Gold's bylaws were amended to reflect and memorialize Plaintiff's investment in the company. Later, in December 2000, Lapatine again traveled to Mali to discuss the restructuring of Shadow Gold with its Malian counsel, Met. Sangare. At the end of his December visit, Lapatine accompanied St. John to Paris to meet with a third-party who claimed to represent investors interested in the project. The third-party, however, failed to appear. Lapatine claims that he made it clear on both occasions that he was in Bamako to represent Plaintiff's interests in Shadow Gold. In December 2000, Lapatine drafted for Plaintiff a demand upon Shadow Gold that it make immediate payment of its debt to her and a Deed in Lieu of Foreclosure seeking title to all of Shadow Gold's assets pledged to her in the August 9, 2000 Pledge Agreement.

  On March 21, 2001, Lapatine drafted an agreement on Plaintiff's behalf providing for surrender of all of St. John's interest in Shadow Gold to Plaintiff. The agreement was executed on March 21, 2001. One week later, on March 28, 2001, Lapatine engaged local Malian counsel to enforce Plaintiff's rights under the agreements described above. Thereafter, Plaintiff commenced this action.

  Eight days after initiating this suit, St. John was served with a copy of the Summons and Complaint at an address he listed with the Connecticut Department of Motor Vehicles. The process server hand-delivered each document to Tonetta Mazziotto, who identified herself as St. John's sister. Thereafter, the process server timely mailed another copy of the Summons and Complaint to St. John at the same address in an envelope marked "Personal and Confidential."

  On January 4, 2002, Plaintiff, through the Clerk of the Court, mailed copies of the Summons and Complaint to Shadow Gold at its address in Bamako, Mali. The Summons and Complaint were sent by registered mail, return receipt requested, but Shadow Gold claims to have never received it. In an attempt to cure any deficiency in the previous attempt to serve Shadow Gold, on September 10, 2002, Plaintiff served Shadow Gold through a local Malian process server.

  II. DISCUSSION

  A. Service on St. John

  Service upon an individual may be effected in any judicial district of the United States "pursuant to the law of the state in which the district court is located, or in which service is effected, for the service of a summons upon the defendant in an action brought in the courts of general jurisdiction of the State." Fed. R. Civ. P. 4(e)(1). In this case, Plaintiff opted to serve defendant pursuant to New York law. To that end, Plaintiff delivered a copy of the Summons and Complaint to an address listed on St. John's driver's license and mailed another copy thirteen days later to the same address in an envelope marked "Personal and Confidential." These actions conform with the service requirements dictated by New York state law. See N.Y.C.P.L.R. § 313 (McKinney 2003) (providing that a person subject to the jurisdiction of the New York state courts may be served outside the state in the same manner as service is made within the state); id. § 308(2) (permitting personal service by delivery of a copy of the summons to a person of suitable age and discretion at the defendant's usual place of abode and then mailing a copy to the last known address in an envelope marked "personal and confidential"). A person's usual place of abode may be inferred ...


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