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Moro Aircraft Leasing, Inc v. John L. Keith

June 9, 2011


The opinion of the court was delivered by: Katz, J.


This matter is before the Court on motions to dismiss filed pro se by defendants Jon Keith (Doc. 7), Phil Walton (Doc. 8), and Clarendon Development Holdings, Inc. (Doc. 9) ("Clarendon"). Plaintiff, Moro Aircraft Leasing, Inc. ("Moro"), has filed responses to Keith's (Doc. 12) and Walton's (Doc. 15) motions. In addition, Plaintiff moves to strike Clarendon's motion to dismiss and Clarendon's Answer to defendant Lorena Harvey's cross-claims. (Doc. Nos. 10 & 20)

Plaintiff's motions to strike will be granted. Walton's motion will be granted in part, and the claims against him will be dismissed without prejudice for lack of personal jurisdiction. Keith's motion will be granted in part, and the Court will order that the claims against him be arbitrated.

I. Background

According to the Complaint, the allegations of which are assumed to be true at this stage of the litigation, in 2009 Moro began looking for sources of financing to purchase new airplanes to expand its business. A representative of Moro, Ward Rosadiuk, contacted Keith, who worked for defendant Corporate Lending & Corporate Leasing Services, Inc., which was in the business of arranging loans for "Private Air Charter Funding" and "Jets and Turbines." After several discussions and the exchange of documents, Keith put Rosadiuk in touch with Clarendon and its President, Walton, who sent a 'letter of offer' to Moro for financing of three aircraft.

On August 24, 2009, Keith emailed a proposed Funding Agreement to Moro. Rosadiuk executed the agreement on behalf of Moro on October 9, 2009. Walton signed the agreement on behalf of Clarendon on October 10. The Funding Agreement, which is attached to the Complaint as Exhibit S, called for Moro to post collateral in the amount of $510,000, in the form of a standby letter of credit to be issued in favor of the Administrator, defendant Watson & Watson, PC, a law firm, by a 'top international bank.' In exchange, Clarendon would provide funding to Moro in the amount of $6,000,000.

On October 18, 2009 the parties executed an amendment to the Funding Agreement that provided that, in lieu of a standby letter of credit, Moro would transfer $510,000 to the Swiss bank account of defendant Stephan M. Hirter, an attorney. The transferred sum would be refunded when the first tranche of the loan proceeds were disbursed. The amendment also provided that the Administrator would send $400,000 to Moro's bank account within twelve days. On October 23, 2009 Rosadiuk wired the $510,000 to Hirter's bank account. On October 26, 2009 Rosadiuk provided Defendants with copies of its business license, articles of incorporation, by-laws, certificate of good standing, and biennial report.

On October 29, 2009 Walton requested additional documents from Moro, and advised that Defendants would transfer $100,000 to Moro on November 5, 2009, with an additional $300,000 to be sent no later than November 10, 2009. The remaining disbursement would occur pursuant to the terms of the Funding Agreement. On November 6, 2009 Walton indicated that the transfer was "on its way." But no funds were released. Later in November, Rosadiuk arranged a meeting with Walton in Miami, but Walton never arrived. Rosadiuk received numerous assurances from Walton and others at Clarendon that the money would be disbursed, but it never was. On December 17, 2009, Rosadiuk requested that if the $400,000 was not transferred to Moro's account by that Friday, that the $510,000 collateral posted by Moro be returned. Later in December, Rosadiuk had two teleconferences with Walton and other Defendants during which they represented that Moro would receive the funding on its loan on January 7, 2010. They said that if Moro did not agree to this, they would use all of the collateral on administrative charges. Moro reluctantly agreed to the new date, and withdrew its request for a return of the collateral.

But the money was not disbursed on January 7. On January 14, 2010, Rosadiuk renewed Moro's request for a return of the collateral funds. Despite more assurances, no funds were disbursed, and the collateral was not returned. On January 28, Rosadiuk emailed Hirter requesting direct communication regarding the return of Moro's funds. Walton was upset that Rosadiuk had contacted Hirter, and defendant William Watson said that there would be administrative fees charged, including his as Administrator. Nonetheless, they assured him that the collateral would be returned.

Moro negotiated fruitlessly until April 2010 to try to get its collateral returned. But the collateral was never returned, and no funds were ever disbursed. Moro filed this suit in December 2010, bringing claims for fraud, conversion, unjust enrichment, theft, civil conspiracy, and promissory estoppel against all Defendants, for breach of fiduciary duty against William Watson, Watson & Watson, PC, and Stephan Hirter, and for breach of contract against Clarendon.

II. Standard of Review

Fed.R.Civ.P. 12(b)(6) provides for dismissal of a lawsuit for "failure to state a claim upon which relief can be granted." The court must accept as true all of the factual allegations contained in the complaint when ruling on a motion to dismiss. Erickson v. Pardus, 551 U.S. 89, 94 (2007). To survive dismissal, a complaint must contain enough factual material to state a claim "that is plausible on its face." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Conclusory allegations or legal conclusions masquerading as factual allegations will not suffice. Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007). Nor is it enough for the complaint to state facts that are "merely consistent with a defendant's liability." Iqbal, 129 S.Ct. at 1949. Rather, the complaint's "factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true.'" Ass'n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Twombly, 550 U.S. at 555).

The term "plausible," as used in Twombly and Iqbal, is to be understood in a peculiarly narrow sense, and does not refer to the likelihood that the plaintiff will be able to prove a particular allegation. See Iqbal, 129 S.Ct. at 1951 ("To be clear, we do not reject these bald allegations on the ground that they are unrealistic or nonsensical."); Twombly, 550 U.S. at 556 ("[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable."). Rather, the Court meant the term to refer to the plausibility of the plaintiff's legal theories, when considered in light of the factual allegations in the complaint.

III. Discussion

A. Motions to Strike

Thus far in this litigation, Defendant Clarendon has filed a motion to dismiss (Doc. 9) and an Answer (Doc. 18) to defendant Lorena Harvey's cross-claims. Plaintiff moves to strike these filings on the ground that they are not signed by a licensed attorney. This argument is well-taken. "It has been the law for the better part of two centuries . . . that a corporation may appear in federal courts only through licensed counsel." Rowland v. California Men's Colony, 506 U.S. 194, 201-202 (1993); see also Doherty v. American Motors Corp., 728 F.2d 334, 340 (6th Cir. 1984) ("The rule of this circuit is that a corporation cannot appear in federal court except through an attorney."). Clarendon's filings are signed by its President, defendant Walton, but there is nothing indicating that he is a licensed attorney.

The Federal Rules of Civil Procedure require that "[e]very pleading, written motion, and other paper must be signed by at least one attorney of record in the attorney's name--or by a party personally if the party is unrepresented." Fed. R. Civ. P. 11(a). "The court must strike an unsigned paper unless the omission is promptly corrected after being called to the attorney's or party's attention." Id. Moreover, "[a] pleading by a corporation that is not signed by an attorney is treated as unsigned for Rule 11(a) purposes." White v. Smith, Dean & Assocs., Inc., 2010 WL 795967 (S.D. Ohio Mar. 2, 2010).

Plaintiff's motion to strike Clarendon's motion to dismiss was served on Clarendon on March 10, 2011 (Doc. 10 at 5), and its motion to strike Clarendon's Answer was served on May 13, 2011 (Doc. 20 at 6). These filings sufficed to call the matter to Clarendon's attention, Clarendon has done nothing to correct the situation in a prompt manner. Therefore, Plaintiff's motions to ...

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