Affidavit, para. 2. Karstrom stated that he acted on behalf of himself and an "associate." This was the first contact between the parties regarding the Guazapares mining property at issue in this case. Cross and Karstrom, at their request, met with Simons in Tuscon, Arizona on May 7, 1984. Id. In May of 1984, the defendants mailed the final draft of the agreement from El Paso to Cheyenne and finally to Cross in Chicago. Under the terms of the agreement, Cross would receive sole and exclusive rights to mine and sell the minerals at the Guazapares project. The defendants would be compensated in return for their contributions of knowledge and assistance. The agreement was signed by the defendants before it reached Cross in Chicago. The defendants later sent a signed addendum to the agreement to Cross. The addendum required the parties to open a bank account in El Paso, Texas. Valenzuela was given the duty of personally verifying the deposits. Simons traveled to Chicago to meet with Cross on three occasions to discuss the parties' agreement. These visits occurred in August of 1985 and in August and October of 1986. Id. at para. 3. Between May of 1984 and December of 1986, Cross had telephone contact with Valenzuela concerning the mining venture. Cross' Affidavit, para. 3.
Cross asserts that this court has personal jurisdiction over the defendants pursuant to the provisions of the Illinois Long-Arm Statute, Ill.Rev.Stat. ch. 110, para. 2-209. To establish personal jurisdiction, Cross must show that the defendants engaged in one of the enumerated jurisdictional acts, that the cause of action alleged arose from the jurisdictional act, and that the exercise of long-arm jurisdiction is consistent with the constitutional requirements of due process. Jacobs/Kahan & Co. v. Marsh, 740 F.2d 587, 590 (7th Cir. 1984).
a. Transaction of Business
Illinois courts have considered a number of factors when determining whether out-of-state defendants have transacted business within Illinois. For example, courts consider which party solicited the contract and where the contract was solicited, negotiated, executed, and substantially performed. See United Federal Savings Bank v. McLean, 694 F. Supp. 529, 533 (C.D.Ill. 1988) (and cases cited within); Konicki v. Wirta, 169 Ill.App. 3d 21, 119 Ill.Dec. 692, 523 N.E.2d 160, 164 (2d Dist. 1988). The courts also determine whether the defendants sought the benefits and protections of Illinois law by, for example, selecting Illinois law with a choice of law provision in their agreement. Id. Finally, the defendants' contacts with the state are noted. These contacts include visits, telephone calls, and any other regular activity in the state. Id. Finally, the court must focus on the acts of the defendants. Afirm, Inc. v. Frazee Paint & Wallcovering Co., 624 F. Supp. 973, 976 (N.D.Ill. 1985) (Aspen, J.); Maurice Sternberg, Inc. v. James, 577 F. Supp. 882, 885 (N.D.Ill 1984) (Grady, J.); Gordon, 498 N.E.2d at 722.
There are insufficient facts to support a finding that the defendants transacted business in this case. The plaintiff solicited the agreement in either Cheyenne or Tuscon. The contract was negotiated, executed, and substantially performed by the defendants outside of Illinois. Even if the agreement was substantially performed in Illinois as Cross contends, this "would not appear to be sufficient, alone, for this Court to find in personam jurisdiction over the Defendant[s]." McLean, 694 F. Supp. at 535; see also J.J. & J. Foundation Co., Inc. v. Tommy Moore, Inc., 640 F. Supp. 1119, 1122 (N.D.Ill. 1986) (Nordberg, J.) ("a corporation does not 'transact business' in Illinois when it merely enters a contract which [provides that] the plaintiff must perform in part in Illinois.").
Furthermore, the defendants did not seek the benefits and protections of Illinois law through a choice of law provision. In addition, Simons' three Illinois visits were made after the parties' agreement was executed. See Woodfield Ford, Inc. v. Akins Ford Corp., 77 Ill.App.3d 343, 32 Ill.Dec. 750, 395 N.E.2d 1131 (1st Dist. 1979). These visits are immaterial because Cross' causes of action arose out of the parties' agreement. Valenzuela never visited Illinois. His "mere communication with [Cross] by interstate telephone or mail service does not significantly aid jurisdiction." Felicia, Ltd. v. Gulf American Barge, Ltd., 555 F. Supp. 801, 805 n. 9 (N.D.Ill. 1983) (Shadur, J.). Consequently, the court finds that the defendants did not transact business for the purposes of Illinois' long-arm statute. See Konicki, 523 N.E.2d at 164; Woodfield Ford, 395 N.E.2d at 1136 (citing to Artoe v. Mann, 36 Ill.App.3d 204, 343 N.E.2d 647 (1st Dist. 1976)) ("the mere receipt of a formal purchase order by mail in Illinois was not a sufficient contact where the plaintiff had initiated the transaction by visiting the defendant's out-of-state office, in spite of numerous phone calls between the parties, some of which originated out of state."); Gordon, 498 N.E.2d at 722-23.
b. The Commission of a Tortious Act
Cross also asserts that the defendants have brought themselves within the reach of the long-arm statute by committing a tortious act within Illinois. See Ill.Rev.Stat., ch. 110, para. 2-209(a)(2). The defendants, according to Cross, committed a tortious act by mailing the agreement and addendum to him in Chicago. This agreement, which is allegedly replete with misrepresentations, led to the loss of Cross' funds. See Cross' Memorandum in Opposition to the Defendants' Amended Motion to Dismiss at 3. Under Illinois law, a tort occurs where the injury occurs. See, e.g., McBreen v. Beech Aircraft Corp., 543 F.2d 26, 28 (7th Cir. 1976). However, "an Illinois court does not acquire jurisdiction under the 'last act' doctrine simply because an economic loss is felt in Illinois when all the conduct contributing to the injury occurred outside Illinois." Turnock, 816 F.2d at 335. Still, "mailing (or causing mailing of) money or messages to Illinois, coupled with defendant's intent to affect Illinois interests, has consistently been held to satisfy the requirements of Section 2-209." Club Assistance, 594 F. Supp. at 346-47; Turnock, 816 F.2d at 335. The defendants mailed the agreement to Illinois with the intent of affecting Cross' interests. Consequently, they have committed a tortious act in Illinois.
The court must now determine whether the causes of action alleged arose from the tortious act.
The common law fraud claim alleged in Count I clearly arose from the parties' agreement. Two of the three RICO claims also arise from the defendants' actions. In Count III, Cross alleges that the defendants conducted the affairs of the Navojoa Mining Enterprise through a pattern of racketeering. 18 U.S.C. § 1962(c). The acts of mail and wire fraud alleged as predicate acts occurred, in part, within Illinois. See Complaint, paras. 112, 113. See Club Assistance, 594 F. Supp. at 349. In Count V, Cross alleges that the defendants acquired an interest in or control of the Navojoa Mining Enterprise through a pattern of racketeering. 18 U.S.C. § 1962(b). The defendants' use of the proceeds from the pattern of racketeering to acquire an interest in or maintain control of Navojoa, a Mexican mining corporation, does not provide this court with personal jurisdiction over them. Id. Cross "does not allege that the defendants used any proceeds of their fraud to acquire any interest in an Illinois business." Id. Accordingly, this court does not have personal jurisdiction over the defendants for the claim alleged in Count V of the complaint.
Finally, in Count IV, Cross alleges that the defendants engaged in a conspiracy to violate 18 U.S.C. §§ 1962(a), (b), and (c). Cross has not alleged a violation of § 1962(a). Furthermore, Cross has alleged nothing that would allow this court to find that it had personal jurisdiction over the defendants for a claim alleging a conspiracy to violate § 1962(b). However, this court does have jurisdiction to determine whether the defendants conspired to violate § 1962(c). Id. As a result, this court will not dismiss Count IV for lack of personal jurisdiction as long as it is modified to allege only a conspiracy to violate § 1962(c). Accordingly, the court finds that Cross has satisfied the state law prong of the jurisdictional analysis with respect to Count I, Count III, and Count IV as modified.
The court must next determine "whether the exercise of long-arm jurisdiction in the case is consistent with due process as defined by prevailing case law." John Walker, 821 F.2d at 403. A non-resident defendant must "have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 85 L. Ed. 278 (1940). This standard
requires only that the contacts between the defendants, the litigation and the forum be substantial enough so that the defendant should have reasonably anticipated being haled into the courts of the forum state.
Ronco, Inc. v. Plastics, Inc., 539 F. Supp. 391, 399 (N.D.Ill. 1982) (Marshall, J.) (citing to World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980)). This standard is satisfied "where a forum seeks to assert specific jurisdiction over an out-of-state defendant who has not consented to suit there . . . if the defendant has 'purportedly directed' [its] activities at residents of the forum . . . and the litigation results from alleged injuries that 'arise out of or relate to' those activities."
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985).
In this case, the defendants intentionally sent the agreement and addendum to Cross, an Illinois resident. The parties' litigation arises from alleged misrepresentations contained in the above documents. Given this, the court finds that the exercise of jurisdiction under the Illinois long-arm statute comports with the requirements of due process. See Id. at 473, quoting Travelers Health Association v. Virginia, 339 U.S. 643, 647, 70 S. Ct. 927, 94 L. Ed. 1154 (1950) ("with respect to interstate contractual obligations, we have emphasized that parties who 'reach out beyond one state and create continuing relationships and obligations with citizens of another state' are subject to regulation and sanctions in the other state for the consequences of their activities.") Accordingly, the defendants' motion to dismiss for lack of personal jurisdiction is granted as to Counts II and V and denied as to Counts I, III, and IV as modified.
The defendants move to dismiss the common law fraud claim alleged in Count I on the grounds that it fails to comply with the requirement of Federal Rule of Civil Procedure 9(b). Rule 9(b) requires that "in all averments of fraud . . . the circumstances constituting fraud . . . shall be stated with particularity." Fed.R.Civ.P. 9(b). To satisfy Rule 9(b), "the plaintiff must describe the 'time, place and particular contents of the false representations, as well as the identity of the party making the misrepresentation, and what was obtained or given up thereby.'" D & G Enterprises v. Continental Illinois National Bank and Trust Co. of Chicago, 574 F. Supp. 263, 267 (N.D.Ill. 1983) (Aspen, J.), quoting Bennett v. Berg, 685 F.2d 1053, 1062 (8th Cir. 1982), cert. denied, 464 U.S. 1008, 104 S. Ct. 527, 78 L. Ed. 2d 710 (1983); UNR Industries, Inc. v. Continental Insurance Co., 623 F. Supp. 1319, 1329 (N.D.Ill. 1985) (Hart, J.); McKee v. Pope Ballard Shepard & Fowle, Ltd., 604 F. Supp. 927, 930 (N.D.Ill. 1985).
Rule 9(b) applies to common law fraud as well as to allegations of fraud in RICO actions. Haroco, Inc. v. American National Bank and Trust Co. of Chicago, 747 F.2d 384, 405 (7th Cir. 1984), aff'd, 473 U.S. 606, 105 S. Ct. 3291, 87 L. Ed. 2d 437 (1985). Finally, "where there are allegations of a fraudulent scheme with multiple defendants, the complaint must 'inform each defendant of the specific fraudulent acts' which constitute the basis of the action against the particular defendant." D & G Enterprises, 574 F. Supp. at 267, quoting Lincoln National Bank v. Lampe, 414 F. Supp. 1270, 1278 (N.D.Ill. 1976); see also McKee, 604 F. Supp. at 931 ("Courts have been quick to reject pleadings in which multiple defendants are 'lumped together. . . .'")
The allegations in Count I of Cross' complaint fail to meet the standards required by Rule 9(b). In paragraph 49 of the complaint, for example, Cross discusses various "statements, representations, pretenses, and promises" that were made but neglects to state the time and place where such statements were made. Moreover, it is not clear which defendant made each particular statement. The allegations made in paragraph 15 on the basis of "information and belief" are insufficient to satisfy the requirements of Rule 9(b). See D & G Enterprises, 574 F. Supp. at 267. Consequently, the court will dismiss Count I of the complaint without prejudice. See, e.g., Id. at 268; McKee, 604 F. Supp. at 932. Cross is given thirty (30) days from the entry of this order to submit an amended complaint. If he fails to submit a timely amended complaint, Count I will be dismissed with prejudice.
The defendants move to dismiss the remaining counts of the complaint pursuant to Rule 12(b)(6). When ruling on this Rule 12(b)(6) motion, the court will "take the allegations in the complaint to be true and view them, along with the reasonable inferences to be drawn from them, in the light most favorable to the plaintiff." Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985), cert. denied, 475 U.S. 1047, 106 S. Ct. 1265, 89 L. Ed. 2d 574 (1986). A complaint should be dismissed only when "it appears beyond doubt that the plaintiff is unable to prove any set of facts which would entitle plaintiff to relief." Id. Nevertheless, "the federal rules still require that a complaint allege facts that, if proven, would provide an adequate basis for each claim." Gray v. County of Dane, 854 F.2d 179, 182 (7th Cir. 1988).
The defendants move to dismiss the RICO claim in Count III on the grounds that Cross has failed to plead sufficient facts to establish a pattern of racketeering. Courts in this Circuit have dealt extensively with the RICO statute's "pattern" requirement. See, e.g., Jones v. Lampe, 845 F.2d 755, 756 (7th Cir. 1988) (and cases cited within). A pattern of racketeering, as the Seventh Circuit has held, "requires at the barest minimum two 'acts of racketeering activity,' . . . [although] much more than two such acts must be shown in order to demonstrate a pattern." Lipin Enterprises, Inc. v. Lee, 803 F.2d 322, 323 (7th Cir. 1986), quoting 18 U.S.C. § 1961(5); see also Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 n. 14, 105 S. Ct. 3275, 87 L. Ed. 2d 346 (1985). The "racketeering activities involved must reveal some 'continuity' -- i.e., activities continuing over time or in different places -- as well as some 'relationship' among activities -- i.e., activities adding up to coordinated actions." Marshall & Ilsley Trust Co. v. Pate, 819 F.2d 806, 810 (7th Cir. 1987); see also Skycom Corp. v. Telstar Corp., 813 F.2d 810, 818 (7th Cir. 1987) ("a 'pattern' of racketeering . . . means predicate acts sufficiently separate in time that they may be viewed as separate transactions."); Morgan v. Bank of Waukegan, 804 F.2d 970, 975 (7th Cir. 1986).
The question of whether a RICO "pattern" exists is a fact specific one which encompasses many relevant factors. Jones, 845 F.2d at 757; Appley v. West, 832 F.2d 1021, 1027 (7th Cir. 1987); Marshall & Ilsley, 819 F.2d at 809-810. Nevertheless, the courts have not hesitated to dismiss complaints alleging RICO violations when the alleged facts, even assuming their truth, failed to establish a pattern of racketeering. See, e.g., Jones, 845 F.2d at 756, 759. Relevant considerations include "the number and variety of predicate acts and the length of time over which they were committed, the number of victims, the presence of separate schemes, and the occurrence of distinct injuries. . . ." Morgan, 804 F.2d at 975; Elliott v. Chicago Motor Club Insurance, 809 F.2d 347, 350 (7th Cir. 1986). None of these factors, standing alone, is determinative. Jones, 845 F.2d at 757; Morgan, 804 F.2d at 975.
Cross contends that the defendants' conduct involved two schemes, multiple and distinct injuries, and multiple victims. These contentions, while imaginative, are not borne out by the allegations of his complaint. The first scheme, according to Cross, relates to the preservation and development of the mines. The second scheme relates to the consulting fees paid to Simons. The above actions represent one broad, general scheme relating to the Guazapares property. Cross' attempt to parse this one scheme into sub-schemes must fail. See Jones, 845 F.2d at 758 (the Seventh Circuit rejected the plaintiff's attempt to break one general scheme into sub-schemes). Cross further contends that each consulting fee paid to Simons constitutes a separate injury. However, these "injuries" are considered as part of the collective injury suffered by Cross in his complaint.
As a result, the court finds that these alleged injuries "stemmed from or were a part of the single harm" which resulted from the parties' agreement. SK Hand Tool Corp. v. Dresser Industries, Inc., 852 F.2d 936, 943 (7th Cir. 1988). Consequently, the payments are not distinct economic injuries for the purposes of RICO. Id.; Cf. Jones, 845 F.2d at 758-59 (and discussion of cases cited within).
Finally, Cross asserts that the "multiple victims are sufficiently alleged as 'U.S. Citizens.'" Cross' Response to Defendants' Motion to Dismiss at 2. A general allegation referring to other purported victims which "contains no well-pleaded facts permitting us to conclude that some [other] investors may have been hurt by the alleged fraud" is insufficient. SK Hand, 852 F.2d at 942. The predicate acts alleged were directed only toward Cross. Cross "has failed to allege any acts of mail or wire fraud, or other instances of racketeering activity, that executed a scheme to defraud the investing public." Id.8
Consequently, the allegations of the complaint indicate that there was one scheme to defraud one victim through multiple acts of mail and wire fraud that occurred over a period of approximately three and a quarter years.
There are no creditable allegations that the defendants engaged in fraudulent activities in the past or threaten to do so in the future. See Jones, 845 F.2d at 759. The Seventh Circuit has repeatedly declined to find the existence of a pattern of racketeering in cases with similar factual allegations. See SK Hand, 852 F.2d at 943; Jones, 845 F.2d at 759 (and cases cited within). Accordingly, the court will dismiss Count III of the complaint because Cross has failed to allege sufficient facts to indicate that the defendants engaged in a pattern of racketeering.
Finally, the defendants assert that Count IV of the complaint should be dismissed because Cross has failed to adequately allege a RICO conspiracy under 18 U.S.C. § 1962(d). Section 1962(d) provides in pertinent part that "it shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of [§ 1962]." 18 U.S.C. § 1962(d). To state a claim under § 1962(d), Cross must allege that each defendant agreed "'that he and his co-conspirators will operate an enterprise through the commission of two predicate acts.'" United States v. Stern, 858 F.2d 1241, 1246-47 (7th Cir. 1988), quoting United States v. Neapolitan, 791 F.2d 489, 496 (7th Cir.), cert. denied, 479 U.S. 939, 107 S. Ct. 421, 93 L. Ed. 2d 371 (1986). Section 1962(d) "does not require that a defendant agree personally to commit two acts of racketeering activity." Id. at 1247. Cross alleges that the defendants participated in the affairs of Navojoa, an enterprise. Complaint, paras. 6, 8. He further alleges that the defendants were personally involved in the commission of multiple predicate acts. Id. at paras. 111-113. Thus, he adequately alleges a RICO conspiracy claim.
For the foregoing reasons, the court grants the defendants' motion to dismiss Counts II and V for lack of personal jurisdiction. The court grants the defendants' motion to dismiss Count I of the complaint without prejudice pursuant to Fed.R.Civ.P. 9(b). The court grants the defendants' motion to dismiss Count III pursuant to Fed.R.Civ.P. 12(b)(6) and denies the defendants' motion to dismiss Count IV. The plaintiff is directed to submit an amended complaint within thirty (30) days of the date of this order encompassing the claims in Counts I and IV in accordance with the modifications ordered by the court. If the plaintiff fails to amend within that time, those counts will be dismissed with prejudice.