The opinion of the court was delivered by: REINHARD
Plaintiffs, Dale Bajorat, Robert Bauer, John Holdren, Daniel Brooks, Gerry Goldman, Michael Green d/b/a JGO Associates, an Illinois partnership, Walter Kalemba, James Swanson and Robert Ellett, bring a fourteen-count complaint against defendants, Columbia-Breckenridge Development Corp. ("CBD"), a Florida corporation, Barry, Bette and Led Duke, Inc. ("BBL"), a New York corporation, Columbia Realty Group, Inc.("CRG"), a Florida Corporation, Gleneagles of Naples, Inc., a Florida corporation, Breckenridge, Ltd. ("Breckenridge"), a Florida limited partnership, Donald Led Duke ("Duke"), Michael F. Bette ("Bette") and Joseph Nicolla ("Nicolla"), alleging various federal and state law claims. Jurisdiction for the federal claims is invoked under 28 U.S.C. § 1331 and 18 U.S.C. § 1964(a), and jurisdiction for the state law claims is invoked under 28 U.S.C. § 1367(a). Venue is premised under both 18 U.S.C. § 1965(a) and 28 U.S.C. § 1391(b). Defendants move to dismiss, or in the alternative, to transfer venue.
The following facts are taken from the complaint and are assumed to be true for purposes of this motion. In 1985, Breckenridge was formed as a limited partnership under the laws of the State of Florida for the purpose of developing as a residential community certain real property located in Lee County, Florida. At about that same time, agents for Breckenridge solicited plaintiffs at plaintiffs' respective places of business and/or residences in Illinois to invest money in Breckenridge as limited partners. Between 1985 and 1987, plaintiffs invested various amounts in Breckenridge in exchange for status as limited partners in the partnership. It appears that plaintiffs' troubles began in November 1988, when the managing general partner of Breckenridge, Breckenridge Development Corporation, sold 52% of its general partnership shares to CBD. (CBD also obtained a limited partnership interest in Breckenridge as well at this time.) As the new managing general partner of Breckenridge, CBD assumed responsibility for the development, pricing and selling of Breckenridge property. Duke was president and a director of CBD, and Bette was the treasurer, secretary and a director of CBD.
CBD apparently ran a cozy operation. As managing general partner, CBD engaged BBL to be the general contractor for the construction and development of Breckenridge's property. By coincidence or otherwise, Duke and Bette were executive officers and directors of BBL. CBD also hired CRG to be the marketing and sales agent for Breckenridge's property beginning in January 1992. Duke, Bette and Nicolla were directors of CRG. It is alleged that CBD, Duke, Bette and Nicolla, through Breckenridge, participated in the sale of Breckenridge property at substantially reduced rates without plaintiffs' knowledge and consent. These sales included property sold to an individual who was an employee of BBL and to Duke's mother. It is also alleged that CBD, Duke, Bette and Nicolla, through Breckenridge, permitted various family members of Nicolla to reside in Breckenridge properties free of charge at various times between 1989 and 1991 without plaintiffs' knowledge and consent. Other allegations of wrongdoing include: (1) CBD, Duke, Bette and Nicolla's placement of Duke's uncle on the Breckenridge payroll and providing him with a substantial salary despite the fact that he had no actual duties; (2) CBD, BBL, Duke, Bette and Nicolla's removal of top soil from Breckenridge properties and diversion of proceeds from Breckenridge; (3) CBD, Duke, Bette and Nicolla's intentional failure to have Breckenridge properties available to show for sale purposes during the peck season (January-March) for three straight years; and (4) CBD, Duke, Bette and Nicolla's closure of the Breckenridge operation in the June of each year (1989-1993).
It is further alleged that on or about December 15, 1992, CBD, Duke, Bette and Nicolla misrepresented to each plaintiff, in letters sent through the U.S. mail from CBD's offices in New York to plaintiffs in Illinois, that Breckenridge was in financial jeopardy due to poor sales and the low price levels of the properties. These defendants advised each plaintiff that CBD needed to invest additional funds in the project and that each plaintiff would have to assign all profits to CBD until said contribution was repaid. CBD and Duke also warned plaintiffs that failure to make such an assignment would result in a liquidation of Breckenridge. It is alleged that these statements were untrue when made and were known to be untrue by these defendants at the time of their utterance. As a result, plaintiffs, with the exception of Ellett, agreed to an amendment to the limited partnership agreement whereby they each assigned their profits and losses from Breckenridge to CBD.
On or about August 23, 1993, CBD and Duke again misrepresented, in letters sent to plaintiffs through the U.S. mail, that slow sales and unprofitable price levels had placed Breckenridge in serious financial trouble without revealing the true reasons therefor. CBD and Duke further advised plaintiffs that because of the losses, CBD was unable to continue funding Breckenridge's cash need and that, as a result, Breckenridge would be offered for sale. On or about December 27, 1993, Duke, Bette and Nicolla, acting through CBD, sold substantially all of Breckenridge's assets to Gleneagles at a significant financial loss without prior notice to or consent of plaintiffs. It is alleged that both Duke and Bette are shareholders and agents of Gleneagles and that Nicolla is vice president, a director and a shareholder of Gleneagles. It is further alleged that the sale of Breckenridge assets to Gleneagles occurred without a legitimate appraisal or accounting, or without any effort to advertise the property for sale.
At some point in time, more than a month after the sale, CBD and Duke informed plaintiffs of the sale and that, because the sale was made at a loss, there were no proceeds to be distributed to plaintiffs. It is alleged that Nicolla was the sole director and officer of Gleneagles and that Gleneagles was created by CBD, Duke, Bette and Nicolla for the sole purpose of buying the assets of Breckenridge at a loss.
Count I, against CBD, Duke, Bette and Nicolla, alleges a claim for breach of fiduciary duties under Florida Statute Chapter 620.66. Counts II and III, against all defendants, allege claims for fraud and conspiracy to commit fraud, respectively. Counts IV, V, VI and VII, against all defendants, allege claims for mail fraud, 18 U.S.C. § 1341, wire fraud, 18 U.S.C. § 1343, interference with commerce, 18 U.S.C. § 1951, and interstate and foreign travel or transportation in aid of racketeering enterprises, 18 U.S.C. § 1952, respectively. Count VIII, against all defendants, alleges a claim for unfair trade practices under Florida Statute Chapter 501.204. Each of the foregoing counts seeks a money judgment for the loss of each plaintiffs' investment capital and profits. Each count also seeks exemplary damages, attorney fees, costs, and an accounting itemizing all transactions, profits and loss between and among each defendant for the years 1989 to the present.
In rather peculiar fashion, Counts IX-XIV allege claims under the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1964. Counts IX-XIII allege substantive violations of RICO under 18 U.S.C. § 1962.
For Count IX, the underlying predicate acts of racketeering are the acts of fraud alleged in Count II-- for Count X, the acts of mail fraud alleged in Count IV; for Count XI, the acts of wire fraud alleged in Count V; for Count XII, the acts of interference with commerce alleged in Count VI; and for Count XIII, the acts of interstate and foreign travel or transportation in aid of racketeering enterprises alleged in Count VII. Count XIV alleges a conspiracy to violate RICO under 18 U.S.C. § 1962(d), and, as predicate acts of racketeering, alleges the conspiracy to commit fraud in Count III and the various substantive RICO violations alleged in Counts IX-XIII.
As to Counts IV-VII, plaintiffs contend that these counts are set forth as predicate acts necessary to state a RICO claim and that because RICO requires the inclusion of predicate acts, which involve violations of certain criminal statutes, there is a statutory basis for inferring that a civil cause of action exists under these statutes if made in the context of a RICO claim. As to the RICO counts, plaintiffs contend that the complaint sufficiently alleges a pattern of racketeering activity as defined by the case law. As to the remaining alleged deficiencies, plaintiffs contend that the complaint states that the RICO claims are made under 18 U.S.C. § 1962(d), as well as under the general provisions of 18 U.S.C. § 1964, that the complaint clearly identifies the RICO persons in a prefatory paragraph in each RICO count and that the complaint sufficiently sets forth allegations of fraud by alleging the time, place and general content of the alleged misrepresentations, as well as the identity of each defendant. As to the issue of venue, plaintiffs point out that defendants rely upon a prior version of 28 U.S.C. § 1391 and that the present, amended version makes venue proper, as a substantial part of the events or omissions took place in this district. As to venue under 18 U.S.C. § 1965(a), plaintiffs contend ...