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Domanus v. Lewicki

August 19, 2009


The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge


Plaintiffs Jan Domanus ("Domanus") and Andrew Kozlowski ("Kozlowski") have filed an amended complaint both individually and on behalf of Krakow Business Park Sp. z.o.o. ("KBP") alleging: violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), against Adam Swiech ("Adam"), Richard Swiech ("Richard"), and Derek Lewicki ("Lewicki") (count I); conspiracy to violate RICO against all defendants (count II); fraud against Adam, Richard, and Lewicki (count III); breach of fiduciary duty against Adam, Richard, and Lewicki (count IV); aiding and abetting breach of fiduciary duty against all defendants (count V); constructive trust against all defendants (count VI); and civil conspiracy against all defendants (count VII).

Before me are the following motions: (1) a motion by defendants Lewicki, Richard, Orchard Meadows Homes, Inc., Lake Ridge Townhomes, Corp., and ADR Enterprises, Inc., to dismiss the amended complaint based on forum non conveniens; (2) a separate motion by the same defendants to dismiss plaintiffs' individual claims for lack of standing, and to dismiss plaintiffs' derivative claims both for failure to comply with the requirements of Fed. R. Civ. P. 23.1 ("Rule 23.1"), and for failure to name the corporation as defendant under Fed. R. Civ. P. 19(b) ("Rule 19(b)"); (3) a motion by defendants Lewicki and Richard to dismiss the amended complaint pursuant to Fed. R. Civ. P. 12(b)(6) ("Rule 12(b)(6)"); a motion by defendants Lake Ridge Townhomes Corp., ADR Enterprises, Inc., and Orchard Meadows Homes, Inc., to dismiss the amended complaint based on Rule 12(b)(6); and (5) a motion by defendant Adam to dismiss the amended complaint pursuant to Fed. R. Civ. P. 12(b)(2). These motions are resolved as follows.


Plaintiffs Kozlowski and Domanus are individual minority shareholders in KBP, together owning thirty-four percent of the company's outstanding shares. Domanus is an Illinois resident. Kozlowski's residence is a bit murky, as plaintiffs allege that he is "a resident of Florida, temporarily residing in Poland."*fn1 The amended complaint is silent about the citizenship or place of business of the corporate plaintiff, KBP, but plaintiffs do not appear to contest the assertion by some defendants that KBP is a Polish corporation that does no business in Illinois.

Plaintiffs' allegations about the identities of the corporate defendants are spotty and sometimes inconsistent, and many of these allegations are made on information and belief. For example, the case caption names only one Lake Ridge Townhomes entity (Lake Ridge Townhomes Corp.), but the allegations in the body of the amended complaint refer first to Lake Ridge Townhomes, LLC, (alleged to be a Nevada limited liability company "managed" by defendant Adam), and only later to Lake Ridge Townhomes Corp., (identified only as an entity "owned and/or controlled by one or more of the individual defendants"). The amended complaint contains no allegations at all regarding the citizenship or place of business of several corporate defendants, but it does assert that one of the Orchard Meadows Homes defendants (which one is unclear, as plaintiffs name both an "Inc." and an "LLC") is registered to do business in Illinois. Another corporate defendant, Spectrum, is alleged to be a nonexistent corporation whose putative principal place of business is also in Illinois. Plaintiffs allege that all of the individual defendants are Illinois residents, although defendant Adam disputes this allegation as to himself.

The gravamen of plaintiffs' complaint is that defendants conspired to defraud the corporate plaintiff and its minority shareholders (i.e., Domanus and Kozlowski) through a scheme of misappropriation and misuse of funds invested in a real estate development and management project in Poland. The alleged wrongful conduct includes a wide range of unlawful activities, including, for example, money laundering, payments made for valueless or fictitious services, the extortion of unidentified third parties, misrepresentations about defendants' ownership of purportedly independent companies, forgery of plaintiffs' signatures, and the refusal to provide plaintiffs with access to KBP's books and records.

The pending motions to dismiss challenge various aspects of the amended complaint, and, in some cases, the action as a whole.


A. Forum Non Conveniens

I begin with the broadest challenge to plaintiffs' action, the motion to dismiss based on forum non conveniens. "A federal court has discretion to dismiss a case on the ground of forum non conveniens 'when an alternative forum has jurisdiction to hear [the] case, and ... trial in the chosen forum would establish ... oppressiveness and vexation to a defendant ... out of all proportion to plaintiff's convenience, or ... the chosen forum [is] inappropriate because of considerations affecting the court's own administrative and legal problems.'" Sinochem Intern. Co. Ltd. v. Malaysia Intern. Shipping Corp., 549 U.S. 422, 429 (2007)(quoting American Dredging Co. v. Miller, 510 U.S. 443, 447-448 (1994) (citations omitted)(alterations in Sinochem). The principle boils down to this: I may dismiss plaintiffs' complaint "if it best serves the convenience of the parties and the ends of justice." Kamel v. Hill-Rom Co., Inc., 108 F.3d 799, 802 (7th Cir. 1997)(citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947) and Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 527 (1947)).

The analysis applied to effectuate this principle involves a two-step inquiry. AAR Intern., Inc. v. Nimelias Enterprises S.A., 250 F.3d 510, 524 (7th Cir. 2001). First, a court must "determine that an adequate alternative forum is available to hear the case, meaning that all parties are within the jurisdiction of the alternative forum and amenable to process there, and that the parties would not be treated unfairly or deprived of all remedies if the case were litigated in the alternative forum." Id. Where a plaintiff has chosen to litigate in his or her home forum, "there is a presumption in favor of allowing [the] plaintiff his choice of courts." Abad v. Bayer Corp., 563 F.3d 663, 666 (7th Cir. 2009). Accordingly, the defendant bears the threshold burden of demonstrating that an adequate alternative forum exists. Abiola v. Abubakar, 267 F.Supp.2d 907, 918 (N.D. Ill. 2003).

Next, if the court is satisfied that an adequate alternative forum exists, it must then proceed to weigh a host of private and public interest factors to determine the appropriateness of dismissal. AAR, 250 F.3d at 524. Examples of private interest factors include "the 'relative ease of access to sources of proof' in each forum, and 'the availability of compulsory process for the attendance of unwilling witnesses,'" id. (quoting Kamel v. Hill-Rom Co., Inc., 108 F.3d 799, 803 (7th Cir. 1997). Public interest factors include, for example, "'administrative difficulties stemming from court congestion,' and the interest of trying a diversity case in a forum that is 'at home with the law that must govern the action.'") AAR, 250 F.3d at 524 (quoting Kamel, 108 F.3d at 803).

In this case, plaintiffs allege that at least one plaintiff, Domanus, is an Illinois resident. As to him, this suit was filed in his home forum. Accordingly, although it is not entirely clear whether Poland or some other forum might appropriately be considered the home forum of one or both of the remaining plaintiffs, there is a reasonable basis for applying the presumption in favor of plaintiffs' chosen forum, and for placing the burden on the defendants asserting forum non conveniens to overcome this presumption. Yet the basis asserted by these defendants for dismissing the action is that "[p]laintiffs have not demonstrated that the Polish legal system does not offer them an adequate remedy." This plainly reverses the parties' burdens of proof at this stage. Moreover, although plaintiffs need not disprove the adequacy of Polish courts to survive the motion (since movants made no effort to ...

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