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Sirazi v. General Mediterranean Holding, Sa

United States District Court, N.D. Illinois, Eastern Division

February 24, 2015



WILLIAM T. HART, District Judge.

Semir Sirazi, Greenstone Capital L.L.C., and Mardini, Inc. (collectively "plaintiffs") sued General Mediterranean Holding, SA ("GMH"), Orifarm, SA ("Orifarm"), and Nadhmi Auchi (collectively "defendants") alleging torts arising out of conduct relating to a Settlement Agreement ("the Agreement") with non-parties Antoin Rezko ("Rezko") and his company Rezmar Corporation. It is alleged that defendants participated in a scheme in which Rezko transferred his ownership in a valuable 62-acre land parcel in Chicago to defendants, leaving Rezko with no assets from which plaintiffs, secured creditors, could recover millions of dollars owed to them. Defendants contend that Rezko was also indebted to them for millions of dollars and that his ownership, after being indicted for fraud, prevented the development of the land parcel in which they had invested over $130, 000, 000. The case is now before the court on defendants' motion for summary judgment.

Plaintiffs are alleged to be Illinois residents. GMH and Orifarm are alleged to be Luxembourg companies based in Luxembourg.[1] Orifarm is a subsidiary of GMH. Auchi is alleged to be a citizen of the United Kingdom and the owner and Chairman or head of GMH and Orifarm. Auchi and Orifarm moved to dismiss the complaint for lack of personal jurisdiction. Defendants were twice ordered to produce a Rule 30(b)(6) witness to testify as to the structure and ownership of the entities. As a sanction for failing to comply with the discovery orders, Judge Gottschall determined that personal jurisdiction be taken as established as to defendant Auchi, and defendant Auchi was deemed to exercise full ownership and control over GMH for all purposes of this litigation. See Order dated March 5, 2013 (ECF 131). With respect to Orifarm, the court found that it was alleged that Orifarm was a primary participant in alleged wrongdoing expressly aimed at an Illinois resident with the knowledge that the effects of that conduct would be felt in Illinois. Personal jurisdiction was found to be proper. Sirazi v. Gen. Mediterranean Holding, SA, 2013 WL 812271 (N.D. Ill. March 5, 2013) (" Sirazi II ") (ECF 134). Jurisdiction exists over the subject matter and the parties. 28 U.S.C. ยง 1332(a)(2).

Defendants moved to dismiss the Complaint, pursuant to Federal Rules of Civil Procedure 12(b)(2) and (6), based on the res judicata effect of rulings in a previous Illinois state Court action brought by plaintiffs against defendants which was dismissed without prejudice. The State Court had held that plaintiffs had failed to establish jurisdiction over defendant Auchi. In the alternative, defendants moved to stay this case pursuant to the Colorado River doctrine. Pursuant to Rule12(f)(2), defendants also moved to strike certain allegations in the Complaint that refer to defendant Auchi's criminal history. With the exception of the motion to strike, the motions were denied. See Sirazi II. Plaintiffs subsequently amended the Complaint.

In the First Amended Complaint ("FAC") (ECF 170), plaintiffs allege tortious interference with contractual relations (Count I), aiding and abetting fraud (Count II), civil conspiracy (Count III), and unjust enrichment (Count IV), all in violation of Illinois law. Plaintiffs no longer seek an accounting (Count V) or injunctive relief (Count VI). Plaintiffs seek actual and punitive damages.

On a motion for summary judgment, the entire record is considered with all reasonable inferences drawn in favor of the nonmovant and all factual disputes resolved in favor of the nonmovant. Crawford v. Metro. Gov't of Nashville & Davidson Cnty., Tenn., 555 U.S. 271, 274 n.1 (2009); Malen v. MTD Prods., Inc., 628 F.3d 296, 303 (7th Cir. 2010); Stokes v. Bd. of Educ. of City of Chicago, 599 F.3d 617, 619 (7th Cir. 2010). The burden of establishing a lack of any genuine issue of material fact rests on the movant. Ponsetti v. GE Pension Plan, 614 F.3d 684, 691 (7th Cir. 2010); Outlaw v. Newkirk, 259 F.3d 833, 837 (7th Cir. 2001). The nonmovant, however, must make a showing sufficient to establish any essential element for which he or it will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Montgomery v. Am. Airlines, Inc., 626 F.3d 382, 389 (7th Cir. 2010). The movant need not provide affidavits or deposition testimony showing the nonexistence of such essential elements. Celotex, 477 U.S. at 324; Freundt v. Allied Tube & Conduit Corp., 2007 WL 4219417 *2 (N.D. Ill. Nov. 29, 2007); O'Brien v. Encotech Constr., 2004 WL 609798 *1 (N.D. Ill. March 23, 2004). Also, it is not sufficient to show evidence of purportedly disputed facts if those facts are not plausible in light of the entire record. See Lorillard Tobacco Co. v. A & E Oil, Inc., 503 F.3d 588, 594-95 (7th Cir. 2007); Yasak v. Ret. Bd. of Policemen's Annuity & Benefit Fund of Chicago, 357 F.3d 677, 679 (7th Cir. 2004); Lampley v. Mitcheff, 2010 WL 4362826 *6 (N.D. Ind. Oct. 27, 2010). As the Seventh Circuit has summarized:

The party moving for summary judgment carries the initial burden of production to identify "those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Logan v. Commercial Union Ins. Co., 96 F.3d 971, 978 (7th Cir. 1996) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548 (1986) (citation and internal quotation omitted)). The moving party may discharge this burden by "showing'-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. 2548. Once the moving party satisfies this burden, the nonmovant must "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). "The nonmovant must do more, however, than demonstrate some factual disagreement between the parties; the issue must be material.'" Logan, 96 F.3d at 978. "Irrelevant or unnecessary facts do not preclude summary judgment even when they are in dispute." Id. (citation omitted). In determining whether the nonmovant has identified a "material" issue of fact for trial, we are guided by the applicable substantive law; "[o]nly disputes that could affect the outcome of the suit under governing law will properly preclude the entry of summary judgment." McGinn v. Burlington Northern R.R. Co., 102 F.3d 295, 298 (7th Cir. 1996) (citation omitted). Furthermore, a factual dispute is "genuine" for summary judgment purposes only when there is "sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505 (1986). Hence, a "metaphysical doubt" regarding the existence of a genuine fact issue is not enough to stave off summary judgment, and "the nonmovant fails to demonstrate a genuine issue for trial where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party....'" Logan, 96 F.3d at 978 (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348 (1986)).

Outlaw, 259 F.3d at 837.

Central to this case is the intent and meaning of the Agreement entered into as of May 5, 2006 by "ANTOIN S. REZKO ('Rezko') as the sole shareholder of Rezmar and as guarantor (Rezmar and Rezko are sometimes collectively referred to as Borrowers')." The other parties to the Agreement are plaintiff Semir Sirazi described as "Collateral Provider, " referred to in the Agreement as "Sirazi/CP, " and plaintiffs Greenstone Capital, L.L.C. and Mardini, Inc., described as creditors of the Borrowers and Rezmar affiliates.

Defendants state that Rezko was not individually bound; that he acted on behalf of Rezmar only. They ignore the individual Guarantee which is part of the Agreement. The undertakings in the Agreement and the guarantee make clear that Rezko was individually bound by the Agreement.

It is stated in the Agreement that the Borrowers and others are in default with respect to several agreements owing $7, 700, 000 and liable on a $5, 000, 000 Republic Bank loan for which Sirazi provided collateral and a bank guaranty. The Borrowers promise to pay $7, 700, 000, pay or refinance a Republic Bank loan with Mutual Bank, and secure the release of Sirazi's collateral securing the Republic Bank loan.

The Agreement describes the manner of the intended payment of the agreed debt. It is warranted that Rezko had authority to enter into the Agreement and that Rezko has an 80% "Ownership Interest" in Heritage Development Partners, LLC ("Heritage"), an Illinois limited liability company, defined in the Agreement as the "Company." (Heritage was the owner of a 49% interest in Riverside District Development, LLC, the entity that held title to the land parcel). Heritage was stated to be engaged in a private placement offering of additional membership interests in Heritage (which could produce as much as $35, 000, 000). Rezko's share in the "Distributions" from the offering was committed to the repayments promised in the Agreement.

The Borrowers granted a Uniform Commercial Code security interest in Distributions from "Ownership Interests" in Heritage. Defendants contend that a security interest was never perfected because the UCC filing was incomplete and defective, and, they state that Sirazi had no security interest and was not a secured creditor senior to their position as creditors.

Plaintiffs have alleged they were damaged because they lost their ability to obtain Rezko's ownership interests in payment of the sums due and promised to them-possibly as senior creditors. Defendants argue that, given prior claims on the land parcel, plaintiffs will not be able to show that there was sufficient value in the land parcel to satisfy ...

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