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Capital Investments Group, Inc. v. Korban

United States District Court, District of Delaware

February 14, 2014

VICTORIA KORBAN, et al., Defendants.


Sherry R. Fallon, United States Magistrate Judge


Presently before the court in this diversity action is the motion to dismiss of defendant Victoria Korban ("Ms. Korban"). (D.I. 54) Ms. Korban moves to dismiss this matter for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2), insufficient service of process under Fed.R.Civ.P. 12(b)(5), failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6), and failure to plead fraud with the particularity required by Fed.R.Civ.P. 9(b). (D.I. 54) Plaintiff Capital Investments Group, Inc. ("CIG") opposes Ms. Korban's motion. (D.I. 56) For the reasons which follow, I recommend that the court GRANT Ms. Korban's motion to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).


A. Procedural History

CIG filed this action on February 12, 2010, seeking injunctive relief, damages, and a declaratory judgment under 28 U.S.C. § 2201, against nineteen named foreign defendants, including Ms. Korban (together, "Defendants").[1] (D.I. 1) CIG alleges theft and conversion of its real property and assets by the Defendants. (Id; See also D.I. 10)

On December 14, 2011, CIG allegedly served Ms. Korban with process in her country of residence, Israel. (D.I. 27) On January 3, 2012, this court granted CIG's Amended Motion for a Preliminary Injunction (D.I. 23) and ordered the Defendants, including Ms. Korban, to respond to the complaint. (D.I. 26) The parties filed two stipulations concerning the filing of an amended complaint and revised briefing schedules. (D.I. 47; D.I. 53) On May 25, 2012, CIG filed an Amended and Supplemental Complaint. (D.I. 48) On July 23, 2012, Ms. Korban filed the pending motion, requesting dismissal for lack of personal jurisdiction, insufficient service of process, failure to state a claim upon which relief can be granted, and failure to plead fraud with particularity. (D.I. 54)

B. Facts

i. CIG's Substantive Claims

CIG is a Wyoming corporation with its principal place of business in Wyoming. (D.I. 56 at 4) CIG owned real property in the Ukraine and held interests in various Ukrainian companies. (Id.) According to CIG, defendant Gennady Korban is the heart of a conspiracy (the "Korban Conspiracy") that utilized a forged power of attorney and sham legal proceedings in the Ukraine to strip CIG of its real property and interests in other companies.[2] (Id.)

CIG alleges that Ms. Korban, Gennady Korban's sister, participated in the Korban Conspiracy, with knowledge of its purpose, by forming and/or operating companies that assisted in converting CIG's assets and/or their proceeds. (Id. at 4-5)

CIG claims that the "lynchpin" for the conversion of its property and assets was a forged power of attorney on behalf of CIG's president, Gerald Pitts, in favor of defendant Oleg Vitaliyovich Eryomenko. (Id. at 5) The purported power of attorney allegedly contained a forged signature of Gerald Pitts, a forged notarization by a notary public in the State of Delaware, and a forged apostille seal of the Delaware Secretary of State certifying the document's authenticity. (Id.)

ii. Service of Process

In early 2010, CIG hired a private investigator to locate Ms. Korban and serve her with process. (Id. at 8) CIG asserts that in March 2010, its private investigator served Ms. Korban. (Id.) However, Ms. Korban claims that the address provided by the investigator was incorrect, and she never received any documents in March 2010. (D.I. 55 at 10) In March 2011, CIG filed an undated certificate of service indicating that Ms. Korban was served by regular mail with a copy of CIG's amended motion for a preliminary injunction. (D.I. 24) According to Ms. Korban, however, the certificate of service lists the incorrect apartment number for her address. (D.I. 55 at 10-11)

In December 2011, CIG executed a request with the Israeli Central Authority to effect service of process. (D.I. 56 at 8) The Israeli Central Authority returned the request, indicating that it served Ms. Korban on December 14, 2011. (Id. at 8-9; D.I. 27 at 1) Ms. Korban disputes that CIG actually served her with process. According to Ms. Korban, the Israeli Central Authority served Reoven Lahav, a security guard that works in Ms. Korban's apartment building. (D.I. 55 at 9) Ms. Korban claims she is unfamiliar with Reoven Lahav, and never authorized him, or any other person, to accept legal documents on her behalf. (Id. at 8-9)

Ms. Korban notes that, with regard to all documents CIG purportedly sent her, CIG is silent as to whether it attempted to provide the documents in a language that she could understand. (Id. at 11) Ms. Korban speaks no English, only Russian and some Hebrew. (Id.)


A. Personal Jurisdiction[3]

Pursuant to Rule 12(b)(2), the court must dismiss a case where it lacks personal jurisdiction over the defendant. Fed.R.Civ.P. 12(b)(2). When reviewing a Rule 12(b)(2) motion to dismiss, the court must accept as true all allegations of jurisdictional fact made by the plaintiff and resolve all factual disputes in the plaintiffs favor. Traynor v. Liu, 495 F.Supp.2d 444, 448 (D. Del. 2007). To establish personal jurisdiction, the plaintiff must set forth sufficient facts to satisfy two requirements by a preponderance of the evidence, one statutory and one constitutional. See Belden Techs., Inc. v. LS Corp., 626 F.Supp.2d 448, 453-454 (D. Del. 2009) (citing Reach & Assocs. v. Dencer, 269 F.Supp.2d 497, 502 (D. Del. 2003)). With respect to the statutory requirement, the court must determine whether there is a statutory basis for jurisdiction under the forum state's long arm statute. See Reach & Assocs., 269 F.Supp.2d at 502. The constitutional basis requires the court to determine whether the exercise of jurisdiction comports with the defendant's right to due process. See id.; Int'l Shoe Co. v. Washington, 326 U.S. 310, 316(1945).

Under the Due Process Clause, a defendant is subject to the jurisdiction of a federal court only when the defendant's conduct is such that he should "reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Personal jurisdiction over a nonresident defendant is proper when either specific or general jurisdiction exists. See Dollar Sav. Bank v. First Sec. Bank of Utah, N.A., 746 F.2d 208, 211 (3d Cir. 1984). "Specific personal jurisdiction exists when the defendant has 'purposefully directed his activities at residents of the forum and the litigation results from alleged injuries that arise out of or related to those activities.'" BP Chems. Ltd. v. Fibre Corp., 229 F.3d 254, 259 (3d Cir. 2000) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). General jurisdiction exists when the defendant's contacts with the forum are "continuous and systematic, " whether or not the contacts relate to the litigation. Id. (quoting Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 416(1984)).

Where the defendant raises a jurisdictional defense, the plaintiff bears the burden of establishing, with reasonable particularity, that sufficient minimum contacts exist between the defendant and the forum to support jurisdiction. Belden Techs., 626 F.Supp.2d at 453 (citing Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987)). In order to meet this burden, the plaintiff must produce "sworn affidavits or other competent evidence, " since a Rule 12(b)(2) motion "requires resolution of factual issues outside the pleadings." Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 67 n.9 (3d Cir. 1984).

B. Service of Process

A defendant may file a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(5) when a plaintiff fails to properly serve him or her with the summons and complaint. Rule 4(m) provides, "[i]f a defendant is not served within 120 days after the complaint is filed, the court - on motion or on its own after notice to the plaintiff - must dismiss the action without prejudice against that defendant or order that service be made within a specified time."[4] ...

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