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Arunachalam v. Pazuniak

United States District Court, D. Delaware

September 11, 2017

GEORGE PAZUNIAK, et al., Defendants.

          Dr. Lakshmi Arunachalam, Menlo Park, California. Pro Se Plaintiff.

          George Pazuniak, Esquire, Pazuniak Law Office LLC, Wilmington, Delaware. Counsel for Defendants George Pazuniak and Pazuniak Law Office LLC.

          Sean T. O'Kelly, Esquire, and Ryan M. Ernst, Esquire, O'Kelly & Ernst, LLC, Wilmington, Delaware. Counsel for Defendant O'Kelly, Ernst & Bielli, LLC.



         Plaintiff Dr. Lakshmi Arunachalam, who appears pro se and has paid the filing fee, filed this action on November 14, 2014, in the United States District Court for the Northern District of California. (D.I. 1). The matter was transferred to this Court on March 25, 2015. (D.I. 99, 100). On February 24, 2016, the Court granted in part and denied in part Defendants' motions to dismiss the First Amended Complaint and Plaintiff was given leave to amend.[1] (D.I. 125). The Second Amended Complaint asserts jurisdiction pursuant to: (1)28 U.S.C. § 1331 by reason of a federal question; (2) 28 U.S.C. § 1337(a) by reason of a federal statute regulating commerce; and (3) 28 U.S.C. § 1338 by reason of patents, copyrights, and trademarks.[2] (D.I. 158 at ¶ 36). Defendants George Pazuniak, Pazuniak Law Office LLC, and O'Kelly, Ernst & Bielli, LLC move for dismissal pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) and for partial summary judgment. (D.I. 159). Plaintiff opposes. Briefing on the matter has been completed. (D.I. 160, 161, 172, 173, 174).


         Plaintiff filed the Second Amended Complaint on August 15, 2016, after having been given several extensions of time. (See D.I. 129, 137, 143, 151, 157). The First Amended Complaint contained eleven counts, as follows: Counts One, Two, Three, and Five were raised against all Defendants and alleged legal malpractice (id. at ¶¶18-30), negligence (id. at ¶¶ 31-34), breach of fiduciary duty (id. at ¶¶ 35-44), and failure to provide competent representation (id. at ¶¶ 56-61). Count Four was raised solely against Pazuniak and alleged that he did not follow instructions. (Id. at ¶¶ 45-55). Count Eleven was raised against Pazuniak and the George Pazuniak Law Firm LLC[3]and sought a declaratory judgment "regarding libel." (Id. at ¶¶ 81-85). Counts Six, Seven, Eight, Nine, and Ten appeared to be directed only against Pazuniak. Count Six alleged intimidation, harassment, blackmail, fraud, drinking, false billing, bullying, duress, collusion with defense counsel and new appellate counsel, conspiracy to commit fraud and intentional breach of fiduciary duty, unauthorized violation of attorney-client privilege, breach of ethical obligations, threats, and racial slurs. (Id. at ¶¶ 62-74). Count Seven alleged sexual harassment, racial slurs, and personal injury (id. at ¶¶ 75-77), Count Eight alleged financial damage (id. at ¶¶ 78), Count Nine alleged elder abuse (id. at ¶ 79), and Count Ten alleged breach of contract (id. at ¶ 80).

         The Second Amended Complaint contains seven counts. (D.I. 158) For the first time, Plaintiff raises civil RICO claims and claims under 42 U.S.C. § 1983. Counts One and Two, raised against all Defendants, contain the newly added civil RICO claims, pursuant to 18 U.S.C. §§ 1962(a), (b), (c), and (d), and § 1964(c). (Id. at ¶¶ 41-142). Count Three is raised against all Defendants and alleges legal malpractice/ngligence, that Pazuniak did not follow client instructions, and Defendants failed to provide competent representation.[4] (Id. at ¶¶ 143-187). Count Four is raised against Pazuniak and alleges that he failed to return or reimburse monies owed to Plaintiff from settlements and monies paid by Plaintiff.[5] (Id. at ¶¶ 189-201). Count Five appears to be raised solely against Pazuniak and raises personal injury, sexual harassment, racial slur, and civil rights violations under 42 U.S.C. §§ 1983 and 1988.[6] (Id. at ¶¶ 202-11). Count Six appears to be raised solely against Pazuniak and alleges intentional fraud. (Id. at ¶¶ 212-14). Count Seven alleges breach of contract and appears to be raised against all Defendants.[7] (Id. at ¶¶ 215-16).

         Plaintiff, a California resident, is the "the sole inventor/owner of early Internet patents" and "the inventor of Web applications displayed on a Web browser in ubiquitous use worldwide by consumers and small, mid-sized and giant corporations and the U.S. Government." (Id. at ¶ 37). George Pazuniak is an "attorney licensed to practice law in Delaware with an office in Wilmington, DE" and George Pazuniak Law Office, LLC, was "a law firm duly organized and existing under the laws of the State of Delaware with its principal place of business in the City of Wilmington, Delaware." (Id. at ¶¶ 28-29). O'Kelly, Ernst & Bielli, LLC is "a law firm duly organized and existing under the laws of the State of Delaware with its principal place of business in the City of Wilmington, Delaware and also in Philadelphia, PA." (Id. at ¶ 30). Plaintiff hired Pazuniak and Pazuniak Law Office "for her patent cases against many infringers in 2011, 2012, and 2013 based upon his representation that he is a patent litigator and would provide competent counsel to competently conduct her patent cases." (Id. at ¶ 38).[8] Plaintiff alleges that Pazuniak "joined the O'Kelly Law Firm during the course of her patent litigation, and Pazuniak and O'Kelly Law firm became the Plaintiff attorneys in her patent cases." (Id.). With the assistance of Defendants, Plaintiff sued a number of corporations for patent infringement. The claims in this action all arise out of Defendants' representation in those patent infringement proceedings.

         Defendants move for dismissal pursuant to Rules 12(b)(1) and 12(b)(6) for lack of standing and for failure to state claims upon which relief may be granted. Fed.R.Civ.P. 12. In addition to seeking dismissal, Defendants also move for summary judgment on Plaintiff's two frauds claims found at Paragraph 214 of the Second Amended Complaint on the grounds that there is no genuine issue as to any material fact.


         Defendants seek dismissal pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure and have submitted matters of public record as well as documents referred to in the Second Amended Complaint in support of their motion.

In deciding motions to dismiss pursuant to Rule 12(b)(6), courts generally consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim. A document forms the basis of a claim if the document is 'integral to or explicitly relied upon in the complaint.' The purpose of this rule is to avoid the situation where a plaintiff with a legally deficient claim that is based on a particular document can avoid dismissal of that claim by failing to attach the relied upon document. Further, considering such a document is not unfair to a plaintiff because, by relying on the document, the plaintiff is on notice that the document will be considered.

Lum v. Bank of Am., 361 F.3d 217, 221-22 n.3 (3d Cir. 2004) (internal citations omitted). The documents submitted to the Court that are matters of public record may properly be considered in ruling on Defendants' motions to dismiss. George Pazuniak included a declaration in briefing the issues, and it may be considered when ruling on Defendants' motion for partial summary judgment. (See D.I. 161).

         Because Plaintiff proceeds pro se, her pleading is liberally construed and her Second Amended Complaint, "however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007).

         Defendants move for dismissal on the grounds that: (1) Plaintiff entirely revised her complaint, but ignored the Court's prior rulings, and "added new problems" by pleading RICO and § 1983 violations; (2) that all seven claims as pled by Plaintiff should be dismissed as a matter of law; (3) no claims are stated against O'Kelly, Ernst & Bielli, LLC; and (4) the Court must abstain from Count Four.

         Rule 12(b)(1)

         Rule 12(b)(1) of the Federal Rules of Civil Procedure permits the dismissal of an action for "lack of subject matter jurisdiction." A Rule 12(b)(1) motion may be treated as either a facial or factual challenge to the court's subject matter jurisdiction. See Constitution Party of Pa. v. Aichele, 757 F.3d 347, 357-58 (3d Cir. 2014). In reviewing a facial attack, "the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff, " and the standards relevant to Rule 12(b)(6) apply. Id. at 358.

         In reviewing a factual challenge to the Court's subject matter jurisdiction, the Court is not confined to the allegations of the complaint, and the presumption of truthfulness does not attach to the allegations in the complaint. Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). Instead, the Court may consider evidence outside the pleadings, including affidavits, depositions and testimony, to resolve any factual issues bearing on jurisdiction. Gotha v. United States, 115 F.3d 176, 179 (3d Cir. 1997). Once the Court's subject matter jurisdiction over a complaint is challenged, the plaintiff bears the burden of proving that jurisdiction exists. Mortensen, 549 F.2d at 891.

         Rule 12(b)(6)

         Rule 8 requires a complainant to provide "a short and plain statement of the claim showing that the pleader is entitled to relief... ." Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) allows the accused party to bring a motion to dismiss the claim for failing to meet this standard. A Rule 12(b)(6) motion may be granted only if, accepting the well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the complainant, a court concludes that those allegations "could not raise a claim of entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007).

         "Though 'detailed factual allegations' are not required, a complaint must do more than simply provide 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action.'" Daw's v. Abington Mem'l Hosp., 765 F.3d 236, 241 (3d Cir. 2014) (quoting Twombly, 550 U.S. at 555). I am "not required to credit bald assertions or legal conclusions improperly alleged in the complaint." In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002). A complaint may not be dismissed, however, "for imperfect statement of the legal theory supporting the claim asserted." Johnson v. City of Shelby, 135 S.Ct. 346, 346 (2014).

         A complainant must plead facts sufficient to show that a claim has "substantive plausibility." Id. at 347. That plausibility must be found on the face of the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "A claim has facial plausibility when the [complainant] pleads factual content that allows the court to draw the reasonable inference that the [accused] is liable for the misconduct alleged." Id. Deciding whether a claim is plausible will be a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.


         The Second Amended Complaint does not comply with the Federal Rules of Civil Procedure, which require the complaint to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The Second Amended Complaint, at 149 pages in length, is not short and it is not plain. Numerous exhibits totalling about 500 pages are attached to the Second Amended Complaint, mostly to support the RICO claims. They are referred to as providing a "preponderance of evidence" of documentary material of Defendants' alleged misconduct, generally without citation to a specific exhibit or page number. (See D.I. 158 at ¶¶ 57, 61, 63, 67, 72, 74, 97, 104, 120, 130, 138, 139).

         RICO, Counts One and Two

         In Count One, Plaintiff attempts to raise civil racketeering claims against all Defendants and alleges that they violated 18 U.S.C. §§ 1962(a), (b), (c), and (d). Count Two seeks treble damages under 18 U.S.C. § 1964(c). Defendants move to dismiss for failure to state claims upon which relief may be granted.

         "[T]he Racketeer Influenced Corrupt Organization Act, 18 U.S.C. §§ 1961-68, authorizes civil suits by '[a]ny person injured in his business or property by reason of a violation of [18 U.S.C. § 1962].'" Hughes v. Consol-Pennsylvania Coal Co., 945 F.2d 594, 609 (3d Cir. 1991) (quoting 18 U.S.C. § 1964(c)).

"Section 1962(a) prohibits any person who has received any income derived . . . from a pattern of racketeering activity from using that money to acquire, establish, or operate any enterprise that affects interstate commerce. Section 1962(b) prohibits any person from acquiring or maintaining an interest in, or controlling any such enterprise through a pattern of racketeering activity. Section 1962(c) prohibits any person employed by or associated with an enterprise affecting interstate commerce from conduct[ing] or participat[ing]... in the conduct of such enterprise's affairs through a pattern of racketeering activity."

Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1411 (3d Cir. 1991). Section 1962(d) provides for a RICO conspiracy claim, making it unlawful "for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section." 18 U.S.C. ยง 1962(d). The Court distills what is ...

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