Heslep v. Americans for African Adoption, Inc.

JAMES WILLIAM HESLEP and CAREY WATERS HESLEP, Plaintiffs,

v.AMERICANS FOR AFRICAN ADOPTION, INC. and CHERYL CARTER-SHOTTS, Defendants.

CIVIL ACTION NO. 1:11CV56

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

DATED: March 11, 2013

(Judge Keeley)

MEMORANDUM OPINION AND ORDER

GRANTING-IN-PART AND DENYING-IN-PART

DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [DKT. NO. 109]

Pending before the Court is the motion for summary judgment filed pursuant to Fed. R. Civ. P. 56 by the defendants, Cheryl Carter-Shotts ("Carter-Shotts") and Americans for African Adoption, Inc. ("AFAA") (collectively "the defendants"). For the reasons that follow, the Court GRANTS-IN-PART and DENIES-IN-PART the defendants' motion. (Dkt. No. 109).

I. Factual Background

In 2007, the plaintiffs, James Heslep ("Mr. Heslep") and his wife, Carey ("Mrs. Heslep") (collectively "the plaintiffs" or "the Hesleps"), decided to adopt a child from a foreign country. After independently researching various agencies and relying onrepresentations and assurances made by Carter-Shotts, the Hesleps selected AFAA, an Indiana-registered nonprofit organization led by Carter-Shotts, to facilitate the adoption process. (Heslep Dep.).¹

At the time they began working with AFAA and Carter-Shotts, the Hesleps understood that AFAA had been operating an orphan guardianship program in Uganda since 1991 (dkt. no. 110-5 at 2) in association with a local social worker named Joseph Kagimu ("Kagimu"). Although Kagimu never received what could be called a salary, AFAA held him out to others as an "employee[]" and a member of its "staff." (Dkt. No. 110-19). It also granted him exclusive possession of AFAA property, including a laptop computer, andmaintained a cooperative relationship with him for approximately eight years. See (Dkt. No. 111-3 at 19). During this time, Kagimu and his family personally cared for a number of the children involved in AFAA's guardianship program, and AFAA paid them for the children's lodging, meals and medical care. Id.

In 2007, Kagimu notified Carter-Shotts that, in a departure from its past policy, the Ugandan government soon intended to allow foreigners to adopt Ugandan orphans. (Dkt. No. 110-7 at 1). In order to take advantage of this new adoption opportunity, Carter-Shotts directed Kagimu to incorporate AFAA within Uganda. By the end of 2007, Kagimu had sent Carter-Shotts a "Reservation of Name" form (dkt. no. 110-10), as well as a certificate of incorporation issued to AFAA Uganda by the Republic of Uganda. (Dkt. No. 110-12). Based on these documents, Kagimu advised Carter-Shotts that AFAA could proceed to conduct adoptions in Uganda. (Dkt. No. 110-7 at 1).

On November 6, 2007, the Hesleps, working with AFAA, agreed to serve as a test case for its nascent Ugandan adoption program. (Dkt. No. 110-15, 110-16). According to AFAA's plan, adoptive families such as the Hesleps would first obtain guardianship of anorphan child from the Ugandan government and then adopt the child in the United States. (Dkt. No. 110-15).

The parties dispute when and how the Hesleps learned from AFAA that a young Ugandan boy named James K. was available for adoption. Relying on a form completed by Kagimu that Carter-Shotts or AFAA forwarded to the Hesleps (dkt. no. 110-17), the defendants maintain that the Hesleps first learned about James K. on November 10, 2007. (Dkt. No. 110 at 4). The Hesleps dispute this, claiming they first learned about James K. on May 10, 2008, when Carter-Shotts telephoned to tell them about him. (Dkt. No. 111 at 3). In any event, it is undisputed that, after learning about James K., the Hesleps agreed to adopt and sponsor him pursuant to AFAA's plan. That plan obligated them to pay AFAA $200.00 per month to provide James K. with housing, food, medical care, and schooling. (Heslep Dep.).

Mr. Heslep contends that, during this process, Carter-Shotts told him James K. was approximately eighteen months old, his biological father had been killed on military duty, and his biological mother had died in an accident. (Heslep Dep.). He claims that Carter-Shotts had not investigated James K.'s background ororphan status when she made these representations. (Dkt. Nos. 111 at 3-4, 111-3 at 30-31).

Later, when AFAA provided James K.'s birth certificate to the Hesleps, they learned for the first time that he was older than the eighteen months represented by Carter-Shotts. (Dkt. No. 111-4). An AFAA employee acknowledged the inaccuracy but stated: "[Carter-Shotts] wanted me to refer you to her 12/16/08 email, where she posted what Joseph [Kagimu] told her about the [birth certificate]. . . . We know [the age] is not accurate, but once it's been issued, it goes." Id.

Throughout 2008 and 2009, Carter-Shotts traveled to Uganda on several occasions to investigate the reason for delays in the Ugandan adoption process. While there, in April 2008, she met with an attorney retained by Kagimu to assist in the adoption process. (Dkt. No. 110-7 at 2). Dissatisfied with that attorney's services, Carter-Shotts directed Kagimu to replace him. Id. Pursuant to Carter-Shotts's directive, Kagimu selected Hamza Sebuta ("Sebuta"), who later informed Carter-Shotts that Kagimu was the source of the delays in the adoption process. (Dkt. No. 110-20 at 2).

Nearly two years after first agreeing to adopt a Ugandan child with the assistance of AFAA, the Hesleps severed their ties withthe agency on September 8, 2009, giving as their reason Carter-Shotts' poor communication and financial mismanagement of AFAA. (Dkt. No. 110-26 at 1). Mr. Heslep informed Carter-Shotts "we want no further contact with you or AFAA." Id.

In an effort to advance their adoption of James K. without the assistance of AFAA, the Hesleps contacted Kagimu and Sebuta directly (dkt. nos. 110-23, 110-24), and traveled to Uganda on September 11, 2009, where Kagimu placed James K. in their care. Six days later, on September 17, 2009, relying on documentation prepared by Kagimu and Sebuta that purported to establish James K.'s orphan status, a Ugandan court named the Hesleps as James K.'s legal guardians. (Dkt. No. 110-31 at 5).

After obtaining legal guardianship, the Hesleps applied to the United States Embassy in Kampala, Uganda for an IR-4 visa for James K. (Dkt. No. 110-42 at 1). Alerted by discrepancies in the paperwork provided by Sebuta and Kagimu, however, the Embassy investigated James K.'s background and concluded that "Kagimu [had] forged documents related to the death certificates" of James K.'s parents. (Dkt. No. 110-38 at 1). Those death certificates indicated that both parents were "stone minners [sic]" who had died of natural causes. Id. Mr. Heslep, however, repeating informationprovided by Carter-Shotts, advised the Embassy that James K.'s father had been killed while serving in the military, and that his mother had died as the result of an accident. (Heslep Dep.). Given the discrepancies in James K.'s case history, the Embassy froze all AFAA-facilitated adoptions in Uganda. Id.

Still intent on adopting James K., the Hesleps turned to the United States Citizenship and Immigration Services ("USCIS") to secure his legal entry into the United States via an I-600 Petition to Classify Orphan as an Immediate Relative. (Dkt. No. 111-8 at 1). On February 12, 2010, USCIS issued a Notice of Intent to Deny ("NOID") the Hesleps' I-600 petition because its own investigation concluded that the Hesleps had failed to establish James K's status as a true orphan. Id. at 3.

The NOID concluded that "evidence confirms that AFAA knowingly and admittedly provided false death certificates for the birth parents of" James K. Id. Additionally, it stated that AFAA "had no legal standing in Ugandan Courts, and had no legal authority to care for, house, or assist in this adoption." Id. USCIS issued nearly identical NOIDS to three other families who also had been attempting to adopt Ugandan children with AFAA's help. (Dkt. No. 111-9). After their own investigation confirmed that James K. wasnot an orphan, the Hesleps relinquished guardianship and returned him to the care of his maternal grandmother. (Dkt. No. 111 at 7-8).

Meanwhile, due to the issues regarding AFAA's corporate status that were raised by the Ugandan court during the Hesleps' guardianship hearing, Carter-Shotts inquired of Sebuta and learned that AFAA'a Ugandan corporate registration was improper. (Dkt. No. 110-32 at 1). Although she flatly denies any prior knowledge about this issue, Carter-Shotts does acknowledge that Kagimu told Sebuta she in fact knew of it. Id. Ultimately, on September 30, 2009, Carter-Shotts properly re-registered AFAA as a Ugandan corporation (dkt. no. 110-33 at 15), and it continues to operate an orphanage in Uganda to this day. (Dkt. No. 110 at 10).

II. Procedural Background

The Hesleps sued AFAA, Carter-Shotts, and AFAA's board of directors on April 25, 2011. Their complaint asserted nine causes of action: (1) violations of the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. §§ 1961 and 1962, (2) fraudulent misrepresentation and inducement, (3) intentional infliction of emotional distress ("outrage"), (4) negligent hiring, (5) negligent supervision, (6) negligent retention, (7) negligent administration of a program, (8) negligent infliction of emotionaldistress ("NIED"), and (9) punitive damages. Earlier in this case, the Court dismissed AFAA's board of directors as well as Counts Five, Seven, and Eight of the complaint. The Hesleps' claims for RICO violations, fraud, outrage, and negligent hiring and retention remain and are the subject of the pending motion for summary judgment.

III. Legal Standard

Summary judgment is appropriate where the "depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials" show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter...