Litowitz v. Haddad

DOUGLAS LITOWITZ, Plaintiff, v. RICHARD HADDAD, et al., Defendants.

No. 19-cv-03197

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

April 10, 2020

Judge Andrea R. Wood

MEMORANDUM OPINION AND ORDER

Plaintiff Douglas Litowitz was sued in New York state court by Defendant U.S. Immigration Fund, LLC ("USIF"). Litowitz claims that the Verified Amended Complaint ("VAC") in the New York action contained numerous false and defamatory statements about him. While that case was pending, one of Litowitz's co-defendants there, Xuejun Makhsous ("Zoe Ma"),¹ sued USIF and several others in this Court ("Zoe Ma Lawsuit"). In connection with its first motion to dismiss the Zoe Ma Lawsuit, USIF filed a declaration by Defendant Richard Haddad that attached the VAC as an exhibit. Litowitz claims he was defamed by the republication of the VAC. Consequently, Litowitz has brought the present five-count defamation action against Defendants USIF, Haddad, William Moran, and Mark Giresi.² (First Am. Compl. ("FAC"), Dkt. No. 6.) Defendants now move to dismiss the FAC for lack of personal jurisdiction and failure tostate a claim upon which relief can be granted pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6).³ (Dkt. No. 9.) For the reasons that follow, the motion to dismiss is granted.

BACKGROUND

For the purposes of the motion to dismiss, the Court accepts all well-pleaded facts in the FAC as true and views the facts in the light most favorable to Litowitz as the non-moving party. Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618 (7th Cir. 2007).

Litowitz, an Illinois-based attorney, was one of three defendants sued by USIF in an action brought in New York state court. (FAC ¶¶ 1-2, 19; FAC, Ex. 1, Dkt. No. 6-1.) Haddad and Moran were USIF's attorneys in that lawsuit, and they drafted and submitted the VAC. (FAC ¶¶ 2, 20-21.) In addition, Giresi, a USIF representative, verified the truth of the allegations in the VAC. (Id. ¶¶ 2, 22.) Along with Litowitz, the VAC also named as defendants Zoe Ma and a Hong Kong business known as Reviv-East Legal Consultants (HK) Co., Ltd. ("Reviv-East"). (FAC, Ex. 1 at 4.) Broadly, the VAC alleges that Litowitz and his associate Zoe Ma created Reviv-East solely to defraud USIF. (Id. at 5.)

According to Litowitz, the VAC contains numerous defamatory statements about him. (FAC ¶ 3.) For example, the VAC states that Litowitz is "from the seedy side of the legal profession." (Id. ¶ 28.) It then accuses Litowitz and Zoe Ma of going to Hong Kong and creating a business, Reviv-East, "for the purpose of fraud, deceptively and maliciously insinuating themselves into USIF's business." (FAC ¶ 30 (internal quotation marks omitted), FAC, Ex. 1 at 4-5.) The VAC also claims that Litowitz committed "numerous violations of the codes andcanons of legal ethics." (FAC ¶ 30.) Litowitz points to several other statements in the VAC containing similar allegations of wrongdoing against him. (FAC ¶¶ 40-41, 50, 59, 66.) However, Litowitz denies the VAC's allegations of wrongdoing and contends that Defendants made the false statements about him with reckless disregard of the truth. (Id. ¶¶ 31, 42, 51, 60, 67.)

While Litowitz recognizes that Defendants were protected by the litigation privilege from liability for filing allegedly false and defamatory statements in the VAC in the New York lawsuit, he contends that they subsequently engaged in conduct not covered by the privilege. (Id. ¶ 12-15.) Specifically, Defendants filed the entire VAC as an exhibit in the Zoe Ma Lawsuit. (Id. ¶ 8.) The Zoe Ma Lawsuit refers to the action brought in this Court by Litowitz's co-defendant in the New York action. (FAC ¶ 8; Makhsous v. Mastroianni, No. 19-cv-01230 (N.D. Ill.)). In her original complaint, Zoe Ma alleged that the defendants, including USIF, were engaged in a criminal enterprise related to their solicitation and management of investments by Chinese EB-5 investors.⁴ (Compl., Makhsous, No. 19-cv-01230 (Feb. 19, 2019), Dkt. No. 1.)⁵ USIF joined with several other defendants to move to dismiss the Zoe Ma Lawsuit. (Mot. to Dismiss, Makhsous, No. 19-cv-01230 (Mar. 6, 2019), Dkt. Nos. 7, 9.) One of the arguments in the motion was that the Court should abstain under Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976), because the then-pending New York action was a parallel action that arose from the same facts as the Zoe Ma Lawsuit. To support that argument, USIF submitted a declaration from Haddad that attached the VAC. (Decl. of Haddad in Supp. of Mot. to Dismiss, Ex. A, Makhsous,No. 19-cv-01230 (Mar. 6, 2019), Dkt. No. 10-1.) But because Litowitz claims he was not involved in the Zoe Ma Lawsuit, he argues that the litigation privilege does not shield Defendants from liability for filing the VAC in that action. (FAC ¶¶ 10-11.) As a result of that filing, Litowitz brings the present defamation action.

DISCUSSION

While Defendants move to dismiss Litowitz's entire FAC for failure to state a claim, they also ask the Court to dismiss Moran and Giresi from the action because this Court lacks personal jurisdiction over them. The Court first addresses whether it has jurisdiction over Moran and Giresi before deciding whether Litowitz has stated a claim against anyone.

I. Personal Jurisdiction

A motion to dismiss under Rule 12(b)(2) "tests whether a federal court has personal jurisdiction over a defendant." United Airlines, Inc. v. Zaman, 152 F. Supp. 3d 1041, 1045 (N.D. Ill. 2015). When its existence is challenged, the plaintiff bears the burden of establishing personal jurisdiction. N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014). And when a court rules on a Rule 12(b)(2) motion based on the parties' submission of written materials without holding an evidentiary hearing, "the plaintiff need only make out a prima facie case of personal jurisdiction." Id. (internal quotation marks omitted). Any well-pleaded facts alleged in the complaint are taken as true and any factual disputes in supporting affidavits are resolved in the plaintiff's favor. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). Still, where the defendant "submits affidavits or other evidence in opposition, 'the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction.'" ABN AMRO, Inc. v. Capital Int'l Ltd., 595 F. Supp. 2d 805, 818 (N.D. Ill. 2008) (quoting Purdue ResearchFound. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 787 (7th Cir. 2003)). If the plaintiff fails to refute a fact contained in the defendant's affidavit, that fact is accepted as true. Id.

A federal court sitting in diversity applies the personal jurisdiction rules of the state in which it sits. Kipp v. Ski Enter. Corp. of Wis., Inc., 783 F.3d 695, 697 (7th Cir. 2015). In Illinois, courts may exercise personal jurisdiction to the full extent permitted by the Fourteenth Amendment's Due Process Clause. Id. (citing 735 ILCS 5/2-209(c)). Thus, the question before the Court is whether Moran and Giresi each have "sufficient 'minimum contacts' with Illinois such that the maintenance of the suit 'does not offend traditional notions of fair play and substantial justice.'" Tamburo, 601 F.3d at 700-01 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Both Moran and Giresi have submitted declarations stating that they are not Illinois residents, have no contacts with Illinois, and have not participated in the Zoe Ma Lawsuit. (Moran Decl. in Supp. of Mot. to Dismiss ¶ 2, Dkt. No. 9-2; Giresi Decl. in Supp. of Mot. to Dismiss ¶ 4, Dkt. No. 9-3.) Litowitz does not refute Moran and Giresi's declarations and therefore the Court accepts as true that they have no contacts with Illinois.

Despite Moran and Giresi's lack of contacts with Illinois, Litowitz contends this Court may exercise specific personal jurisdiction over them because Litowitz felt the injury from their defamatory statements in Illinois. The specific personal jurisdiction inquiry "focuses on the relationship among the defendant, the forum, and the litigation." Walden v. Fiore, 571 U.S. 277, 284 (2014). Thus, "[f]or a State to exercise jurisdiction consistent with due process, the defendant's suit-related conduct must create a substantial connection with the forum State." Id.

Here, Moran and Giresi's suit-related conduct was limited to drafting and verifying the VAC prior to filing it in the New York action. They had no involvement with the Zoe Ma Lawsuit and played no role in the publication of the VAC in connection with that action. Standing alone,the fact that Litowitz suffered his injury in Illinois is not a sufficient link between Moran and Giresi and this forum. "The proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant's conduct connects him to the forum in a meaningful way." Id. at 290. Having failed to demonstrate such a connection, Litowitz has fallen short of carrying his burden of making out a prima facie case of specific personal jurisdiction. For that reason, Defendants' Rule 12(b)(2) motion is granted and Moran and Giresi are dismissed from this action.

II. Failure to State a Claim

Because there is no dispute that the Court has jurisdiction over USIF and Haddad, the Court next must determine whether the FAC states a claim against them. To survive a Rule 12(b)(6) motion, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This pleading standard does not necessarily require a complaint to contain detailed factual allegations. Twombly, 550 U.S. at 555. Rather, "[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."...