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Schneider Rucinski Enterprises v. Stratasoft

March 3, 2009


The opinion of the court was delivered by: Hayes, Judge


The matters before the Court are the motion to dismiss filed by Defendants Stratasoft and INX (Doc. 65), and the motion to dismiss filed by Defendant US Colo (Doc. 66).


On January 23, 2008, Noreen Rucinski, proceeding pro se on behalf of her business Schneider Rucinski Enterprises, filed a complaint against Touch Asia Outsourcing Solutions, Inc., Rudy Ngaw, Stratasoft, Inc., INX, Inc., Lane McCarthy, Jason Pace, Mike Bridges, Michael Bridges, Jr., Navros Haji, and COLO 6 LLC. (Doc. 1.) The complaint alleged twenty state law claims for relief, including claims for specific performance, breach of contract, breach of lease agreement, breach of guarantee, claim and delivery, conversion, fraud and deceit, declaratory relief, account stated, imposition of constructive trust, injunctive relief, unfair competition, intentional and negligent interference with contractual relations, intentional and negligent interference with prospective economic advantage, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, fraudulent inducement, and civil conspiracy. (Id.)

On February 19, 2008, and March 14, 2008, Defendants INX and Stratasoft filed motions to dismiss for lack of subject matter jurisdiction. (Docs. 7, 8, 17, 18.) On April 29, 2008, this Court granted Defendants' motions to dismiss the complaint for lack of subject matter jurisdiction. (Doc. 48.) The Court found that the complaint had failed to establish complete diversity between the parties and did not raise any federal question. The Court dismissed the complaint its entirety without prejudice and granted Plaintiff leave to file and serve an amended complaint.

On May 30, 2008, Plaintiff filed a First Amended Complaint (FAC) against Stratasoft, INX, US COLO One Wilshire LLC of Nevada, and Touch Asia. (Doc. 51.) In the FAC, Plaintiff asserted eighteen claims for relief, including intentional fraud and intentional misrepresentation, fraud and deceit, constructive trust fund, violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1964(a) and (c) (RICO), unfair business practices, intentional interference with contractual relations, negligent misrepresentation, injunctive relief, breach of contract, breach of implied good faith, computer fraud, fraudulent inducement, telemarketing fraud, warranty fraud, breach of fiduciary duty, civil conspiracy, fraudulent conversion and conveyance, and breach of guaranty. (Id.)

On June19, 2008, Defendant US COLO One Wilshire filed a motion to dismiss for lack of diversity jurisdiction (Doc. 52) and a motion to dismiss for failure to state a claim or, in the alternative, motion for a more definite statement. (Doc. 53.) Defendants INX and Stratasoft filed a motion to dismiss for lack of subject matter jurisdiction or, in the alternative, to dismiss for failure to state a claim or, in the alternative, for a more definite statement. (Doc. 54.) On August 4, 2008, Plaintiff filed a motion for leave to file a second amended complaint (SAC). (Doc. 59.) On November 7, 2008, the Court granted the Defendants' motions to dismiss and granted Plaintiff leave to file a second amended complaint in order to "allege facts to support a federal RICO claim." (Doc. 63 at 3.)

On November 17, 2008, Plaintiff filed the second amended complaint. (Doc. 64.) The SAC names Stratasoft, INX, and "US COLO, Inc., the 'Nevada Corporation' AKA, US COLO, ET AL" as the defendants. (Doc. 64 at 1.) The SAC names Touch Asia and Rudy Ngaw as "non-defendants." (Id.) Plaintiff alleges RICO violations of 18 U.S.C. §§ 1962(c) and (d) and state law claims for intentional interference with business and/or economic relationships, conspiracy to commit intentional interference with business or economic relationships, negligent misrepresentation, conspiracy to engage in promissory fraud, breach of fiduciary duty, breach of contract, breach of implied good faith, warranty fraud, conspiracy to breach fiduciary duties, fraud, and conspiracy to defraud.

On December 8, 2008, Defendants Stratasoft and INX filed a motion to dismiss the second amended complaint pursuant to Rule 12(b) (1) of the Federal Rules of Civil Procedure on the grounds that (1) Plaintiff has failed to meet her burden of establishing that there is complete diversity between herself and each of the defendants named in the second amended complaint and (2) Plaintiff has failed to state a plausible RICO claim sufficient to support federal question jurisdiction. (Doc. 65.) In the alternative, Defendants Stratasoft and INX move to dismiss under Rule 12(b)(6) for failure to state a claim. On December 9, 2008, Defendant US Colo, LLC filed a motion to dismiss the second amended complaint for lack of diversity jurisdiction under Rule 12(b)(1). (Doc. 66.) Plaintiff filed a response in opposition to the motions (Doc. 70) and Defendants filed their replies (Docs. 71, 72). The Court heard oral argument on February 23, 2009.


"Plaintiff Noreen Rucinski is a California citizen doing business under the business name Schneider Rucinski Enterprises (SRE), a sole proprietorship." (SAC ¶ 9.) Defendant Stratasoft is a "Texas LLC Corporation" that "operates a company that sells software, hardware for call center platforms. Stratasoft also sells annual and/or monthly maintenance and call solutions services to the public." (Id. ¶ 10.) Mike Bridges, Jason Pace, and Lance McCarthy are employed by Stratasoft. (Id.) Defendant "US COLO LLC ('US COLO') according to the Secretary of State of Nevada is a limited liability company with domicile and residency in Nevada." (Id. ¶ 11.) "US COLO currently operates a 'closed door' 'lockout' operation for telecommunications, providing a location with power, and other ancillary options for connectivity to other suppliers of telecommunications." (Id.) Haji Navroz, Rick Fisher, and Max McCombs are employed by US COLO. (Id.) Defendant INX is the "parent company of Stratasoft which presently has principle place of business in Harris County, Texas and operates as the holding company for Stratasoft." (Id. ¶ 12.) Under the heading "non-parties" the SAC alleges that "Rudy Ngaw was president of Touch Asia, a factious and invisible company" that has "had several other names" including "Pacific Call Centers, Touch Asia Solutions, Pacific Call Solutions and Touch Asia Call Centers." (Id. ¶ 13.)

In May 2004, Plaintiff received a phone call "from a person who introduced himself as Michael Bridges, Sales Representative of Stratasoft Inc." (Id. ¶ 14.) Mr. Bridges "asked plaintiff if she would be interested to finance the equipment purchase of one of their corporate clients named Touch Asia because the latter was unable to get funding directly from Stratasoft's in house financing and that Touch Asia was having a difficult time getting financing anywhere." (Id. ¶ 17.) Plaintiff informed Mr. Bridges that she was not interested. (Id. ¶ 18.) Two days later, "Mike Bridges called again and asked plaintiff what would it take to have their client Touch Asia be funded by plaintiff and that Stratasoft is willing to do anything to get the deal done." (Id. ¶ 19.) "Plaintiff still refused and stated that SRE is not a financing or lease company. Plaintiff clarified that she normally just purchases equipment and rents it to her clients for very short durations no longer than 18 months." (Id. ¶ 20.)

After several more unsuccessful attempts to negotiate a financing deal, Plaintiff was contacted by Stratasoft Sales Manager Jason Pace. (Id. ¶ 21.) "Jason Pace then induced plaintiff to do the deal." (Id.) The terms of the deal were represented to Plaintiff as follows:

SRE will purchase the equipment from Stratasoft; SRE will get all the sales documents, warranties and licenses for the hardware and software relating the Call Center Equipment, it will come with fully functioning licenses that would also be allowed for resale at any future time when necessary; SRE will rent the equipment to Touch Asia to Operate from the USA; the equipment will have a software shut off toggle or dongle remotely controlled via the internet and accessible by SRE so that Touch Asia cannot operate the equipment in the event of default; Stratasoft will deliver the equipment to Touch Asia's office in California; Touch Asia will pay rentals to SRE directly; in the event of Touch Asia's default, Stratasoft will recover the equipment from Touch Asia and resell it and the proceeds of the sale shall be given to SRE plus any balance. (Id. ¶ 22.) Plaintiff was contacted by Stratasoft Chief Financial Officer Lance McCarthy, who "further guaranteed the above mentioned scheme." (Id. ¶ 23.) "Pace, Bridges, and McCarthy all stated repeatedly to plaintiff that all that is needed to do is for SRE to give the purchase order and send the initial payment to Stratasoft and that no other agreement is necessary." (Id.)

In May and June 2004, "defendants had their US Mail Delivery Service make several picks up for the plaintiff's payments to Stratasoft using the American Express Checks of Plaintiff along with the Purchase Order amounting to $128,000.00 from the plaintiff's Soho residence in California and delivered it to the defendant Stratasoft's office in Harris County, Texas." (Id. at ¶ 26.) In June and July 2004, Plaintiff "asked Jason Pace and others in Stratasoft for the sale documents, licenses and for the software access for the 'remote access' to the equipment as guaranteed by defendants, but was informed that it will be sent through the mail after the signed off approval of the installation of the equipments." (Id. at ¶ 27.) "Plaintiff emailed a landlord waiver contract to US Colo on or about May of 2004 for the process of getting the equipment set up in US Colo's colo per Touch Asia." Plaintiff made it clear to "Haji Navroz and Rick Fisher of US Colo" that she "would not allow SRE Owned equipment that was to be rented or operated by Touch Asia or Rudy Ngaw or anyone else, or to go into US Colo's leased spaces without a signed auto release waiver." (Id. at ¶ 28.)

In May 2004, "US Colo Haji Navroz emailed the plaintiff" and informed her that "the contract was being reviewed and they have no issues." (Id. at ¶ 28.) "US Colo and Rudy Ngaw on a phone conversation asked plaintiff to relent on a waiver, instead in the furtherance to get the equipment in the closed door facility." (Id.) "Haji Navroz told the plaintiff that the paperwork was 'on its way' 'signed' so that the plaintiff would be lulled in to allowing the equipment in to the facility." (Id.) "US Colo knowingly and fraudulently conspired with Touch Asia and Stratasoft using the previous historical unlawful, containment and concealment of the Plaintiff's equipment in 2003 (seecomm VS US COLO) and SRE VS US Colo also in 2003, for stealing and harboring, aiding and abetting a theft and fraud." (Id.) "US Colo with this prior knowledge of ownership, knowingly and with clear intent to defraud and aided and abetted by 'Association in Fact' in the second of three enterprises used to defraud the plaintiff and keep, retain, conceal the equipment unlawfully using deception and lulling." (Id.) "The intent to defraud was put into action from the very beginning." (Id.)

In June 2004, "defendants shipped the equipment from Harris County, Texas to the Philippines" without Plaintiff's knowledge and consent "and with the intent to defraud the plaintiff." (Id. ¶ 30.) "To divert plaintiff's attention, another delivery was made in July of 2004 to Touch Asia's US Colo Collocation in Los Angeles" in order to "make it appear as if no fraudulent diversion of delivery was made by defendants." (Id.) The scheme "appears to be following a certain pattern which the defendants have been following all along as they seem to be smoothly and stealthily committing their fraud scheme and aiding and abetting the Interstate Transport, Transit of Stolen Goods." (Id.)

In August of 2004, Plaintiff called and emailed Rudy Gnaw at Touch Asia, "who claimed the equipment [was] in operation and already fully installed." (Id. ΒΆ 31.) Rudy Gnaw concealed the delivery locations "and any subsequent paperwork from the defendants" from Plaintiff. (Id.) "The Plaintiff expected to receive payments but she waited in vain. Touch Asia appeared to be one of ...

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