NORTH CAROLINA MUTUAL LIFE INSURANCE COMPANY v. STAMFORD BROOK CAPITAL, LLC et alREPLYM.D.N.C.February 14, 2019 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF NORTH CAROLINA, DURHAM DIVISION -----------------------------------------------------------------X NORTH CAROLINA MUTUAL LIFE INSURANCE COMPANY, Plaintiff, - v. - STAMFORD BROOK CAPITAL, LLC, FOREFRONT CAPITAL HOLDINGS, LLC, FOREFRONT CAPITAL SERVICES, LLC, FOREFRONT PARTNERS SHORT TERM NOTES, LLC, PORT ROYAL REASSURANCE COMPANY SPC, LTD., SUMMIT TRUST COMPANY, BRADLEY REIFLER, MICHAEL FLATLEY, DAVID WASITOWSKI and FF SULLY PARTNERS, LP, Defendants. -----------------------------------------------------------------X Case No. 1:16-cv-1174 DEFENDANT DAVID WASITOWSKI’S REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF HIS MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO TRANSFER VENUE DAVID WASITOWSKI 5 Laga Court Ringoes, New Jersey 08551 Tel: (908) 392-4455 Email: david@wasitowski.com Defendant pro se Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 1 of 13 1 I. INTRODUCTION Defendant David Wasitowski (“Wasitowski”), acting pro se, submits this reply memorandum of law in further support of his motion to dismiss or, in the alternative, to transfer venue. As shown here and in Wasitowski’s moving papers, the case should be dismissed or, in the alternative, transferred to the SDNY. II. ARGUMENT A. NCM Has Not Timely Served Wasitowski 1. NCM Failed to Serve Wasitowski in August 2018 As permitted by FRCP 4(e)(1), plaintiff North Carolina Mutual Life Insurance Company (“NCM”) attempted to serve Wasitowski with the summons and amended complaint under state law by sending it via Federal Express to Wasitowski’s purported residence address pursuant to North Carolina Rule of Civil Procedure (“NCRCP”) 4(j)(1)(d), which provides that “the manner of service of process within or without the State” on an individual shall be made by “depositing with a designated delivery service authorized pursuant to 26 U.S.C. § 7502(f)(2) a copy of the summons and complaint, addressed to the party to be served, delivering to the addressee, and obtaining a delivery receipt.” N.C. R. Civ. Proc. 4(j)(1)(d) (emphasis added). NCM attempts to rebut Wasitowski’s evidence that he moved from the address in Califon, New Jersey to which NCM sent process prior to service with the irrelevant point that Wasitowski’s wife owns the Califon residence. Who owns the property is irrelevant. Who lives there is what matters. Wasitowski lived at the Califon residence until the end of July 2018 and permanently moved to his current address in Ringoes, New Jersey before NCM attempted service at the Califon residence. Reply Declaration of David Wasitowski (“Wasitowski Reply Decl.”) ¶ 2. Wasitowski’s wife rented out the Califon residence to an unrelated tenant, who was living there when NCM sent the summons and amended complaint. Wasitowski Reply Decl. ¶ 3. Wasitowski does not know “E. Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 2 of 13 2 Witinski,” the person who purportedly signed for the Federal Express envelope, and never appointed “E. Witinski” as his agent for any purpose. Wasitowski Reply Decl. ¶¶ 4-5. As for Gregory Smith, the attorney acting for Wasitowski for the limited purpose of negotiating a potential resolution and/or an agreement regarding service, he, too, was not appointed to accept service on Wasitowski’s behalf. Wasitowski Reply Decl. ¶ 6; 1 Moore's Federal Practice - Civil § 4.93 (2018) (“An attorney accepting service on behalf of a defendant, like any other agent, must be specifically appointed for the purpose of accepting service ….”). Contrary to NCM’s insinuation, therefore, Mr. Smith’s notice of the claims against Wasitowski cannot cure NCM’s failure to serve process on Wasitowski by a method not in substantial compliance with the law. Cf. Bizrobe Trust v. InoLife Techs. Inc., No. 17 CVS 306, 2019 NCBC LEXIS 3, at *14 (Forsyth Co. Super. Ct. Jan. 9, 2019) (rejecting argument that motion to quash service by defendant’s attorney established defendant’s receipt of service, since that would require denial of every motion to quash service). It is NCM’s burden under NCRCP 4(j)(1)(d) to demonstrate that process was “deliver[ed] to the addressee”; it is not Wasitowski’s burden to establish process never reached him. Id., 2019 NCBC LEXIS 3, at *12. Wasitowski has shown - and NCM does not contest - that process was delivered to his former residence address and signed for by an unknown person. “[S]ervice on [an] unidentified individual does not satisfy the … requirement of ‘delivering to the addressee.’” See id., 2019 NCBC LEXIS 3, at *15. NCM’s attempted service in August 2018 failed. 2. NCM’s Late Service of Process in December 2018 was Ineffective NCM does not contest that personal service of process on Wasitowski at his workplace in December 2018 occurred five weeks after expiration of FRCP 4(m)’s 90-day time limit. Instead, NCM seeks to excuse late service by claiming one of its lawyers was in trial and Wasitowski breached an imaginary “agreement to agree” on a date of (presumably timely) service. Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 3 of 13 3 NCM has not moved to extend the time to serve Wasitowski. FRCP 6(b)(1)(B), however, requires a formal motion if a party seeks to extend a deadline that has already passed. Fed. R. Civ. Proc. 6(b)(1)(B) (“When an act may or must be done within a specified time, the court may, for good cause, extend the time … on motion made after the time is expired if the party failed to act because of excusable neglect.”) (emphasis added); see also Martinez v. U.S., 578 Fed. App’x 192, 194 (4th Cir. 2014) (plaintiff seeking extension of FRCP 4(m)’s limit to serve complaint following expiration of the time limit must move and show “excusable neglect”). In addition, this Court’s Local Rules require that “[a]ll motions for an extension of time to perform an act required or allowed to be done within a specified time must comply with Fed.R.Civ.P. 6(b) and show prior consultation with opposing counsel and the views of opposing counsel.” M.D.N.C. Local Rule 6.1(a) (emphasis added). NCM has not moved to extend its time to serve the amended complaint beyond FRCP 4(m)’s deadline, nor has it consulted with Wasitowski prior to requesting this Court to extend the deadline as required by Local Rule 6.1(a). Wasitowski Reply Decl. ¶ 8. In any event, “‘a party that fails to act with diligence will be unable to establish that [its] conduct constituted excusable neglect.’” Martinez, 578 Fed. App’x at 194 (quoting Robinson v. Wix Filtration Corp., LLC, 599 F.3d 403, 413 (4th Cir. 2010)). NCM spins a fanciful tale to excuse its failure to timely serve Wasitowski. As Wasitowski has established, NCM’s counsel, Turner Broughton, rejected Wasitowski’s offer to execute a waiver and acknowledgement of service, its New York counsel failed to discuss service at the parties’ October 3, 2018 meeting and Mr. Broughton ignored Mr. Smith’s October 12, 2018 inquiry regarding service for seven weeks. In the meantime, FRCP 4(m)’s 90-day deadline to serve the amended complaint expired on October 31, 2018. Mr. Broughton waited another four weeks after expiration of the service deadline before contacting Mr. Smith about service, claiming to this Court that he was busy with a “multi-week trial.” Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 4 of 13 4 Mr. Broughton, however, is not a solo practitioner. He is a partner in a large, full-service firm that has 43 attorneys in its Raleigh, North Carolina office alone. See https://www. williamsmullen.com/offices/raleigh-nc (accessed Feb. 5, 2019). In addition, NCM has three additional Williams Mullen attorneys representing it in this action beyond Mr. Broughton, one of whom, per local rule, must serve as the responsible attorney in this action.1 None of NCM’s other attorneys has provided any excuse whatsoever for failing to timely serve Wasitowski. Mr. Broughton’s busy workload is irrelevant for another reason: “the professional commitments and busy caseload of an attorney are not ordinarily grounds for finding excusable neglect.” Morris-Belcher v. Housing Auth. of the City of Winston-Salem, No. 1:04CV255, 2005 WL 1423592, at *4 (M.D.N.C. June 17, 2005); see also Thompson v. E.I. DuPont de Nemours & Co., 76 F.3d 530, 533-34 (4th Cir.1996) (“The most important of the factors identified … for determining whether ‘neglect’ is ‘excusable’ is the reason for the failure to file.”); McLaughlin v. City of LaGrange, 662 F.2d 1385, 1387 (11th Cir.1981) (counsel’s busy practice “does not establish ‘excusable neglect’ under Rule 6(b)(2)”). As for the claim that Mr. Broughton and Mr. Smith had “agreed to agree” on Wasitowski’s acceptance of service, NCM well knows there is no such creature in the law as an “agreement to agree.” See, e.g., Evans v. Plusone Sports, LLC, No. 1:15-cv-683, 2015 WL 2901553, at *2 (E.D. Va. May 16, 2016) (an “agreement to agree” leaves material terms unspecified and is unenforceable). Here, Mr. Broughton and Mr. Smith could not reach agreement on the single most crucial term - Wasitowski’s time to respond to the amended complaint. Without agreement on this 1 Mr. Broughton is not listed as admitted to practice before this Court. Thus, his appearance herein must be pursuant to Local Rule 83.1(d). M.D.N.C. Local Rule 83.1(d)(1) (attorney not admitted to bar of this Court may make special appearance in association with admitted attorney). Under that rule, however, Mr. Broughton cannot serve as the lawyer ultimately responsible for managing the case on NCM’s behalf. An attorney admitted to practice before this Court must fulfill that role. See id. 83.1(d)(2). Accordingly, Mr. Broughton’s alleged inability to pay attention to the service deadline is irrelevant. Lauren Fussel and Michael Kapp, two of the other Williams Mullen attorneys appearing herein on NCM’s behalf, are admitted to the bar of this Court. Under Local Rule 83.1(d)(2), therefore, one of them is the responsible attorney herein. Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 5 of 13 5 point, there could be no “agreement” regarding service. Reply Declaration of Gregory L. Smith ¶ 5. Because NCM did not serve Wasitowski within the 90-day limit established by FRCP 4(m) and has not established “excusable neglect” (or even moved to extend the time for service as required by FRCP 6(b) and local rule), Wasitowski’s motion to dismiss for lack of timely service should be granted. B. Venue Is Improper In This District 1. No Venue exists under 28 U.S.C. § 1391 NCM rests its claim of venue pursuant to 28 U.S.C. section 1391(b) on the argument that Wasitowski’s attendance at a December 2014 meeting in North Carolina between NCM executives, Michael Flatley (representing one or more of the Forefront entities named as defendants herein) and Steven Fickes (representing defendant Port Royal Reassurance Company SPC, Ltd. (“Port Royal”)), establishes that this district is one in which “a substantial part of the events or omissions giving rise to the claim occurred ….” 28 U.S.C. § 1391(b). This argument fails. Wasitowski established in his moving papers that he attended the North Carolina meeting at the request of defendant Bradley Reifler (“Reifler”) for the sole purpose of pitching a proposal on behalf of Forefront Capital Markets, LLC (“FCM”), an entity not named herein or otherwise involved in the underlying transactions, to offer investment advisory services to NCM’s insureds. Wasitowski Decl. ¶ 18. Wasitowski quickly learned that NCM was not interested in his proposal, and he simply sat in on the meetings between the others as a spectator. Id. Indeed, Wasitowski had nothing to add, since he knows nothing about insurance or reinsurance and even had to Google the term “reinsurance” following the meetings to learn its meaning. Wasitowski Reply Decl. ¶ 7. Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 6 of 13 6 On this evidence, NCM brazenly asserts that “Wasitowski admits [sic] that he came to North Carolina Mutual’s office, located in Durham, North Carolina, in December 2014 to participate in a pitch to company executives to transfer business and assets.” Plaintiff’s Response in Opposition to Wasitowski’s Motion to Dismiss or Transfer Venue (“NCM Opp.”) [ECF Dkt. No. 160] at 6 (emphasis added). In fact, as noted, Wasitowski’s declaration to which NCM cites for this assertion “admits” nothing of the sort. See Declaration of David Wasitowski in support of Motion to Dismiss or Transfer ¶ 18 (“I quickly learned that NCM had its own investment advisory services, so there were no opportunities for FCM. While I sat in on other meetings between Flatley and NCM representatives, I made no substantive contributions to those discussions.”). In the amended complaint’s seventy pages, the only allegation about the meeting in North Carolina that Wasitowski attended is the following statement: [o]n or about December 17, 2014, Wasitowski, Flatley, and Fickes traveled to Durham, North Carolina in order to meet with senior executives of North Carolina Mutual to, inter alia, persuade North Carolina Mutual to change its reinsurer from Markel to Port Royal in order to gain access to, and control over, the Trust Assets. Amended Complaint ¶ 37, at 9. Furthermore, NCM states no claims against Wasitowski - such as fraudulent inducement or fraudulent misrepresentations - based on anything Wasitowski allegedly said or did at the North Carolina meeting. Instead, the thrust of the amended complaint concerns defendants’ alleged theft or misinvestment of funds entrusted to them in New York, which wrongful acts were allegedly taken in New York after NCM entered into the operative agreements in April 2015, five months after the North Carolina meeting. In response to Wasitowski’s declaration setting forth his utter lack of substantive participation in the meetings, NCM simply points to the threadbare, conclusory allegations of its amended complaint and offers zero evidence with its opposition to contradict Wasitowski’s detailed averments. NCM has failed to meet its burden to establish venue under 28 U.S.C. section 1391(b). Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 7 of 13 7 2. The “Ends of Justice” do not support Venue under 15 U.S.C. 1965(b) NCM urges the Court to find venue under 15 U.S.C. section 1965(b), which provides an alternative venue for RICO claims where “it is shown that the ends of justice require that other parties residing in any other district be brought before the court ….” 15 U.S.C. § 1965(b). NCM asserts “the ends of justice” require finding venue in this district for its RICO claims against Wasitowski to promote “judicial efficiency and economy” and avoid delay. NCM Opp. at 8.2 It is clear, however, that “Congress intended the ‘ends of justice’ provision to enable plaintiffs to bring all members of a nationwide RICO conspiracy before a court in a single trial.” Butcher's Union Local No. 498, United Food & Commercial Workers v. SDC Inv., Inc., 788 F.2d 535, 539 (9th Cir. 1986) (emphasis added); see also Monarch Normandy Square Partners v. Normandy Square Assocs. Ltd. P’ship, 817 F. Supp. 899, 905 (D. Kan. 1993) (same), cited in NCM Opp. at 7-8. Here, only three defendants remain in the case - Reifler, Wasitowski and Port Royal. Reifler resides and works in New York, and Wasitowski and Port Royal transact business in New York. Each of them is amenable to personal jurisdiction in the SDNY, and venue lies there under both 28 U.S.C. section 1391(b) and 15 U.S.C. section 1965(a). See, e.g., Southmark Prime Plus, L.P. v. Falzone, 768 F. Supp. 487, 491 (D. Del. 1991) (holding “ends of justice” not served “if there is a district where venue is proper as to every RICO defendant, without resort to § 1965(b)”). The Court should also consider additional factors - for instance, inconvenience to parties and witnesses, almost all of whom are in New York, of litigating in this district. Southmark Prime, 768 F. Supp. At 491. Also relevant is the existence of related litigation in another district and whether litigating in a different district would avoid a multiplicity of lawsuits. Wood v. Barnette, Inc., 648 F. Supp. 936, 940 (E.D. Va. 1986) (“In deciding what ‘the interests of justice’ require, 2 Although NCM now urges that the “ends of justice” require venue to be found in this district, it did not even bother to cite any of the RICO Act’s venue provisions in its amended complaint. See Amended Complaint ¶ 13 (alleging venue solely on the basis of 28 U.S.C. § 1391(b)(2)). Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 8 of 13 8 avoiding a multiplicity of litigation is an important factor.”). NCM’s amended complaint acknowledges that NCM has been litigating against Reifler in the SDNY Bankruptcy Court for almost two years relating to these claims. Amended Complaint ¶¶ 247-258. Further, Wasitowski has shown he intends to file claims against numerous parties who cannot be sued here but can be sued in the SDNY. It would hardly serve the “ends of justice” to force Wasitowski to litigate far away from home in this district and litigate in the SDNY against other parties who cannot be sued here, while forcing almost all relevant witnesses to travel from New York to North Carolina. In short, this is not a case involving dozens of defendants in multiple districts in a “nationwide” conspiracy, the situation section 1965(b) was intended to reach. Simply put, venue does not lie in this district under 15 U.S.C. section 1965(b), either. C. Alternatively, Wasitowski’s Motion To Transfer Venue Should Be Granted If the Court finds venue is improper in this district, it should dismiss the case pursuant to 28 U.S.C. section 1406(a), because NCM had no basis to file in this district to begin with. See, e.g., Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1201 (4th Cir.1993) (dismissal appropriate where plaintiff made obvious error in choosing original venue). If the Court declines to dismiss, or finds that venue lies in this district, it should transfer the case to the SDNY under 28 U.S.C. sections 1404(a) or 1406(a). NCM argues as if no factors balance in Wasitowski’s favor to justify transfer under section 1404(a), ignoring the authority Wasitowski cited establishing that (a) transfer is appropriate where most parties and witnesses are located (NCM identifies no witnesses in this district), (b) transfer to the district where the operative events occurred is favored, (c) transfer would avoid burdening Wasitowski (and the court system) with two actions in two distant districts when Wasitowski sues other potentially liable parties and (d) NCM’s choice of forum carries diminished weight because Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 9 of 13 9 almost no operative events occurred in this district. In fact, like most cases in which a party requests transfer, there are considerations pulling in both directions. The factors pulling toward the SDNY are clearly far stronger. As between Wasitowski and NCM, Wasitowski is far less able to bear the expense, and manage the procedural and logistical difficulties, that come with litigating away from home. NCM may be in receivership, but it has had the funds to litigate against Reifler in the SDNY for nearly two years represented by a large firm while also litigating here represented by a large firm. Wasitowski cannot afford counsel here or in New York, much less retain counsel in both districts. NCM provides zero evidence why it cannot afford to continue as before, with New York counsel representing it in further litigation in the SDNY on materially identical claims. Finally, NCM grossly exaggerates how far this case has progressed and how deeply the Court has considered the merits. While this matter has been pending since September 23, 2016, it was stayed from January 2017 [see ECF Dkt. No. 47] until April 2018 [see ECF Dkt. No. 79] while the parties argued over the effect of Reifler’s bankruptcy proceeding in the SDNY and entered into a settlement that fell apart. Most defendants have defaulted, pleading on NCM’s amended complaint is not even closed and the parties have yet to start discovery. Little would be lost by transfer to the SDNY. Accordingly, if the Court declines to dismiss, it should at minimum transfer the action to the SDNY. Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 10 of 13 10 III. CONCLUSION For the foregoing reasons, Wasitowski’s motion to dismiss should be granted for lack of venue and/or failure to timely serve him. If the Court declines to dismiss the action, however, it should grant Wasitowski’s motion to transfer this action to the SDNY. Dated: February 14, 2019 DAVID WASITOWSKI ____/s/ David Wasitowski_______ David Wasitowski 5 Laga Court Ringoes, New Jersey 08551 Tel: (908) 392-4455 Email: david@wasitowski.com Defendant pro se Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 11 of 13 11 CERTIFICATE OF WORD COUNT Pursuant to Local Rule 7.3(d)(1), I hereby certify that the accompanying reply brief contains 3,082 words, exclusive of the caption page and signature lines, as tallied by the word-count feature of the word-processing system used to prepare the brief. Dated: February 14, 2019 DAVID WASITOWSKI ____/s/ David Wasitowski_______ David Wasitowski 5 Laga Court Ringoes, New Jersey 08551 Tel: (908) 392-4455 Email: david@wasitowski.com Defendant pro se Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 12 of 13 12 CERTIFICATE OF SERVICE The undersigned hereby certifies that on February 14, 2019, the foregoing memorandum of law, together with the reply declarations filed herewith, was served upon each party or that party's counsel of record by electronically filing the same with the Clerk of Court using the Court’s CM/ECF system, which sends electronic notice of each filing to all counsel of record and parties that have made an appearance in this civil action, all of whom are registered users of the CM/ECF system. No paper copies of the foregoing documents have been served on any of the parties who have failed to appear following service of the summons and amended complaint, as the Clerk has entered default against them, and they are no longer entitled to service. Dated: February 14, 2019 DAVID WASITOWSKI ____/s/ David Wasitowski_______ David Wasitowski 5 Laga Court Ringoes, New Jersey 08551 Tel: (908) 392-4455 Email: david@wasitowski.com Defendant pro se Case 1:16-cv-01174-LCB-JEP Document 168 Filed 02/14/19 Page 13 of 13