B Choice Limited v. Epicentre Development Associates, LLC
4:14-cv-02096
S.D. Tex.Mar 3, 2017Background
- B Choice Ltd. invested in the planned "EpiCentre Houston" development on the former AstroWorld site, initially subscribing $11,000,000 for a 10% interest in EpiCentre Development Associates, LLC (EDA) in July 2008.
- EDA used most funds to obtain a limited partnership interest in the land owner (H8W); Plaintiff did not receive title and later lost its investment when H8W transferred the property to a new owner to avoid foreclosure in 2010.
- Between 2010–2013, parties exchanged multiple memoranda and emails about new investors, financing, and phased land acquisitions; Plaintiff later extended a €200,000 loan and a $13,650,000 credit facility to EDA.
- Key defendants include Frattini, Guiduzzi (director of Plaintiff), EDA principals (Delaney, Botero, Iragorri), and related entities (Vantage/Vanguard/VPC, EDA II, PLG/F&G). Allegations include fraud, RICO, civil conspiracy, breach of fiduciary duty, breach of contract, and veil piercing.
- Evidence shows contested facts: (1) Guiduzzi learned in May 2010 that the $11,000,000 was lost; (2) emails and auditor letters indicate deliberate efforts to conceal that loss from Siusi S.p.A./Plaintiff; (3) funds were diverted to overhead and other entity debts; (4) an 11.34-acre parcel was later mortgaged and sold.
- The magistrate judge recommends denying summary judgment for Frattini, the EpiCentre Defendants, PLG, and Guiduzzi, finding genuine fact disputes on statute-of-limitations tolling, fraud, RICO/conspiracy, fiduciary duties, veil piercing, and personal liability issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claims tied to the $11,000,000 are time-barred | Tolling by fraudulent concealment; Guiduzzi's knowledge should not be imputed to Plaintiff because Guiduzzi acted adversely | Plaintiff (through Guiduzzi) knew of loss by May 2010; limitations should run | Denied: factual dispute whether Guiduzzi's knowledge is imputed and whether concealment tolled limitations |
| Whether defendants committed common-law and statutory fraud (multiple transactions) | Defendants misrepresented use/value of funds, concealed losses, and induced additional loans | Defendants say Plaintiff knew risks/structure and cannot show detrimental reliance or falsity | Denied: genuine issues of material fact on misrepresentations, reliance, and intent for the $11M, €200k, and $13.65M transactions |
| Whether RICO and civil conspiracy claims survive summary judgment | Pattern of mail/wire fraud, money laundering, travel-act predicates and coordinated concealment support RICO and conspiracy | Defendants argue no meeting of minds, no unlawful agreement, and RICO fails if fraud claims fail | Denied: jury issues exist on predicate acts, continuity, agreement, overt acts, and damages |
| Whether corporate veil should be pierced and officers made personally liable | Entities used to move funds, perpetrate fraud; EDA officers/directors abused corporate form; post-forfeiture liability under Tex. Tax Code alleged | Defendants assert corporate separateness and that debts were incurred pre-forfeiture so no personal liability | Denied (summary judgment): factual disputes on actual fraud, alter-ego use of entities, and timing of debts preclude judgment; personal liability under tax statute not found as a matter of law |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (establishes summary judgment burden-shifting framework)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (standard for assessing genuine disputes of material fact)
- Little v. Smith, 943 S.W.2d 414 (Tex. 1997) (fraud limitations accrual—runs when party knew or should have known of misrepresentation)
- Askanase v. Fatjo, 130 F.3d 657 (5th Cir. 1997) (imputation of knowledge to a corporation and exception for fraudulent agents)
- Borderlon v. Peck, 661 S.W.2d 907 (Tex. 1983) (fraudulent concealment tolling and equitable estoppel)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (RICO private-right-of-action and proximate causation principles)
- Castleberry v. Branscum, 721 S.W.2d 270 (Tex. 1986) (standards for piercing the corporate veil; constructive fraud in tort context)