579 F.Supp.3d 685
E.D. Pa.2022Background
- One World, LLC (Delaware) was formed by Gabriel Chaleplis (U.K. citizen) to invest in U.S./Greek opportunities; Karloutsos (MAK) and James Rodgers (attorney and related entities) acted as trusted advisers.
- Between March and December 2018 Chaleplis contributed roughly €10.75 million (~$12M) to One World for a Greek medicinal-cannabis venture; substantial sums were wired into Rodgers’ Citizens Bank IOLTA account for transfer.
- Plaintiffs allege defendants (with nonparty Onoufriadis) routed funds through Greek entities (Conmave, Bioprocann, Leadercann, Hellascann) and then to U.S. accounts controlled by Rodgers and Karloutsos, who converted roughly $9M for personal use.
- Plaintiffs assert 13 state-law counts (conversion, conspiracy, aiding/abetting, fiduciary breaches, unjust enrichment, accounting, constructive trust, declaratory relief, alter ego, fraud).
- Defendants moved on multiple grounds: lack of personal jurisdiction, failure to state claims (Rule 12(b)(6)), misjoinder/nonjoinder (Rule 19), transfer (28 U.S.C. § 1404), motions to strike, and sanctions.
- The Court denied Karloutsos’s jurisdictional motion, denied most dismissal/transfer/sanctions motions, struck constructive trust as a standalone claim, dismissed declaratory-judgment count with prejudice, and dismissed alter-ego and fraud counts without prejudice with leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over Karloutsos | Karloutsos knowingly participated in a conspiracy and funds were transferred through Rodgers’ Citizens Bank IOLTA account in Pennsylvania | Karloutsos moved to VA and lacks sufficient contacts with PA for general or specific jurisdiction | Specific jurisdiction exists; 12(b)(2) denied (prima facie showing of purposeful direction via transfers and co-conspirator conduct) |
| Conversion / Conspiracy / Aiding & Abetting Conversion | Money was misappropriated via specific transfers; conspiracy and concerted conduct alleged | Transfers not traceable to plaintiffs; aiding/abetting conversion not a recognized tort | Conversion and conspiracy survive; aiding/abetting construed as concerted tortious conduct under Pennsylvania law and survives |
| Breach of fiduciary duties (loyalty, care, usurpation) | Informal/trust-based fiduciary relationship arose from plaintiffs’ reliance on defendants’ special influence | No formal office/agency = no fiduciary duty | Plaintiffs plausibly pled fiduciary relationship; fiduciary claims survive 12(b)(6) |
| Declaratory judgment (title to defendants’ residences) | Plaintiffs seek adjudication that misappropriated funds made them rightful owners | Insufficient tracing and properties bought with mortgages; at most recover down payment amount; duplicative of other remedies | Count XI dismissed with prejudice (insufficient pleading and futility) |
| Alter-ego / veil piercing | Corporate forms were disregarded, funds commingled, entities undercapitalized | Plaintiffs plead only conclusions, not factual examples of commingling or failure of formalities | Alter-ego claim dismissed without prejudice; leave to amend (conclusory pleading insufficient) |
| Fraud (fraud in inducement) | Defendants misrepresented the venture and concealed siphoning of funds | Complaint fails to identify particularized false statements, dates, or who said what | Fraud claim dismissed without prejudice for failure to satisfy Rule 9(b) particularity; leave to amend |
| Constructive trust as independent claim | Plaintiffs seek constructive trust over defendants’ assets and residences | Constructive trust is an equitable remedy, not an independent cause of action | Count X stricken under Rule 12(f) as redundant/remedial only |
| Rule 19 joinder / transfer / sanctions | (Defs) Nonparty Onoufriadis is necessary/indispensable; venue should be SDNY; sanctions for plaintiffs’ tactics | Plaintiffs not required to join joint tortfeasor; forum has PA contacts; sanctions premature | Rule 19 dismissal denied (Onoufriadis not indispensable); motion to transfer denied; sanctions denied |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim to survive Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (courts need not accept legal conclusions as true on a Rule 12(b)(6) motion)
- Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93 (3d Cir. 2004) (prima facie standard for personal jurisdiction where court declines an evidentiary hearing)
- O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312 (3d Cir. 2007) (three-part test for specific personal jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment and minimum contacts principles for personal jurisdiction)
- HRANEC Sheet Metal, Inc. v. Metalico Pittsburgh, Inc., 107 A.3d 114 (Pa. 2014) (adoption of Restatement §867 for concerted tortious conduct)
- Marion v. Bryn Mawr Trust Co., 253 A.3d 682 (Pa. Super. Ct. 2021) (recognizing aiding/abetting claims as concerted tortious conduct)
- Lomando v. United States, 667 F.3d 363 (3d Cir. 2011) (Rule 19 does not require joinder of joint tortfeasors)
- Bank of Am. Nat. Tr. & Sav. Ass’n v. Hotel Rittenhouse Assocs., 844 F.2d 1050 (3d Cir. 1988) (claims for contribution from absent parties do not render them indispensable)
- Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786 (3d Cir. 1984) (Rule 9(b) requires particularity in pleading fraud)