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Case 2:15-cv-05265-SDW-LDW Document 24 Filed 04/12/16 Page 1 of 9 PageID: <pageID> NOT FOR PUBLICATION UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY SOON DUK PARK, Case: 2:15-cv-05265-SDW-SCM Plaintiff, OPINION v. HEE NAM BAE, MYUNG SOO BAE a/k/a MYUNG SOO AHN, DAEKYUNG BAE, HOYLE LEE, JUNG WON PARK, MUN April 12, 2016 YOUNG YOO a/k/a TONY YOO, PRISCA LEIGH, JUNG HWA KIM a/k/a SOPHIA KIM, YOUNG TAI CHOI, KI SOOK CHOI, YOO LIM HWANG, DAEYUN LIM, BIG CONTINENT, INC., BIG PROPERTIES HANA, LCC, 2027 FIRST AVENUE, LLC, BKL CAPITAL, INC., ABC COMPANIES 1 THROUGH 10, and JOHN DOES AND JANE DOES, Defendants. WIGENTON, District Judge. Before this Court is a Motion to Dismiss plaintiff Soon Duk Park’s (“Plaintiff”) Amended Complaint for lack of subject-matter jurisdiction pursuant to FEDERAL RULE OF CIVIL PROCEDURE (“Rule”) 12(b)(1) and for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6) filed by defendants Hee Nam Bae (“Bae”), Myung Soo Bae a/k/a Myung Soo Ahn, Daekyung Bae, Hoyle Lee, Jung Won Park, Mun Young Yoo a/k/a Tony Yoo, Prisca Leigh, Jung Hwa Kim a/k/a Sophia Kim, Young Tai Choi, Ki Sook Choi, Yoo Lim Hwang, Daeyun Lim, BIG Continent, Inc. (“BIG”), BIG Properties Hana, LLC, 2027 First Avenue, LLC, and BKL Capital, 1 Case 2:15-cv-05265-SDW-LDW Document 24 Filed 04/12/16 Page 2 of 9 PageID: <pageID> Inc. (collectively, “Defendants”). For the reasons stated herein, the Motion to Dismiss is GRANTED. BACKGROUND AND PROCEDURAL HISTORY Plaintiff claims to be a shareholder of BIG, a company she alleges is run by Bae. (Am. Compl. ¶¶ 1, 74.) According to Plaintiff, Defendants carried out a scheme to defraud unsuspecting members of the Korean-American community in the Tri-State area by convincing them to invest in New York real estate through BIG. (Id. at ¶ 21.) Plaintiff alleges that Bae and the remaining defendants conducted seminars and personal meetings where they misrepresented that BIG had $4,000,000 in capital, was targeting lucrative real estate projects in New York, and had already secured other investors, in an effort to induce Plaintiff and others to invest with BIG. (Id. at ¶¶ 22-37; Dkt. No. 1, Declaration of Soon Duk Park (“Park Decl.”) ¶¶ 18-21.) Plaintiff alleges that Bae failed to provide her with an investment agreement, bylaws, proof of incorporation, investor questionnaire, or details of the plan to purchase New York real estate. (Park Decl. ¶ 24.) She also alleges that she invested $110,000 with BIG over a period of several years, but that her investment funds were not used to purchase real property in BIG’s name.1 Instead, she contends, the funds were used to purchase property in the names of other corporate entities without informing investors. (Am. Compl. ¶¶ 38-40.) When Plaintiff invested, she received BIG stock certificates reflecting her five separate investments—(i) two shares in Plaintiff’s name on January 28, 2011, (ii) one share in the name of Jiho Lee on August 22, 2011, (iii) one share in the name of Guho Lee on August 22, 2011, (iv) nine shares in Plaintiff’s name 1 Regarding her investment, Plaintiff inconsistently claims (1) that she never received dividends or the return of her investment, (2) that she sold her interests at a price below market value, and (3) that she sold back some of her shares and received checks from BIG. Plaintiff also incorrectly states that she attached her refund checks to her Declaration as Exhibit E. (Park Decl. ¶¶ 53, 71.) 2 Case 2:15-cv-05265-SDW-LDW Document 24 Filed 04/12/16 Page 3 of 9 PageID: <pageID> on March 31, 2012, and (v) one share in Plaintiff’s name on January 16, 2013.2 (Dkt. No. 1, Ex. B.) Plaintiff filed her Complaint on July 7, 2015. (Dkt. No. 1.) On the same day, this Court denied Plaintiff’s application for injunctive relief, a temporary restraining order, and an asset freeze. (Dkt. No. 3.) On August 14, 2015, Defendants moved to dismiss Plaintiff’s Complaint pursuant to Rules 12(b)(1) and 12(b)(6). (Dkt. No. 4.) On September 3, 2015, Plaintiff filed both a brief in opposition to the motion and an Amended Complaint.3 (Dkt. Nos. 6-7.) The filing of the Amended Complaint rendered Defendants’ motion moot, and the motion to dismiss was withdrawn without prejudice. (Dkt. No. 8.) The Amended Complaint alleges fifteen counts. Against all defendants, Plaintiff alleges violations of §§ 12(a)(2) and 17(a) of the Securities Act of 1933 (the “1933 Act”) (Counts One and Two, respectively), conspiracy to defraud by false representation (Count Four), fraud (Count Five), embezzlement (Count Seven), conversion (Count Eight), unjust enrichment (Count Nine), interference with prospective economic advantage (Count Eleven), violation of New Jersey Racketeer Influenced and Corrupt Organizations Act (“NJ RICO”), N.J.S.A. § 2C:41-1, et seq. (Count Thirteen), conspiracy to violate NJ RICO (Count Fourteen), and violation of New Jersey Consumer Fraud Act (“NJCFA”) (Count Fifteen). (Am. Compl. ¶¶ 61-72, 77-84, 89-96, 116-126.) Against all individual defendants, Plaintiff alleges aiding and abetting fraud (Count Six). (Id. at ¶¶ 85-88.) Against Bae, Plaintiff alleges violation of § 15(a) of the 1933 Act (Count Three) and shareholder oppression (Count Twelve). (Id. at ¶¶ 73-76, 107-115.) Against Bae, Hoyle Lee, 2 Plaintiff asserts that she has bought two shares since January 2013, but this contention is not supported by Plaintiff’s attached stock certificates (Dkt. No. 21 at 7; Dkt. No. 1, Ex. B.) 3 Plaintiff’s Amended Complaint adds two new paragraphs, (¶¶ 29 and 30), which allege that Bae used written materials to induce investors, and one new cause of action against Bae for a violation of § 15(a) of the Securities Act of 1933 (Count Three), (¶¶ 73-76). 3 Case 2:15-cv-05265-SDW-LDW Document 24 Filed 04/12/16 Page 4 of 9 PageID: <pageID> Daekyung Bae, Jung Won Park, and Young Tai Choi, Plaintiff alleges breach of fiduciary duty (Count Ten). (Id. at ¶¶ 97-101.) Defendants filed the pending Motion to Dismiss pursuant to Rules 12(b)(1) and 12(b)(6) on October 9, 2015. (Dkt. No. 17.) Plaintiff filed her opposition on November 2, 2015, and Defendants filed their reply on November 9, 2015. (Dkt. Nos. 21, 23.) LEGAL STANDARD Rule 12(b)(6) Defendants move to dismiss the federal claims under Rule 12(b)(6). Pursuant to Rule 8(a)(2), an adequate complaint must be “a short and plain statement of the claim showing that the pleader is entitled to relief.” This Rule “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted); see also Phillips v. Cty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (stating that Rule 8 “requires a ‘showing,’ rather than a blanket assertion, of an entitlement to relief”). In considering a Motion to Dismiss under Rule 12(b)(6), the Court must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips, 515 F.3d at 231 (external citation omitted). However, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Rule 12(b)(1) 4 Case 2:15-cv-05265-SDW-LDW Document 24 Filed 04/12/16 Page 5 of 9 PageID: <pageID> Defendants move to dismiss the state law claims for lack of subject matter jurisdiction under Rule 12(b)(1). A motion to dismiss pursuant to Rule 12(b)(1) challenges the existence of a federal court's subject matter jurisdiction. “When subject matter jurisdiction is challenged under Rule 12(b)(1), the plaintiff must bear the burden of persuasion.” Symczyk v. Genesis HealthCare Corp., 656 F.3d 189, 191 n. 4 (3d Cir.2011) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir.1991)). In considering a Rule 12(b)(1) motion, “the district court may not presume the truthfulness of plaintiff's allegations, but rather must ‘evaluat[e] for itself the merits of [the] jurisdictional claims.’ ” Hedges v. United States, 404 F.3d 744, 750 (3d Cir.2005) (citing Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977)). DISCUSSION Sections 12(a)(2) and 15(a) Claims (Counts One and Three, respectively) To state a claim under § 12(a)(2) of the 1933 Act, a plaintiff “must allege that [she] purchased securities pursuant to a materially false or misleading ‘prospectus or oral communication.’” In re Adams Golf, Inc. Sec. Litig., 381 F.3d 267, 273 (3d Cir. 2004) (quoting 15 U.S.C.A. § 77l). In Gustafson v. Alloyd Co., in order to construe the term consistently throughout the 1933 Act, the Supreme Court defined “prospectus” as used in § 12(a)(2) to have the same meaning as “prospectus” as used in § 10 of the 1933 Act, which is a document that “contain[s] the information contained in the registration statement.” 513 U.S.