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GUBITOSI v. ZEGEYE

October 23, 1996

DAVID GUBITOSI et al., Plaintiffs
v.
YONAS ZEGEYE, et al., Defendants.



The opinion of the court was delivered by: JOYNER

 Joyner, J.

 October 23, 1996

 INTRODUCTION

 Plaintiffs, limited partners in the Lehigh Valley Physicians Imaging Center ("Lehigh Valley"), have brought this federal question action pursuant to 28 U.S.C. § 1331 in their individual capacities, and on behalf of Lehigh Valley. Plaintiffs allege violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), as codified in 18 U.S.C.A. § 1961 et seq, and pendent claims.

 Defendants Lauren B. Angstadt, ("Angstadt"), and Ross B. Steckel, ("Steckel"), are limited partners of Lehigh Valley. Defendant ZPR Investments, Inc. ("ZPR") is the general partner of Lehigh Valley. Defendants Yonas Zegeye, ("Zegeye"), Hiruit Seleshi, ("Seleshi"), and Peter J. Karoly, ("Karoly"), are the sole shareholders and controlling parties of Defendant ZPR, and were also limited partners of Lehigh Valley during most of the time periods alleged in the complaint. Defendant ZP Investments, Inc. ("ZP") is the general partner of two limited partnerships to which defendants allegedly transferred funds belonging to Lehigh Valley.

 All the defendants have filed motions to dismiss for failure to state a claim upon which relief may be granted, pursuant to Fed. R. Civ. P. 12 (b)(6). This memorandum addresses these motions.

 BACKGROUND

 Plaintiffs are limited partners in Lehigh Valley, an Imaging Center created to provide Magnetic Resonance Imaging ("MRI") services to patients. *fn1" Defendants apparently offered plaintiffs an opportunity to purchase partnership units in Lehigh Valley at $ 25,000 a unit. Plaintiffs were sent a confidential offering memorandum which, among other things, explained the risk factors involved in the venture. The offer was that once defendants had received enough investors willing to purchase partnership units, defendants would be able to use the funds to lease MRI equipment and form the limited partnership Imaging Center. The plaintiffs also allege that the confidential offering memorandum had a provision which stated that the limited partnership would be able to purchase the MRI equipment for one dollar ($ 1) at the end of the lease term (the "lease-purchase provision").

 Plaintiffs allege that they purchased partnership units in reliance on the offering memorandum but defendants allegedly used the funds to purchase the MRI equipment in their own name, not that of Lehigh Valley. Plaintiffs further allege that defendants entered into a lease agreement (the "lease agreement") with Lehigh Valley which named defendants as lessor, and Lehigh Valley as lessee. Under this lease agreement, defendants would lease the MRI machine to Lehigh Valley for five years at a cost equal to the amount defendants were obligated to pay under the lease-purchase provision to acquire title in the partnership's name, plus $ 6,000 dollars a month. This lease agreement did not allow the partnership to purchase the equipment at the end of the lease term, as the offering memorandum had stated.

 In addition, plaintiffs allege that defendants sent to them income statements which purportedly demonstrated that Lehigh Valley was paying for the leasing and maintenance of the MRI machine under the lease-purchase provision, thereby inducing plaintiffs to believe that those payments would lead to the partnership's eventual acquisition of the MRI machine. Plaintiffs learned of defendants alleged fraud when they received a letter advising them of the status of their partnership interest in light of litigation pending against Defendant Zegeye and filed by Defendants Karoly and Steckel in state court. Apparently, Defendants Karoly and Steckel were alleging that Defendant Zegeye had removed financial records from Defendant ZPR and limited partnerships in which the three parties were involved. After the litigation, Defendant Zegeye purchased Defendants Karoly and Defendant Angstadt's interests in ZPR and Lehigh Valley.

 After these acts, in December 1995, Defendant Zegeye initiated a lawsuit in the Court of Common Pleas of Northampton County on behalf of ZPR Investments, Inc. This lawsuit was filed against plaintiffs and all other limited partners in Lehigh Valley who had not signed the amendment, and it seeks a declaratory judgment confirming that the lease-purchase provision was a drafting mistake.

 Plaintiffs believe that all the other limited partners sold their interest to Defendant Zegeye because of fear of the economic strain that a lawsuit would impose on them. As a result, Defendant Zegeye became the sole party controlling the general partner Defendant ZPR, and he thereby gained substantial control over the plaintiff Lehigh Valley.

 Plaintiffs' complaint has eight counts, three federal law counts and five state law counts. The first three counts of the complaint allege RICO violations arising from defendants' alleged mail fraud, since many of the documents plaintiffs received from defendants were sent through the mail, and extortion, for the threats to file a lawsuit and withhold distributions.

 The five state law counts are as follows: two for conspiracy, one for conversion, one requesting punitive damages for willful, malicious, reckless and intentional conduct, and one for breach of the ...


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