Pesic v. Mauritius International Arbitration Centre Limited

Background

Peter Nikola Pesic, proceeding without a lawyer, sued numerous entities and individuals under the Racketeer Influenced and Corrupt Organizations Act, commonly called RICO. The Fourth Amended Complaint alleged that the defendants participated in or enabled a money-laundering scheme involving the acquisition and transfer of securities previously held by Pesic’s firm. Pesic sought $171,789.23 in compensatory and punitive damages for alleged reputational harm and fees and costs connected to holding the securities.

An earlier order dismissed Pesic’s first complaint for lack of constitutional standing but allowed an amendment. Another order later dismissed many claims, including the RICO claims, because they were filed in the wrong venue. Pesic then received permission to add defendants and filed the Fourth Amended Complaint, which revived the RICO claims. The court had not yet reviewed whether that complaint adequately stated a claim.

RICO Claims

The court stated that a civil RICO plaintiff must show a RICO violation, an injury to business or property, and a connection between the violation and the injury. The court was inclined to conclude that Pesic’s allegations did not meet that requirement.

The court viewed Pesic’s alleged injury to his business reputation as too speculative because he identified no specific economic loss, such as a lost business opportunity, and did not connect the alleged harm to the defendants’ conduct. The court viewed Pesic’s alleged custody, deposit, and due-diligence fees as concrete financial losses. However, it was inclined to find that Pesic had not shown that the defendants’ alleged RICO violations directly caused those costs. The court noted, among other things, that some defendants allegedly asked Pesic to transfer or sell the securities rather than continue holding them.

Possible Contract Claims and Jurisdiction

The court considered whether Pesic might be permitted to file another amended complaint asserting a state-law breach-of-contract claim against Sawatsky, Talinka Trading, and Tilley. The complaint alleged unpaid fees involving securities held for defendants, including $96,687.24 allegedly owed by Sawatsky and $75,101.99 allegedly owed by Talinka Trading. It also alleged that Tilley was the sole beneficial owner of securities held for Talinka Trading. The court emphasized that a contract claim would require details such as the agreements’ dates, major terms, contracting parties, and the assent of the party to be bound.

The court also questioned whether it would have subject-matter jurisdiction over a contract claim. Pesic alleged that he was a California citizen and intended to return there, but he also said that he conducted his affairs in Switzerland and had used a Swiss address throughout the lawsuit. The court directed him to address whether he was a California citizen or a United States citizen domiciled abroad.

Order

The court ordered Pesic to show cause in writing by December 16, 2024, why the Fourth Amended Complaint should not be dismissed for failure to allege RICO standing and why he should not be denied permission to file a Fifth Amended Complaint. His submission had to include a memorandum of law of no more than fifteen pages and a personal declaration under penalty of perjury addressing facts relevant to his domicile.

The court did not dismiss the Fourth Amended Complaint in this order. It denied Pesic’s three outstanding motions and his request for a certificate of default against Alkaline Water Company Inc. without prejudice to renewal if appropriate, and directed the clerk to terminate the docket entries for the three motions.