Josephs v. Marzan

Background

Michaleen Josephs sued Alberto Jose Marzan and Press Media Group, Inc. doing business as VumaTV. She alleged that Marzan induced her to lend money to and invest in Press Media Group, pay business expenses, and pay expenses connected to an apartment for Marzan’s personal use, while promising repayment. The complaint alleged that the promised investment was instead part of a fraudulent scheme.

Josephs alleged that Press Media Group executed two promissory notes dated January 16, 2020, covering a $150,000 loan and $47,000 in expenses, with 8% annual interest compounded annually. Marzan personally guaranteed those notes. Josephs also documented additional transfers, credit-card charges, miscellaneous expenses, apartment rent and furnishing costs, and attorney fees and costs.

Both defendants were served on April 15, 2021. Neither appeared, answered, or filed a motion. The clerk entered default on May 27, 2021. Josephs then moved for default judgment and later submitted additional documentation concerning damages and equitable relief.

Claims and liability

Because the defendants defaulted, the court treated the complaint’s factual allegations—other than allegations about the amount of damages—as true. The court nevertheless independently considered whether those facts stated legally valid claims.

The court found that the complaint adequately supported all asserted causes of action except that it treated promissory estoppel, Count IV, as moot because it was an alternative theory of recovery duplicating the breach-of-contract damages. The court found viable claims for:

- Racketeering Influenced and Corrupt Organizations Act (RICO), Count I, against Marzan: The court concluded that the alleged enterprise, racketeering activity involving mail and wire fraud, pattern of racketeering activity, and Marzan’s participation in operating the enterprise satisfied the RICO requirements. - Fraudulent misrepresentation, Count II, against Marzan and Press Media Group: The court found that the alleged false representations induced Josephs to provide money and pay expenses, causing damages. - Breach of contract, Count III, against Marzan and Press Media Group: The court found that the promissory notes, guaranty, and other alleged agreements supported liability because Josephs performed and the defendants did not repay her. - Abuse of process, Count V, against Marzan: The court found that the alleged use of a harassment restraining order to prevent Josephs from seeking repayment supported a claim for using legal process for an improper purpose and causing direct financial injury.

Damages

The court determined that an evidentiary hearing was unnecessary because the damages were shown by affidavits and documentary evidence.

The court awarded Josephs $266,233.36 against Marzan and Press Media Group, jointly and severally, for the business-related losses tied to Counts II and III. The award also included at least $31,521.73 in accrued promissory-note interest as of December 20, 2021, with interest continuing at $46.63 per day until the date of judgment.

Because those business-related damages were included in the RICO claim, the court awarded Josephs treble damages against Marzan alone under 18 U.S.C. § 1964(c): $532,466.72, plus at least $63,043.45 representing treble damages on accrued interest as of December 20, 2021, with those damages continuing to accrue at $93.26 per day until judgment.

The court also awarded against Marzan alone:

- $58,284.50 in attorney fees and costs for prosecuting the lawsuit, based on RICO and Marzan’s personal guaranty; - $46,092.19 for apartment and furniture-related expenses under Counts II and III; and - $125,442.60 in attorney fees and costs Josephs incurred responding to the harassment restraining order, under Count V.

The court did not award these additional attorney fees and costs against Press Media Group because the company was not included in the RICO or abuse-of-process claims and the promissory notes did not authorize recovery of enforcement expenses.

Equitable relief

The court held that private plaintiffs may seek permanent equitable relief under 18 U.S.C. § 1964(a). It also held that Josephs had standing because the requested relief could increase the likelihood of recovering her monetary judgment, even though some direct benefits would go to other people or entities.

The court therefore ordered equitable relief against Marzan until further order. The order requires Marzan to divest himself of direct or indirect interests in Press Media Group and Jupiter Rising Film; stop managing, controlling, working for, or otherwise being involved with those entities, except as necessary to transfer information and property; and hand over relevant information and property within seven days of receiving the order. He may not remove assets from those entities, although he may submit evidence of personal ownership for the court to decide.

The order also requires Marzan to disclose his 2014 guilty plea to insurance fraud and provide specified case documents and the court’s order to potential or actual investors, businesses, employees, and contractors of entities in whose finances, operations, management, or control he is involved. He may not form a corporation, limited liability company, partnership, or other entity without the court’s permission. Josephs must notify the court within 28 days after satisfaction of the judgments against each defendant.

Disposition

The court’s order states that Josephs’s motion for default judgment was GRANTED IN PART and DENIED IN PART. Marzan was held liable on Counts I, II, III, and V. Press Media Group was held liable on Counts II and III. The motion for default judgment on Count IV, promissory estoppel, was DENIED as moot. Judgment was ordered to be entered accordingly.