Pesic v. Mauritius International Arbitration Centre Limited

Background

Peter Nikola Pesic and Peter Pesic & Co. Advisors filed an amended complaint against the Mauritius International Arbitration Centre Limited (MIAC), Salim Moollan, Asraf Ally Caunhye, Neil Rogers, and unidentified defendants. Pesic appeared without a lawyer. Because the complaint described Peter Pesic & Co. Advisors as a sole proprietorship and Pesic did not allege that he was an attorney, the court treated Pesic as the true plaintiff and referred to both named plaintiffs collectively as “Plaintiff.”

The complaint alleged that Pesic was a financial advisor with an office in Geneva, Switzerland, and held certain United States securities in custody. It alleged that Barry Thomas Tilley claimed to own the securities, that Tilley and related parties had not provided requested identity and anti-money-laundering documentation, and that an arbitration before MIAC sought to require transfers of the securities. Pesic alleged that MIAC proceeded with the arbitration and requested payments for arbitration costs despite uncertainty about Tilley’s identity and location. He characterized those actions as attempted or actual money laundering and asserted claims under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), along with claims apparently based on state law.

Pesic sought more than $75,000 in compensatory damages, $7.5 million in punitive damages, and a finding that MIAC should be placed on the United States Office of Foreign Assets Control sanctions list.

Jurisdiction and standing

The court held that the amended complaint did not establish standing. Standing is the requirement that a plaintiff show a personal injury caused by the defendant that the requested court relief could likely remedy. The court found that Pesic alleged that MIAC directed parties to an arbitration—an arbitration Pesic said he was not part of—to pay arbitration costs, but did not allege facts showing that he personally suffered an actual or threatened injury, that any injury was traceable to MIAC’s conduct, or that the requested relief would likely remedy it.

Because Pesic did not establish standing, the court dismissed his claims for lack of standing and therefore for lack of subject-matter jurisdiction. Subject-matter jurisdiction is the court’s legal authority to hear a dispute.

The court also held that the complaint did not adequately establish diversity jurisdiction for the apparent state-law claims. Pesic alleged that he was an American citizen but did not specify his domicile, and the complaint appeared to indicate that he was domiciled in Switzerland. The court explained that a United States citizen domiciled abroad is generally neither a citizen of a United States state nor a citizen or subject of a foreign country for purposes of diversity jurisdiction. The complaint also did not allege Moollan’s citizenship. The court therefore dismissed the state-law claims brought under diversity jurisdiction for lack of subject-matter jurisdiction.

RICO claims

The court held that the complaint did not provide facts supporting a civil RICO claim. Civil RICO permits a person injured in business or property by a RICO violation to sue for damages. The court explained that such a claim requires facts showing, among other things, a defendant’s participation in an enterprise through a pattern of at least two racketeering acts affecting interstate or foreign commerce, as well as injury to the plaintiff’s business or property caused by the violation.

The court concluded that Pesic’s allegations concerned an MIAC arbitration in which he said he was not a party and did not state a civil RICO claim. It dismissed the civil RICO claims for failure to state a claim on which relief could be granted.

Venue

The court held that the amended complaint did not show that the Southern District of New York was a proper venue. Venue concerns the geographic federal court in which a case may be heard. For the RICO claims, Pesic did not allege facts showing that any defendant resided, was found, had an agent, or conducted business in the district. For the state-law claims, he also did not allege that a defendant resided in the district, that a substantial part of the relevant events occurred there, that relevant property was located there, or that any defendant was subject to personal jurisdiction there.

Pesic argued that the case belonged in the district because custodial banks in New York, New York, had settled the transactions. The court found that allegation insufficient. It dismissed the action as filed in the wrong venue and determined that transferring it was not in the interest of justice.

Disposition

The court dismissed the action; dismissed the claims for lack of standing and, consequently, lack of subject-matter jurisdiction; dismissed the state-law claims under diversity jurisdiction for lack of subject-matter jurisdiction; dismissed the civil RICO claims for failure to state a claim; and dismissed the claims as brought in the wrong venue. The court granted Pesic 60 days to file a second amended complaint alleging facts addressing standing, diversity jurisdiction, the RICO claim, and venue. If he did not timely amend or show cause for failing to do so, the court stated that it would enter judgment dismissing the action.

The clerk was directed not to issue summonses unless the court ordered otherwise. The court also certified that an appeal would not be taken in good faith and denied permission to proceed without paying appeal fees.