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Grayson v. Anderson

United States Court of Appeals, Fourth Circuit

March 7, 2016

ALAN M. GRAYSON; AMG TRUST, Plaintiffs - Appellants,
v.
RANDOLPH ANDERSON; PATRICK KELLEY; VISION INTERNATIONAL PEOPLE GROUP PL.; TOTAL ECLIPSE INTERNATIONAL LTD., Defendants - Appellees, and CHARLES CATHCART; EVELYN CATHCART; YURIJ DEBEVC; CHARLES HSIN; DERIVIUM CAPITAL USA INC; VERIDIA SOLUTIONS LLC; SHENANDOAH HOLDINGS LTD; PTS INTERTECH INC; AQUILIUS INC; OPTECH LIMITED; PAUL ANTHONY JARVIS; COLIN BOWEN; BANCROFT VENTURES LTD; BANCROFT VENTURES UK LTD; SPENCER PARTNERS LTD; ISLE OF MAN ASSURANCE LTD; DMITRY BOURIAK; BRYAN JEEVES; ALEXANDER JEEVES; KRISTINA PHELAN; JEEVES GROUP, THE; JEEVES HOLDINGS LTD; JAVELIN LTD; LEXADMIN TRUST REG; ST VINCENT TRUST COMPANY LTD; ST VINCENT TRUST SERVICE LTD; WINDWARD ISLES TRUST COMPANY LTD; SELBOURNE TRUST COMPANY LTD; PELICAN TRUST COMPANY LTD; JEEVES GROUP ASIA LTD; WACHOVIA SECURITIES, INC; JOHN DOE 1; JOHN DOE 2; JOHN DOE 3; JOHN DOE 4; JOHN DOE 5; JOHN DOE 6; JOHN DOE 7; JOHN DOE 8; JOHN DOE 9; JOHN DOE 10; JEEVES COMPANY LTD; ORANGEBURG METAL TREATMENT CO LLC; ROBERT BRADENBURG; NIGEL THOMAS TEBAY; JOANNA OVERFIELD BODELL; ISLE OF MAN FINANCIAL TRUST LIMITED; NIGEL HARLEY WOOD; VISION INTERNATIONAL PEOPLE GROUP PL; METARIZON LLC, f/k/a Metarizon Solutions LLC; JONATHAN SANDIFER, Defendants. GRAYSON CONSULTING, INC., Plaintiff - Appellant, and KEVIN CAMPBELL, Chapter 7 Trustee, Plaintiff,
v.
VISION INTERNATIONAL PEOPLE GROUP PL.; TOTAL ECLIPSE INTERNATIONAL LTD., Defendants - Appellees, and EVELYN CATHCART; CHARLES D. CATHCART CRUSADER TRUST; CATHCART INVESTMENT TRUST; CATHLIT INVESTMENT TRUST; DIVERSIFIED DESIGN ASSOCIATED LTD; DAVID KEKICH; RED TREE INTERNATIONAL; CHARLES HSIN, a/k/a CH Hsin, Chi Hsiu Hsin; FIRST SECURITY CAPITAL OF CANADA INC; MARCO TOY INC; BANCROFT VENTURES LTD; BANCROFT VENTURES UK LTD; WITCO SERVICES UK LTD; JEEVES GROUP, THE; JEEVES COMPANY LTD; JEEVES HOLDINGS LTD; BRYAN JEEVES; ALEXANDER JEEVES; KRISTINA PHELAN; PAUL ANTHONY JARVIS; NIGEL THOMAS TEBAY; COLIN CYPH BOWEN; MORIA THOMPSON MCHARRIE; DAVID ANTHONY KARRAN; NIGEL HAMPTON MCGOWAN; FRANCIS GERRARD QUINN; PETER KEVIN PERRY; BRIAN BODELL; ANDREW THOMAS; EDWARD J. BUDDEN; JOANNA OVERFIELD BODELL; CONISTON MANAGEMENT LTD; JAVELIN LTD; ST VINCENT TRUST SERVICE LTD; ST VINCENT TRUST COMPANY LTD; LEXADMIN TRUST REG; ISLE OF MAN ASSURANCE LTD; ISLE OF MAN FINANCIAL TRUST LTD; SPENCER PARTNERS LTD; SPENCER VENTURE PARTNERS LLC; LINDSEY AG; OPTECH LTD; JACK W. FLADER, JR.; JAMES C. SUTHERLAND; ZETLAND FINANCIAL GROUP LTD; FRANKLIN W. THOMASON; DMITRY BOURIAK; NOBLESTREET LTD; FINANCIAL RESOURCES GROUP LLC; STRUCTURED SYSTEMS AND SOFTWARE INC; EAST BAY CAPITAL VENTURES LLC; CLIFFORD LLOYD; NIGEL HARLEY WOOD; TSUEI CONSULTANTS INCORPORATED, Defendants

Argued December 8, 2015.

Page 263

[Copyrighted Material Omitted]

Page 264

Appeals from the United States District Court for the District of South Carolina, at Charleston. (2:07-cv-00593-DCN; 2:07-cv-02992-DCN; 2:08-cv-03129-DCN). David C. Norton, District Judge.

ARGUED:

Tucker Harrison Byrd, TUCKER H. BYRD & ASSOCIATES, P.A., Winter Park, Florida, for Appellants.

Brian Cantwell Duffy, DUFFY & YOUNG, LLC, Charleston, South Carolina; Mark H. Wall, WALL TEMPLETON & HALDRUP, P.A., Charleston, South Carolina, for Appellees.

ON BRIEF:

Katherine A. Stanton, WALL TEMPLETON & HALDRUP, P.A., Charleston, South Carolina, for Appellee Patrick Kelley.

Seth W. Whitaker, DUFFY & YOUNG, LLC, Charleston, South Carolina, for Appellee Total Eclipse International Ltd. W. Randolph Anderson, Jr., New York, New York, Appellee Pro se.

Before WILKINSON, NIEMEYER, and DIAZ, Circuit Judges. Judge Niemeyer wrote the opinion, in which Judge Wilkinson and Judge Diaz joined.

OPINION

Page 265

NIEMEYER, Circuit Judge:

Victims of a massive, South Carolina-centered Ponzi scheme -- characterized by fraudulent loans secured by the borrowers' publicly traded stock -- obtained a judgment of over $150 million against Derivium Capital (USA), Inc., its principals, and numerous other participants in the scheme. Alan M. Grayson, AMG Trust, and Grayson Consulting, Inc., three of the plaintiffs, are now pursuing others whom they claim also participated in the scheme.

With respect to the three plaintiffs' claims against Vision International People Group, P.L., a Cypriot company, the district court granted Vision International's motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). And with respect to Grayson's and AMG Trust's claims against Randolph Anderson, Patrick Kelley, and Total Eclipse International Ltd. for aiding and abetting common law fraud, the district court granted those defendants' motion for judgment as a matter of law at trial, concluding that the cause of action was not recognized by South Carolina courts.

The plaintiffs filed separate appeals on the two rulings. In the first, the three plaintiffs contend that, because the district court did not conduct an " evidentiary hearing" in which it took live testimony, it should have assessed the Rule 12(b)(2) motion under the more relaxed standard of whether the plaintiffs had made a prima facie showing of personal jurisdiction over Vision International rather than under the more demanding standard that the district court applied, which required them to prove facts demonstrating personal jurisdiction by a preponderance of the evidence. And in the second, Grayson and AMG Trust contend that the district court erred in dismissing their claims for aiding and abetting fraud, maintaining that South Carolina recognized the cause of action in Connelly v. State Co., 152 S.C. 1, 149 S.E. 266 (S.C. 1929).

We consolidated the two appeals by order dated August 26, 2015, and now affirm on both. We conclude that, because the parties engaged in full discovery on the jurisdictional issue and fully presented the relevant evidence to the district court, the court properly addressed Vision International's Rule 12(b)(2) motion by weighing the evidence, finding facts by a preponderance of the evidence, and determining as a matter of law whether the plaintiffs carried their burden of demonstrating personal jurisdiction over Vision International. We also agree with the district court's conclusion that South Carolina has not recognized a cause of action for aiding and abetting common law fraud and that it is not our role as a federal court to so expand state law.

I

Under the fraud scheme referred to as the 90% Stock Loan Program, which began in 1997, borrowers delivered their publicly ...


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