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V. Real Estate Group v. United States

United States District Court, D. Nevada

January 9, 2015

V.REAL ESTATE GROUP, INC. et al., Plaintiffs,
v.
UNITED STATES CITIZENSHIP AND IMMIGRATION SERVICES, et al., Defendants

Page 1201

For V. Real Estate Group, Inc., Fairtop Realty, Inc., Wellcity Realty, Inc., Richcorp Realty, Inc., Whistler Realty, Inc., Plaintiffs: Mark S Dzarnoski, LEAD ATTORNEY, Gordan & Silver, Ltd, Las Vegas, NV; Dylan T. Ciciliano, Gordon Silver, Las Vegas, NV.

For United States Citizenship & Immigration Services, Jeh Charles Johnson, Leon Rodriguez, Kathy Baran, Nicholas Colucci, Eric Holder, Lori Scialabba, Defendants: Glenn M Girdharry, LEAD ATTORNEY, Geoffrey Forney, United States Department of Justice, Washington, DC.

Page 1202

ORDER

ROBERT C. JONES, United States District Judge.

This case arises from the United States Citizenship & Immigration Service's (" USCIS" ) decision to revoke its initial approval of various I-526 petitions. Pending before the Court is the USCIS's Motion to Dismiss (ECF No. 30). For the reasons contained herein, the motion is GRANTED in part and DENIED in part.

I. PROCEDURAL HISTORY AND FACTS

The employment-based, fifth preference (" EB-5" ) immigrant visa category allocates a certain number of visas each year to " qualified special immigrants" who commit a threshold amount of capital to a United States business that either employs or will employ at least ten United States citizens. 8 U.S.C. § 1153(b)(5)(A). An

Page 1203

alien entrepreneur seeking a visa under this program prepares and files an I-526 petition to the USCIS. 8 C.F.R. § 204.6(c). To qualify, the alien entrepreneur must invest at least $1,000,000 into a new commercial enterprise (" NCE" ), or a minimum of $500,000 if the location of the NCE is considered a Target Employment Area (" TEA" ). Id. § 204.6(f). An investor organizing an original business to satisfy the NCE requirement must submit a " comprehensive business plan" detailing the nature and projected size of the NCE so that no fewer than ten jobs will be created. Id. § 204.6(j)(4). The signed I-526 petition along with the accompanying documentation is submitted to the USCIS for review. Id. § 204.6(j). If, after the initial review, the USCIS determines that the petition lacks sufficient supporting evidence, it sends a request for additional evidence (" RFE" ) to the petitioner indicating the need for supplemental documentation. Once this process is complete, the USCIS makes its determination.

If the USCIS approves the I-526 petition, then the immigrant investor may apply for conditional permanent resident status at the United States consular post in the investor's own country. 8 U.S.C. § § 1201-02, 1186b(a)(1). The Secretary of Homeland Security retains the right to revoke an approved I-526 petition " at any time, for what he deems to be good and sufficient cause." 8 U.S.C. § 1155. A revocation of the approval, however, may occur only after notice is given to the alien investor and he or she is provided with " the opportunity to offer evidence in support of the . . . self-petition and in opposition to the grounds alleged for revocation of the approval." 8 C.F.R. § 205.2(b). The Notice of Intent to Revoke (" NOIR" ) must explain " the specific reasons" why the approval is being revoked so that the petitioner knows of the specific deficiencies in his or her petition. After receiving the petitioner's response to the NOIR, the USCIS then decides whether to revoke its prior approval. Id. § 205.2(c). If the investor disagrees with the USCIS's decision to revoke its approval, he or she has fifteen days after the service of a notice of revocation to appeal the revocation to the Board of Immigration Appeals. 8 C.F.R. § 103.3(a)(1)(ii).

Steven Lee, a former immigrant investor who received an EB-5 visa years ago and who is now a United States citizen, formed Plaintiff V Real Estate Group, Inc. (" VREG" ) as a franchising enterprise that would " attract foreign investment and immigrant investors from China who desired to follow [his] example and obtain permanent residence and/or citizenship in the US." (Lee Decl. ¶ ¶ 4-7, ECF No. 11). With the advice of counsel, Lee created a business model that he believed satisfied the criteria of the EB-5 program. ( Id. ¶ 8). Lee chose Clark County, Nevada for his operations because parts of Clark County are TEAs, requiring an investment of $500,000 rather than $1,000,000. ( Id. ¶ 9). Liang Shao, Yongming Hu, Yanzhao Zou, and Xiaolong Li (collectively " the Immigrant Investors" ) each used Lee's business plan to establish franchised real estate companies (" the NCE Plaintiffs" ). ( Id.¶ 10). The Immigrant Investors then each filed I-526 petitions with the USCIS at the end of 2012 or near the beginning of 2013. (Voigtmann Decl. ¶ ¶ 5, 11, 17, 23, 29, ECF No. 6). Subsequently, the USCIS sent a RFE to each Investor seeking supplemental evidence that an NCE had been established in a TEA, that the investment capital was in the process of being invested, and that the capital had been placed " at risk." (RFE 2-4, ECF No. 6-2). Each Investor responded to the RFE, and the USCIS approved the I-526 petitions. (Voigtmann Decl. ¶ ¶ 7, 13, 19, 25, 31). The USCIS forwarded the approved petitions to the National Visa Center for consular processing, but the petitions were

Page 1204

returned to the USCIS. (Shao NOIR 2, ECF No. 6-4).

The USCIS then notified the Immigrant Investors that their petitions were approved in error by sending them each a NOIR. ( See, e.g., id.). The NOIR stated that because the full $500,000 investment would be released from escrow to VREG rather than to the various entities created by the Immigrant Investors, the record was insufficient to show that the funds would be made " immediately available to or directly transferred to the NCE[s]." ( Id. at 3). The NOIR also identified employment creation and the overall business model as causes for the potential revocation. ( Id. at 5-7). The Immigrant Investors each responded to the NOIR, (Response to Intent to Revoke, ECF No. 6-5), but their responses apparently did not correct the deficiencies since a final revocation occurred on or around May 30, 2014. (Notice of Revocation, ECF No. 9-1). The USCIS explained that the approval was revoked because the Immigrant Investors' business plan did not demonstrate that the NCEs would require ten employees or that the capital investment was placed " at risk" for the purpose of generating a return. (Notice of Revocation 4).

Plaintiffs in this suit include VREG and the four NCEs established by the Immigrant Investors (collectively " Plaintiffs" ). Plaintiffs rely on Section 702 of the Administrative Procedure Act (" APA" ) to bring this action as " person[s] suffering legal wrong" because of the USCIS's decision to revoke the Immigrant Investors' I-526 petitions. 5 U.S.C. § 702. The Complaint contains three causes of action: (1) intentional or negligent interference with economic advantage; (2) intentional interference with business relations; and (3) declaratory judgment. Plaintiffs initially sought a preliminary injunction of the USCIC's revocation, which the Court denied. (ECF No. 35). The USCIS now moves for dismissal of the case for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1), or alternatively, for Plaintiffs' failure to state a claim for which relief can be granted pursuant to Rule 12(b)(6).

II. LEGAL STANDARDS

A. 12(b)(1) Motion to Dismiss

Federal Rule of Civil Procedure 12(b)(1) states that a court may dismiss a claim for lack of subject-matter jurisdiction. Fed.R.Civ.P. 12(b)(1). While the defendant is the moving party in a motion to dismiss, the plaintiff is the party invoking the court's jurisdiction. Consequently, " the plaintiff bears the burden of proving that the case is properly in federal court." Wright v. Incline Vill. Gen. Imp. Dist., 597 F.Supp.2d 1191, 1198 (D. Nev. 2009) (citing McCauley v. Ford Motor Co., 264 F.3d 952, 957 (9th Cir. 2001)). A motion to dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1) may take one of two forms. Thornhill Publ'g Co. v. Gen. Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979). It may be a " facial" challenge or it may be a " factual" challenge. Id. " In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction." Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). " [I]n a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Id.

If the movant's challenge is a facial one, then the " court must consider the allegations of the complaint to be true and construe them in the light most favorable to the plaintiff." Nevada ex rel. Colo. River Comm'n of Nev. v. Pioneer Cos., 245 F.Supp.2d 1120, 1124 (D. Nev. 2003) (citing Love v. United States, 915 F.2d 1242, 1245 (9th Cir. ...


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