Anderson et al v. Chandler et al
Filing
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ORDER, the Chandler Defendants' Motion to Dismiss for Lack of Personal Jurisdiction 6 is denied without prejudice; the Motion to Strike filed by the Plaintiffs 13 is denied; the Motion for Rule 56(d) Relief filed by the Plaintiffs 13 is denied as moot; the Motion for an Evidentiary Hearing filed by the Chandler Defendants 14 is denied. Signed by Judge G Murray Snow on 9/21/12.(REW)
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WO
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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Anthony D. Anderson and
Anderson, husband and wife,
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No. CV-12-813-PHX-GMS
ORDER
Plaintiffs,
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Gay-Dee
v.
John D. and Jane Doe Chandler, husband
and wife; Jeffrey and Jane Doe MacDonald,
husband and wife; Allstate Insurance
Company, a foreign corporation; John and
Jane Does I-X; ABC Corporations I-X; and
XYZ Partnerships I-X,
Defendants.
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Pending before the Court is a Motion to Dismiss For Lack of Personal Jurisdiction
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(Doc. 6) and a Motion for Evidentiary Hearing (Doc. 14) filed by Defendants John D. and
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Jane Doe Chandler; and a Motion to Strike filed and a Motion for Rule 56(d) Relief filed
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by Plaintiffs Anthony D. Anderson and Gay-Dee Anderson (Doc. 13). For the following
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reasons, the Court DENIES all four motions.
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BACKGROUND
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Some time ago, Plaintiffs Anthony D. Anderson and Gay-Dee Anderson sold their
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interest in a California Allstate Insurance agency to California resident Leonardo Xavier.
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(Doc. 1, Ex. 1 ¶¶ 2-3, 7, 11.) Part of the purchase agreement between the Andersons and
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Xavier required Xavier to make a series of monthly payments to the Andersons. (Id. ¶¶ 8,
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11.) The Andersons now reside in Maricopa County, Arizona. (Id. ¶¶ 1, 11.) In December
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2009, Xavier arranged to sell the agency to Defendants John Chandler and Jeffrey
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MacDonald, both residents of California. (Id. ¶ 7.) This transaction was purportedly
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structured fraudulently to allow Allstate to avoid making a termination payment to the
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Andersons, Xavier to cease making the required monthly payments, and Chandler and
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MacDonald to evade incurring any payment obligation. (Id. ¶¶ 9, 11, 19-30.)
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On November 22, 2011, the Andersons filed their complaint in Arizona Superior
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Court. The Chandlers filed their Motion to Dismiss for Lack of Personal Jurisdiction on
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April 1, 2012. (Doc. 1, Ex. 1 at 33.) On April 18, 2012, Allstate removed the action to
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this Court. (Doc. 1 at 1.) The Chandlers gave notice to this Court of the pending motion
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to dismiss on May 4, 2012. (Doc. 6.) The Andersons then moved to strike as extraneous
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matter the affidavit attached by the Chandlers to their Motion to Dismiss (Doc. 13 at 5),
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or to allow the Andersons limited discovery on the issue of personal jurisdiction under
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Rule 56(d) (Id. at 6). The Chandlers objected and moved in the alternative for an
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evidentiary hearing. (Doc. 14 at 4.)
DISCUSSION
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I.
LEGAL STANDARD
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The plaintiff bears the burden of establishing personal jurisdiction. See, e.g.,
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Ziegler v. Indian River Cnty., 64 F.3d 470, 473 (9th Cir. 1995). Once a defendant has
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moved to dismiss, “the plaintiff is ‘obligated to come forward with facts, by affidavit or
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otherwise, supporting personal jurisdiction’” over the defendant. Cummings v. W. Trial
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Lawyers Assoc., 133 F. Supp.2d 1144, 1151 (D. Ariz. 2001). “[M]ere allegations of a
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complaint, when contradicted by affidavits, are not enough to confer personal jurisdiction
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over a non-resident defendant.” Chem Lab Products, Inc. v. Stepanek, 554 F.2d 371, 372
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(9th Cir. 1977); Data Disc, Inc. v. Sys. Tech. Assocs., 557 F.2d 1280, 1285 (9th Cir.
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1977) (“[W]e may not assume the truth of allegations in a pleading which are
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contradicted by affidavit.”)
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Because no statutory method for resolving the personal jurisdiction issue exists,
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the district court determines the method of its resolution. See Data Disc, Inc. v. Sys. Tech.
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Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977) (citing Gibbs v. Buck, 307 U.S. 66, 71-72
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(1939)). A district court may, but is not required to, allow discovery to help determine
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whether it has personal jurisdiction over a defendant. See id. at 1285 n.1. In addition, a
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district court may, but is not required to, hear evidence at a preliminary hearing to
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determine its jurisdiction. See id. at 1285 n.2. If the district court does not hear testimony
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or make findings of fact and proceeds on written materials only, then the plaintiff must
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make only a prima facie showing of jurisdictional facts to defeat the defendant’s motion
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to dismiss. See Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 268 (9th Cir.
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1995).
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Under this prima facie burden of proof, the plaintiff need only establish facts that
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if true would support personal jurisdiction over the defendant. See Ballard v. Savage, 65
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F.3d 1495, 1498 (9th Cir. 1995). If the plaintiff survives the motion to dismiss under a
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prima facie burden of proof, however, the plaintiff still must prove the jurisdictional facts
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by a preponderance of the evidence at a preliminary hearing or at trial. Data Disc, 557
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F.2d at 1285 n.2.
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II.
ANALYSIS
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A.
Evidentiary Basis
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The parties have filed three motions with respect to the evidentiary basis for the
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instant Motion to Dismiss for Lack of Personal Jurisdiction: the Andersons have filed a
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Motion to Strike the affidavit attached to the Chandlers’ Motion to Dismiss, or
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alternatively, to allow limited discovery on the question of personal jurisdiction (Doc.
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13); the Chandlers assert that those motions should be denied, or, in the alternative, that
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the Court should order an evidentiary hearing (Doc. 14). How to proceed on this question
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is left to the discretion of the Court. See Data Disc, 557 F.2d at 1285. The Court has
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determined not to allow discovery or hold evidentiary hearings on the issue of personal
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jurisdiction at this stage, and those motions will be denied. The Court will consider only
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the affidavits that have been attached to the Motion to Dismiss. See AT&T v. Compagnie
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Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996); Scott v. Breeland, 792 F.2d 925,
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927 (9th Cir. 1986). Consequently, the Andersons’ Motion to Strike is denied. In
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considering the affidavits, however, “conflicts between the facts contained in the parties'
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affidavits must be resolved in [plaintiffs'] favor for purposes of deciding whether a prima
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facie case for personal jurisdiction exists.” Id.
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B.
Personal Jurisdiction
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To establish that personal jurisdiction over the Chandlers is proper, the Andersons
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must demonstrate that (1) Arizona's long arm statute confers jurisdiction over the
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Chandlers, and (2) that “the exercise of jurisdiction comports with the constitutional
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principles of Due Process.” See Rio Props. v. Rio Int’l Interlink, 284 F.3d 1007, 1019
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(9th Cir. 2002) (citation omitted). Because Arizona's long-arm statute extends jurisdiction
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“to the maximum extent permitted by the . . . Constitution of the United States,” the
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personal jurisdiction inquiry largely collapses into a Due Process analysis. See Ariz. R.
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Civ. P. 4.2(a); Davis v. Metro Prod., Inc., 885 F.2d 515, 520 (9th Cir. 1989); Williams v.
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Lakeview Co., 199 Ariz. 1, 5, 13 P.3d 280, 282 (2000). Absent traditional bases for
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personal jurisdiction (e.g., physical presence, domicile, and consent) the Due Process
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Clause requires that nonresident defendants have certain “minimum contacts” with the
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forum state such that the exercise of personal jurisdiction does not offend traditional
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notions of fair play and substantial justice. See Int’l Shoe Co. v. Washington, 326 U.S.
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310, 316 (1945).
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“In determining whether a defendant had minimum contacts with the forum state
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such that the exercise of jurisdiction over the defendant would not offend the Due Process
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Clause, courts focus on ‘the relationship among the defendant, the forum, and the
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litigation.’” Brink v. First Credit Resources, 57 F. Supp. 2d 848, 860 (D. Ariz. 1999)
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(citing Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). If a defendant’s contacts with the
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forum state are sufficient to satisfy the Due Process Clause, then the Court must exercise
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either “general” or “specific” jurisdiction over the defendant. See Helicopteros
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Nacionales de Colombia v. Hall, 466 U.S. 408, 414-15 nn.8-9 (1984). No party contends
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that the Court has general jurisdiction over the Chandlers. Thus the Court will only
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consider whether it has specific jurisdiction over the Chandlers with respect to the claims
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brought against them.
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The Ninth Circuit applies a three-part test to determine whether a defendant’s
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contacts with the forum state are sufficient to subject him to a court’s specific
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jurisdiction. Under this three-part test, specific jurisdiction exists only if:
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defendant purposefully availed himself of the privileges of conducting activities in the
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forum, thereby invoking the benefits and protections of its laws, or purposely directs
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conduct at the forum that has effects in the forum; (2) the claim arises out of the
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defendant’s forum-related activities; and (3) the exercise of jurisdiction comports with
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fair play and substantial justice, i.e., it is reasonable. See, e.g., Burger King v. Rudzewicz,
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471 U.S. 462, 472-76 (1985); Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d
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1082, 1086 (9th Cir. 2000) (citing Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 417
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(9th Cir. 1997)).
(1) the
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Specific jurisdiction over a tort defendant exists where the intended effects of the
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defendant’s non-forum conduct were purposely directed at and caused harm in the forum
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state. Calder v. Jones, 465 U.S. 783, 788-90 (1984); see Sinatra v. Nat’l Enquirer, 854
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F.2d 1191, 1195 (9th Cir. 1988) (“[T]he decisions of this court have interpreted the
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holdings of Calder and Burger King . . . to allow ‘the exercise of jurisdiction over a
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defendant whose only ‘contact’ with the forum is the ‘purposeful direction’ of a foreign
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act having effect in the forum state.’”) (quoting Haisten v. Grass Medical Reimbursement
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Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986)) (emphasis in original); Caruth v. Int’l
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Psychoanalytical Ass’n, 59 F.3d 126, 128 n.1 (9th Cir. 1995) (applying effects test to
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defamation, tortious interference with business relations, and intentional infliction of
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emotional distress claims). Thus with respect to tort claims, the effects test requires that
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the defendant have “(1) committed an intentional act, (2) expressly aimed at the forum
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state, (3) causing harm that the defendant knows is likely to be suffered in the forum
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state.” Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002).
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The acts in question here arose out of the Chandlers’ purchase of the California
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Allstate Insurance agency from Xavier. (Doc. 1, Ex. 1 ¶ 7.) The situation is thus a sale of
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a California agency by one California resident to another. Nevertheless, the Complaint
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attempts to establish contacts with Arizona by alleging that the purchase was done at a
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below-market price with the purpose to cut off payments owed to Arizona residents under
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a previous agreement with Xavier. (Id. ¶ 8.) The question becomes whether those
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allegations are sufficient to show that Chandlers “expressly aimed” their conduct at
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Arizona. Admittedly, the words “expressly aimed,” standing alone, provide little
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guidance. “Express aiming is a concept that in the jurisdictional context hardly defines
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itself. From the available cases, we deduce that the requirement is satisfied when the
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defendant is alleged to have engaged in wrongful conduct targeted at a plaintiff whom the
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defendant knows to be a resident of the forum state.” Bancroft, 223 F.3d at 1087.
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The Andersons allege that the Chandlers entered into a contract with Xavier and
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Allstate with the intent to impair a flow of payments to which the Andersons were
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entitled, thereby causing harm to the Andersons in Arizona. (Doc. 1, Ex. 1 ¶¶ 21, 23, 25,
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30.) The Chandlers therefore allegedly targeted Arizona residents. This is analogous to
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the situation in CE Distribution, LLC v. New Sensor Corp., where the Ninth Circuit found
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sufficient “aiming” when two companies entered into a contract in one state that impaired
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the rights of another company in another state. 380 F.3d 1107, 1111 (9th Cir. 2004); see
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also Pure, Ltd. v. Shasta Beverages, Inc., 691 F. Supp. 1274, 1278-79 (D. Haw. 1988)
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(finding purposeful direction when the defendants intentionally sought to interfere with a
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contract). While the alleged contacts between the Chandlers and Arizona are few (and
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may only be this one event), “it is not the quantity, but rather the ‘nature and quality’ of
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the defendant’s activities which determine whether extension of jurisdiction offends due
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process.” Thos. P. Gonzales Corp. v. Consejo Nacional de Produccion de Costa Rica,
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614 F.2d 1247, 1252 (9th Cir. 1980) (internal quotations and citations omitted).
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According to the allegations of the Complaint, the Chandlers knew about the Andersons,
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knew about the Andersons’ rights under their agreement with Xavier, knew that the
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Andersons resided in Maricopa County, and agreed with the other Defendants to cut off
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the Andersons’ monthly payments. (Doc. 1, Ex. 1 ¶¶ 21, 23, 25, 30.) Based on these
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claims, the Andersons have adequately alleged express aiming.
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The Chandlers’ Motion to Dismiss included an affidavit from Mr. Chandler. (Doc.
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1, Ex. 1 at 40-41.) In that affidavit, he refutes several of the allegations contained in the
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Andersons’ Complaint. Specifically, Mr. Chandler avers that he was unaware of the
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Andersons’ alleged interest in the agency, had no knowledge whatsoever of the
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Andersons, never had any contact with the Andersons until after the purchase, and never
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intended to harm the Andersons’ alleged rights under their agreement with Xavier. (Doc.
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1, Ex. 1 at 40-41.) In other words, the Chandlers had no intention to affect anything
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related to Arizona. Notably, Mr. Chandler did not include any statements in his affidavit
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that the Andersons were not entitled to payments under the Xavier purchase agreement.
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While a core jurisdictional fact is the existence of the Andersons’ right to payments, if the
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Chandlers indeed knew nothing of that right, there was likely no “express aiming” and
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therefore no basis for personal jurisdiction. Moreover, many—if not all—of the
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Andersons’ claims likely fail if the Chandlers were ignorant of the Xavier obligation. The
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averments in the affidavit related to the existence or lack of specific jurisdiction are
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consequently intertwined with the merits. While statements in an affidavit typically trump
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allegations in a complaint, in this context they are sufficient only to raise issues of fact
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that cannot be resolved at this stage of the proceedings. To simply credit the Chandler
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affidavit at this early stage would effectively end the case before it begins.
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For the reasons stated above, the determination of whether this Court has
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jurisdiction will involve the same factual inquiries that will resolve some of the principal
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issues of this case—i.e., whether the Chandlers were aware of, and desired to disrupt,
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payments due by Xavier to the Arizona Plaintiffs. Therefore, for present purposes the
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Court will deny the Chandlers’ Motion to Dismiss without prejudice to the Chandlers
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renewing the motion after the Court has provided the Andersons and Chandlers sufficient
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discovery to raise the issue again. The Chandlers may preserve their jurisdictional
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objection by including it in their answer and subsequent motions. See, e.g., Aerotel v.
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Sprint Corp., 100 F. Supp. 2d 189, 193 (S.D.N.Y. 2000). If either party desires, the Court
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will prioritize issues relating to specific jurisdiction, and set a time when the jurisdiction
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motion can be renewed at the upcoming scheduling conference. The Court will address
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the remaining issues pertaining to specific jurisdiction—the “arising out of” requirement,
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the reasonableness requirement and issues of pendent jurisdiction—at the time that it
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resolves any future jurisdictional motion. Meanwhile this Court maintains jurisdiction to
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determine its own jurisdiction. See Aragon-Ayon v. INS, 206 F.3d 847, 849 (9th Cir.
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2000).
CONCLUSION
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The Andersons have alleged sufficient contacts between the Chandlers and
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Arizona for this Court to satisfactorily exercise jurisdiction at this time under Arizona
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law and the Constitution. Accordingly, the Chandlers’ Motion to Dismiss is denied
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without prejudice.
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IT IS HEREBY ORDERED that the Chandler Defendants’ Motion to Dismiss
for Lack of Personal Jurisdiction (Doc. 6) is DENIED WITHOUT PREJUDICE.
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IT IS FURTHER ORDERED THAT:
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1.
The Motion to Strike filed by the Plaintiffs (Doc. 13) is DENIED.
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2.
The Motion for Rule 56(d) Relief filed by the Plaintiffs (Doc. 13) is
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DENIED as moot.
3.
The Motion for an Evidentiary Hearing filed by the Chandler Defendants
(Doc. 14) is DENIED.
Dated this 21st day of September, 2012.
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