Illumination Station, Inc. v. Bank of America, N.A. et al
ORDER finding as moot 45 Motion to Dismiss Party; granting 53 Motion to Set Aside Default and denying 58 Motion to Dismiss. Signed by Honorable Jimm Larry Hendren on September 26, 2011. (sh)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
ILLUMINATION STATION, INC.
Civil No. 10-3047
BERMAN INDUSTRIES, INC.;
ILLUMINATION HOME DECOR, LLC;
CASA CREATIONS, INC.;
RJB GROUP, LLC;
RONALD ARMSTRONG; and
O R D E R
consideration the following:
Defendant Ronald Armstrong's Motion To Dismiss Or, In The
Illumination Home Decor, LLC And Casa Creations, Inc. ("Motion To
Set Aside Default")(document #53); and
Armstrong, Illumination Home Decor, LLC And Casa Creation, Inc.
("Second Motion To Dismiss")(document #58),
and from said motions, and the response thereto, the Court finds and
orders as follows:
Station") asserts multiple causes of action said to have arisen out
defendants and relating to the buying and selling of home decor
The defendants are Ronald Armstrong ("Armstrong") and two
entities he controls, Illumination Home Decor, LLC ("IHD") and Casa
Industries, Inc. ("Berman Industries"), an entity of which Berman
and Armstrong are both officers; and RJB Group, LLC ("RJB").
The initial Complaint named Bank of America, N.A. and
Berman Industries as defendants.
A First Amended And Restated
Armstrong, IHD, Casa, Berman, and RJB.
In response to the First Amended Complaint, Armstrong filed the
Complaint ("Second Amended Complaint") and Armstrong, IHD, and Casa
filed the Second Motion To Dismiss.
The First Motion To Dismiss contends that this Court lacks
personal jurisdiction over Armstrong and that the First Amended
Complaint fails to state a claim.
These arguments are repeated in
the Second Motion To Dismiss, and consequently the Court finds the
First Motion To Dismiss moot.
On March 31, 2011, the First Amended Complaint was served
on Patrick Mitchell ("Mitchell), Registered Agent for both IHD and
When these defendants failed to timely respond, Illumination
Station obtained a Default against each of them.
IHD and Casa move to set aside the Default, contending that
President of Casa) that he had been served with the First Amended
Complaint until April 26, 2011, and that they would have meritorious
defenses against the First Amended Complaint for the same reasons
set forth in the First Motion To Dismiss.
A default judgment may be set aside where there is mistake,
inadvertence, surprise, or excusable neglect; the defaulting party
makes some showing of a meritorious defense; and the opposing party
would not be prejudiced if the default is excused.
El-Batrawi, 524 F.3d 907, 912-14 (8th Cir. 2008).
The same factors
are relevant in determining whether to grant relief from an entry of
default, but a lesser showing is required.
Johnson v. Dayton
Electric Mfg. Co., 140 F.3d 781, 783 (8th Cir. 1998).
is appropriate in some situations, there is "a 'judicial preference
for adjudication on the merits'." Id.
The reason given by IHD and Casa for failure to respond to the
First Amended Complaint is that they did not know about it because
their registered agent failed to notify Armstrong about service of
This satisfies the relatively low hurdle of excusable
The showing of a meritorious defense is slim, colorable at
best, but in light of the preference for adjudication on the merits,
the Court will give IHD and Casa the benefit of the doubt.
There is no reason to believe Illumination Station will be
prejudiced by setting aside the Default.
This case has moved slowly
to date, for reasons entirely unrelated the default of IHD and Casa,
and discovery has not commenced.
When the Court weighs all three factors, in light of the
relatively modest burden for setting aside a default, it finds that
the Motion To Set Aside Default should be granted.
In its Second Amended Complaint, Illumination Station
asserts the following claims:
that Berman Industries has been unjustly enriched at the
expense of Illumination Station;
that Berman, Armstrong, and Berman Industries violated
the Arkansas Deceptive Trade Practices Act;
that Berman, Armstrong, and Berman Industries defrauded
that all defendants engaged in the making of fraudulent
conveyances in violation of both Arkansas and Illinois law;
that all defendants engaged in a civil conspiracy to
defraud Illumination Station; and
that the corporate veil of Berman Industries should be
pierced so as to allow Illumination Station to reach the assets of
Berman and Armstrong personally.
Armstrong, IHD and Casa move the Court to dismiss these
claims, or to transfer them to the United States District Court for
the Northern District of Illinois.
In support of dismissal, they
contend that this Court lacks personal jurisdiction over them and
that the Second Amended Complaint fails to state a claim upon which
relief can be granted.
In support of transfer, they contend that
the matter should be consolidated with a "parallel action" pending
in Illinois (the "Illinois Case").
Illumination Station objects to all types of relief requested
in the motion.
As plaintiff, Illumination Station has the burden of
proving by a preponderance of the evidence that the Court has
personal jurisdiction over defendants. Dakota Industries, Inc. v.
Dakota Sportswear, Inc., 946 F.2d 1384 (8th Cir. 1991).
requirements of personal jurisdiction in a diversity case such as
the one at bar.
The relevant principles may be quoted from one
such case, Burlington Industries, Inc. v. Maples Industries, Inc.,
97 F.3d 1100 (8th Cir. 1996), as follows:
In a diversity action, a federal court may assume
jurisdiction over nonresident defendants only to the
extent permitted by the long-arm statute of the forum
state, and by the due process clause of the Fourteenth
We have previously recognized that the
Arkansas long-arm statute authorizes jurisdiction over
foreign corporations to the fullest extent allowed by
constitutional due process.
Due process requires "minimum contacts" between the nonresident defendant and the forum state such that
"maintenance of the suit does not offend traditional
notions of fair play and substantial justice.
defendant's conduct and connection with the forum state
must be such that defendant should "reasonably
anticipate being haled into court there."
Specific jurisdiction refers to jurisdiction over causes
of action arising from or related to a defendant's
jurisdiction refers to the power of a state to
adjudicate any cause of action involving a particular
defendant, regardless of where the cause of action
Where specific personal jurisdiction over a non-resident
is asserted, due process is satisfied if the defendant
has purposely directed its activities at forum
residents, and the litigation results from injuries
arising out of, or relating to, those activities.
(Internal citations omitted.)
Burlington sets out five factors to be considered in
evaluating a challenge to personal jurisdiction:
the nature and quality of defendant's contacts with the
the quantity of defendant's contacts with the forum
the relationship between defendant's contacts with the
forum state and the cause of action asserted against it;
the interests of the forum state in providing a forum
for plaintiff to resolve its dispute with defendant; and
the convenience of the parties.
The first three of these factors are the most important, with
the last two being of lesser importance.
The evidence with regard to whether Armstrong, IHD and
Casa purposely directed their activities at Illumination Station,
an Arkansas resident, comes from the Declaration of Steve Pederson
Illumination Station, and the Declaration of Armstrong, Managing
Member of IHD and President of both Casa and Berman Industries.
Pederson averred that he and his wife had become friends
with Armstrong and his wife, and that Armstrong visited Arkansas
ten to twelve times a year in the last ten years, both for
business and recreational purposes.
Pederson averred that during
those years, Armstrong also directed numerous telephone calls and
Station's offices in Arkansas.
Pederson averred that Armstrong visited Harrison about half
a dozen times in early 2009 "to discuss the status of Berman
[Illumination Station] based upon representations that [Berman and
Armstrong] would invest additional monies into Berman Industries
to keep it afloat."
Armstrong spent about half of each month in Harrison, conducting
business on behalf of IHD and Casa, staying at least part of the
Illumination Station's offices.
Armstrong averred that Berman Industries was an Illinois
corporation headquartered in Chicago, which manufactured and sold
light fixtures and related products for some forty years, until it
closed on April 21, 2009.
Armstrong further averred that Berman
Industries conducted its business from Chicago, and that many
former employees still reside in that area.
Armstrong averred that Illumination Station directed its
Illumination Station's account balance got out of hand, Armstrong
handled negotiations to reduce it from Chicago.
The Court need not dwell at length on the last two
providing a forum for their citizens to resolve disputes, and as
analyzed in ¶12, infra, there is no evidence one way or the other
about the convenience of the parties.
contradictory, and when the Court evaluates them it concludes that
Illumination Station and its officer Pederson in Arkansas, to
justify this Court's exercise of personal jurisdiction over him.
Pederson's Declaration averred to numerous business contacts -- in
Armstrong, and to a significant amount of time spent in the state,
in the offices of Illumination Station, doing business related to
Pederson's Declaration also supplies evidence sufficient to
justify the exercise of personal jurisdiction over IHD and Casa,
in that he avers Armstrong spent many weeks in Arkansas in the
Summer of 2009 conducting business on behalf of these entities.
For these reasons, the Court finds that the Second Motion To
Dismiss should be denied insofar as it seeks dismissal for lack of
personal jurisdiction over Armstrong, IHD, and Casa.
Armstrong, IHD and Casa also contend that the Second
Amended Complaint fails to state a claim upon which relief can be
Their arguments in this regard are so insufficiently
fleshed out that the Court will not consider them, and the Second
Motion To Dismiss will be denied insofar as it seeks dismissal on
Finally Armstrong, IHD and Casa contend for transfer on
the basis that there is a "parallel action" pending in Illinois.
Illinois, having dismissed Illumination Station's claims against
Northern District of Illinois.
Movants also contend that transfer would fulfill the purposes
of 28 U.S.C. § 1404(a), preventing the waste of time, energy and
money and protecting litigants, witnesses, and the public against
unnecessary inconvenience and expense.
They make no effort to
substantiate this sweeping contention, other than to refer to a
letter from counsel for Illumination Station to Armstrong in which
it is asserted that the case at bar and the Illinois Case are
witnesses, in the interest of justice, a district court may transfer
any civil action to any other district or division where ti might
have been brought."
The party seeking transfer has the burden of
proving that it is warranted, and considerable deference is given to
Mississippi Chemical Corp., 119 F.3d 688, 695 (8th Cir. 1997).
Movants have not carried their burden of justifying a transfer
Armstrong, IHD and Casa are mirror images of any claims asserted in
the Illinois Case, nor that such were filed earlier than the claims
against them in the case at bar.
The statements of plaintiff's
counsel in his letter to Armstrong are not evidence.
Moreover, Armstrong, IHD and Casa made no effort to demonstrate
that the convenience of parties or witnesses weighs in favor of
transfer. The Second Motion To Dismiss will, therefore, be denied
insofar as it requests a transfer of this case to the United States
District Court for the Northern District of Illinois.
Motion To Dismiss Or, In The Alternative, Motion To Stay Case
(document #45) is moot.
IT IS FURTHER ORDERED that the Motion To Set Aside Clerk's
Creations, Inc. (document #53) is granted.
IT IS FURTHER ORDERED that the Motion To Dismiss Or, In The
Alternative, Motion To Transfer Venue And Consolidate Of Separate
Defendants Ronald Armstrong, Illumination Home Decor, LLC And Casa
Creation, Inc. (document #58) is denied.
IT IS SO ORDERED.
/s/ Jimm Larry Hendren
JIMM LARRY HENDREN
UNITED STATES DISTRICT JUDGE
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