Global Acquisitions Network et al v. Bank of America Corporation et al
Filing
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ORDER DENYING DEFENDANT LEARY MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(2) 65 by Judge Dean D. Pregerson . (lc). Modified on 7/9/2013 (lc).
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UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
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GLOBAL ACQUISITIONS NETWORK,
a Wyoming corporaiton; SHAWN
CORNEILLE, an individual,
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Plaintiff,
v.
BANK OF AMERICA CORPORATION,
a Delaware corporation;
ORIANA CAPITAL PARTNERS,LLC,
a Connecticut limited
liability company; ZANCO, a
company of unknown business
form, HLB FINANCIAL, LLC, a
company of unknown form; W/C
INVESTMETN HOLDINGS INC., a
Florida corporatin; DEXTER
CHAPPELL, an individual;
VALERIE CHAPPELL, an
individual; JON LEARY, an
individual; GLEN McINERNEY
also known as LARRY BENNETT,
an individual; CHRISTOPHER
RAY ZANCO, an individual;
BERNARD WOODSON, an
individual,
Defendants.
___________________________
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Case No. CV 12-08758 DDP (CWx)
ORDER DENYING DEFENDANT’S MOTION
TO DISMISS PURSUANT TO FED. R.
CIV. P. 12(B)(2)
[Dkt. No. 65]
Presently before the Court is Defendant’s Motion to Dismiss
Plaintiffs’ Complaint pursuant to Fed. R. Civ. P. 12(b)(2)
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(“Motion”).
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denies the Motion and adopts the following Order.
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I.
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Having considered the parties’ submissions, the Court
BACKGROUND
Plaintiffs are Global Acquisitions Network (“GAN”) and Shawn
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Corneille.
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are Oriana Capital Partners (“Oriana”), Dexter Chappell, and Jon
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Leary (sometimes referred to herein as the “Oriana Defendants”)1.
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(Id. at ¶¶ 4-7.)
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resides in the State of Connecticut and is licesnsed to practice
(First Amended Complaint (“FAC”) ¶¶ 2-3.)
Defendants
Relevant to this motion, Defendant Jon Leary
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law there.
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Chappell, and engaged in business in the State of California.
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at ¶ 7.)
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Mr. Leary acted as legal counsel for Oriana and Dexter
Plaintiffs allege the following facts.
(Id.
Plaintiffs are the
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owners of two collateralized mortgage obligations (“CMOs”) that
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have a combined face value of approximately $2.5 billion.
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¶ 10.)
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generate financial returns by using them as collateral on a loan.
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(Id. at ¶ 12.)
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Plaintiffs sought help and were introduced to Defendants Leary and
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Chappell.
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Oriana Capital Partners (“Oriana”) who agreed to use the CMOs as
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collateral for an approximately $18 million non-recourse loan
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(“NRL”) to Plaintiffs.
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agreement, the Plaintiffs requested assurances from the Oriana
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Defendants that Oriana had the ability to fund the NRL.
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21.)
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(Id. at
Plaintiffs sought opportunities where the CMOs could
Having no experience in that particular field, the
(Id. at ¶ 13.)
Defendants Chappell and Leary approached
(Id. at ¶ 15.)
Before consummating the
(Id. at ¶
To address Plaintiffs’ concerns, a conference call was
Bank of America was originally a defendant, but was dismissed
on February 19, 2013. (Dkt. No. 38.)
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allegedly held on February 9, 2012, at approximately 7:56 a.m.,
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between Plaintiffs, the Oriana Defendants, and a Bank of America
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Bank Officer whose name Plaintiffs believe was Tom Hazlet or
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Hazlit.
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from the number 800-432-1000, which Plaintiffs allege is a Bank of
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America phone number.
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Oriana Defendants and the Bank Officer, Hazlet or Hazlit, told
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Plaintiffs that Bank of America was the primary financial
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institution with which Oriana did business and that it would be the
(Id. at ¶ 25.)
The call was identified as originating
(Id. at ¶ 24.)
During this call, both the
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institution funding the credit line for Plaintiffs’ non-recourse
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loan.
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Oriana had access to a credit line and had the financial resources
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to fund the loan.
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(Id. at ¶ 28.)
Additionally, the Bank Officer stated that
(Id.)
Based on these assurances from the Oriana Defendants and the
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Bank of America Bank Officer, Plaintiffs decided to transfer the
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CMOs to Oriana.
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designated by Oriana between February 27 and 29, 2012, and they
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confirmed receipt of the CMOs.
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12, 2012, Oriana Defendants told Plaintiffs that they would be
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unable to fund the loan within the contractually required time
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period, so the parties agreed to extend the payout deadline to
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April 18.
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The CMOs were delivered to the Fidelity account
(Id. at ¶¶ 33-35;Exh. 2.)
On March
(Id. at ¶ 41.)
By June 2, Oriana still had not made the loan to Plaintiffs.
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(Id. at ¶¶ 47-48.)
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communicated, primarily through counsel, by phone and email about
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the status of the loan and the CMOs.
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Chappell and Mr. Leary would provide different reasons for the
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delay in payment.
Over the next couple of months, the parties
(Id.; Exh. 5.)
(Id. at ¶¶ 47-55.)
Over the course of this
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Mr.
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communication, Plaintiffs learned that the Fidelity account to
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which they had transferred the CMOs was actually owned by a third
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party.
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account, but the Oriana Defendants informed Plaintiffs that, as of
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July 7, 2012, the account had been closed and Oriana was unable to
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obtain any details about the closure because Defendant Chappell was
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not listed as an account holder.
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Oriana Defendants stated that they did not know what had happened
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to the CMOs or where they were located.
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(Id. at ¶¶ 63-65.)
Oriana’s name had been added to the
(Id. at ¶ 68.)
At that time, the
(Id. at ¶ 86.)
Eventually, in an August 6, 2012, email,2 counsel for the
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Oriana Defendants admitted that they misrepresented their ability
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to fund the loan through a Bank of America credit line or with
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their own funds, but contended that the CMOs were never received in
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the Fidelity account.
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of Plaintiff’s original complaint in October 2012, the Oriana
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Defendants still had not paid the loan or returned the CMOs, and
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Plaintiffs did not know where the CMOs were located.
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86.)
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(Id. at ¶ 82.)
As of the time of the filing
(Id. at ¶
On February 9, 2013, Defendant Bank of America filed a motion
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to dismiss which the Court granted with leave to amend the
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complaint.
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America filed a second motion to dismiss.
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motion was granted on June 7, 2013.
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(Dkt. No. 38.)
After the FAC was filed, Bank of
(Dkt. No. 50.)
Its
(Dkt. No. 60.)
Defendant Jon Leary now moves to dismiss pursuant to Fed. R.
Civ. P. 12(b)(2) for lack of personal jurisdiction.
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This August 6, 2012 email is not included with the other
email correspondence attached as the fifth exhibit to Plaintiffs’
complaint.
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II.
LEGAL STANDARD
When a defendant moves to dismiss for lack of personal
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jurisdiction, the plaintiff bears the burden of demonstrating that
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the court has jurisdiction over the defendant.
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Caddy, F.3d 1151, 1154 (9th Cir. 2006).
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jurisdiction over a defendant, a plaintiff must show that personal
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jurisdiction is (1) permitted under the applicable state’s long-arm
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statute and that (2) the exercise of jurisdiction does not violate
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federal due process.
Id.
Pebble Beach Co. v.
To demonstrate a court’s
California’s long-arm statute, Cal.
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Code. Civ. Pro. § 410.10, allows personal jurisdiction on any basis
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not inconsistent with the Constitution.
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410.10.
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Cal. Code. Civ. Pro. §
A federal district court may exercise either general or
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specific jurisdiction over a non-forum defendant.
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Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15 (1984).
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Demonstrations of general or specific jurisdiction require that the
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plaintiff make a prima facie showing of jurisdictional facts, facts
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that if taken as true would support jurisdiction and withstand the
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motion to dismiss.
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See Helicopteros
Id.
Any disputed facts for the purposes of the motion to dismiss
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are construed in favor of the plaintiff.
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permit discovery to help determine whether it has personal
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jurisdiction, especially in circumstances where pertinent facts are
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controverted.
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F.2d 1280, 1285 n.1 (9th Cir. 1977).
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III. DISCUSSION
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Id.
However, a court may
Data Disc, Inc., v. Systems Tech. Assoc. Inc., 557
Mr. Leary moves to dismiss the complaint against him for lack
of personal jurisdiction.
He argues that he maintains no contacts
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with California.
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State of Connecticut, who has never solicited or conducted business
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outside of Massachusetts and Connecticut.
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4.)
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in 1991, as a tourist and that his only contact with the Plaintiffs
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was through email and one phone call.
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Mr. Leary claims to be a lifelong resident of the
(Motion to Dismiss at
Moreover he contends that he has only visited California once,
(Mot. to Dismiss at 4.)
The Plaintiffs appear to concede that the Court lacks general
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jurisdiction; instead, the Plaintiffs argue that the FAC has
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sufficiently alleged that this Court can exercise specific
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jurisdiction over Mr. Leary.
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A. Specific Jurisdiction
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Under Ninth Circuit law, a court may exercise specific
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jurisdiction over a nonresident defendant when (1) a defendant
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purposefully directs her activities or consummates some transaction
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with the forum or resident thereof, or performs some act by which
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she purposefully avails herself of the privilege of conducting
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activities in the forum, thereby invoking the benefits and
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protections of its laws, (2) the plaintiff’s claim arises out of or
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relates to the defendant’s forum related activities, and (3) the
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exercise of jurisdiction comports with fair play and substantive
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justice, i.e. it must be reasonable.
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Motor Co., 374 F.3d 797, 801-02 (9th Cir. 2004).
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Schwarzenegger v. Fred Martin
Depending on the type of claim made by a plaintiff, purposeful
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direction takes on different meanings.
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Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)(explaining how
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personal jurisdiction in intentional tort cases is a question of
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purposeful direction which is evaluated under the “effects test”
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(quoting Calder v. Jones, 465 U.S. 783 (1984))), with
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Compare Dole Foods Co.,
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Schwarzenegger, 374 F.3d at 803 (explaining that personal
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jurisdiction in contracts cases is a question of purposeful
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availment to the privileges of doing business in the forum state).
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If a plaintiff can establish the first two prongs, then the
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defendant must come forward with a “compelling case” that the
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exercise of jurisdiction would be unreasonable.
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v. Rudzewicz, 471 U.S. 462, 477 (1985).
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Burger King Corp.
i. Purposeful Direction
Here, the Plaintiffs argue that Mr. Leary purposefully
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directed his activities toward residents of California.
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to Dismiss at 9.)
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tort claims.
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purposeful direction, the first prong of the test determining
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whether a court may exercise specific jurisdiction over a
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defendant, a plaintiff must show that the defendant (1) committed
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an intentional act, (2) expressly aimed at the forum state, (3)
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which caused harm that the defendant knows is likely to be suffered
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in the forum state.
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(1984)).
(See Mot.
A purposeful direction analysis is relevant for
Schwarzenegger, 374 F.3d at 803.
To demonstrate
Id.(citing Calder v. Jones, 465 U.S. 783
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The FAC alleges that Mr. Leary made representations to the
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Plaintiffs that the Oriana Defendants would be able to fund the
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CMOs; however, Mr. Leary knew that the Oriana Defendants’ ability
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to pay was contingent on a third party.
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Moreover, the FAC alleges that the Plaintiffs suffered monetary
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losses due to Mr. Leary’s representations.
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facts establish that Mr. Leary’s actions meet the first and third
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prongs of “purposeful direction”: that he acted intentionally and
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that his actions caused harm to the Plaintiffs in the forum state.
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(FAC at ¶¶ 22-26, 49-50.)
(Id. at ¶ 90.)
These
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The issue is whether Mr. Leary’s actions were “expressly aimed” at
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the forum state.
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“Expressly aimed” requires “more” than mere foreseeability;
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“expressly aimed” requires that the relevant action in the forum
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state be individually targeted to a forum resident, so that the
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defendant can reasonably anticipate being hauled into court in the
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forum state.
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223 F.3d 1082, 1088 (9th Cir. 2000); Calder v. Jones, 465 U.S. 783,
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790 (1984).
Bancroft & Masters, Inc. v. Augusta National Inc.,
For example, in Dole, the defendants were found to
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have expressly aimed their actions at California, the forum state,
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because they knew the decision makers they were communicating with
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were located in California.
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Inc,557 F.2d at 1288 ("The inducement of reliance in California is
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a sufficient act within California to satisfy the requirement of
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minimum contacts where the cause of action arises out of that
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inducement.”).
303 F.3d at 1111; see also Data Disc,
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Here, while Mr. Leary did not actively solicit business in
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California, his actions were still expressly aimed at the forum
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state.
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had California contacts because every email sent to Mr. Leary
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contained a signature block with a California address.
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5.)
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reasonable expectation that Mr. Leary could be hauled into court in
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California.
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resident does not allow this Court to exercise general jurisdiction
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over him; however, Mr. Leary’s communications targeted California
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residents and are the basis of the present cause of action, thereby
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providing a basis for this Court to exercise specific jurisdiction.
Like the defendants in Dole, Mr. Leary knew the Plaintiffs
(FAC, Exh.
These indicia of the Plaintiffs’ California contacts created a
Mr. Leary is correct that his status as a Connecticut
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Mr. Leary contends that any communication with the Plaintiffs
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in California occurred through email and telephone and is therefore
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insufficient to establish personal jurisdiction. However, courts
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have held that limited personal jurisdiction may be based on email
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contacts that are intentionally directed to residents of the forum
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state and then cause harm in the forum state.
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Clifton, 682 F.3d 665, 674-76 (7th Cir. 2012)(fraudulent
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misrepresentations sent by email, regular mail, and telephone can
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be the basis for specific jurisdiction).
See Felland v.
Here, the Plaintiffs have
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attached multiple email exchanges between themselves and Mr. Leary;
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these exchanges not only support the negligence and fraud-based
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claims against Mr. Leary, but also establish sufficient contacts to
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allow this Court to exercise specific jurisdiction.
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ii. Arising From
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Under the second prong of the specific jurisdiction test,
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whether the defendant’s actions give rise to the current action is
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measured in terms of “but for” causation.
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1088.
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representation about the Oriana Defendants’ ability to pay was
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essential to the Plaintiffs in deciding whether to transfer the
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CMOs.
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communications with Plaintiffs caused the alleged harm; Mr. Leary
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only argues that his California contacts are insufficient to grant
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this Court jurisdiction.
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Bancroft, 223 F.3d at
Here, the Plaintiffs allege in the FAC that Mr. Leary’s
(FAC at ¶ 30.)
Mr. Leary does not contend that his
iii. Reasonableness
If both of these prongs are met, the burden falls on the
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defendant to show that the exercise of jurisdiction would be
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unreasonable.
Felland, 682 F.3d at 674-76.
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In his Motion to
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Dismiss, Mr. Leary alleges that his status as a Connecticut
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domiciliary means this Court cannot exercise personal jurisdiction
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over him; however, Mr. Leary does argue why exercising personal
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jurisdiction over a Connecticut domiciliary would be unreasonable.
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The Court declines to speculate a reason why exercising personal
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jurisdiction would be unreasonable, but notes that nothing in Mr.
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Leary’s papers or in the FAC suggests that it would not be
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reasonable.
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IV.
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CONCLUSION
For the above reasons, Leary’s motion to dismiss for lack of
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personal jurisdiction is DENIED.
The Plaintiffs have alleged facts
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sufficient to demonstrate that Mr. Leary possessed the necessary
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minimum contacts with California for this Court to exercise
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personal jurisdiction over him.
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IT IS SO ORDERED.
Dated: July 9, 2013
DEAN D. PREGERSON
United States District Judge
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