Global Acquisitions Network et al v. Bank of America Corporation et al

Filing 68

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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1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 GLOBAL ACQUISITIONS NETWORK, a Wyoming corporaiton; SHAWN CORNEILLE, an individual, 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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. ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 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) 1 (“Motion”). 2 denies the Motion and adopts the following Order. 3 I. 4 Having considered the parties’ submissions, the Court BACKGROUND Plaintiffs are Global Acquisitions Network (“GAN”) and Shawn 5 Corneille. 6 are Oriana Capital Partners (“Oriana”), Dexter Chappell, and Jon 7 Leary (sometimes referred to herein as the “Oriana Defendants”)1. 8 (Id. at ¶¶ 4-7.) 9 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 10 law there. 11 Chappell, and engaged in business in the State of California. 12 at ¶ 7.) 13 Mr. Leary acted as legal counsel for Oriana and Dexter Plaintiffs allege the following facts. (Id. Plaintiffs are the 14 owners of two collateralized mortgage obligations (“CMOs”) that 15 have a combined face value of approximately $2.5 billion. 16 ¶ 10.) 17 generate financial returns by using them as collateral on a loan. 18 (Id. at ¶ 12.) 19 Plaintiffs sought help and were introduced to Defendants Leary and 20 Chappell. 21 Oriana Capital Partners (“Oriana”) who agreed to use the CMOs as 22 collateral for an approximately $18 million non-recourse loan 23 (“NRL”) to Plaintiffs. 24 agreement, the Plaintiffs requested assurances from the Oriana 25 Defendants that Oriana had the ability to fund the NRL. 26 21.) 27 28 (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.) 1 2 1 allegedly held on February 9, 2012, at approximately 7:56 a.m., 2 between Plaintiffs, the Oriana Defendants, and a Bank of America 3 Bank Officer whose name Plaintiffs believe was Tom Hazlet or 4 Hazlit. 5 from the number 800-432-1000, which Plaintiffs allege is a Bank of 6 America phone number. 7 Oriana Defendants and the Bank Officer, Hazlet or Hazlit, told 8 Plaintiffs that Bank of America was the primary financial 9 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 10 institution funding the credit line for Plaintiffs’ non-recourse 11 loan. 12 Oriana had access to a credit line and had the financial resources 13 to fund the loan. 14 (Id. at ¶ 28.) Additionally, the Bank Officer stated that (Id.) Based on these assurances from the Oriana Defendants and the 15 Bank of America Bank Officer, Plaintiffs decided to transfer the 16 CMOs to Oriana. 17 designated by Oriana between February 27 and 29, 2012, and they 18 confirmed receipt of the CMOs. 19 12, 2012, Oriana Defendants told Plaintiffs that they would be 20 unable to fund the loan within the contractually required time 21 period, so the parties agreed to extend the payout deadline to 22 April 18. 23 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. 24 (Id. at ¶¶ 47-48.) 25 communicated, primarily through counsel, by phone and email about 26 the status of the loan and the CMOs. 27 Chappell and Mr. Leary would provide different reasons for the 28 delay in payment. Over the next couple of months, the parties (Id.; Exh. 5.) (Id. at ¶¶ 47-55.) Over the course of this 3 Mr. 1 communication, Plaintiffs learned that the Fidelity account to 2 which they had transferred the CMOs was actually owned by a third 3 party. 4 account, but the Oriana Defendants informed Plaintiffs that, as of 5 July 7, 2012, the account had been closed and Oriana was unable to 6 obtain any details about the closure because Defendant Chappell was 7 not listed as an account holder. 8 Oriana Defendants stated that they did not know what had happened 9 to the CMOs or where they were located. 10 (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 11 Oriana Defendants admitted that they misrepresented their ability 12 to fund the loan through a Bank of America credit line or with 13 their own funds, but contended that the CMOs were never received in 14 the Fidelity account. 15 of Plaintiff’s original complaint in October 2012, the Oriana 16 Defendants still had not paid the loan or returned the CMOs, and 17 Plaintiffs did not know where the CMOs were located. 18 86.) 19 (Id. at ¶ 82.) As of the time of the filing (Id. at ¶ On February 9, 2013, Defendant Bank of America filed a motion 20 to dismiss which the Court granted with leave to amend the 21 complaint. 22 America filed a second motion to dismiss. 23 motion was granted on June 7, 2013. 24 25 (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. 26 27 28 This August 6, 2012 email is not included with the other email correspondence attached as the fifth exhibit to Plaintiffs’ complaint. 2 4 1 2 II. LEGAL STANDARD When a defendant moves to dismiss for lack of personal 3 jurisdiction, the plaintiff bears the burden of demonstrating that 4 the court has jurisdiction over the defendant. 5 Caddy, F.3d 1151, 1154 (9th Cir. 2006). 6 jurisdiction over a defendant, a plaintiff must show that personal 7 jurisdiction is (1) permitted under the applicable state’s long-arm 8 statute and that (2) the exercise of jurisdiction does not violate 9 federal due process. Id. Pebble Beach Co. v. To demonstrate a court’s California’s long-arm statute, Cal. 10 Code. Civ. Pro. § 410.10, allows personal jurisdiction on any basis 11 not inconsistent with the Constitution. 12 410.10. 13 Cal. Code. Civ. Pro. § A federal district court may exercise either general or 14 specific jurisdiction over a non-forum defendant. 15 Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15 (1984). 16 Demonstrations of general or specific jurisdiction require that the 17 plaintiff make a prima facie showing of jurisdictional facts, facts 18 that if taken as true would support jurisdiction and withstand the 19 motion to dismiss. 20 See Helicopteros Id. Any disputed facts for the purposes of the motion to dismiss 21 are construed in favor of the plaintiff. 22 permit discovery to help determine whether it has personal 23 jurisdiction, especially in circumstances where pertinent facts are 24 controverted. 25 F.2d 1280, 1285 n.1 (9th Cir. 1977). 26 III. DISCUSSION 27 28 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 5 1 with California. 2 State of Connecticut, who has never solicited or conducted business 3 outside of Massachusetts and Connecticut. 4 4.) 5 in 1991, as a tourist and that his only contact with the Plaintiffs 6 was through email and one phone call. 7 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 8 jurisdiction; instead, the Plaintiffs argue that the FAC has 9 sufficiently alleged that this Court can exercise specific 10 jurisdiction over Mr. Leary. 11 A. Specific Jurisdiction 12 Under Ninth Circuit law, a court may exercise specific 13 jurisdiction over a nonresident defendant when (1) a defendant 14 purposefully directs her activities or consummates some transaction 15 with the forum or resident thereof, or performs some act by which 16 she purposefully avails herself of the privilege of conducting 17 activities in the forum, thereby invoking the benefits and 18 protections of its laws, (2) the plaintiff’s claim arises out of or 19 relates to the defendant’s forum related activities, and (3) the 20 exercise of jurisdiction comports with fair play and substantive 21 justice, i.e. it must be reasonable. 22 Motor Co., 374 F.3d 797, 801-02 (9th Cir. 2004). 23 Schwarzenegger v. Fred Martin Depending on the type of claim made by a plaintiff, purposeful 24 direction takes on different meanings. 25 Inc. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)(explaining how 26 personal jurisdiction in intentional tort cases is a question of 27 purposeful direction which is evaluated under the “effects test” 28 (quoting Calder v. Jones, 465 U.S. 783 (1984))), with 6 Compare Dole Foods Co., 1 Schwarzenegger, 374 F.3d at 803 (explaining that personal 2 jurisdiction in contracts cases is a question of purposeful 3 availment to the privileges of doing business in the forum state). 4 If a plaintiff can establish the first two prongs, then the 5 defendant must come forward with a “compelling case” that the 6 exercise of jurisdiction would be unreasonable. 7 v. Rudzewicz, 471 U.S. 462, 477 (1985). 8 9 Burger King Corp. i. Purposeful Direction Here, the Plaintiffs argue that Mr. Leary purposefully 10 directed his activities toward residents of California. 11 to Dismiss at 9.) 12 tort claims. 13 purposeful direction, the first prong of the test determining 14 whether a court may exercise specific jurisdiction over a 15 defendant, a plaintiff must show that the defendant (1) committed 16 an intentional act, (2) expressly aimed at the forum state, (3) 17 which caused harm that the defendant knows is likely to be suffered 18 in the forum state. 19 (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 20 The FAC alleges that Mr. Leary made representations to the 21 Plaintiffs that the Oriana Defendants would be able to fund the 22 CMOs; however, Mr. Leary knew that the Oriana Defendants’ ability 23 to pay was contingent on a third party. 24 Moreover, the FAC alleges that the Plaintiffs suffered monetary 25 losses due to Mr. Leary’s representations. 26 facts establish that Mr. Leary’s actions meet the first and third 27 prongs of “purposeful direction”: that he acted intentionally and 28 that his actions caused harm to the Plaintiffs in the forum state. 7 (FAC at ¶¶ 22-26, 49-50.) (Id. at ¶ 90.) These 1 The issue is whether Mr. Leary’s actions were “expressly aimed” at 2 the forum state. 3 “Expressly aimed” requires “more” than mere foreseeability; 4 “expressly aimed” requires that the relevant action in the forum 5 state be individually targeted to a forum resident, so that the 6 defendant can reasonably anticipate being hauled into court in the 7 forum state. 8 223 F.3d 1082, 1088 (9th Cir. 2000); Calder v. Jones, 465 U.S. 783, 9 790 (1984). Bancroft & Masters, Inc. v. Augusta National Inc., For example, in Dole, the defendants were found to 10 have expressly aimed their actions at California, the forum state, 11 because they knew the decision makers they were communicating with 12 were located in California. 13 Inc,557 F.2d at 1288 ("The inducement of reliance in California is 14 a sufficient act within California to satisfy the requirement of 15 minimum contacts where the cause of action arises out of that 16 inducement.”). 303 F.3d at 1111; see also Data Disc, 17 Here, while Mr. Leary did not actively solicit business in 18 California, his actions were still expressly aimed at the forum 19 state. 20 had California contacts because every email sent to Mr. Leary 21 contained a signature block with a California address. 22 5.) 23 reasonable expectation that Mr. Leary could be hauled into court in 24 California. 25 resident does not allow this Court to exercise general jurisdiction 26 over him; however, Mr. Leary’s communications targeted California 27 residents and are the basis of the present cause of action, thereby 28 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 8 1 Mr. Leary contends that any communication with the Plaintiffs 2 in California occurred through email and telephone and is therefore 3 insufficient to establish personal jurisdiction. However, courts 4 have held that limited personal jurisdiction may be based on email 5 contacts that are intentionally directed to residents of the forum 6 state and then cause harm in the forum state. 7 Clifton, 682 F.3d 665, 674-76 (7th Cir. 2012)(fraudulent 8 misrepresentations sent by email, regular mail, and telephone can 9 be the basis for specific jurisdiction). See Felland v. Here, the Plaintiffs have 10 attached multiple email exchanges between themselves and Mr. Leary; 11 these exchanges not only support the negligence and fraud-based 12 claims against Mr. Leary, but also establish sufficient contacts to 13 allow this Court to exercise specific jurisdiction. 14 ii. Arising From 15 Under the second prong of the specific jurisdiction test, 16 whether the defendant’s actions give rise to the current action is 17 measured in terms of “but for” causation. 18 1088. 19 representation about the Oriana Defendants’ ability to pay was 20 essential to the Plaintiffs in deciding whether to transfer the 21 CMOs. 22 communications with Plaintiffs caused the alleged harm; Mr. Leary 23 only argues that his California contacts are insufficient to grant 24 this Court jurisdiction. 25 26 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 27 defendant to show that the exercise of jurisdiction would be 28 unreasonable. Felland, 682 F.3d at 674-76. 9 In his Motion to 1 Dismiss, Mr. Leary alleges that his status as a Connecticut 2 domiciliary means this Court cannot exercise personal jurisdiction 3 over him; however, Mr. Leary does argue why exercising personal 4 jurisdiction over a Connecticut domiciliary would be unreasonable. 5 The Court declines to speculate a reason why exercising personal 6 jurisdiction would be unreasonable, but notes that nothing in Mr. 7 Leary’s papers or in the FAC suggests that it would not be 8 reasonable. 9 IV. 10 CONCLUSION For the above reasons, Leary’s motion to dismiss for lack of 11 personal jurisdiction is DENIED. The Plaintiffs have alleged facts 12 sufficient to demonstrate that Mr. Leary possessed the necessary 13 minimum contacts with California for this Court to exercise 14 personal jurisdiction over him. 15 16 17 18 19 IT IS SO ORDERED. Dated: July 9, 2013 DEAN D. PREGERSON United States District Judge 20 21 22 23 24 25 26 27 28 10

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