Pearsall Holdings, LP v. Mountain High Funding, LLC et al

Filing 67

ORDER: Defendant Riviere's Motion 42 to Dismiss is GRANTED for lack of personal jurisdiction. The clerk is directed to dismiss Defendant Riviere from this action. Signed by Judge Janet Bond Arterton on 12/10/2013. (Bonneau, J)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
PEARSALL HOLDINGS, LP,
Plaintiff,
v.
MOUNTAIN HIGH FUNDING, LLC, et al.,
Defendants.

Civil No. 3:13cv437 (JBA)

December 10, 2013

RULING ON DEFENDANT RIVIERE’S MOTION TO DISMISS
On June 20, 2013, Plaintiff Pearsall Holdings, LP filed a Second Amended
Complaint [Doc. # 39] against Defendants Mountain High Funding, LLC, Mountain
High Finance, LLC (the “Mountain High Defendants”), Charles James Blue, Kevin Lee
Day, L. John Lewis, and Robert Riviere, bringing claims for violations of the Connecticut
Uniform Securities Act (“CUSA”) (Counts One and Two); Intentional Misrepresentation
(Count Three); Negligent Misrepresentation (Count Four); Breach of Contract (Count
Five); Unjust Enrichment (Count Six); and an Action for Accounting (Count Seven),
arising out of an investment Plaintiff made with the Mountain High Defendants.
Defendant Riviere now moves [Doc. # 42] pursuant to Federal Rule of Civil Procedure
12(b)(2) and 12(b)(6) to dismiss all counts against him, arguing that this Court lacks
personal jurisdiction over him, and that Plaintiff has failed to state a claim for which relief
can be granted.

For the following reasons, the Court concludes it lacks personal

jurisdiction over Defendant Riviere and his motion to dismiss is granted.
I.

Background
A.

Factual Background as Alleged in the Second Amended Complaint

Plaintiff is an Alaska limited partnership, and David Pearsall, its general partner,
is a resident of Roxbury Connecticut. (See 2d Am. Compl. ¶ 1.) Defendant Mountain

High Funding, LLC was a Nevada limited liability company located in Salt Lake City,
Utah, but its limited liability company status was revoked by the Nevada Secretary of
State on April 1, 2011. (See id. ¶ 2.) Defendant Mountain High Funding, LLC had three
members: KMM Financial Corporation—a Utah corporation with its principal place of
business in Utah, Blue Skies Corporation—a Utah corporation with its principal place of
business in Utah, and D-Day Corporation—a Utah corporation with its principal place of
business in Utah. (See id. ¶ 3.) Defendant Mountain High Finance, LLC was a Utah
limited liability company, and its members, Defendants Charles James Blue, Ray D.
Carter, and Kevin Lee Day,1 are all residents of Utah. (See id. ¶¶ 4–6.) Defendant L. John
Lewis is a resident of Utah who purported to act as legal counsel for the Mountain High
Defendants. (See id. ¶ 7.) Defendant Robert L. Riviere is a resident of Texas. (See id.
¶ 8.)
In 2010, Pearsall spoke to one Joseph Miller during a seminar, who informed him
that he would be investing in the Mountain High Defendants and advised Pearsall to
invest in them as well. (See id. ¶ 9–10.) Miller also informed Pearsall that he was working
with Blue, Lewis, and Day on a separate commodities trading deal. (See id. ¶ 10.) Miller
telephonically introduced Pearsall to Defendants Riviere, Lewis, and Blue while Pearsall
was in Connecticut. (See id. ¶ 11.) None of these defendants are registered to sell
securities in the State of Connecticut. (See id. ¶ 16.) The individuals on the call explained
that the Mountain High Defendants intended to issue a rated life settlement bond based
on aggregated viatical settlements via entities controlled by the Mountain High
Defendants. (See id.) The individuals on the call explained that Defendant Riviere’s role

1

In 2011, Kevin Lee Day replaced Ray D. Carter as a member and manager of
Defendant Mountain High Finance, LLC. (See Second Am. Compl. ¶ 6.)
2

in the transaction was to line up buyers for the bond and represented that a buyer, in
addition to back-up buyers, had already been located. (See id.) The individuals also
emphasized the urgency and necessity of Plaintiff’s investment by explaining that Plaintiff
would be replacing a current investor in the transaction that needed to withdraw. (See
id.) Plaintiff does not identify which individuals made which representations on the call,
except to allege that Defendant Blue “did most of the talking.” (See id.) Defendant
Riviere avers that he was “patched into” this call while it was already in progress. (See
Riviere Decl. [Doc. # 44] ¶ 4–5.) He further avers that he never said or suggested that
buyers for the bond had been lined up or that he was conducting due diligence, and no
one else made such representations while he was on the call. (See id. ¶ 5.)
After this initial call, Blue, Lewis, Day, and Riviere made five or six telephone calls
over the next four weeks to Pearsall at his home and business in Connecticut, continuing
to solicit his investment in the Mountain High Defendants. (See 2d Am. Compl. ¶ 13.)
The individuals continued to represent that they had buyers in place for the bond and
that Riviere had experience with this type of deal. (See id. ¶ 14.) The individuals also
stated that outside lawyers and investment firms were involved in the deal. (See id.)
Defendant Riviere avers that he was “patched into” these follow-up calls while they were
already in progress, and that he never made nor heard anyone else make the
representations that Plaintiff alleges were made to him on these calls. (See Riviere Decl.
¶¶ 4–5.) Plaintiff concedes that Defendant Riviere was only on some of these calls and
alleges no misrepresentations corresponding to Defendant Riviere’s presence on any
particular call. (See id. ¶ 13.)
Around February 25, 2010, “Defendants” mailed to Plaintiff in Connecticut their
Confidential Offering Memorandum (the “Offering Memorandum”) detailing the
3

proposed investment. (See 2d Am. Compl. ¶ 19.) The Offering Memorandum stated that
the Mountain High Defendants had entered into a joint venture with Aliya Companies,
LLC to form a company called M&A Funding, LLC, and explained that the Mountain
High Defendants had a 67.5% ownership in M&A Funding, LLC. (See id. ¶ 20.) It further
stated that M&A Funding, LLC had formed Paladin Funding, LLC with Riviere Securities,
which is Defendant Riviere’s company. (See id. ¶ 21.) M&A Funding, LLC owned 80% of
Paladin Funding, LLC, and Riviere Securities owned the other 20%. (See id.) The
Offering Memorandum stated that Paladin Funding, LLC owned Loeg Capital I, LLC—an
Irish Qualified Investment Fund—which was the vehicle for issuing the life settlement
bonds that were the basis for Plaintiff’s investment. (See id. ¶ 22.)
The Offering Memorandum also provided several precautionary provisions. It
indicated that the investment was being offered only to “accredited investors,” and
warned that the investment involved “a high degree of risk and should only be considered
by those individuals who c[ould] afford the loss of their entire investment.” (See Offering
Memorandum, Ex. A to Quick Decl. [Doc. # 45] at 3.)2 The Offering Memorandum
further provided that “[n]o person is authorized to give any information or to make any
representation in connection with this offering other than those contained in this
memorandum. Information or representations not contained herein must not be relied
on as having been authorized by the company.” (See id. at 29.)

2

Although Plaintiff did not attach the Offering Memorandum or the Investment
Agreement to its Complaint, Plaintiff’s counsel stated at oral argument that Plaintiff does
not object to the Court’s consideration of these documents. See DiFolco v. MSNBC Cable
L.L.C., 622 F.3d 104, 11 (2d Cir. 2010) (“Where a document is not incorporated by
reference, the court may nevertheless consider it where the complaint relies heavily on its
terms and effect, thereby rendering the document integral to the complaint.” (internal
citations and quotation marks omitted)).
4

The Offering Memorandum stated that the Mountain High Defendants would pay
up to an amount equal to the proposed investment plus a three times return (see 2d Am.
Compl. ¶ 25), and represented that an investment of $750,000 would entitle Plaintiff to a
participation interest of 5% of the net profits following the sale of any bonds in which the
Mountain High Defendants had a participation interest (see id. ¶ 26.) Defendant Blue
told Pearsall that this could yield as much as $7 million to $9 million. (See id.) The
individuals on the call also represented to Pearsall that Plaintiff would only be out of its
$750,000 investment for 45 to 90 days, and that within 45 to 90 days Plaintiff would have
received a $3 million return because a buyer for the bond had already been lined up. (See
id. ¶ 27.) Plaintiff alleges that these representations induced Plaintiff to invest in the
Mountain High Defendants. (See id. ¶ 29.)
On June 1, 2010, Lewis sent a facsimile to and spoke with Pearsall’s attorney at her
office in Connecticut to solicit the investment. (See id. ¶ 15.) On June 3, 2010, Pearsall
executed an Investment Agreement on behalf of Plaintiff and made a $750,000
investment in the Mountain High Defendants. (See id. ¶ 30.) The Investment Agreement
provided that Plaintiff “relied upon independent investigations” in deciding to make the
investment (Investment Agreement, Ex. B to Quick Decl. at A-3), and that “no
representations ha[d] been made to [Plaintiff] concerning the Investment or the
Company, its business or prospects or other matters,” (id. at A-4). The Investment
Agreement also contained a merger clause:
This Agreement and any exhibits hereto constitute the entire agreement
and understanding of the parties hereto with respect to the matters herein
set forth, and all prior negotiations, writings, and understandings relating
to the subject matter of this Agreement are merged herein and are
superseded and canceled by this Agreement.

5

(Id. at A-8.) On June 4, 2010, Defendant Lewis, on behalf of the Mountain High
Defendants, acknowledged and confirmed receipt of the investment and the forthcoming
return on the investment. (See 2d Am. Compl. ¶ 31.) On June 15, 2010, Defendant Blue
accepted the investment on behalf of the Mountain High Defendants and signed the
Investment Agreement. (See id. ¶ 32.)
Beginning in July 2010, Pearsall would periodically check on the status of the
bond sale. (See id. ¶ 34.) Defendants Blue and Lewis would respond to these requests for
updates with emails stating that they were negotiating with buyers for the bond. (See id.)
They also set up calls with Defendant Riviere to describe the sale efforts to Plaintiff, and
stated during these calls that buyers were going through due diligence.

(See id.)

Defendant Riviere avers that he made no such representations and that no such
representations were made while he was on the calls. (See Riviere Decl. ¶ 5.) Pearsall
continued to exchange emails and telephone calls with Defendants throughout 2011 and
2012. (See 2d Am. Compl. ¶ 35.)3 In early 2012, after Pearsall complained about the lack
of progress, Defendant Blue sent an email to Pearsall assuring him that Defendants were
moving forward with the sale of an unrated bond. (See id. ¶ 36.) On August 17, 2012,
Plaintiff sent a letter to “Defendants” demanding an accounting of the investment. (See
id. ¶ 40.) To date, Plaintiff has received no return on its investment nor any payments of
its 5% participation interest, and Defendants have refused to provide Plaintiff with an
accounting. (See id. ¶¶ 37–39, 41.)

3

However, when Defendant Mountain High Funding, LLC’s status was revoked
by the Nevada Secretary of State in April 2011, no one informed Pearsall of this fact. (See
2d Am. Compl. ¶ 35.)
6

B.

Procedural Background

On February 28, 2013, Plaintiff commenced this action against Defendants in the
Connecticut Superior Court for the Judicial District of Litchfield. (See Compl., Ex. B to
Notice of Removal [Doc. # 1].) On April 1, 2013, Defendants timely removed the action
to federal court. On May 1, 2013, Plaintiff filed an Amended Complaint [Doc. # 29]. On
May 30, 2013, the Court held a pre-filing conference to identify potential grounds for
Defendant Riviere’s pending motion to dismiss, during which the Court granted leave for
Plaintiff to file a Second Amended Complaint in anticipation of those issues. The Court
also scheduled limited written discovery regarding the jurisdictional issues in the case.
(See Scheduling Order [Doc. # 38].) Deposition discovery was stayed until a ruling on
Defendant Riviere’s pending motion to dismiss issued. (See id.)4
II.

Discussion
Defendant Riviere is named in Counts One, Three, Four, Six, and Seven of the

Second Amended Complaint. He moves to dismiss each of these counts pursuant to
Federal Rule of Civil Procedure 12(b)(2) and 12(b)(6), arguing that the Court lacks
personal jurisdiction over him, and that Plaintiff has failed to state a claim for which relief
can be granted.5

4

On July 12, 2013, counsel for the Mountain High Defendants, and for
Defendants Blue, Day, and Lewis moved [Doc. # 40] to withdraw from the case. The
Court granted [Doc. # 54] the motion to withdraw on September 18, 2013. To date, there
have been no appearances filed on behalf of these defendants. On October 8, 2013
Plaintiff moved [Doc. # 55] for Default Entry against these defendants, which was granted
[Doc. # 56] for failure to appear on October 10, 2013. Plaintiff’s subsequent motion [Doc.
# 63] for Default Judgment against each of these defendants, with the exception of
Defendant Blue, whom Plaintiff avers is subject to an automatic bankruptcy stay, remains
pending.
5
Because this Court concludes that it lacks personal jurisdiction over Defendant
Riviere, it will not address his arguments under Rule 12(b)(6).
7

When deciding a motion to dismiss for lack of personal jurisdiction, the Court
conducts a two-part analysis. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez,
305 F.3d 120, 124 (2d Cir. 2002). First, the Court applies Connecticut’s long-arm statute.
Id. If the Court finds that the long-arm statute applies, the Court must then decide
whether the exercise of jurisdiction over the defendant comports with the constitutional
requirements of due process. Id. “When responding to a Rule 12(b)(2) motion to dismiss
for lack of personal jurisdiction, the plaintiff bears the burden of establishing that the
court has jurisdiction over the defendant.” Id. at 784. When a court does not conduct a
“full-blown evidentiary hearing” on the motion, the plaintiff need only make out “a prima
facie showing that the court possesses personal jurisdiction over the defendant.”
DiStefano v. Carozzi North America, Inc., 286 F.3d 81, 84 (2d Cir. 2001) (quoting Marine
Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)). Such a showing must be
made by alleging facts, not simply conclusions, but the Court “construe[s] jurisdictional
allegations liberally and takes as true uncontroverted factual allegations.” Robinson v.
Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994) (internal citations omitted).
Defendant Riviere argues that an exercise of personal jurisdiction in this case would
comport with neither the Connecticut long-arm statute, nor the constitutional
requirements of due process.
A.

Long-Arm Statute

The Connecticut long-arm statute governing jurisdiction over foreign individuals
provides, in pertinent part, that “a court may exercise personal jurisdiction over any
nonresident individual . . . who in person or through an agent: (1) [t]ransacts any
business within the state; [or] (2) commits a tortious act within the state . . . .” Conn.
Gen. Stat. § 52-59b(a). Plaintiff claims that Defendant Riviere’s conduct in failing to
8

correct telephonic misrepresentations by other defendants in connection with the
investment at issue in this case constitutes both the transaction of business within the
state and the commission of a tortious act within the state.
1.

Transacts Business Within the State

Pursuant to § 52-59b(a)(1), a Connecticut court may exercise personal
jurisdiction over a defendant that transacts any business in this state. Although the
phrase “transacts any business” in § 52-59b(a)(1) is not defined, the Connecticut Supreme
Court has construed the term to embrace even “a single purposeful business transaction.”
Zartolas v. Nisenfeld, 184 Conn. 471, 474 (1981). “A purposeful business transaction is
one in which the defendant has engaged in some form of affirmative conduct allowing or
promoting the transaction of business within the forum state.” Nusbaum & Parrino, P.C.
v. Collazo De Colon, 618 F. Supp. 2d 156, 162 (D. Conn. 2009) (quoting Health
Communs., Inc. v. Chicken Soup for the Soul Publ’g, LLC, No. X06CV084014539S, 2009
WL 579227, *22 (Conn. Super. Ct. Feb. 9, 2009)). “Moreover, a nonresident individual
who has not entered this state physically nevertheless may be subject to jurisdiction in
this state under § 52–59b(a)(1) if that individual has invoked the benefits and protection
of Connecticut’s laws by virtue of his or her ‘purposeful Connecticut related activity.’”
Ryan v. Cerullo, 282 Conn. 109, 120 (2007) (internal citations and quotation marks
omitted). If a defendant is found to have transacted business in Connecticut, the cause of
action against the defendant must arise from its business activity in this state. See id. at
121–22.
Defendant Riviere avers that he has never lived in or visited Connecticut, has
never owned property in Connecticut, has never conducted or solicited business in
Connecticut, has no clients in Connecticut, and has never derived any revenue from
9

Connecticut. (See Riviere Decl. ¶ 2.) He further states that his only involvement in the
transaction at issue in this case was to provide marketing services to the Mountain High
Defendants for the bond, and that because the other defendants were never able to
structure the bond, neither he nor his company received any money from Plaintiff or the
Mountain High Defendants and derived no profit from Plaintiff’s investment. (See id.
¶ 3.) Defendant Riviere claims that his only contact with Pearsall occurred during two or
three phone calls during which Defendant Riviere was patched into calls that were already
in progress.

(See id. ¶¶ 4–5.)

Defendant Riviere avers that he never made any

representations that a buyer was lined up or that he was conducting due diligence, and
that he never heard anyone else make such representations while he was on the calls. (See
id. ¶ 5.) Thus, because his only connection to Connecticut consisted of a handful of
phone calls, he maintains that has never transacted business in Connecticut and no longarm jurisdiction over him exists under § 52-59b(a)(1).
“[T]he transmission of communications between an out-of-state defendant and a
[party] within the jurisdiction does not, by itself, constitute the transaction of business
within the forum state.” Mitchell v. Patterson, No. 4001501, 2005 WL 1671528, at *7
(Conn. Super. Ct. June 21, 2005) (internal citations and quotation marks omitted)
(collecting cases); see also Martinez v. Yavorcik, 455 F. Supp. 2d 115, 121 (D. Conn. 2006)
(“[C]ourts have in other cases found that minimal contacts with Connecticut by a
nonresident defendant, such as mail, phone, and fax communications, occasional visits,
and even pro hac vice admission to Connecticut courts will not constitute the transaction
of business within the state.”). For example, in Mitchell, the court concluded that it
lacked personal jurisdiction over the defendants where the only purposeful acts the
defendants engaged in in Connecticut were three faxes or e-mails sent to the plaintiffs
10

regarding contractual services the defendants would provide in North Carolina.
Similarly, in Harris v. Wells, 832 F. Supp. 31 (D. Conn. 1993), where the defendant merely
had some telephone conversations with the plaintiff in Connecticut regarding a litigation
agreement that was not prepared, negotiated, or executed in Connecticut, the defendant
had not engaged in a single purposeful business transaction in Connecticut. Id. at 34. See
also Martinez, 435 F. Supp. 2d at 120–122 (attorneys’ communications with individuals in
Connecticut regarding an ongoing attorney-client relationship with Ohio residents did
not constitute the transaction of business in Connecticut); Greene v. Sha-na-na, 637 F.
Supp. 591, 596 (D. Conn. 1986) (a telephone call, telegram, and letter sent by the
defendants to the plaintiff in Connecticut regarding their out-of-state partnership
agreement was insufficient to constitute the transaction of business in Connecticut).
Plaintiff argues that these cases are inapposite because Defendant Riviere actively
marketed the bond for the other defendants, as illustrated by his email correspondence
with them regarding his attempts to secure a buyer. (See, e.g., Ex. 1 to Miller Decl. [Doc.
# 58–2] at RR0000885–887, RR0000894.) Plaintiff also alleges that Defendant Riviere
participated in the calls to Pearsall “to help pitch Pearsall Holdings, to provide assurances
that he was marketing the bond, and to try to obtain Pearsall Holdings’ investment.” (See
Pl.’s Opp’n [Doc. # 58] at 9 (citing Pearsall Aff., Ex. A to Pl.’s Opp’n ¶¶ 6–12).) Thus,
Plaintiff reaaons that this case is more akin to the circumstances of Under Par Assocs.,
LLC v. Wash Depot A., Inc., 47 Conn. Supp. 319 (2001), in which the defendant was
alleged to have participated in telephonic negotiations with the plaintiff in Connecticut
regarding the sale of real property located in Connecticut during which time he allegedly
made several material misrepresentations. Id. 320–21. The court held that the defendant
had “participated in the business negotiation in the forum state,” id. at 322, “well beyond
11

the situation where a defendant merely telephones a single order from outside the State,”
id. (internal citations and quotation marks omitted). The defendant had purposefully
availed himself of the benefits of transacting business in Connecticut such that an exercise
of personal jurisdiction was appropriate. Id. at 322–23.
However, none of the allegations in the Second Amended Complaint or the
Pearsall Affidavit contradict Defendant Riviere’s statement that he merely joined a
handful of calls with Plaintiff that were already in progress. In the Second Amended
Complaint and the Pearsall Affidavit, Plaintiff gives no particularity as to which calls
Defendant Riviere joined, when those calls took place, whether Defendant Riviere was
present when any of the alleged misrepresentations were made and does not attribute any
affirmative misrepresentation to Defendant Riviere. Nor has Plaintiff disputed Defendant
Riviere’s representation that he has no other connections to this state.6 Unlike the
defendant in Under Par, Defendant Riviere did not enter into a contractual relationship
with Plaintiff and did not negotiate a transaction during the telephone calls with Plaintiff.
Further, unlike Under Par, the subject of the underlying transaction at issue in this case
was not the sale of real property in Connecticut, but rather an investment governed by a
contract with a Utah choice-of-law provision. (See Investment Agreement at A-7.)
6

Plaintiff has identified two emails that were exchanged between Plaintiff and
Defendant Riviere, as well as the other defendants. (See Ex. 1 to Mitchell Decl. at
RR0000485, RR0000489.) The first is an email from the Mountain High Defendants
setting up a conference call with Defendant Riviere, and the second is Defendant Riviere’s
reply stating that he will be available for the call. (See id.) However, both emails were
sent in January 2011, six months after Plaintiff made the Investment with the Mountain
High Defendants and his claims had accrued. Therefore, these emails are not relevant to
the jurisdictional analysis. See Back9 Network, Inc. v. Altounian, No. 3:12-CV-00582
(JCH), 2013 WL 996598, at *3 (D. Conn. Mar. 13, 2013) (refusing to consider actions that
post-dated the accrual of the plaintiff’s claim in deciding a motion to dismiss for lack of
personal jurisdiction).
As well, they do not contradict Defendant Riviere’s
representations that he only attended a handful of conference calls with Plaintiff.
12

Finally, Plaintiff argues that the emails exchanged between Defendant Riviere and
the other defendants, in addition to his presence on the calls with Plaintiff establish that
Defendant Riviere provided “material assistance” to an “offer to sell” securities in
Connecticut within the meaning of the CUSA and that he therefore transacted business
within the state for the purposes of § 52-59b(a)(1). However, Plaintiff offers no case law
in support of this argument. Further, even if Defendant Riviere did provide material
assistance to an offer to sell securities, the only Connecticut-related assistance that he
provided was to join a handful of conference calls with Plaintiff. Defendant Riviere has
never been to Connecticut, has no other business in Connecticut, derives no profit from
Connecticut, never entered into a contractual relationship with Plaintiff in Connecticut
and had no other contact with this state outside of the phone calls described above, which
related to a transaction governed by Utah law. Plaintiff has not even alleged that
Defendant Riviere knew Plaintiff was located in Connecticut when these calls were made.
Plaintiff is an Alaska limited partnership and because the calls did not originate from
Plaintiff in Connecticut, Defendant Riviere would not have seen a Connecticut area code
on the caller ID for the conference calls he joined, and the emails described in footnote
six give no indication of Plaintiff’s presence in Connecticut. Thus, there is no basis for
the Court to infer that Defendant Riviere knew he was materially assisting an offer to sell
securities in Connecticut if he did materially assist such an offer. Therefore, Defendant
Riviere did not “transact business within the state” for the purposes of § 52-59b(a)(1).
2.

Commits a Tortious Act Within the State

Plaintiff also alleges that this Court has personal jurisdiction over Defendant
Riviere pursuant to § 52-59b(a)(2) because he engaged in tortious conduct within the
state.

The Connecticut Supreme Court has not addressed the issue of whether a
13

nonresident who sends oral and written misrepresentations into Connecticut commits a
tort “within the State” for the purposes of § 52-59b(a)(2). Defendant Riviere urges this
Court to follow the approach of New York courts in interpreting the New York statute
that was the model for § 52-59b and conclude that an individual must be present in the
state when the misrepresentation is made for jurisdiction to attach. (See Def.’s Reply
[Doc. # 62] at 4 n.6.) However, the weight of authority holds that “[i]t is well-established
that false or fraudulent misrepresentations transmitted to Connecticut by mail, wire[,] or
telephone constitute ‘tortious conduct in Connecticut sufficient to establish personal
jurisdiction under Connecticut’s long-arm statute.’” Vertrue Inc. v. Meshkin, 429 F. Supp.
2d 479, 492 (D. Conn. 2006) (internal citations omitted). For example, in Cody v. Ward,
954 F. Supp. 43 (D. Conn. 1997), the court concluded in the context of a CUSA claim that
where a nonresident defendant directed fraudulent misrepresentations to the plaintiff in
Connecticut via phone, email, and online message boards inducing the plaintiff to
purchase securities, these allegations were sufficient to support a finding of personal
jurisdiction under § 52-59b(a)(2). Id. at 45–46; see also Back9 Network, Inc. v. Altounian,
No. 3:12-CV-00582 (JCH), 2013 WL 996598, at *3–4 (D. Conn. Mar. 13, 2013) (holding
that the court had jurisdiction pursuant to § 52-59b(a)(2) where the nonresident
defendant had addressed misrepresentations from outside the state to the plaintiff in
Connecticut via email, text message, and telephone).
Defendant points to two Connecticut cases concluding that when the plaintiff
initiated the call in which the alleged misrepresentation was transmitted, personal
jurisdiction under § 52-59b(a)(2) was not established. In Swain v. American Capital
Strategies, Ltd., No. X04CV030103924S, 2004 WL 1966013 (Conn. Super. Ct. Aug. 4,
2004), the basis for the plaintiff’s claims was statements made during an out-of-state
14

board meeting which Plaintiff joined via telephone from Connecticut. The court held
that the determinative factor for evaluating whether this call constituted a tort committed
within the state was “whether the alleged tortious conduct was directly and expressly
targeted at the forum state.” Id. a *8. Because the plaintiff had initiated the call to the
defendants, the court determined that the defendants had not targeted Connecticut with
their statements and that the alleged tortious conduct had not occurred in Connecticut
for the purposes of §52-59b(a)(1). Id. Similarly, in Dime Bank v. Merrill Lynch, No.
X05CV094017091S, 2010 WL 760441 (Conn. Super. Ct. Jan. 15, 2010), the court
determined that it lacked personal jurisdiction over an individual defendant pursuant to
§ 52-57b(a)(1) where the only alleged misrepresentations the defendant had made
occurred during a call the defendant had received from the plaintiff during which he
responded to the questions posed or were contained in presentation materials that were
later transmitted to the plaintiff by other defendants. Id. at *12.
Here, as in Dime Bank and Swain, the only alleged misrepresentations occurred
during conference calls that Defendant Riviere did not initiate and in which he responded
to questions. The closest Plaintiff comes to alleging that Defendant Riviere committed
any tortious conduct targeted to Connecticut is that “each of the Defendants made
additional assurances that there was a buyer for the bond already lined up, and that there
were other investors.” (Pearsall Decl. ¶ 12.) Even disregarding Defendant Riviere’s
sworn statement and accepting Plaintiff’s general allegations that “individuals” made
misrepresentations during the phone calls, Plaintiff has not alleged that Defendant
Riviere acted in any particular manner to direct his statements to Connecticut, or that he
even knew that anyone from Connecticut was on the calls.
concludes that it lacks personal jurisdiction under § 52-59b(a)(2).
15

Therefore, the Court

B.

Due Process

Specific personal jurisdiction may be exercised if the foreign defendant has
purposefully established significant contact with the forum state and the plaintiff’s cause
of action arises out of or is related to the defendant’s forum contacts. Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 472, 486 (1985); Metro. Life Ins. Co. v. Robertson-Ceco Corp.,
84 F.3d 560, 568 (2d Cir. 1996). In order to determine that the requisite minimum
contacts exist, “it is essential in each case that there be some act by which the defendant
purposefully avails itself of the privilege of conducting activities within the forum State,
thus invoking the benefits and protections of the laws.” Bensmiller v. E.I. Dupont de
Nemours & Co., 47 F.3d 79, 84–85 (2d Cir. 1995) (emphasis in original) (quoting Hanson
v. Denckla, 357 U.S. 235, 254 (1958)). “This purposeful availment requirement ensures
that a defendant will not be haled into a jurisdiction solely as a result of random,
fortuitous, or attenuated contacts, or of the unilateral activity of another party or a third
person.” Burger King Corp., 471 U.S. at 475 (internal citations and quotation marks
omitted). “Jurisdiction is proper, however, where the contacts proximately result from
actions by the defendant himself that create a ‘substantial connection’ with the forum
State.” Id. (emphasis in original).
Plaintiff

argues

that

its

allegations

that

Defendants

made

material

misrepresentations during phone calls to Pearsall in Connecticut in order to induce
Plaintiff to invest with the Mountain High Defendants suffice to show that Defendant
Riviere has purposefully availed himself of the benefits of this state’s laws. In Cody, the
district court concluded that because the defendant affirmatively made material
representations to the plaintiff in Connecticut in a series of emails and telephone calls to
induce the plaintiff to purchase securities, “he should reasonably have anticipated being
16

sued here.” 954 F. Supp. at 47; see also Center Capital Corp. v. Hall, CV 92-0452084S,
1993 WL 214614, at *5 (Conn. Super. Ct. June 9, 1993) (“One who causes fraudulent
misrepresentations to be communicated to Connecticut, either in person or through their
agent, in order to induce a Connecticut corporation to act thereon, cannot claim surprise
when called upon to answer in a Connecticut court.”)
However, the record shows no purposeful conduct by Defendant Riviere directed
toward Connecticut, and it would be unfair to subject him to personal jurisdiction in this
state. In Margolis v. Gilliam, No. CV94-0363504, 1995 WL 94548 (Conn. Super. Ct. Feb.
22, 1995), the nonresident defendants were alleged to have made defamatory statements
to the plaintiff’s future employer when contacted by that prospective employer and asked
about the plaintiff’s employment history, such that they tortiously interfered with the
plaintiff’s business expectancy. Id. at *1. The court concluded that unlike cases where
defendants purposely addressed fraudulent communications to Connecticut, the
defendants “merely received a telephone call during which they responded to inquiries
concerning the plaintiff” and such conduct did not represent purposeful activity directed
toward Connecticut. Id. at *5.
Defendant Riviere never contacted Plaintiff directly in Connecticut, he has no
other contacts with this state, he never entered into an ongoing contractual relationship
with Plaintiff, and the subject of the misrepresentation was unrelated to Connecticut. He
communicated with Plaintiff regarding a potential investment with the nonresident
Mountain High Defendants that would be governed by Utah law, and there is nothing in
the record before the Court to support an inference that Defendant Riviere even knew
that Pearsall was in Connecticut during the phone calls in question. Without such
knowledge, Defendant Riviere’s alleged conduct cannot represent a purposeful availment
17

of the benefits and privileges of Connecticut laws such that he should have anticipated
being sued in this jurisdiction. See, e.g., Grunberger Jewelers v. Leone, No. Civ. A
303CV647 (CFD), 2004 WL 1393608, at *4 (D. Conn. June 18, 2004) (“Considering the
totality of the circumstances—which include that the telephone negotiations between
Leone and Grunberger were part of negotiations with all three plaintiffs, two of whom
were in Illinois with Leone, and that the subject of the negotiation was the sale of a metals
testing machine to be used not in Connecticut but in West Africa—the Court concludes
that the two phone calls from Leone’s office to Grunberger in Connecticut, and his
participation in them, did not constitute a connection with the forum state such that
Leone should have reasonably anticipated being haled into court in Connecticut.”
(internal citations and quotation marks omitted)); Harris, 832 F. Supp. at 35 (“[The
defendant] did not purposefully direct his activities to residents of Connecticut. He
executed a joint litigation agreement outside of Connecticut which related to actions and
parties in several jurisdictions. He had some telephone conversations with Wells. This
was his only direct contact with any resident of Connecticut. Based on these limited
contacts, [the defendant] should not have anticipated that he would be haled into a
Connecticut court.”). Even if this Court were to have personal jurisdiction under the
Connecticut long-arm statute, the exercise of such jurisdiction would not comport with
the constitutional requirements of due process.7

7

In their briefing, the parties confine their discussion of due process to the
“minimum contacts” test, and neither party addresses the reasonableness analysis that
represents the second step of evaluating due process. Because the Court concludes that
Defendant Riviere lacks the requisite minimum contacts with Connecticut for an exercise
of personal jurisdiction over him to comport with due process, it will not address the
reasonableness factors.
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III.

Conclusion
For the foregoing reasons, Defendant Riviere’s Motion [Doc. # 42] to Dismiss is

GRANTED for lack of personal jurisdiction. The clerk is directed to dismiss Defendant
Riviere from this action.

IT IS SO ORDERED.
/s/
Janet Bond Arterton, U.S.D.J.

Dated at New Haven, Connecticut this 10th day of December, 2013.

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