Centrinex, LLC v. Darkstar Group, LTC et al
Filing
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MEMORANDUM AND ORDER. Motion of defendant's, Ajax Group, LLC and Alexander L. Shogren, to dismiss for lack of personal jurisdiction (Dk. 11) is denied. See attached for more details. Signed by U.S. District Senior Judge Sam A. Crow on 9/19/2012. (bmw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
CENTRINEX, LLC,
Plaintiff,
v.
Case No. 12-2300-SAC
DARKSTAR GROUP, LTD, AJAX GROUP,
LLC, and ALEXANDER L. SHOGREN,
Defendants.
MEMORANDUM AND ORDER
This case comes before the court on a motion to dismiss two of the
three defendants for lack of personal jurisdiction. Defendant Darkstar Group,
Ltd (“Darkstar”) does not join in the motion to dismiss, and has answered
the complaint. Dk. 19. Plaintiff opposes the motion.
I. Motion to Dismiss Standard
Plaintiff bears the burden of establishing a prima facie case of personal
jurisdiction by a preponderance of the evidence. Dudnikov v. Chalk &
Vermilion Fine Arts, Inc., 514 F.3d 1063 (10th Cir. 2008). Plaintiff may make
this showing by demonstrating, via affidavit or other written materials, facts
that if true would support jurisdiction over the defendant. TH Agric. &
Nutrition, LLC v. Ace European Grp. Ltd., 488 F.3d 1282, 1286 (10th Cir.
2007). To the extent they are uncontroverted, the Court must accept the
well-pleaded allegations of the complaint. Wenz v. Memery Crystal, 55 F.3d
1503, 1505 (10th Cir. 1995). The Court resolves any factual disputes in
favor of the plaintiff. Wenz, 55 F.3d at 1505. “Where the district court
considers a pre-trial motion to dismiss for lack of personal jurisdiction
without conducting an evidentiary hearing, the plaintiff need only make a
prima facie showing of personal jurisdiction to defeat the motion.” ClearOne
Communications, Inc. v. Bowers, 643 F.3d 735 (10th Cir. 2011), quoting
AST Sports Sci., Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1056–57 (10th Cir.
2008).
II. Facts
The evidence of record and the well-pleaded allegations of the
complaint which Defendants have not controverted establish the following
facts.
Plaintiff Centrinex, LLC, is a limited liability company organized
pursuant to the laws of Nevada, and has its principal place of business in
Kansas. Defendant Darkstar is a corporation organized pursuant to the laws
of British Virgin Islands which Plaintiff believes conducts its principal
business operations in Miami Beach, Florida.1 Defendant AJAX Group, LLC
(“AJAX”) is a limited liability company organized pursuant to the laws of the
state of New York and has its principal place of business at same address in
1
Darkstar’s answer denies Plaintiff’s belief, yet does not state its principal place of business.
2
Miami Beach, Florida as Darkstar.2 Defendant Alexander L. Shogren is an
individual resident of the state of Florida who is a principal of Darkstar.
Plaintiff believes Shogren is also a principal of AJAX. See Dks. 1, 19, para. 4.
On September 21, 2011, AJAX was formed in the state of New York.
On or about September 22, 2011, Centrinex entered into a contract with
Darkstar for Centrinex to provide call center services to Darkstar for the
ensuing two-year period. Centrinex has experience in the payday loan
industry and supports those operations by providing call center services to
others in that same industry. Under the agreement, Darkstar would decide
to approve or disapprove loans which were worked on by Centrinex, and
Darkstar would cause approved loans to be funded from its operations in
Florida.
On October 12, 2011, Shogren met with Bart Miller, Centrinex’s CEO,
in Centrinex’s Kansas office. Miller negotiated the terms and conditions of
the call center contract with Shogren and others, both in person in the
Kansas Centrinex office and via email. During those conversations, Shogren
represented to Miller that Shogren was a principal of Darkstar and of AJAX.
Three or more other representatives of Darkstar and AJAX came to the
Centrinex offices in Kansas on multiple occasions.
2
This fact is asserted in the Complaint, Dk. 1, para. 3, and is not denied by Darkstar’s
Answer, Dk. 19, para. 3. But the Contract attached to the Complaint lists Darkstar’s address
for purposes of notice as: “3rd Floor, Omar Hodge Bldg., PO Box 3504, Road Town, Tortola,
British Virgin Islands,” while another exhibit attached to the Complaint lists Ajax’s address
as: “560 Lincoln Road, Miami Beach, FL.” See Dk. 1, Exh. A, p. 16; Dk. 1, Exh. B, p. 21, 22.
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Shogren sent at least 89 emails to Centrinex related to contract
negotiations, the provision of services by Centrinex, Shogren’s desire to
begin his own call center operations, and payment for Centrinex’s services.
The signature blocks used by Shogren on those emails variously represent
him to be: “President & CEO of DS Lending, Ltd. & Snap Leads, Ltd”;
“President & CEO of DS Lending, Ltd.”; “Managing General Partner, Darkstar
Partners LLC”; “Founder & Chairman, Pure Action Sports, Inc.”; and simply
“Darkstar Lending, LLC.” Other persons affiliated with Shogren also had
email and other communications with Centrinex related to the contract or
services.
On January 17, 2012, Centrinex received an email stating in part:
“after careful consideration we have decided to move our call center
operations in-house effective today at 8:00 AM (EST).” The email was signed
by “Phil, AJAX Group, LLC, … Miami Beach, FL.” Dk. 18, Exh. B. Centrinex
was then locked out from the software which it needed to continue providing
services to Darkstar under the contract. Centrinex’s CEO contacted Shogren
and other representatives of Darkstar or AJAX regarding the matter and was
promised payment of the outstanding invoices due at that time, but received
no payment. Centrinex believed, based on the personal and electronic
communications and the parties’ course of dealing, that Darkstar and AJAX
were one and the same business controlled by Shogren.
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Centrinex then brought suit seeking a permanent injunction, and
making the following claims: 1) violation of Kansas Uniform Trade Secrets
Act against all defendants; 2) breach of contract against Darkstar; 3)
tortious interference with contract against AJAX and Shogren; and 4) fraud
against all defendants. Centrinex believes that from the inception of its
agreement with Darkstar, all three defendants conspired to learn Centrinex’s
call center trade secrets and then use them for their own benefit.
Analysis
Defendants AJAX and Shogren have moved to dismiss them from the
case for lack of personal jurisdiction, but have submitted no evidence. Dk.
11. Plaintiff contends that this court has personal jurisdiction over these two
defendants because they transacted business within the state of Kansas, and
committed a tortious act within the state of Kansas. Dk. 18. In support of its
position, Plaintiff submits an affidavit from its CEO and copies of multiple
email communications between the parties.
“To obtain personal jurisdiction over a nonresident defendant in a
diversity action, a plaintiff must show that jurisdiction is legitimate under the
laws of the forum state and that the exercise of jurisdiction does not offend
the due process clause of the Fourteenth Amendment.” Emp'rs Mut. Cas. Co.
v. Bartile Roofs, Inc., 618 F.3d 1153, 1159 (10th Cir. 2010). Pursuant to
Federal Rule of Civil Procedure 17(b), the capacity of a party to be sued in
federal court is to be determined by “the law of the state where the court is
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located.” Fed. R.Civ.P. 17(b). Thus, the court looks to Kansas law. Kansas'
long-arm statute is construed liberally so as to allow jurisdiction to the full
extent permitted by due process, Fed. Rural Elec. Ins. Corp. v. Kootenai
Elec. Coop., 17 F.3d 1302, 1305 (10th Cir. 1994), so the court need not
conduct a statutory analysis apart from the federal constitutional analysis.
“The due process analysis consists of two steps.” Id. “First, we
consider whether the defendant has such minimum contacts with the
forum state that he should reasonably anticipate being haled into court
there.” Id. (internal quotation marks omitted). “This minimumcontacts standard may be satisfied by showing general or specific
jurisdiction.” Id. “Second, if the defendant has the minimum contacts
with the forum state, we determine whether the exercise of personal
jurisdiction over the defendant offends traditional notions of fair play
and substantial justice.” Id. (internal quotation marks omitted). “This
analysis is fact specific.” Id.
ClearOne, 643 F.3d at 763, citing Emp'rs Mut. Cas. Co., 618 F.3d at 1159.
Defendant Shogren
To meet its burden to show minimum contacts with Kansas, Plaintiff
points to the following facts, which are supported by the record. Shogren
traveled to Kansas at least once as a representative of Darkstar or AJAX to
visit Centrinex in relation to its call center services. Shogren exchanged
numerous e-mails and had other communications with Plaintiff in Kansas in
the process of negotiating, executing, and allegedly breaching the call center
contract. Shogren’s actions, including his alleged decision to breach the call
center contract and move his call center business in-house instead of
continuing his business relationship with the Plaintiff, caused injuries to
Plaintiff in Kansas.
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The court concludes that Shogren “purposefully availed [himself] of
the privilege of conducting activities or consummating a transaction in”
Kansas, and that by doing so, he caused injuries to Plaintiff that are the
subject of this litigation. Emp'rs Mut. Cas., 618 F.3d at 1160 (discussing
requirements for specific jurisdiction). Accordingly, Shogren had sufficient
minimum contacts with the state of Kansas to reasonably expect to be haled
into court there in connection with his Centrinex-related activities.
Shogren contends that even if minimum contacts exist as to AJAX or
Darkstar, the fiduciary shield doctrine prevents the exercise of personal
jurisdiction over him. See Dk. 11, p. 5. The Tenth Circuit recognizes this
doctrine. See Ten Mile Indus. Park v. W. Plains Serv. Corp., 810 F.2d 1518,
1527 (10th Cir. 1987) (“Where the acts of individual principals of a
corporation in the jurisdiction were carried out solely in the individuals'
corporate or representative capacity, the corporate structure will ordinarily
insulate the individuals from the court's jurisdiction.”) But Shogren has
carefully avoided any allegation as to which corporation’s shield he is raising
as protection from jurisdiction over him, individually. Since the record
reflects that Shogren held himself out to Plaintiff at various times as acting
on behalf of DS Lending, Ltd., Snap Leads, Ltd., Darkstar Partners LLC., Pure
Action Sports, and Darkstar Lending, LLC, the court cannot currently
determine that Shogren’s participation in the allegedly wrongful activity was
solely in his capacity as an officer or employee of any corporation. Shogren
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has not shown that the corporate shield doctrine applies to him. See
ClearOne, 643 F.3d at 764.
The court thus considers whether the exercise of personal jurisdiction
over Shogren would offend traditional notions of fair play and substantial
justice. Here, the defendant “bears the burden of presenting a compelling
case that the presence of some other considerations would render
jurisdiction unreasonable.” Emp'rs Mut. Cas., 618 F.3d at 1161 (internal
quotation marks and brackets omitted).
“This reasonableness analysis requires the weighing of five factors:
(1) the burden on the defendant, (2) the forum state's interest in
resolving the dispute, (3) the plaintiff's interest in receiving convenient
and effective relief, (4) the interstate judicial system's interest in
obtaining the most efficient resolution of controversies, and (5) the
shared interest of the several states in furthering fundamental social
policies.”
Id. (citing Pro Axess, Inc. v. Orlux Distrib., Inc., 428 F.3d 1270, 1279–80
(10th Cir. 2005)).
Shogren has not attempted to discuss any of these factors, so he
necessarily fails to carry his “burden of presenting a compelling case that
this court’s exercise of personal jurisdiction over him would be
unreasonable.” ClearOne, 643 F.3d at 764. Further, based on the facts of
record, the exercise of jurisdiction over this Defendant appears to be
reasonable.
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Defendant AJAX
The record is skinnier regarding AJAX’s contacts with the state of
Kansas. AJAX is not a Kansas company and does not have its principal place
of business there. Its only activity within Kansas shown by the record is its
sending of three emails to Centrinex.
In the “unique” context of communications and activities on the
internet, the Tenth Circuit has “adapt[ed] the analysis of personal
jurisdiction [by] placing emphasis on the internet user or site intentionally
directing [its] activity or operation at the forum state rather than just having
the activity or operation accessible from there.” Shrader v. Biddinger, 633
F.3d 1235, 1240 (10th Cir. 2011) (emphasis in original). With respect to
email, “the apt analogues may be phone calls, faxes, and letters made or
sent by out-of-state defendants to forum residents,” which “have been found
sufficient to support specific personal jurisdiction when they directly give rise
to the cause of action.” Id. at 1247.
Such is the case here. On January 17, 2012, AJAX sent the email
which notified Centrinex that its services [to Darkstar] were no longer
needed. Centrinex believes that email evidences a breach of its contract with
Darkstar. The second email was sent to Centrinex by “Leah Parisian [mailto:
leah@ajaxgroupllc.com].” Dated January 20, 2012, it copied Bart Miller, Alex
Shogren, and others about a return shipment of some phones. Dk. 18, Exh.
C, p. 00011. The third email, also sent to Centrinex by “Leah Parisian
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[mailto: leah@ajaxgroupllc.com],” dated January 27, 2012, responded to
Centrinex’s intervening request for payment by stating that Leah would be
processing all payments at the end of the month. Centrinex did not receive a
payment at the end of the month. These emails directly give rise to Plaintiff’s
claim for breach of contract against Darkstar, for tortious interference with
contract against Ajax and Shogren, and for fraud against all Defendants.
The record also contains the affidavit of Centrinex’s CEO stating his
belief, based on the parties’ course of dealing and Shogren’s representations
to him, that Shogren was a principal of AJAX and of Darkstar. The close
relationship between Darkstar and AJAX is shown by the facts that Darkstar
apparently initiated or consented to AJAX’s sending the email which
terminated the Darkstar-Centrinex contract, and that Centrinex accepted
AJAX’s email notice as effectively terminating its contract with Darkstar.
AJAX subsequently communicated with Centrinex in other matters relevant
to this lawsuit, including responding to Centrinex’s request for payment for
services Centrinex had already rendered to Darkstar. Although these
contacts are few, they are sufficient to show that AJAX purposefully directed
its activities at Centrinex, which was known to be in Kansas, and that
Centrinex’s injuries arose out of AJAX’s forum-related activities which gave
rise to this lawsuit.3 Accordingly, Plaintiff has made a prima facie case of
3
The court does not have sufficient information to determine whether AJAX was viable or
whether Shogren is an alter ego of AJAX, but Plaintiff’s assertion that Darkstar and AJAX
were actually the same corporation foreshadows this as a potential issue for another day.
See Ten Mile, 810 F.2d at 1527.
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minimum contacts. AJAX has not attempted to show that the court’s exercise
of personal jurisdiction over it would be unreasonable.
Based on the record as it stands today, Plaintiff has met its burden to
make a prima facie showing of personal jurisdiction over these Defendants.
IT IS THEREFORE ORDERED that Defendants’ motion to dismiss for
lack of personal jurisdiction (Dk. 11) is denied.
Dated this 19th day of September, 2012 at Topeka, Kansas.
s/ Sam A. Crow
Sam A. Crow, U.S. District Senior Judge
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