Universal Settlements International, Inc. v. National Viatical, Inc. et al

Filing 240

OPINION ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)

UNITED STATES DISTRICT COURT F O R THE WESTERN DISTRICT OF MICHIGAN S O U T H E R N DIVISION

U N IV E R S A L SETTLEMENTS INTERNATIONAL, INC., P l a in tif f , F ile No. 1:07-CV-1243 v. H O N . ROBERT HOLMES BELL N A T I O N A L VIATICAL, INC., JAMES TORCHIA, and MARC A. CELELLO, D e f e n d a n ts . / OPINION T h is matter comes before the Court on Defendants' motions to dismiss for lack of p e rs o n a l jurisdiction. (Dkt. Nos. 143, 146.) Plaintiff opposes Defendants' motions on the b a s is of waiver. (Dkt. Nos. 161, 162.) For the reasons that follow, the motions to dismiss f o r lack of personal jurisdiction will be denied. I. P la in tif f Universal Settlements International, Inc. ("USI") filed this action against D e f en d a n ts National Viatical, Inc. ("NVI"), James Torchia, and Marc A. Cellelo on D e c e m b e r 12, 2007. On January 30, 2008, Defendants NVI, Torchia, and Celello filed their a n sw e r to the complaint, raising the affirmative defense of lack of personal jurisdiction. (D k t. No. 24.) On the same date, Defendants filed a Rule 12(b)(6) motion to dismiss for f a ilu re to state a claim. (Dkt. No. 23.) Defendants NVI and Torchia filed a motion to

tra n sf e r venue on June 2, 2008. (Dkt. No. 67.) Defendants did not file their motions to d is m is s for lack of personal jurisdiction until September 2008. (Dkt. Nos. 143, 146.)1 T h e Federal Rules of Civil Procedure provide that a party waives the Rule 12(b)(2) p e rs o n a l jurisdiction defense by omitting it from a previously filed motion to dismiss if the p e rs o n a l jurisdiction defense was available when the initial motion was made. Fed. R. Civ. P . 12(g)(2)2 and (h)(1)3 . See 2 James Wm. Moore et al., Moore's Federal Practice § 12.22 ( 3 d ed. 2009) ("Under Rule 12(h)(1)(A), a party waives these defenses [including the defense o f lack of personal jurisdiction] by omitting them from a rule 12(b) motion if the defenses w e re available at the time the motion was made."); 5C Charles Alan Wright, et al., Federal

Defendants NVI and Torchia filed their Rule 12(b)(2) motion to dismiss for lack of p e rso n a l jurisdiction on September 7, 2008. (Dkt. No. 146.) Defendant Celello filed his R u le 12(b)(2) motion to dismiss for lack of personal jurisdiction on September 15, 2008. (D k t. No. 143.)
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Rule 12(g)(2) provides:

E x c e p t as provided in Rule 12(h)(2) or (3), a party that makes a motion under th is rule must not make another motion under this rule raising a defense or o b je c tio n that was available to the party but omitted from its earlier motion. F e d . R. Civ. P. 12(g)(2). The exceptions noted in Rule 12(h)(2) and (3) are not relevant to th e circumstances of this case.
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Rule 12(h)(1) provides:

A party waives any defense listed in Rule 12(b)(2) ­ (5) by: (A) omitting it f ro m a motion in the circumstances described in Rule 12(g)(2); or (B) failing to either: (i) make it by motion under this rule; or (ii) include it in a responsive p le a d in g or in an amendment allowed by Rule 15(a)(1) as a matter of course. F e d . R. Civ. P. 12(h)(1).

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P ra c tice & Procedure Civil § 1391 (3d ed. 2009) ("According to Federal Rule 12(h)(1), the th re sh o ld defenses of lack of personal jurisdiction [etc.] . . . are waived if they are not in c lu d e d in a preliminary motion under Rule 12 as required by Rule 12(g) . . . ."). Defendants acknowledge that they did not raise their Rule 12(b)(2) lack of personal ju risd ictio n defense when they filed their first motion under Rule 12 to dismiss for failure to s ta te a claim, but nevertheless contend that they should not be deemed to have waived the d e f en s e . Defendants contend that they are not subject to waiver because they satisfied the s e c o n d prong of Rule 12(h)(1)(B) by raising the lack of personal jurisdiction as an a f f irm a tiv e defense in their answer. Defendants' argument ignores the provisions of Rule 12(h)(1)(A). Under Rule 1 2 (h )(1 )(A ), a party waives a 12(b) defense by omitting it from a previously filed 12(b) m o tio n . Rule 12(h)(1)(A) does not address or exempt those situations when the party has f ile d an answer asserting a jurisdictional defect as an affirmative defense. Defendants also contend that they should not be deemed to have waived the lack of p e rso n a l jurisdiction defense because the motion was not "available" to them until Magistrate J u d g e Carmody issued her September 4, 2008, Report and Recommendation ("R&R") which f o u n d no evidence that the funds paid to NVI came from Receivership funds. Defendants c o n te n d that until the R&R found that the money had not been stolen from the Receivership, th e y were hamstrung from pursuing their personal jurisdiction defense. The Court is not p e rsu a d e d by Defendants' argument.

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In a diversity action, the law of the forum state determines the reach of the district c o u r t' s personal jurisdiction over parties, subject to constitutional due process requirements. A ir Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 550 (6th Cir. 2007). Under M ic h ig a n law a court's ability to exercise personal jurisdiction over a defendant depends on f a c to rs such as a defendant's presence in the state, incorporation in the state, consent to ju ris d ic tio n , transaction of business in the state, causing acts in the state resulting in an action f o r tort, ownership of property in the state, or contracting for services to be rendered in the state. Mich. Comp. Laws §§ 600.701, .705, .711, .715. The facts underpinning the Court's a b i lity to exercise personal jurisdiction over Defendants are uniquely within Defendants' k n o w le d g e . Defendants knew what Plaintiff was alleging and they knew whether or not they c o m m itte d the fraudulent acts alleged. Defendants did not have to wait for a ruling on P l a in tif f 's motion for preliminary injunction in order to know whether a lack of personal ju ris d ic tio n defense was available to them. Whether or not Defendants could have succeeded o n a motion to dismiss for lack of jurisdiction when they filed their first motion to dismiss d o e s not affect the "availability" of a lack of jurisdiction defense. The Court concludes that Defendants waived their ability to raise a lack of personal ju ris d ic tio n defense. Accordingly, Defendants' motions to dismiss for lack of personal ju ris d ic tio n will be denied. An order consistent with this opinion will be entered.

Dated: June 8, 2009

/s/ Robert Holmes Bell ROBERT HOLMES BELL UNITED STATES DISTRICT JUDGE 4