Ibekwe v. Blood Oranges LLC et al

Filing 24

ORDER granting in part and denying in part 8 Motion to Dismiss for Lack of Jurisdiction. DENIED in part with regard to Defendants Amy Hill; Scott Ward; Blood Oranges, LLC; CrissCross Funding; Minicast, LLC; and Native Digit al, Inc., and GRANTED in part with regard to Defendants Miguel Sosa and Juliet Summer Thomson. The relevant portions of the Complaint against Defendants Sosa and Thomson are DISMISSED WITHOUT PREJUDICE. Signed by Chief Judge Frank D. Whitney on 5/29/18. (clc)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:18-cv-00089-FDW-DCK
BRYANT IBEKWE,
Plaintiffs,
vs.
BLOOD ORANGES, LLC; CRISSCROSS
FUNDING; MINICAST, LLC; NATIVE
DIGITAL, INC., AMY HILL, MIGUEL
SOSA, JULIET SUMMER THOMSON;
SCOTT WARD; and JAMES LINEN,
Defendants.

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ORDER

THIS MATTER is before the Court on a Motion to Dismiss Plaintiff’s Complaint (Doc.
No. 8) for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Upon
review by the Court, for the reasons below, the Motion is GRANTED with regard to Defendants
Sosa and Thomson and DENIED with regard to all other moving parties.
BACKGROUND
According to the Complaint,1 Plaintiff Bryant Ibekwe is a resident of Mecklenburg County,
North Carolina. (Doc. No. 1, p. 1). His complaint concerns an assortment of defendants2 including
four business entities: Blood Oranges, LLC; CrissCross Funding; Minicast, LLC; and Native
Digital, Inc. (collectively, “Entity Defendants”), and five individuals (Amy Hill, Miguel Sosa,
Juliet Summer Thomson, and Scott Ward (collectively “Individual Defendants”), as well as James

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The allegations and assertions of the pleadings and supporting affidavits are to be read in the light most favorable to
Plaintiff. Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).
2
Defendant James Linen has not yet appeared in this matter and is not party to the Defendants’ Motion to Dismiss.
(Doc. No. 8). Any reference to “Individual Defendants” or “Moving Defendants” does not include Defendant Linen.

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Linen. (Doc. No. 1, p. 1). Entity Defendants and Individual Defendants are collectively “Moving
Defendants.”
Plaintiff alleges he and Defendants entered into several loan agreements, ostensibly for the
purpose of supporting various business plans and charitable ventures. (Doc. No. 1, pp. 3–4).
Plaintiff eventually came to believe Defendants were operating sham businesses to induce loans
that Defendants never intended to repay or use for any stated business purpose. (Doc. No. 1, pp.
10–15).
Plaintiff alleges that none of Moving Defendants are residents of North Carolina.
According to the Complaint, Entity Defendants are residents of either Delaware, Wyoming, or
Missouri with principal places of business in either California or Missouri. (Doc. No. 1, pp. 1–3).
Moving Defendants have not challenged this in their pleadings. According to their own affidavits,
Individual Defendants are residents of either Florida or Colorado.3 (Doc. No. 9, Exhibits B–E).
Only one of the Defendants, Amy Hill, purports to have ever been to North Carolina, (Doc. No.
23).
Plaintiff alleges all Defendants knew he was a resident of North Carolina when they entered
into their business relationships. (Doc. No. 19, Exhibit A). Plaintiff also alleges Defendants
knowingly contacted him in North Carolina with the sole purpose of soliciting loans or
investments. (Doc. No. 1, pp. 3–4). Defendants assert that none of the agreements were “signed,
negotiated, or performed” in North Carolina, (Doc. No. 9, p. 7).

Plaintiff’s Complaint alleges that, on information and belief, many of the Individual Defendants are residents of
California. (Doc. No. 1, pp. 2–3). Plaintiff’s other pleadings do not make an issue of Defendants’ subsequent claims
of residency. See, e.g. (Doc. No. 19). Defendant James Linen has not yet appeared, and Plaintiff has filed a motion
to extend the deadline for service. (Doc. No. 20). Defendant Linen is not party to Defendants’ Motion to Dismiss
(Doc. No. 8).
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Before filing an answer, Defendants filed a motion to dismiss for lack of personal
jurisdiction under Fed. R. Civ. P. 12(b)(2) and a memorandum in support of the motion. (Docs.
Nos. 8 & 9). Plaintiff filed a memorandum in opposition with an attached affidavit presenting
evidence that Defendant Hill was aware of Plaintiff’s residency throughout their business
relationship. (Doc. No. 19). Moving Defendants replied to Plaintiff’s memorandum with an
attached affidavit by Defendant Hill countering Plaintiff’s assertions. (Docs. Nos. 22 & 23).
APPLICABLE LAW
Upon a motion to dismiss for lack of personal jurisdiction under Fed. R. Civ. P. 12(b)(2),
the burden is on the plaintiff to make a prima facie showing of the grounds for jurisdiction. See
Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 558 (4th Cir. 2014). When the court’s
analysis rests solely on the pleadings and supporting affidavits, the court will read the pleadings
and affidavits in the light most favorable to the plaintiff. Combs v. Bakker, 886 F.2d 673, 676 (4th
Cir. 1989). For the court to exercise personal jurisdiction over non-resident defendants, it must
comply with the long-arm statute of the forum state, and it must meet the requirements of the Due
Process Clause of the Fourteenth Amendment. Christian Sci. Bd. Of Dirs. of the First Church of
Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001).
The North Carolina long-arm statute is interpreted to extend jurisdiction to the extent
allowed by the Due Process Clause, thereby merging the jurisdictional analysis into a single due
process inquiry. Id. The paradigmatic case for personal jurisdiction questions is International
Shoe, which requires that “minimum contacts” exist between the defendant and the forum state
such that “the suit does not offend traditional notions of fair play and substantial justice.”

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International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted); see
also Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011).
A court may exercise general personal jurisdiction over a defendant when that defendant
is essentially “at home” in the forum. See Daimler AG v. Bauman, 571 U.S. 117, 127. For a
corporate (or other entity) defendant, “at home” will usually mean their domicile and their
principal place of business. See id. at 137. For individual defendants, it typically means their
domicile. Id. When general personal jurisdiction does not apply, a court may still exercise specific
personal jurisdiction if the plaintiff makes a sufficient showing that 1) the defendant purposefully
availed themselves of the forum and the benefits and protections of its laws, 2) the plaintiff’s claim
arises from the purposefully availing conduct, and 3) the exercise of jurisdiction would be
constitutionally reasonable. See Consulting Engineers Corp. v. Geometric Ltd., 561 F.3d 273, 278
(4th Cir. 2009).
ANALYSIS
Here, there is no need for extensive analysis of general personal jurisdiction. Plaintiff does
not allege that any Defendant is a resident of or has its principal place of business in North
Carolina. (Doc. No. 1, pp. 1–3). As for specific personal jurisdiction, the three elements laid out
in Consulting Engineers must be met. Here, the second element is easily established. Plaintiff
asserts jurisdiction on the basis of alleged solicitations for loans and investments and alleges these
solicitations and transactions constitute fraud. (Doc. No. 1); (Doc. No. 19, p. 11). It is, of course,
still necessary to show Defendants have purposefully availed themselves of the forum and that
jurisdiction would be constitutionally reasonable. As explained below, these elements are met,
and the Court may exercise specific personal jurisdiction over Defendants Hill; Ward; Blood
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Oranges, LLC; CrissCross Funding; Minicast, LLC; and Native Digital, Inc. As to Defendants
Sosa and Thomson, the element of purposeful availment is not met, and the Court may not exercise
specific personal jurisdiction over them.
A. Purposefully Availing Contacts
Specific personal jurisdiction over a foreign defendant requires minimum contacts that
“give rise to the liabilities sued on.” International Shoe, 326 U.S. at 317. These contacts must be
the result of the defendant’s own conduct, thereby purposefully availing themselves of the forum.
See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980); see also J. McIntyre
Machinery, Ltd. v. Nicastro, 564 U.S. 873, 877 (2011). A defendant that has accepted the
privileges of directing business at the forum state has also accepted the burden of appearing before
its courts, even if they have never physically entered the forum state. Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 476 (1985).
In Consulting Engineers, the Fourth Circuit provided a non-exhaustive list of factors to
consider when weighing whether the defendant purposefully availed themselves of the forum state:
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]

whether the defendant maintains offices or agents in the forum state,
whether the defendant owns property in the forum state,
whether the defendant reached into the forum state to solicit or initiate business,
whether the defendant deliberately engaged in significant or long-term business
activities in the forum state,
whether the parties contractually agreed that the law of the forum state would
govern disputes,
whether the defendant made in-person contact with the resident of the forum in
the forum state regarding the business relationship,
the nature, quality and extent of the parties’ communications about the business
being transacted, and
whether the performance of contractual duties was to occur within the forum.

Consulting Engineers, 561 F.3d at 278 (internal citations omitted). Even with the aid of these
factors, this analysis is “not susceptible to mechanical application” of any test. Id. That is, any
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one factor—or one not listed—may be sufficient, depending upon the facts. Cf. BeoCare Group,
Inc. v. Morrissey, 124 F. Supp. 3d 696, 704 (W.D.N.C. 2015) (holding that sufficient contacts
existed to establish personal jurisdiction over a defendant despite that defendant having no offices,
property, or employees in the state and having never visited the state).
Moving Defendants place great emphasis on the holding of Consulting Engineers, in which
a foreign corporate defendant was held to be beyond the personal jurisdiction of the trial court. In
Consulting Engineers, the Fourth Circuit held that mere email and phone communications, even
in contemplation of business transactions, are not sufficient contacts to establish specific personal
jurisdiction. 561 F.3d at 281. Still, the comparison is not apt. In that case, the communications
between the defendants and the plaintiffs in the forum state did not directly result in the creation
or sustaining of a substantial business relationship. Id. at 279–80. Moreover, the conduct leading
to the lawsuit concerned the performance of a contract outside of the forum state. Id. at 281. Here,
Moving Defendants’ communications and solicitations resulted in a continuous business
relationship, consummated by an assortment of loan agreements. (Doc. No. 1, Exhibits D–I). In
addition, the solicitations and loans themselves form the basis for Plaintiff’s Complaint. (Doc.
No. 1).
The previously referenced case BeoCare Group provides a better comparison. In BeoCare
Group, one defendant, Alliance Labs, LLC, was an out of state entity with no offices, property, or
employees in the forum. 124 F. Supp. 3d at 704–05. The defendant, however, repeatedly solicited
business from an employee of the plaintiff, and the defendant allegedly entered into some
transactions on the basis of those solicitations. Id. at 704. The court held personal jurisdiction
was appropriate, finding that Alliance Labs had purposefully availed itself of the forum state by
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initiating business contacts and entering into an actual business relationship with the employee of
a plaintiff they had reason to know was a North Carolina resident. Id.
Here, the emails and loan agreements provided in Plaintiff’s complaint tend to show a
continuing relationship initiated by Moving Defendants over the course of around four years in
which agreements were entered into and money actually changed hands. (Doc. No. 1). Plaintiff
has plausibly alleged that at least one Individual Defendant, Amy Hill, knew Plaintiff was a
resident of North Carolina throughout their business relationship. (Doc. No. 19, pp. 2–3). Given
the business relationship that appears to have existed between Defendant Hill and Defendant
Ward—they both hold themselves out as representatives or agents of Entity Defendants and were
counterparties to all of the loan agreements at issue—it is similarly plausible that Defendant Ward
was aware of Plaintiff’s residency. (Doc. No. 1, Exhibits A–O). As in BeoCare, Defendants Hill
and Ward have engaged in conduct sufficient to purposefully avail themselves of both the
privileges and burdens of doing business in North Carolina.
A corporate or other entity defendant may be subject to personal jurisdiction on the basis
of the conduct and contacts of its members, agents, or employees. See International Shoe, 326
U.S. at 319–20. In the course of their contacts, Defendants Hill and Ward held themselves out as
representatives of Blood Oranges, LLC; CrissCross Funding; Minicast, LLC; and Native Digital,
Inc. (Doc. No. 1, Exhibits A–O). Plaintiff has made a prima facie showing that Entity Defendants
purposefully availed themselves of the forum state.
The same cannot be said of Defendants Sosa and Thomson. Plaintiff alleges both are
owners or controllers of various Entity Defendants and alleges they both engaged in solicitations
similar to those of Defendants Hill and Ward. (Doc. No. 1, pp. 2–8). Based on the statements and
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exhibits presently before the Court, these allegations are insufficient. Defendant Sosa is listed as
a recipient of several communications from Plaintiff, but not as the sender of these
communications. (Doc. No. 1, Exhibits J–M). In addition, there is no indication of either Sosa or
Thomson having actually transacted business with Plaintiff—as the loan agreements signed by
Hill and Ward so indicate. Contacts that are mere communications about potential transactions
and are initiated only by the plaintiff or third parties are not sufficient to establish personal
jurisdiction. See World-Wide Volkswagen, 444 U.S. at 297; Consulting Engineers, 561 F.3d at
281–82. Furthermore, the contacts of a business entity cannot be imputed to its members or owners
without evidence that the individual engaged in their own purposeful contacts with the forum state.
V-E2, LLC v. Callbutton, LLC, (No. 3:10-cv-00538), 2012 WL 6108245, at *3 (W.D.N.C. Dec.
10, 2012) (citing Shaffer v. Heitner, 433 U.S. 186 (1977)). Absent further pleadings making
plausible allegations to the contrary, Defendants Sosa and Thomson have not purposefully availed
themselves of the forum state. Therefore, the test for the exercise of specific personal jurisdiction
fails in their case.
B. Constitutional Reasonableness
Excepting Defendants Sosa and Thomson, the first and second elements of the test for
specific personal jurisdiction as applied to Moving Defendants have been satisfied. The third
element that remains is whether the exercise of such jurisdiction would be “constitutionally
reasonable.” This element is evaluated with a five-factor test: 1) the burden on the defendant, 2)
the forum state’s interest in hearing the case, 3) the convenience of the plaintiff, 4) judicial
efficiency, and 5) the states’ interests in “furthering fundamental substantial social policy.” See
Burger King, 471 U.S. at 477.
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In any case, there is some burden on a defendant being forced to litigate in a foreign forum,
but this burden is usually reasonable when the defendant could foresee litigating in a particular
state because of purposeful contacts with the forum. See CFA Inst. v. Inst. of Chartered Financial
Analysts of India, 551 F.3d 285, 296 (4th Cir. 2009). Here, Individual Defendants are Florida and
Colorado residents who would be forced to travel to North Carolina in order to appear for trial.
However, by soliciting business in North Carolina, they should have reasonably expected they
could face liability in this state.
It is obvious that it would be most convenient to Plaintiff, a resident of North Carolina, to
litigate in North Carolina. It also requires little analysis to find the forum state has an interest in
providing its residents a convenient means by which to vindicate their rights. Judicial efficiency
is well served by providing a single forum in which to hear claims concerning diverse defendants,
see Beocare, 124 F. Supp. 3d at 706, and neither party has presented another forum as a favorable
alternative. (Doc. No. 19, p. 13). There is also no indication in the pleadings of any other
“substantive social policy” that would be frustrated by an exercise of personal jurisdiction in this
case.
As explained above concerning purposeful availment, Moving Defendants (except Sosa
and Thomson) had deliberate contacts with North Carolina. This gave fair notice to these
Defendants that they may be subject to suit in North Carolina. Therefore, the burden of litigating
in North Carolina does not offend basic constitutional fairness with regard to these Defendants.
All other factors concern either Plaintiff or the forum itself, and it has been established there is no
patent unfairness with regard to them. It is constitutionally reasonable for specific personal
jurisdiction to attach to Defendants Hill; Ward; Blood Oranges, LLC; CrissCross Funding;
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Minicast, LLC; and Native Digital, Inc. As applied to these Defendants, the third element of
specific personal jurisdiction has been met.
CONCLUSION
Substantial communications to and solicitations of business from a known resident of the
forum state that result in an established business relationship are sufficient “minimum contacts” to
establish personal jurisdiction over a defendant. Here, most, but not all, of Moving Defendants
engaged in such solicitations and relationships with Plaintiff. Accordingly, the Court may exercise
specific personal jurisdiction over Defendants Amy Hill, Scott Ward, Blood Oranges LLC,
CrissCross Funding, Minicast LLC, and Native Digital Inc. Based upon the record presently
before the Court, the Court may not exercise personal jurisdiction over Defendants Miguel Sosa
and Juliet Summer Thomson.
Therefore, the Motion to Dismiss (Doc. No. 8) is DENIED in part with regard to
Defendants Amy Hill; Scott Ward; Blood Oranges, LLC; CrissCross Funding; Minicast, LLC; and
Native Digital, Inc., and GRANTED in part with regard to Defendants Miguel Sosa and Juliet
Summer Thomson. The relevant portions of the Complaint against Defendants Sosa and Thomson
are DISMISSED WITHOUT PREJUDICE.
IT IS SO ORDERED.
Signed: May 29, 2018

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