Private Capital Group v. Dareus

Filing 28

MEMORANDUM DECISION denying 11 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Ted Stewart on 08/02/2013. (asp)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

PRIVATE CAPITAL GROUP, INC.,
Plaintiff,

MEMORANDUM DECISION AND
ORDER DENYING DEFENDANT’S
MOTION TO DISMISS

vs.
MARCELL SHINTUN DAREUS,

Case No. 2:13-CV-00018

Defendant.

This matter is before the Court on Defendant Marcell Dareus’ Motion to Dismiss for
Lack of Personal Jurisdiction. For the reasons discussed below, the Court will deny Defendant’s
Motion to Dismiss.
I. BACKGROUND
The following facts are relevant to Defendant’s Motion to Dismiss. Unless otherwise
noted, they are taken from Plaintiff’s Memorandum in Opposition1 and presented in the light
most favorable to Plaintiff as the nonmoving party.
Plaintiff Private Capital Group, Inc. (“PCG”) is a Utah corporation organized and
existing under the laws of the State of Utah.2 Defendant is a professional football player under

1

Docket No. 18.

2

Docket No. 14, at 5.
1

contract with the Buffalo Bills in Buffalo, New York, and permanently resides in Fairfield,
Alabama.3
On July 27, 2012, Solaris Capital, LLC, Andrew McClellen, TDC Lending, LLC (the
“Lenders”) and Defendant entered into a Secured Promissory Note, Loan Agreement, and AllAssets Security Agreement (collectively referred to as the “Loan Documents”) wherein
Defendant borrowed $1,267,436 ( the “Loan”). The Loan Agreement states that the Loan
Documents shall “be governed by and construed in accordance with the laws of the state of Utah,
and by Borrower’s acceptance hereof Borrower submits to the jurisdiction of the Federal and
District Courts located in Salt Lake County, Utah.”4
Plaintiff negotiated the Loan with Defendant on behalf of the Lenders. Plaintiff obtained
various documents, including Defendant’s player contract, bank statements, and credit report, to
verify Defendant’s identity, net worth, cash flow, and/or ability to repay. Plaintiff also had
several telephone conferences with Defendant to arrange for the details of the Loan.
Defendant contends that he did not sign the Loan Documents. According to Defendant,
the loans are a result of a sham orchestrated by a third-party to use his identity to defraud entities
such as Plaintiff. Defendant has provided multiple affidavits supporting his contention.
Plaintiff, however, has provided evidence to support its claims.
II. PERSONAL JURISDICTION STANDARD
“The plaintiff bears the burden of establishing personal jurisdiction, but where, as here,
the issue is raised early on in litigation, based on pleadings . . . and affidavits, that burden can be

3

Docket No. 12, at 2.

4

Docket No. 14, at 28.
2

met by a prima facie showing.”5 “The allegations in the complaint must be taken as true to the
extent they are uncontroverted by the defendant’s affidavits. If the parties present conflicting
affidavits, all factual disputes are resolved in the plaintiff’s favor, and the plaintiff’s prima facie
showing is sufficient notwithstanding the contrary presentation by the moving party.”6
“In order to defeat a plaintiff’s prima facie showing of jurisdiction, a defendant must
present a compelling case demonstrating ‘that the presence of some other considerations would
render jurisdiction unreasonable.’”7 “[I]n the absence of a full evidentiary hearing, a district
court relying on documentary evidence in its consideration of a motion to dismiss may not weigh
the factual evidence.”8 “[W]hatever degree of proof is required initially, a plaintiff must have
proved by the end of trial the jurisdictional facts by a preponderance of the evidence.”9
“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.”10
5

Shrader v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011) (quoting Dudnikov v. Chalk
& Vermillion Fine Arts, Inc., 514 F.3d 1063, 1069-70 (10th Cir. 2008)).
6

Kennedy v. Freeman, 919 F.2d 126, 128 (10th Cir. 1990) (quoting Behagen v. Amateur
Basketball Ass’n of the US, 744 F.2d 731, 733 (10th Cir. 1984), cert. denied, 471 U.S. 1010
(1985)).
7

OMI Holdings, Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086, 1091 (10th Cir. 1998)
(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).
8

Ten Mile Indus. Park v. W. Plains Serv. Corp., 810 F.2d 1518, 1524 (10th Cir. 1987).

9

Fed. Deposit Ins. Corp. v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir. 1992)
(quoting Forsythe v. Overmyer, 576 F.2d 779, 781 (9th Cir. 1978)); see also CutCo Indus., Inc.
v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986) (“plaintiff has the ultimate burden of establishing
jurisdiction”); Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)
(regardless of procedure “[e]ventually . . . plaintiff must establish jurisdiction . . . either at a
pretrial evidentiary hearing or at trial”).
10

Soma Med. Int’l v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir. 1999).
3

“It is frequently helpful to undertake the due process analysis first, because any set of
circumstances that satisfies due process will also satisfy the long-arm statute.”11
III. DISCUSSION
A due process analysis of personal jurisdiction is a two-step inquiry. First, the Court
must consider whether Defendant has sufficient “minimum contacts” with the forum state “that
he should reasonably anticipate being haled into court there.”12 Second, “if the defendant’s
actions create sufficient minimum contacts, we must then consider whether the exercise of
personal jurisdiction over the defendant offends traditional notions of fair play and substantial
justice.”13
A. MINIMUM CONTACTS
The “minimum contacts” standard can be established through a finding of either general
jurisdiction or specific jurisdiction. Both will be discussed below.
1. GENERAL JURISDICTION
For general jurisdiction to exist, “‘the defendant must be conducting substantial and
continuous local activity in the forum state.’”14 These activities must be continuous and
systematic to justify a finding of general jurisdiction.15

11

Sys. Designs, Inc. v. New Customward Co., 248 F. Supp. 2d 1093, 1097 (D. Utah

12

World-Wide Volkswagen Corp., 444 U.S. at 297.

13

OMI Holdings, Inc., 149 F.3d at 1091 (quotation marks and citation omitted).

2003).

14

Soma, 196 F.3d at 1295 (quoting Arguello v. Indus. Woodworking Mach. Co., 838 P.2d
1120, 1122 (Utah 1992)).
15

Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984).
4

Defendant correctly argues that he has no contacts with Utah that would allow a finding
of general jurisdiction, and Plaintiff does not argue to the contrary. Therefore, Plaintiff has
failed to meet its burden to prove general jurisdiction.
2. SPECIFIC JURISDICTION
The evaluation of specific jurisdiction in Utah mandates a three-part inquiry: ‘(1)
the defendant’s acts or contacts must implicate Utah under the Utah long-arm
statute; (2) a ‘nexus’ must exist between the plaintiff’s claims and the defendant’s
acts or contacts; and (3) application of the Utah long-arm statute must satisfy the
requirements of federal due process.’16
The Utah Legislature has determined the Utah long-arm statute “should be applied so as
to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due
process clause of the Fourteenth Amendment to the United States Constitution.”17 The Utah
Supreme Court “frequently make[s] a due process analysis first because any set of circumstances
that satisfies due process will also satisfy the long-arm statute.”18
“In order to assess whether minimum contacts occurred in a contract case, we look at
‘prior negotiations and contemplated future consequences, along with the terms of the contract
and the parties’ actual course of dealing.’”19
In AST Sports Sci., Inc. v. CLF Distribution Ltd., the plaintiff alleged breach of contract,
breach of implied contract, unjust enrichment, and fraud in the inducement and claimed the

16

Soma 196 F.3d at 1297 (quoting Nat’l Petroleum Mktg., Inc. v. Phoenix Fuel Co., 902
F. Supp. 1459, 1465 (D. Utah 1995)).
17

Utah Code Ann. § 78B-3-201(3) (2008).

18

Soma, 196 F.3d at 1298 (quoting SII MegaDiamond, Inc. v. Am. Superabrasives Corp.,
969 P.2d 430, 433 (Utah 1998)); see also Farr West Capital, Inc. v. Towne, 46 F.3d 1071, 1075
(10th Cir. 1995).
19

AST Sports Sci., Inc. v. CLF Distribution Ltd., 514 F.3d 1054, 1058 (10th Cir. 2008)
(quoting Burger King, 471 U.S. at 479).
5

defendant failed to pay for products received from the plaintiff.20 The defendant argued that the
plaintiff did not provide competent proof of a contract.21 The court held: “while we are aware
that [defendant] claims he has never seen the Agreement, much less signed it, at this stage of the
litigation we are bound to construe all contested evidence in favor of AST.”22 The court found
that the contract produced by the plaintiff clearly referenced the defendant and “evidence[d] the
prior negotiations and future consequences of an intended continuing business relationship, the
terms of which would be governed by Colorado law.”23 Even though the contract was unsigned,
the court found it to be prima facie evidence of a contract between the parties.24
While “a contract alone does not subject a nonresident defendant to the jurisdiction of the
subject forum,” the AST court found several facts that supported personal jurisdiction.25 In
particular, the court found that the defendant’s actions in approaching the plaintiff about
becoming plaintiff’s distributor and then forming an ongoing business relationship to facilitate
the agreement were significant.26 These conditions “constitute[d] a business relationship . . . that
include[d] ‘prior negotiations and contemplated future consequences, along with the . . . parties’
actual course of dealing.’”27 The court held that:

20

Id. at 1055.

21

Id. at 1058.

22

Id.

23

Id.

24

Id.

25

Id. at 1059.

26

Id.

27

Id. (quoting Burger King, 471 U.S. at 479).
6

where a defendant who purposefully has directed activities at forum residents
seeks to defeat jurisdiction, he must present a compelling case that the presence of
some other considerations would render jurisdiction unreasonable. In such
circumstances, absent a showing that exercising jurisdiction over [defendants]
would “offend traditional notions of fair play and substantial justice,”
[j]urisdiction is proper . . . where the contacts proximately result from actions by
the defendant himself that create a substantial connection with the forum state.28
Similarly here, Defendant’s sole argument against jurisdiction is that the Loan
Documents were fraudulently procured and that he has no connection with the State of Utah.29
Defendant contends that Plaintiff submitted no admissible evidence in support of its claim that
Defendant signed the Loan Documents. Contrary to Defendant’s contention, the Court finds the
following evidence included in the Loan application supports Plaintiff’s claims: a copy of
Defendant’s driver’s license,30 the bank statements from CapStar Bank,31 Defendant’s credit
report,32 Smith’s acknowledgment of the Carter loan,33 and Ms. Niger Purdie’s notarization of
the Secured Promissory Note.34 This evidence provides additional support for Plaintiff’s claim
that Defendant signed the Loan Documents.
Additionally, Plaintiff’s evidence shows prior negotiations and contemplated future
consequences of obtaining the loan. Defendant’s actions, determined through Plaintiff’s
evidence, establish a substantial connection with Utah. The Loan Documents provided by

28

Id. (internal quotations omitted).

29

Docket No. 19, at 3.

30

Docket No. 18-1, at 94; see also id. at 19.

31

Id. at 95; see also id. at 21-27.

32

Id.; see also id. at 29-32.

33

Docket No. 13, at 4.

34

Docket No. 18-1, at 57.
7

Plaintiff state the Secured Promissory Note was negotiated in the State of Utah, made by
Borrower and accepted by Lender in the State of Utah, and the proceeds of the note were
disbursed from Utah.35
The Court is not at liberty to weigh the conflicting evidence at this time. Therefore, any
conflict must be resolved in favor of Plaintiff at this stage of the litigation, “notwithstanding the
contrary presentation by the moving party.”36 In sum, the Court finds that Plaintiff has met its
burden on this factor.
B. TRADITIONAL NOTIONS OF FAIR PLAY AND SUBSTANTIAL JUSTICE
If the Court finds that Defendant had adequate minimum contacts with the forum state,
the Court must also determine that personal jurisdiction is reasonable in light of the
circumstances surrounding the case or, in other words, that exercising jurisdiction would not
offend traditional notions of “fair play and substantial justice.”37
Courts consider the following factors to decide whether exercise of jurisdiction is
reasonable: (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 substantive policies.38
When dealing with the reasonableness of exercising personal jurisdiction
the analyses of minimum contacts and reasonableness are complementary, such that the
reasonableness prong of the due process inquiry evokes a sliding scale: the weaker the
plaintiff’s showing on [minimum contacts], the less a defendant need show in terms of
unreasonableness to defeat jurisdiction. The reverse is equally true: an especially strong
35

Id. at 55.

36

Kennedy, 919 F.2d at 128; see also AST Sports Sci., Inc., 514 F.3d at 1058.

37

Burger King, 471 U.S. at 476.

38

Bell Helicopter Textron, Inc. v. Heliqwest Int’l., Ltd., 385 F.3d 1291, 1296 (10th Cir.

2004).
8

showing of reasonableness may serve to fortify a borderline showing of [minimum
contacts].39
Defendant’s sole argument that the exercise of jurisdiction would be unreasonable is that
Plaintiff did not make a prima facie showing that Defendant signed the Loan Documents.
However, as previously discussed, Plaintiff’s evidence, if accepted as true, is sufficient to make a
prima facie showing of a valid contract, and this issue must be resolved in Plaintiff’s favor at this
time.40 Defendant makes no other argument to support his contention that this Court’s exercise
of personal jurisdiction over Defendant would offend traditional notions of fair play and
substantial justice. Considering the above listed factors, the Court finds that the exercise of
personal jurisdiction would be reasonable in light of the circumstances.
IV. CONCLUSION
For the reasons stated above, Defendant’s Motion to Dismiss for Lack of Personal
Jurisdiction (Docket No. 11) is DENIED.
DATED August 2, 2013.
BY THE COURT:

_____________________________________
TED STEWART
United States District Judge

39

Pro Axess, Inc. v. Orlux Distrib., Inc., 428 F.3d 1270, 1279-80 (10th Cir. 2005)
(alterations in original) (quoting OMI Holdings, Inc., 149 F.3d at 1092).
40

Kennedy, 919 F.2d at 128; see also AST Sports Sci., Inc., 514 F.3d at 1058.
9