McNutt, Thomas v. Weinerman & Associates, LLC

Filing 43

ORDER granting in part and denying in part 29 Motion to Dismiss for Lack of Jurisdiction; denying 33 Motion for Leave to File; denying 38 Motion for Leave to File. The claims against defendants Leiferman and TMT are DISMISSED, without prejudice, for lack of personal jurisdiction. By 2/22/2016, plaintiff must file a status report indicating how he plans to proceed with the rest of this case. Signed by District Judge James D. Peterson on 2/8/2016. (arw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

THOMAS MCNUTT,
Plaintiff,
v.

OPINION & ORDER

WEINERMAN & ASSOCIATES, LLC,
TMT MANAGEMENT GROUP, LLC,
MARK BUGNI, and TOM LEIFERMAN,

14-cv-307-jdp

Defendants.

In April 2014, plaintiff Thomas McNutt sued defendant Weinerman & Associates,
LLC for violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et
seq., and of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. The parties
settled, and the court dismissed the case without prejudice in December 2014. But a few
months later, McNutt moved to reopen the case because Weinerman did not pay him
pursuant to the parties’ settlement agreement. As it turned out, Weinerman had filed a notice
of dissolution with the Minnesota Secretary of State less than a month after the court closed
the case. McNutt’s motion to reopen the case therefore included a proposed amended
complaint alleging that the court should pierce Weinerman’s corporate veil and impose
liability on three new defendants: TMT Management Group, LLC, Mark Bugni, and Tom
Leiferman.
TMT and Leiferman moved to dismiss the amended complaint (Bugni is avoiding
service of process and has not yet appeared, see Dkt. 35-1), and McNutt responded with a
proposed second amended complaint. TMT and Leiferman contend that the proposed second
amended complaint cannot survive their original motion to dismiss because, among other

things, the court lacks personal jurisdiction over them. After the parties completed briefing
on these motions, McNutt moved for leave to file supplemental materials that, according to
him, refute various representations that TMT and Leiferman made in their brief in support of
their motion to dismiss.
The court disapproves of Weinerman’s attempts to dodge is obligations under the
settlement agreement. And the court has misgivings about letting Leiferman and Bugni—two
of Weinerman’s members—avoid liability despite their likely involvement in the company’s
actions. But even with McNutt’s supplemental materials, the amended complaint and
proposed second amended complaint do not demonstrate that this court has personal
jurisdiction over TMT or Leiferman (and likely not over Bugni either). The court will
therefore deny McNutt’s motion to amend, grant TMT and Leiferman’s motion to dismiss,
and deny McNutt’s motion for leave to file a supplemental document.

BACKGROUND
The court draws the following factual allegations from McNutt’s first amended
complaint and from his proposed second amended complaint. At this point in the case, the
court accepts McNutt’s allegations as true. The court will also summarize the relevant
procedural aspects of this case, which are part of the record.
McNutt resides in Hudson, Wisconsin. Weinerman was a Minnesota limited liability
company, with its principal place of business in Burnsville, Minnesota. During the relevant
events of this case, Weinerman was a closely held business that purchased debts and engaged
in debt collection activities. Bugni and Leiferman were both members of the company, along
with Beth Trautman, who is not a party to this case.

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In September 2013, Weinerman called McNutt on his cell phone to discuss collecting
a debt (McNutt does not allege the nature of the debt or how he incurred it). Weinerman did
not identify itself as a debt collector, instead implying that it was a law firm. After McNutt
disputed that he owed any debt, Weinerman threatened to put a lien on McNutt’s home and
sell it if he did not settle the debt within the next few days. Notwithstanding this threat,
Weinerman never put a lien on McNutt’s home, and McNutt alleges that Weinerman never
intended to place such a lien.
Weinerman continued to call McNutt, and the company used an automatic telephone
dialing system to do so. During the calls, Weinerman’s representatives were rude: they
threatened McNutt and interrupted him when he tried to speak. It is not clear how long
these calls continued, nor has McNutt alleged the date of the most recent call. But McNutt
continued to dispute the debt throughout these calls.
In April 2014, McNutt filed suit in this court, alleging that Weinerman violated
provisions of the FDCPA and the TCPA. Weinerman answered and participated in a
preliminary pretrial conference before Magistrate Judge Stephen Crocker. But then
Weinerman essentially stopped defending the case. Without comment or explanation,
Weinerman did not respond to McNutt’s discovery requests, and the company’s counsel
moved to withdraw, indicating that his client had stopped responding to his communications
and had not otherwise participated in its own defense. Before the court addressed the motion
to withdraw, however, McNutt notified the court that the parties had reached a settlement.
After a status conference on December 2, 2014, the court granted Weinerman’s counsel’s
motion to withdraw and dismissed the case without prejudice, indicating that McNutt could
seek further relief if he had difficulty enforcing the terms of his settlement. Case closed.

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Or not. McNutt moved to reopen the case in February 2015, contending that
Weinerman had simply refused to pay the agreed-upon settlement amount. Worse,
Weinerman had filed a notice of dissolution with the Minnesota Secretary of State on
December 29, 2014. But McNutt had discovered that shortly after Bugni and Leiferman
organized Weinerman, they established another company: TMT. According to TMT’s
website—which Weinerman’s website referred to as its “sister website”—the company is also
in the business of debt management and brokering. This prompted McNutt to file an
amended complaint alleging that TMT, Bugni, and Leiferman were liable for Weinerman’s
FDCPA and TCPA violations.

ANALYSIS
TMT and Leiferman move to dismiss the claims against them under Federal Rules of
Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). Dkt. 29.1 They contend that: (1) the court
lacks subject matter jurisdiction over this case; (2) the court lacks personal jurisdiction over
them; and (3) McNutt’s amended complaint fails to state a claim against them upon which
relief can be granted. McNutt responded to the motion to dismiss with a motion to amend
his complaint. Dkt. 33. TMT and Leiferman oppose McNutt’s motion to amend because the
proposed second amended complaint would not survive their original motion to dismiss.

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TMT and Leiferman also invoke Rule 12(b)(3), which concerns whether venue is proper in
this district. Dkt. 29, at 1 and Dkt. 30, at 3. But TMT and Leiferman have not offered more
than a lone statement in their brief that “venue is not proper for this matter in the Western
District of Wisconsin.” Dkt. 30, at 3-4. “[P]erfunctory and undeveloped arguments that are
unsupported by pertinent authority, are waived,” and so the court will not further address
TMT and Leiferman’s challenge to venue. Kramer v. Banc of Am. Sec., LLC, 355 F.3d 961, 964
n.1 (7th Cir. 2004) (internal citations and quotation marks omitted).

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“Under normal circumstances, the filing of an amended complaint renders moot any
pending motion to dismiss.” Aqua Fin., Inc. v. Harvest King, Inc., No. 07-cv-015, 2007 WL
5404939, at *1 (W.D. Wis. Mar. 12, 2007). But McNutt has already amended his pleadings
once, and so he must obtain the court’s leave before doing so again. Fed. R. Civ. P. 15(a)(2).
The court must freely give leave to amend “when justice so requires.” Id. But the court may
deny a motion to amend when the amendments would be futile, meaning that the proposed
amended complaint could not survive a second motion to dismiss. Gonzalez-Koeneke v. West,
791 F.3d 801, 807 (7th Cir. 2015), reh’g denied, (Aug. 3, 2015). Thus, the parties’ motions
present two sides of the same coin: if McNutt’s proposed second amended complaint cannot
overcome TMT and Leiferman’s jurisdictional or merits-based objections, then the court
must deny McNutt leave to amend and grant TMT and Leiferman’s motion to dismiss.
After reviewing the parties’ submissions and McNutt’s proposed second amended
complaint, the court concludes that it has subject matter jurisdiction over this case. But
McNutt has not made a prima facie showing that the court has personal jurisdiction over
TMT or Leiferman. Because jurisdiction is lacking, the court will not address the merits-based
challenges to McNutt’s claims. The end result is that the court will deny McNutt’s motion to
amend and grant TMT and Leiferman’s motion to dismiss. The court will also direct McNutt
to file a status report indicating how he plans to proceed with the rest of the case.
A. Subject matter jurisdiction
TMT and Leiferman contend that the court lacks subject matter jurisdiction over this
case—a bold assertion, given that McNutt explicitly alleges violations of two federal statutes
in his complaint. See Dkt. 33-1, ¶¶ 6, 79, 82, 85, 88. According to TMT and Leiferman,
however, McNutt’s complaint implicates only Weinerman for the alleged FDCPA and TCPA

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violations, not them. And because state law governs whether McNutt can pierce
Weinerman’s corporate veil, TMT and Leiferman argue that his claims against them do not
raise a federal question for purposes of establishing jurisdiction under 28 U.S.C. § 1331. This
argument is not persuasive for two reasons.
First, TMT and Leiferman’s approach to subject matter jurisdiction is inconsistent
with precedent in this circuit. The Seventh Circuit discussed the issue of subject matter
jurisdiction over piercing claims with underlying federal law claims in Board of Trustees, Sheet
Metal Workers’ National Pension Fund v. Elite Erectors, Inc., 212 F.3d 1031 (7th Cir. 2000). Elite
Erectors was an ERISA case, in which the plaintiff sought to impose liability on the
defendant’s “alter ego” companies. 212 F.3d at 1033. The Seventh Circuit concluded that the
district court had subject matter jurisdiction over the plaintiff’s ERISA claims as asserted
against the alter egos because “when the parent and subsidiary are just alter egos, then
everything depends on, and the claim arises under, federal law.” Id. at 1038.
The same principle applies in FDCPA and TCPA cases. For example, in Pettit v.
Retrieval Masters Creditor Bureau, Inc., the Seventh Circuit indicated that the FDCPA “does
not contemplate personal liability for shareholders or employees of debt collection companies
who act on behalf of those companies, except perhaps in limited instances where the corporate veil is
pierced.” 211 F.3d 1057, 1059 (7th Cir. 2000) (emphasis added). Indeed, the Seventh Circuit
has affirmed—on the merits and without questioning jurisdiction—a district court’s refusal to
pierce the corporate veil in an FDCPA case. See Aubert v. Am. Gen. Fin., Inc., 137 F.3d 976,
979 (7th Cir. 1998). The import of these cases is that, depending on the circumstances,
federal courts may exercise subject matter jurisdiction over cases in which a plaintiff pursues

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FDCPA or TCPA claims against a debt collector’s shareholders or alter egos. TMT and
Leiferman have not identified authority supporting their argument to the contrary.
Second, even if TMT and Leiferman were correct that veil piercing claims do not arise
under federal law regardless of the underlying cause of action, the court would still have
subject matter jurisdiction over this case. Under 28 U.S.C. § 1367(a), the court has
“supplemental jurisdiction over all other claims that are so related to claims in the action
within such original jurisdiction that they form part of the same case or controversy under
Article III of the United States Constitution.” “Two claims are part of the same case or
controversy if they derive from a common nucleus of operative facts. A loose factual
connection between the claims is generally sufficient.” Sanchez & Daniels v. Koresko, 503 F.3d
610, 614 (7th Cir. 2007) (internal citations and quotation marks omitted). Here, McNutt
has alleged FDCPA and TCPA claims against Weinerman, claims that TMT and Leiferman
have conceded fall within the court’s original jurisdiction. Dkt. 30, at 12 and Dkt. 36, at 16.
The question of whether TMT and Leiferman are liable for Weinerman’s violations is a
related issue that bears more than a “loose factual connection” to McNutt’s underlying
claims. See Elite Erectors, Inc., 212 F.3d at 1037 (suggesting, but not deciding, that § 1367
permits a district court to hear a piercing claim in the same suit as an underlying federal law
claim).
Whether under § 1331 or under § 1367, McNutt has alleged a basis from which this
court can exercise subject matter jurisdiction over his claims. The court will therefore deny
TMT and Leiferman’s motion to dismiss as it pertains to subject matter jurisdiction.2

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TMT and Leiferman also contend that McNutt’s piercing claim is so frivolous that he must
be using the FDCPA and TCPA “solely for the purpose of obtaining jurisdiction.” Dkt. 30, at
13 and Dkt. 36, at 16-17 (citing Bell v. Hood, 327 U.S. 678, 682-83 (1946)). The court does

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B. Personal jurisdiction
TMT and Leiferman also challenge whether the court has personal jurisdiction over
them. Because the court will resolve this challenge on the basis of the parties’ written
materials, McNutt must make only a prima facie showing that jurisdiction is proper. Purdue
Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). After reviewing
the allegations in the amended complaint and in the proposed second amended complaint, as
well as McNutt’s supplemental materials, the court concludes that McNutt cannot make this
showing. The court will therefore deny McNutt’s motion to amend and grant TMT and
Leiferman’s motion to dismiss for lack of personal jurisdiction.
McNutt offers two reasons for why the court may exercise personal jurisdiction over
TMT and Leiferman. First, he contends that Weinerman “acted through” TMT and
Leiferman. Dkt. 37, at 4-5. With regard to TMT, however, McNutt does not explain how the
company “acted” for Weinerman. Indeed, it is not clear that the companies ever had a
parent-subsidiary relationship or that they were ever related beyond having some of the same
organizers and members. As for Leiferman, McNutt alleges only that he managed Weinerman
and that he exercised considerable control over the company’s collection activities in
Wisconsin. Dkt. 33-1, ¶¶ 14-17. But even accepting these allegations as true, Leiferman’s
contacts with Wisconsin do not “directly relate to the challenged conduct or transaction.”
Tamburo v. Dworkin, 601 F.3d 693, 702 (7th Cir. 2010). McNutt does not allege, for example,
that Leiferman was involved in collecting the specific debt that is at issue in this case. Thus,
neither the proposed second amended complaint nor the amended complaint provides a basis

not agree. Although McNutt has not alleged facts to make a prima facie showing that the
court has personal jurisdiction over TMT and Leiferman, his piercing claim is not frivolous.

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for exercising specific jurisdiction over TMT or Leiferman based on their contacts with
Wisconsin.3
McNutt’s supplemental materials include a declaration from his counsel and a
complaint that a third party filed against TMT, Weinerman, Bugni, and Leiferman in Florida
state court. See Dkt. 40 and Dkt. 40-1. But these materials do not meaningfully add to
McNutt’s allegations. At most, they show that TMT was in fact involved in debt collection
activities, contrary to its assertion that it “is no debt collection company,” Dkt. 36, at 22,
and that one other plaintiff has alleged state law claims against the same group of defendants.
Neither point bears on whether McNutt’s claims in this case arise from actions that TMT or
Leiferman purposefully directed toward Wisconsin. And although the state court complaint
named all four of the defendants in this case, the plaintiff did not allege any theories of
liability based on piercing the corporate veil.
McNutt’s second argument for personal jurisdiction is that the court can exercise
personal jurisdiction over TMT and Leiferman because he has pleaded a veil-piercing theory
of liability in his proposed second amended complaint. Under this theory, Weinerman’s
contacts with Wisconsin would become TMT and Leiferman’s contacts. See, e.g., Taurus IP v.
DaimlerChrysler Corp., 519 F. Supp. 2d 905, 921 (W.D. Wis. 2007), aff’d sub nom., Taurus IP,
LLC v. DaimlerChrysler Corp., 726 F.3d 1306 (Fed. Cir. 2013). But the court is not persuaded
that McNutt’s piercing allegations support the exercise of personal jurisdiction over TMT or
Leiferman.

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McNutt does not contend that either TMT or Leiferman are subject to the court’s general
personal jurisdiction.

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Weinerman was organized under Minnesota law. Dkt. 33-1, ¶¶ 2, 8. Courts in
Minnesota allow conclusory allegations to overcome a motion to dismiss a piercing claim at
the pleading stage, provided that the plaintiff gives the defendant notice of his or her intent
to pierce the defendant’s corporate veil. Barton v. Moore, 558 N.W.2d 746, 749-50 (Minn.
1997).4 But requiring courts to have personal jurisdiction over defendants is a constitutional
due process protection. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471 (1985). Thus,
regardless of the substantive standards that the court would use to evaluate the merits of
McNutt’s piercing claims, he must still make a prima facie showing that TMT and Leiferman
had sufficient minimum contacts with Wisconsin to support the exercise of personal
jurisdiction. Felland v. Clifton, 682 F.3d 665, 673 (7th Cir. 2012). Bare, conclusory allegations
that TMT is Weinerman’s alter ego, or that Weinerman is a facade for Leiferman’s individual
dealings, will not suffice to establish personal jurisdiction, even under Minnesota’s liberal
standards for pleading a substantive piercing claim. See, e.g., BioFuels Automation, Inc. v. Kiewit
Energy Co., No. 10-cv-610, 2010 WL 3023391, at *3 (D. Minn. July 28, 2010); Steward v.
Royal Bank of Can., No. 06-cv-5124, 2007 WL 1964564, at *4 (D. Minn. July 2, 2007), aff’d,
295 F. App’x 863 (8th Cir. 2008). The few specific facts that McNutt has alleged do not
amount to a prima facie showing that the court could pierce Weinerman’s corporate veil to
exercise personal jurisdiction over TMT or Leiferman.

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TMT and Leiferman assume that Minnesota law applies. Dkt. 30 and Dkt. 36. But the
Seventh Circuit had issued conflicting decisions regarding whether to apply the forum state’s
law or the law of the state of incorporation when examining personal jurisdiction based on a
piercing theory. Compare Ill. Bell Tel. Co. v. Glob. NAPs Ill., Inc., 551 F.3d 587, 597 (7th Cir.
2008) (state of incorporation), with IDS Life Ins. Co. v. SunAmerica Life Ins. Co., 136 F.3d 537,
540 (7th Cir. 1998) (forum state). The point is academic because McNutt’s factual
allegations are too thin to establish personal jurisdiction under any theory.

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McNutt alleges that TMT and Weinerman have the same members and organizers
and share the same offices, and that the companies’ websites link to each other. Dkt. 33-1,
¶¶ 9, 19, 21-28. But McNutt has not alleged that TMT disregarded Weinerman’s corporate
existence by exercising complete control over its affairs, nor that the two companies
intermingled finances, employees, or assets. These are the types of allegations that Minnesota
state and federal courts have required before exercising personal jurisdiction on the basis of a
plaintiff’s piercing claims. See George v. Uponor Corp., 988 F. Supp. 2d 1056, 1064-67 (D.
Minn. 2013); Bielicki v. Empire Stevedoring Co., 741 F. Supp. 758, 762-63 (D. Minn.), amended,
765 F. Supp. 991 (D. Minn. 1990); JL Schwieters Const., Inc. v. Goldridge Const., Inc., 788
N.W.2d 529, 536 (Minn. Ct. App. 2010). The same is true for McNutt’s allegations
concerning Leiferman. Even accepting as true that Leiferman directed Weinerman’s business
activities and was one of a small group of individuals who organized both Weinerman and
TMT, these allegations, without more, do not support imputing Weinerman’s contacts with
Wisconsin to Leiferman. Thus, McNutt has not made a prima facie showing that personal
jurisdiction through veil piercing would be appropriate.
Neither the amended complaint nor the proposed second amended complaint alleges
facts which, if true, would support this court’s exercise of personal jurisdiction over TMT or
Leiferman. McNutt’s supplemental materials do not change this conclusion. The court must
therefore deny McNutt’s motion to amend and grant TMT and Leiferman’s motion to
dismiss. The court will also deny McNutt’s motion for leave to file a supplemental document.
Because the court will dismiss TMT and Leiferman on jurisdictional grounds rather than on
the merits, McNutt is free to refile his piercing claims in a court with jurisdiction.

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C. Remaining issues
The court’s conclusion that it lacks personal jurisdiction over TMT and Leiferman
does not end this case. McNutt must therefore provide a status report indicating how he
plans to proceed from here. That status report must address the following two issues.
First, McNutt has live FDCPA and TCPA claims against Weinerman. After the
original parties reached a settlement, the court dismissed McNutt’s claims against
Weinerman without prejudice. Dkt. 16. McNutt reasserted those claims in his amended
complaint, Dkt. 21, and in his proposed second amended complaint, Dkt. 33. But
Weinerman has not answered or otherwise responded to the amended complaint. Thus, the
appropriate course of action appears to be for McNutt to move for the entry of default
against Weinerman. Alternatively, if McNutt does not wish to pursue his claims against
Weinerman, then he should promptly file a notice of dismissal. McNutt’s status report must
indicate how he plans to proceed with the rest of the case.
Second, McNutt has not served Bugni. Dkt. 35-1. Under Rule 4(m), when a plaintiff
fails to timely serve a defendant, the court must dismiss the claims against that defendant
without prejudice, or order the plaintiff to accomplish service within a specified time. It
appears that Bugni will not be subject to this court’s personal jurisdiction for substantially
the same reasons that the court cannot exercise personal jurisdiction over TMT and
Leiferman. Dismissal would therefore be appropriate. But under Rule 4(m), McNutt is
entitled to notice and an opportunity to respond. Thus, McNutt’s status report must also
discuss whether Bugni should be dismissed from this case.

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ORDER
IT IS ORDERED that:
1. Defendants Tom Leiferman and TMT Management Group, LLC’s motion to
dismiss, Dkt. 29, is GRANTED in part. The claims against Leiferman and TMT
are DISMISSED, without prejudice, for lack of personal jurisdiction.
2. Plaintiff Thomas McNutt’s motion for leave to file a second amended complaint,
Dkt. 33, is DENIED.
3. McNutt’s motion for leave to file supplemental document, Dkt. 38, is DENIED.
4. By February 22, 2016, McNutt must file a status report with the court, indicating
how he plans to proceed with the rest of this case.
Entered February 8, 2016.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

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