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Entzminger v. Flannel Damage Holdings LC

United States District Court, D. Arizona

May 15, 2017

Michael S Entzminger, Plaintiff,
v.
Flannel Damage Holdings LC, et al., Defendants.

          ORDER

          Douglas L. Rayes United States District Judge.

         Plaintiff Michael Entzminger filed this action in December 2016 alleging a number of claims arising from a real estate investment gone awry. (Doc. 1.) Defendants Rex Baldwin (Rex) and Blue Danube LC (Blue Danube) have moved to dismiss the claims against them pursuant to Federal Rules of Civil Procedure 12(b)(2) and (6). (Doc. 17.) The motion is fully briefed and no party requested oral argument or an evidentiary hearing. For the following reasons, the Court finds that personal jurisdiction over Rex and Blue Danube is lacking and therefore dismisses the claims against them.[1]

         I. Background

         Entzminger, an Arizona resident, entered into an investment agreement with Defendant Flannel Damage Holdings LC (Flannel), a Utah limited liability company, in March 2016. (Doc. 1 ¶¶ 1-2, 11-12.) Flannel's only three members are Defendants Richard Pupunu, Malohi Capital Enterprises LLC (Malohi), and Blue Danube. (¶¶ 13-15.) Pupunu is Flannel's managing member, and also is the sole member and manager of Malohi, a Utah limited liability company. (¶¶ 3, 5, 13.) Likewise, Blue Danube is a Utah limited liability company, and its sole manager and member is Rex, a Utah citizen. (¶¶ 4, 7, 14.)

         Pursuant to the agreement, Entzminger invested money in Flannel for the purchase and resale of residential property and, in exchange, Flannel agreed to make monthly interest payments to Entzminger and to give him a portion of net profits from the sale of each property. (¶¶ 17-18, 21, 24-25, 36, 37-38.) At the time the Agreement was executed, Pupunu and Defendant Richard Baldwin (Richard) signed a guaranty, in which they guaranteed repayment of Entzminger's investment. (¶ 27.) Entzminger alleges that Rex signed the guaranty as a witness, but Rex contends that his signature was forged. (¶ 28; Doc. 17-1 ¶ 10.)

         Entzminger agreed to invest in Flannel because Richard, who Entzminger has known personally for several years, misrepresented that he was Flannel's managing member and would be in control of the investment funds. (Doc. 1 ¶¶ 44-46.) In reality, Richard is Rex's son, but is not a member of Flannel, Malohi, or Blue Danube. (¶¶ 6, 47; Doc. 17-1 ¶ 14.) Entzminger had no prior relationship with Pupunu, Rex, Blue Danube, or Malohi, and claims he would not have invested had he known that Richard was not affiliated with Flannel. (Doc. 1 ¶ 46.)

         When Flannel failed to repay the agreed-upon amounts, Entzminger filed this lawsuit. (¶¶ 23, 41, 43.) As relevant here, Entzminger alleges that Rex conspired with Richard and Pupunu to defraud him, and that Rex and Blue Danube aided and abetted Richard's fraud, acted negligently, and were unjustly enriched by Richard's wrongful conduct. (¶¶ 102-126.) Rex and Blue Daube have moved to dismiss the claims against them for lack of personal jurisdiction. (Doc. 17.)

         II. Legal Standard

         “Where a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). To do so, the plaintiff must show both that the forum state's long-arm statute confers jurisdiction over the non-resident defendant and that the exercise of jurisdiction comports with due process. Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 269 (9th Cir. 1995).

         Where, as here, the state's long-arm statute confers jurisdiction co-extensive with the limits of the due process clause, the two inquiries merge and the court need consider only whether the exercise of jurisdiction comports with due process. Id.; Doe v. Am. Nat. Red Cross, 112 F.3d 1048, 1050 (9th Cir. 1997); Ariz. R. Civ. P. 4.2(a). The exercise of jurisdiction comports with due process when the non-resident defendant has “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int'l Shoe v. Washington, 326 U.S. 310, 316 (1945) (internal quotation and citation omitted).

         If the non-resident defendant's “motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts.” Schwarzenegger, 374 F.3d at 800 (internal quotations and citation omitted). At this stage, the court “may not assume the truth of allegations in a pleading which are contradicted by affidavit.” Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1284 (9th Cir. 1977). Uncontroverted allegations in the complaint, however, “must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in [the plaintiff's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists.” Am. Tel. & Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588-89 (9th Cir. 1996) (internal quotations and citations omitted).

         III. Discussion

         Personal jurisdiction can be either general or specific. General personal jurisdiction exists where the non-resident defendant has continuous and systematic contact with the forum. Schwarzenegger, 374 F.3d at 801. “This is an exacting standard, as it should be, because a finding of general jurisdiction permits a defendant to be haled into court in the forum state to answer for any of its activities anywhere in the world.” Id. “When a defendant's contacts with the forum do not rise to the level required for general jurisdiction, a court may exercise specific jurisdiction over a claim when it arises from the defendant's activities within that forum.” Compass Fin. Partners LLC v. Unlimited Holdings, Inc., No. CV 07-1964-PHX-MHM, 2008 WL 2945585, at *2 (D. Ariz. July 2, 2008).

         Here, there is no indication that Rex and Blue Danube had continuous and systematic contact with Arizona, and Entzminger argues only that they are subject to specific personal jurisdiction. The Court employs a ...


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