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Joudeh v. Beck

United States District Court, D. Arizona

July 10, 2018

M Firas Joudeh, et al., Plaintiffs,
James F Beck, et al., Defendants.



         Plaintiffs M. Firas Joudeh and Manal Alhakim accuse Defendants James Beck, Ginger Beck, and LUX Home Investments LLC (“LUX”) of violating the federal Racketeer Influenced and Corrupt Organizations (“RICO”) act through a scheme to defraud Plaintiffs in their purchase of a new home. Plaintiffs also raise claims of intentional infliction of emotional distress, unjust enrichment, conversion, and for a declaratory judgment. Before the Court is Defendants' motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b) for lack of personal jurisdiction and for failure to state a claim for which relief can be granted. (Doc. 19.) The motion is fully briefed and neither party requested oral argument. (Doc. 24.) For the following reasons, Defendants' motion is granted in part and denied in part.

         I. Background

         In early 2017, Plaintiffs agreed to buy a home that was being developed, marketed, and sold by CalAtlantic Homes. (Doc. 1 ¶¶ 14-15.) The closing date for the sale was set for March 3, 2017, and Plaintiffs agreed to work with CalAtlantic Title, an affiliate of CalAtlantic Homes. (¶ 15.)

         On March 1, 2017, Plaintiffs received an email from CalAtlantic Title with an attachment containing, among other things, wire instructions. (¶ 18.) The wire instructions contained CalAtlantic Title's logo, address, and phone number. (¶ 27.) On March 2, 2017, Plaintiffs went to CalAtlantic Title's office, signed the closing documents, and confirmed that the wire instructions were correct. (¶ 21.) On March 3, 2017, Plaintiffs wired $492, 221.00 to purchase the home. (¶¶ 19, 22.) Later that same day, Plaintiffs were notified by CalAtlantic Title that the wired funds had not been received and that the closing date would be extended. (¶ 24.)

         On March 7, 2017, Plaintiffs and CalAtlantic Title's escrow officer reviewed the wire instructions Plaintiffs' had received and determined that the named recipient and account holder was LUX, and that the ABA routing number and account number listed were not those of CalAtlantic Title's bank. (¶ 26.) CalAtlantic Title's employees were unable to explain why Plaintiffs received incorrect wire instructions. (¶ 28.) On March 8, 2017, CalAtlantic Homes cancelled the sales contract because Plaintiffs had insufficient funds to complete the transaction. (¶¶ 29-30.)

         In an attempt to recover the misplaced funds, Plaintiffs contacted Regions Bank in Arkansas, the bank associated with the ABA routing number listed on the wire instructions. Regions Bank confirmed that the funds were received and deposited into LUX's account on March 3, 2017. (¶ 32.) After determining James Beck was the managing member of LUX, Plaintiffs requested the return of their funds. (¶¶ 33, 35.) During a telephone call on March 7, 2017, Beck informed Plaintiffs that he had received the wired funds, but that he no longer was in possession of the money because on March 6, 2017, he wired the funds to other bank accounts he was unable to access. (¶ 36.) Specifically, Beck had wired $165, 000.00 to a Bank of Little Rock account also held in LUX's name, and $325, 000.00 to a JP Morgan Chase Bank account held in the name of M&K Home Maintenance Services. (¶¶ 37-38). To date, Beck has refused to return the funds and has offered a series of excuses, including that he himself was also defrauded as part of these transactions. (¶¶ 46, 47.)

         II. Discussion

         A. Personal Jurisdiction

         Where a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). Where, as here, the motion is based on written materials rather than an evidentiary hearing, “the plaintiff need only make a prima facie showing of jurisdictional facts.” Id. In such cases, the court inquires only “into whether [the plaintiff's] pleadings and affidavits make a prima facie showing of personal jurisdiction.” Caruth v. Int'l Psychoanalytical Ass'n, 59 F.3d 126, 128 (9th Cir. 1995). In determining whether the plaintiff has met this burden, uncontroverted allegations in the plaintiff's complaint 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.” AT & T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996).

         The exercise of jurisdiction over a non-resident defendant requires that the defendant “have certain minimum contacts . . . such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. State of Wash., Office of Unemployment Compensation and Placement, 326 U.S. 310, 316 (1945) (internal quotations and citation omitted). Personal jurisdiction may be general or specific. A court may assert general jurisdiction over foreign defendants “to hear any and all claims against them when their affiliations with the State are so ‘continuous and systematic' as to render them essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (citing Int'l Shoe Co., 326 U.S. at 317). “Specific jurisdiction, on the other hand, depends on an affiliation between the forum and the underlying controversy, principally, activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation.” Id. (internal quotation and citation omitted).

         Here, neither party contends that the Court has general personal jurisdiction over Defendants, and based on its independent review of the complaint and the parties' competing sworn statements the Court agrees. This case, therefore, presents a question of specific personal jurisdiction.

         In specific jurisdiction cases, the relationship between the defendant and the forum state “must arise out of contacts that the ‘defendant himself' creates with the forum State.” Walden v. Fiore, 571 U.S. 277, 284 (2014) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). Additionally, the requisite “minimum contacts” must be “with the forum State itself, not . . . with persons who reside there.” Id. A court will exercise specific jurisdiction over a non-resident defendant only when three requirements are satisfied: (1) the defendant either “purposefully directs” its activities or “purposefully avails” itself of the benefits afforded by the forum's laws; (2) the claim “arises out of or relates to the defendant's forum-related activities;” and (3) the exercise of jurisdiction comports with fair play and substantial justice. See Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002).

         Defendants challenge only the first prong of this three-part test-whether Defendants purposefully availed themselves of the privilege of conducting activities in or purposefully directed their activities towards Arizona. (Doc. 19-2 at 3). Purposeful direction exists where the defendant “(1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” Axiom ...

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