United States District Court, D. Arizona
ORDER
H.
Russel Holland United States District Judge.
Motion
to Dismiss
Defendants
Mayfair Administration, LLC, Stuart Horwich, and Leon
Dutkiewicz move to dismiss plaintiffs' complaint for lack
of personal jurisdiction.[1] This motion is opposed.[2] Oral argument was
requested but is not deemed necessary.
Background
Plaintiffs
are Fahad Al-Rajhi and Jood, Ltd. Defendants are Mayfair
Holdings, LLP; Mayfair Administration, LLC; Mayfair Real
Estate LP; Mayfair Finance Group, LP; Mayfair Finance, LLP;
Stuart Horwich; Leon Dutkiewicz; and Michael D. Evans.
Plaintiffs
allege that in May 2012, Evans induced Al-Rajhi to invest in
“a real estate scheme involving the purchase and resale
of distressed real estate in and around Phoenix,
Arizona.”[3] On June 27, 2012, Al-Rajhi and Mayfair
Real Estate entered into a Partnership Agreement to form the
entity Mayfair Holdings.[4] Mayfair Holdings was the entity that
was going to purchase the Arizona real estate.[5] Mayfair
Administration was the initial manager of Mayfair
Holdings.[6] Mayfair Administration is alleged to be a
Delaware corporation with its principal place of business in
Pitman, New Jersey.[7]
Also on
June 27, 2010, Al-Rajhi and Mayfair Holdings entered into a
Subscription Agreement which issued 250, 000 class B ordinary
shares of Mayfair Holdings to Al-Rajhi.[8]Horwich signed the
Subscription Agreement on behalf of Mayfair Administration,
which was acting in its capacity as the manager of Mayfair
Holdings.[9]
Al-Rajhi
loaned $2.5 million to Mayfair Holdings. The first loan,
which was for $2.25 million, was memorialized in a promissory
note dated June 27, 2012.[10] The June promissory note was
signed by Horwich on behalf of Mayfair Administration, which
was acting in its capacity as the manager of Mayfair
Holdings.[11]
In
November 2012, Al-Rajhi, through Jood, made a second loan,
which was for $250, 000, and which was memorialized by a
promissory note dated November 30, 2012.[12]The November
promissory note was signed by Horwich on behalf of Mayfair
Administration, which was acting in its capacity as the
manager of Mayfair Holdings.[13]
The
terms of both promissory notes called for interest to be paid
on the loans, but plaintiffs allege that no interest has been
paid to date.[14] Plaintiffs allege that Evans has
borrowed significant amounts of money from the Mayfair
entities in breach of various Mayfair entity
agreements.[15]
Horwich
is alleged to be a United States citizen who resides in the
United Kingdom.[16]Horwich is an attorney who is alleged to
have “advised [d]efendant Evans, and participated
individually, in the formation and operation of the Mayfair
entities.”[17] Horwich is alleged to have signed
documents on behalf of Mayfair Administration.[18] Dutkiewicz is
alleged to be a United States citizen who “resides in
New Jersey and regularly conducts business throughout the
United States, including Arizona.”[19] Dutkiewicz is
an accountant who is alleged to have “advised
[d]efendant Evans and Horwich, and participated individually,
in the formation of the Mayfair
entities.”[20] Horwich and Dutkiewicz, along with
Evans, are alleged to have advised Al-Rajhi to form Jood, and
Jood is allegedly “managed by individuals selected and
directed by [d]efendants Evans, Horwich, and
Dutkiewicz.”[21]
Plaintiffs
further allege that
Horwich was a partner in Pitman Property Management, and had
management responsibilities for the Mayfair portfolio. As a
partner in Pitman, Horwich had direct and regular access to
the Mayfair bank accounts and provided legal advice and
counsel to Defendants Evans and Dutkiewicz. Horwich also
played a role in working with accountants and outside
attorneys to set up the Mayfair entities. Horwich personally
signed the June Promissory Note and November Promissory Note
and Subscription Agreement given to Al-Rajhi, as a corporate
representative of Mayfair. Horwich was also designated as the
initial manager of Mayfair Administration, LLC.[22]
And,
plaintiffs allege that
Dutkiewicz was a partner in Pitman Property Management with
Horwich, and upon information and belief [was] involved with
the creation of the agreements at issue and the management of
the Mayfair properties. Further, upon information and belief,
he had the same direct and regular access to the Mayfair bank
accounts as Horwich, and also individually, played a role as
the accountant for the Mayfair Entities generally, and
[d]efendant Evans specifically, and among other acts, drafted
and signed tax returns for and on behalf of the Mayfair
entities.[23]
Horwich
and Dutkiewicz aver that they co-own “UK U.S. Tax
Services LLC, an accounting firm located in Pitman, New
Jersey and incorporated in the state of
Delaware.”[24] They aver that “UK U.S. Tax
Services LLC specializes in providing advice on U.S. tax
issues for persons living outside the United
States.”[25] Horwich and Dutkiewicz aver that
“[f]rom 2012 through October 2016, Defendant Mayfair
Holdings, LLP received tax services, bookkeeping, and
accounting services from UK U.S. Tax Services, LLP, either
directly or through an affiliated entity, Pitman Property
Management, LLP.”[26] They further aver that they
“formed Mayfair Administration, LLC in July 2011 under
the name FBAR, LLC” and that although Mayfair
Administration was named the initial manager of Mayfair
Holdings, it resigned as manager on November 30,
2012.[27]
In
their complaint, plaintiffs assert breach of contract, breach
of fiduciary duty, unjust enrichment, theft, and accounting
claims against all defendants. Plaintiffs also assert fraud
claims against Evans, Horwich, and Dutkiewicz.
Plaintiffs' fraud claim against Horwich is based on
allegations that he made false representations
“concerning the structure of the Mayfair Scheme and
plans for the performance of the
investment.”[28] Plaintiffs' fraud claim against
Dutkiewicz is based on allegations that he made false
representations about the “valuations of the portfolio
of the Mayfair Scheme.”[29]
Horwich,
Dutkiewicz, and Mayfair Administration (“the moving
defendants”) now move to dismiss plaintiffs' claims
against them for lack of personal jurisdiction.
Discussion
“Where
defendants move to dismiss a complaint for lack of personal
jurisdiction, plaintiffs bear the burden of demonstrating
that jurisdiction is appropriate.” Dole Food Co.,
Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002).
“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. (quoting
Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir.
1990)). “In determining whether [a plaintiff has] met
this prima facie burden, uncontroverted allegations in [the]
complaint must be taken as true, and ‘conflicts between
the facts contained in the parties' affidavits must be
resolved in [the plaintiff's] favor. . . .'”
Ochoa v. J.B. Martin and Sons Farms, Inc., 287 F.3d
1182, 1187 (9th Cir. 2002) (quoting Am. Tel. & Tel.
Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588
(9th Cir. 1996)). “Additionally, any ...