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Fahad Al-Rajhi and Jood, Ltd. v. Mayfair Holdings, LLP

United States District Court, D. Arizona

August 16, 2018

Fahad Al-Rajhi and Jood, Ltd., Plaintiffs,
v.
Mayfair Holdings, LLP, et al., Defendants.

          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 ...


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