United States District Court, D. Arizona
ORDER
HONORABLE ROSEMARY MARQUEZ UNITED STATES DISTRICT JUDGE.
Pending
before the Court is a Rule 12(b)(2) Motion to Dismiss
(“MTD”) filed by Pacific Ocean Harvest, S. De
R.L. De C.V. (“Pacific Ocean”) (Doc.
157.)[1]
I.
Background
This
litigation began in July 2018, when Plaintiff Ocean Garden
Products, Inc. (“OG”) initiated a lawsuit against
Blessings, Inc. (“Blessings”) and David Mayorquin
(“David”) in case number CV-18-322. (Doc. 1.) OG
later initiated a separate lawsuit alleging claims under
Arizona's Uniform Fraudulent Trade Act
(“UFTA”) against numerous defendants, including
Pacific Ocean, in case number CV-19-284. (Doc. 1 in
CV-19-284) (the “UFTA Action”). After case
numbers CV-18-322 and CV-19-284 were consolidated, OG filed a
First Amended Complaint in the UFTA Action (“UFTA
FAC”), the operative pleading with respect to Pacific
Ocean. (Doc. 154.)
On July
9, 2019, Pacific Ocean filed the pending MTD (Doc. 157),
which was directed at OG's original UFTA Complaint but
which the parties appear to agree may be treated as seeking
dismissal of the claims asserted against Pacific Ocean in the
UFTA FAC. (See Doc. 196 at 3 n.1; see also
Doc. 186 at 4; see generally Doc. 187.) The MTD was
fully briefed on August 26, 2019. (Docs. 187, 196.) The Court
held oral argument on September 16, 2019, and took the matter
under advisement. (Doc. 215.)
II.
Allegations of UFTA FAC Concerning Pacific Ocean
OG's
UFTA FAC makes the following allegations with respect to
Pacific Ocean:
At a
time when Blessings was in serious financial distress and
facing an existential threat from a criminal investigation,
David and his brother Abraham Mayorquin
(“Abraham”) ran up Blessings' debt to OG and
transferred millions of dollars-in addition to equipment and
intangible assets-from Blessings to a Mexican company called
ADAB Ocean Harvest, S. De R.L. De C.V. (“ADAB
Mexico”), thereby isolating the debts of their shrimp
business in Blessings and the assets in ADAB Mexico. (Doc.
154 at 2, 5-10.) David and Abraham later set up Pacific Ocean
in Nogales to take over the business of ADAB Mexico (shrimp
processing); they also set up a company called ADAB Ocean
Harvest LLC (“ADAB Tucson”) in Arizona to take
over the business of Blessings (shrimp sales). (Id.
at 2, 13-14.)
Pacific
Mexico now processes shrimp from a building formerly occupied
by ADAB Mexico in Nogales, Mexico, using ADAB Mexico's
equipment, which ADAB Mexico received through fraudulent
transfers from Blessings. (Doc. 154 at 14.) Pacific Ocean
uses the equipment based on an insider lease negotiated by
David and Abraham. (Id. at 14-15.) ADAB Mexico did
not receive reasonably equivalent value in exchange for the
equipment lease, and Pacific Mexico did not enter into the
lease in good faith. (Id. at 17-18.) Abraham is the
99% owner of Pacific Ocean, but in reality David is still an
equitable owner and shares in revenues funneled from ADAB
Tucson to ADAB Mexico and Pacific Ocean. (Id. at
14-15.) Due to the Mayorquin brothers'
“cross-border corporate shell game, Blessings is
insolvent and judgment-proof” while ADAB Mexico and
Pacific Ocean are operational “primarily thanks to the
millions of dollars” transferred from Blessings.
(Id. at 2.) Although Pacific Mexico is a Mexican
entity with premises in Nogales, Mexico, jurisdiction over it
is proper because it is not a good-faith transferee of assets
fraudulently transferred to it from Blessings via ADAB
Mexico. (Id. at 3-4.)
III.
Legal Standard
“Federal
courts apply state law to determine the bounds of their
jurisdiction over a party.” Williams v. Yamaha
Motor Co., 851 F.3d 1015, 1020 (9th Cir. 2017).
Arizona's long-arm statute permits the exercise of
jurisdiction to the full extent permissible under the United
States Constitution. Ariz. R. Civ. P. 4.2(a); Davis v.
Metro Prod., Inc., 885 F.2d 515, 520 (9th Cir. 1989). In
order for the exercise of personal jurisdiction over an
out-of-state defendant to comport with the requirements of
due process under the United States Constitution, the
defendant must “have certain minimum contacts”
with the forum state “such that the maintenance of the
suit does not offend traditional notions of fair play and
substantial justice.” Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945) (internal quotation
omitted).
The
plaintiff bears the burden of establishing that the exercise
of personal jurisdiction is proper. Ranza v. Nike,
Inc., 793 F.3d 1059, 1068 (9th Cir. 2015). This is true
even though the defendant is the moving party on a Rule
12(b)(2) motion to dismiss. Rio Props., Inc. v. Rio
Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir.
2002). But in the absence of an evidentiary hearing, the
plaintiff need only make “a prima facie showing of
personal jurisdiction.” Schwarzenegger v. Fred
Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)
(internal quotation omitted).[2]
Personal
jurisdiction can be general or specific. General personal
jurisdiction exists when the defendant's affiliations
with the forum state are so “continuous and
systematic” that the defendant can properly be said to
be “at home” in that state. Goodyear Dunlop
Tires Operations, S.A. v. Brown, 564 U.S. 915, 919
(2011) (internal quotation omitted). A corporate defendant is
typically “at home” only in its state of
incorporation and the state in which it has its principal
place of business. See Id. at 924. Specific personal
jurisdiction exists only when “the defendant's
suit-related conduct . . . create[s] a substantial connection
with the forum State.” Walden v. Fiore, 571
U.S. 277, 284 (2014). Three requirements must be satisfied
for a court to exercise specific personal jurisdiction over a
non-resident defendant: (1) the defendant must have
“purposefully direct[ed] his activities or
consummate[d] some transaction with the forum or resident
thereof” or “purposefully avail[ed itself] of the
privileges of conducting activities in the forum, thereby
invoking the benefits and protections of its laws”; (2)
the claim must have arisen out of or relate to the
defendant's forum-related activities; and (3) “the
exercise of jurisdiction must comport with fair play and
substantial justice, i.e. it must be reasonable.”
Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th
Cir. 2002). If the plaintiff meets its burden of showing
sufficient minimum contacts to satisfy the first two
requirements for exercising specific personal jurisdiction,
the burden then shifts to the defendant to “present a
compelling case that the exercise of jurisdiction would not
be reasonable.” Schwarzenegger, 374 F.3d at
802 (internal quotation omitted).
In
evaluating a motion to dismiss for lack of personal
jurisdiction under Rule 12(b)(2), the Court is not restricted
to the four corners of the Complaint and may consider
extrinsic evidence, including affidavits and discovery
materials. Doe v. Unocal Corp., 248 F.3d 915, 922
(9th Cir. 2001) (per curiam), abrogated on other grounds
by Daimler AG v. Bauman, 571 U.S. 117 (2014).
Uncontroverted allegations of a complaint must be taken as
true. Ranza, 793 F.3d at 1068. Factual ...