United States District Court, M.D. Tennessee, Nashville Division
RICHARDSON UNITED STATES DISTRICT JUDGE
before the Court is Defendant #AE20's Motion to Dismiss
Second Amended Complaint and Cross-Claim for lack of personal
jurisdiction (Doc. No. 103), filed pursuant to Fed.R.Civ.P.
12(b)(2). Defendant Evans filed a Response (Doc. No. 110),
Plaintiff filed a Response (Doc. No. 112), Defendant #AE20
filed a Reply (Doc. No. 117), and Plaintiff filed a Sur-Reply
(Doc. No. 137).
pending before the Court is Defendant #AE20's Motion to
Dismiss First (sic)Amended Complaint and Cross-Claim for
failure to state a claim (Doc. No. 105). Plaintiff filed
Responses (Doc. Nos. 111 and 141), #AE20 filed Replies (Doc.
Nos. 118 and 142), and Plaintiff filed a Sur-Reply (Doc. No.
pending before the Court is Defendant Evans' Renewed
Motion to Dismiss (Doc. No. 109), which is brought under
Fed.R.Civ.P. 12(b)(7) and 19 for failure to join a required
party. Evans relies on her previously-submitted Motion to
Dismiss, Memorandum, Reply and “Sur-SurReply”
(Doc. Nos. 84, 85, 91 and 97). Plaintiff filed a Response
(Doc. No. 88) and a Sur-Reply (Doc. No. 94) to Evans'
previously-submitted Motion to Dismiss and a Response (Doc.
No. 114) in opposition to Evans' Renewed Motion to
is a citizen of Buenos Aires, Argentina. His Second Amended
Complaint (Doc. No. 101) (“SAC”) alleges that
Plaintiff was targeted by Defendants Evans, James, #AE20,
LLC, and Gore Capital, LLC (“Gore”) in a series
of fraudulent investment schemes, as a result of which
Plaintiff claims he lost $550, 000. The SAC alleges that
Defendant Evans is a resident of Tennessee, Defendant #AE20,
LLC is a California limited liability company, and Defendant
Gore Capital, LLC is a Delaware limited liability
“corporation.” The SAC does not allege the state of
Defendant James' residence. Plaintiff's original
Complaint (Doc. No. 1) and First Amended Complaint (Doc. No.
20) (“FAC”) list James' residence as
Colorado. The Statement of Information filed with the State
of California for #AE20 indicates that Defendant James is a
resident of Colorado (Doc. No. 61-2), and Defendant
Evans' Responses to Interrogatories indicate that
James' address is in Colorado (Doc. No. 103-3 at Int. 2).
Defendants #AE20 and Evans point out, the allegations of
Plaintiff's original Complaint (Doc. No. 1), FAC (Doc.
No. 20), and SAC (Doc. No. 101) contain allegations that are
inconsistent among one another. Plaintiff has also filed at
least two Affidavits (Doc. Nos. 55-1 and 112-2) that allege
somewhat different accounts of what happened among these
parties. For purposes of this background, the Court will rely
upon Plaintiff's SAC, the operative Complaint at this
time. Any relevant conflicts with prior pleadings and
Affidavits will be noted where appropriate.
SAC, Plaintiff contends that he began a relationship with
Defendant Evans in late 2013, soon after which Evans began to
introduce Plaintiff to business investment opportunities with
friends and business associates in the United States,
including an investment opportunity related to professional
car racing. Plaintiff asserts that, in March 2014, Evans took
him to a professional car-racing event in St. Petersburg,
Florida, where he met Defendant James and Erik Davis, the
co-founder of #AE20. Plaintiff alleges that James was the
managing member of Gore. Plaintiff contends that Evans, James
and Davis invited Plaintiff to invest money in the
racing-related businesses of #AE20 and/or Always
alleges that on April 12, 2014, Davis filed a Statement of
Information with the State of California listing Davis and
James as the two members of #AE20, LLC. Plaintiff contends
that “it appears” that James' interest in
#AE20 was transferred (or authorized to be transferred) to
Gore on April 4, 2014. Plaintiff has not presented evidence
that that transfer was ever made, however. Plaintiff asserts
that, on April 23, 2014, Davis filed Articles of
Incorporation for #AE20, but the document filed was actually
Articles of Organization for #AE20, LLC.
See Doc. No. 61-1. The Articles of Organization list
Davis as the organizing member of the LLC. Id. Davis
stated in his Declaration that, at all material times herein,
he was a 50 percent member of #AE20 and James was the other
50 percent member (Doc. No. 61 at ¶ 2).
asserts that “Defendants” instructed Plaintiff to
wire-transfer money for investment in #AE20 to Evans'
bank account in Tennessee, but paragraph 10 of
Plaintiff's Affidavit, filed at Doc. No. 55-1, indicates
that it was Defendant Evans who gave him that instruction.
Defendant Evans has stated in discovery responses that she
never transferred money to or from any accounts for #AE20
(Doc. No. 103-3 at Int. 8). Plaintiff avers that he wired
$250, 000 to Evans' account for the purpose of investing
with #AE20, #AE20-related businesses and Gore. Plaintiff also
alleges that in exchange for a promissory note from Gore in
the amount of $200, 000, he transferred $200, 000 to
Gore's bank account. Plaintiff alleges that he also twice
transferred $50, 000 (an additional $100, 000 investment) to
Gore, which Plaintiff represents is a 50 percent member of
#AE20, although that fact has no support in the
record. Plaintiff claims that he sought, in vain,
to obtain documents from Defendants about his investments
before ultimately filing this action on July 15, 2017.
asserts breach of contract against Gore, fraud against all
Defendants, fraud by wire transfer against all Defendants,
intentional misrepresentation against all Defendants, and
negligent misrepresentation against all Defendants. In her
Answer to the First Amended Complaint, Defendant Evans
alleged cross-claims against #AE20, James and Gore. #AE20 has
moved to dismiss the claims and cross-claims against it for
lack of personal jurisdiction and for failure to state a
claim. Evans has moved to dismiss the claims against her for
failure to join a necessary party, Defendant James. The
Magistrate Judge allowed the parties to take limited
discovery on the issues of personal jurisdiction and whether
Defendant James is a necessary party to this action (Doc. No.
response to #AE20's Motion to Dismiss, Defendant Evans
points out that there is no longer a cross-claim by Evans
against #AE20 in this action in its current posture.
Evans' cross-claim was filed in response to the First
Amended Complaint, which has been replaced with the Second
Amended Complaint. Evans has not filed an Answer or
Cross-Claim with regard to the Second Amended Complaint, in
light of her pending Motion to Dismiss (Doc. No. 109) and
represents that she has no cross-claims pending against #AE20
at this time. Evans has stated that, if her Motion to
Dismiss is denied, she will consider re-filing a cross-claim
against #AE20 at that time. Therefore, #AE20's Motion to
Dismiss the Cross-Claim will be denied as moot.
MOTION TO DISMISS PURSUANT TO FED. R. CIV. P.
party seeking to establish the existence of personal
jurisdiction (here, Plaintiff) bears the burden to establish
such jurisdiction. Beydoun v. Wataniya Restaurants
Holding, 768 F.3d 499, 504 (6th Cir. 2014). In the face
of a properly supported motion for dismissal, the plaintiff
may not stand on his pleadings, but rather must, by affidavit
or otherwise, set forth specific facts showing that the court
has jurisdiction. Kent v. Hennelly, 328 F.Supp.3d
791, 796 (E.D. Tenn. 2018), appeal docketed, No.
18-5821 (6th Cir. Aug. 7, 2018); Miller v. AXA Winterthur
Ins. Co., 694 F.3d 675, 678 (6th Cir. 2012). In deciding
whether to dismiss for lack of personal jurisdiction,
district court may rely upon the affidavits alone; it may
permit discovery in aid of deciding the motion; or it may
conduct an evidentiary hearing to resolve any apparent
factual questions. Anwar v. Dow Chem. Co., 876 F.3d
841, 847 (6th Cir. 2017). Here, the Magistrate Judge
permitted discovery in aid of deciding the motion.
district court rules on a motion to dismiss for lack of
personal jurisdiction without conducting an evidentiary
hearing, the court must consider the pleadings and affidavits
in a light most favorable to the nonmoving party.
Ficarelli v. Champion Petfoods USA, Inc., No.
3:18-cv-00361, 2018 WL 6832075, at * 4 (M.D. Tenn. Dec. 28,
2018); Beydoun, 768 F.3d at 504. To defeat such a
motion absent an evidentiary hearing, the plaintiff need only
make a prima facie showing of jurisdiction.
Id. In this procedural posture, the court does
not weigh the facts disputed by the parties but may consider
the defendant's undisputed factual assertions. Conn
v. Zakharov, 667 F.3d 705, 711 (6th Cir. 2012).
Schneider v. Hardesty, 669 F.3d 693 (6th Cir. 2012),
the court declined to decide what standard to use when the
parties are allowed discovery in aid of the jurisdictional
issue but there is no evidentiary hearing, since the
plaintiff had demonstrated personal jurisdiction even under
the more-exacting “preponderance of the evidence”
standard anyway. Id. at 699. The court did suggest,
however, that to the extent that the
preponderance-of-the-evidence standard could apply
in the absence of an evidentiary hearing, it should
apply only in those “rare instances” in which a
plaintiff has been granted all discovery requested and that
discovery results in an undisputed set of facts such that an
evidentiary hearing would be pointless. Id. Finally,
the court in Schneider noted that some courts have
held that the preponderance-of-the-evidence standard
never applies in the absence of an evidentiary
hearing. Id. at 698, n. 6. In Bridgeport Music,
Inc. v. Still N the Water Publ'g, 327 F.3d 472,
476-78 (6th Cir. 2003), the court applied the prima
facie standard where there was limited discovery but no
evidentiary hearing. See also Schneider, 669 F.3d at
as noted, the Magistrate Judge allowed limited discovery on
the issue of personal jurisdiction. Plaintiff claims that he
has not received all the discovery he requested and that
there are real disputes about the facts relating to
jurisdiction. #AE20 contends that it has provided full and
complete responses to all discovery related to jurisdictional
issues. There is no indication that Plaintiff filed a motion
to compel the requested discovery, and Plaintiff did not
request additional time to respond to #AE20's Motion to
Dismiss to obtain additional discovery. Instead, Plaintiff
responded to the motion but added an alternative request
that, if the Court believes additional discovery is needed,
Plaintiff be allowed to file a motion to compel documents.
Plaintiff, however, not the Court, has the burden of proof
and the obligation to figure out whether he can meet it.
Plaintiff decided to attempt to carry that burden on the
record as it now stands. Plaintiff is disputing discovery
responses in his Response to Defendant's Motion to
Dismiss, which is inappropriate. Discovery issues are to be
determined upon proper motion to the Magistrate Judge, under
her case management rulings, the Local Rules of this Court,
and the Federal Rules of Civil Procedure.
there has been no evidentiary hearing (and, for that matter,
no request for an evidentiary hearing) with regard to this
motion, the Court, in accordance with Bridgeport Music,
Inc. v. Still N the Water Publ'g, 327 F.3d 472 (6th
Cir. 2003), will determine whether Plaintiff has demonstrated
personal jurisdiction over #AE20 under a prima facie
diversity case such as this one, a plaintiff must satisfy the
state-law requirements for personal jurisdiction.
Ficarelli, 2018 WL 6832075, at * 2. There is a
two-step test to determine whether the Court properly has
personal jurisdiction over #AE20. First, the Court must
determine whether Tennessee's law authorizes
jurisdiction; second, the Court must determine whether that
authorization comports with due process. Id. For
Tennessee federal courts sitting in diversity, it is
unnecessary to analyze jurisdiction under Tennessee's
long-arm statute separately from analyzing jurisdiction under
the Due Process Clause, however, because Tennessee's
long-arm statute has been interpreted to be
“coterminous with the limits on personal jurisdiction
imposed by the Due Process Clause.” Id. at *
3. In other words, the jurisdictional limits of Tennessee law
and federal constitutional due process are identical, and the
two inquiries are merged. Id.; Up-Rite Systems,
Inc. v. Allender, No. 3-15-cv-710, 2016 WL 4702801, at *
2 (M.D. Tenn. Sept. 8, 2016) (citing Bridgeport, 327
F.3d at 477).
order for a non-resident defendant to be subject to the
personal jurisdiction of a court, the defendant must have
certain “minimum contacts” with the forum state,
such that maintenance of the lawsuit does not offend
“traditional notions of fair play and substantial
justice.” Kent, 328 F.Supp.3d at 797 (citing
Int'l Shoe Co. v. Washington, 326 U.S. 310, 316
(1945)). Personal jurisdiction comes in two forms: general
and specific. Here, Plaintiff asserts that the Court has
specific jurisdiction over #AE20. Specific jurisdiction must
arise out of or be related to a defendant's contacts with
the forum state. Ficarelli, 2018 WL 6832075, at * 3.
In other words, specific jurisdiction is confined to
adjudication of issues deriving from, or connected with, the
very controversy that establishes jurisdiction.
Up-Rite, 2016 WL 4702801, at * 4 (citing
Goodyear Dunlap Tires Operations, S.A. v. Brown, 564
U.S. 915, 919 (2011)). For a court to exercise specific
jurisdiction that is consistent with constitutional due
process, the defendant's suit-related conduct must create
a substantial connection with the forum state. Kent,
328 F.Supp.3d at 797.
specific jurisdiction to exist: (1) the defendant must
purposefully avail itself of the privilege of acting in the
forum state or causing a consequence in the forum state; (2)
the cause of action must arise from the defendant's
activities there; and (3) the acts of the defendant or
consequences caused by the defendant must have a substantial
enough connection with the forum state to make exercise of
personal jurisdiction over the defendant reasonable.
Ficarelli, 2018 WL 6832075 at * 3; Southern
Machine Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381
(6th Cir. 1968).
purposeful availment requirement is considered the most
important. Kent, 328 F.Supp.3d at 798. Purposeful
availment is something akin to a deliberate undertaking to do
or cause an act or thing to be done in the forum state or
conduct that can properly be regarded as a prime generating
cause of effects resulting in the forum state-something more
than a passive availment of the forum state's
opportunities. Bridgeport, 327 F.3d at 478. The
defendant must have purposefully availed itself of the
privilege of acting in the forum state or causing a
consequence in the forum state. Kent, 328 F.Supp.3d
at 798. Requiring that a defendant take purposeful steps in
the forum state ensures that a defendant's random,
fortuitous, or attenuated contacts with the forum state will
not subject it to being haled into court there. Id.
(citing Burger King Corp. v. Rudzewicz, 471 U.S.
462, 475 (1985)). Additionally, the defendant's
relationship with the forum state ...