Camps v. Gore Capital, LLC

FERNANDO CAMPS, Plaintiff, v. GORE CAPITAL, LLC, KARL JAMES,ANGELA EVANS, and #AE20, LLC, Defendants.

NO. 3:17-cv-1039

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

July 2, 2019

JUDGE RICHARDSON

MEMORANDUM OPINION

Pending 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).

Also pending before the Court is Defendant #AE20's Motion to Dismiss First (sic)¹ Amended Complaint and Cross-Claim for failure to state a claim (Doc. No. 105). Plaintiff filed Responses (Doc. Nos. 111 and 141²), #AE20 filed Replies (Doc. Nos. 118 and 142), and Plaintiff filed a Sur-Reply (Doc. No. 136).

Also 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 Dismiss.

BACKGROUND

Plaintiff 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."³ 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).

As both 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 and112-2) 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.

In the 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 Evolving.⁴

The SAC 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).

The SAC 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.⁵ Plaintiff claims that he sought, in vain, to obtain documents from Defendants about his investments before ultimately filing this action on July 15, 2017.

The SAC 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. 68).

CROSS-CLAIM

In 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.⁶ 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.

#AE20'S MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(b)(2)

(A) Personal Jurisdiction

The 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,⁷ thedistrict 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.

When a 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.⁸ 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).

In 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 699.⁹ 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 ...