Catipovic v. Turley

Decision Date08 June 2012
Docket NumberNo. C 11-3074-MWB,C 11-3074-MWB
PartiesBRANIMIR CATIPOVIC, Plaintiff, v. MARK TURLEY, RONALD FAGEN, and FAGEN, INC., Defendants.
CourtU.S. District Court — Northern District of Iowa
MEMORANDUM OPINION AND ORDER REGARDING DEFENDANTS' MOTIONS TO DISMISS
TABLE OF CONTENTS
II. LEGAL ANALYSIS......................................................................11
A. Turley's Motion To Dismiss....................................................11
1. Arguments of the parties................................................11
2. Applicable standards.....................................................13
a. Principles of personal jurisdiction............................13
b. "General" personal jurisdiction...............................14
c. "Specific" personal jurisdiction...............................15
d. The role of contracts in the personal jurisdiction analysis.............................................................16
e. Rule 12(b)(2) standards for dismissal for lack of personal jurisdiction.............................................18
3. Application of the standards...........................................20
4. Summary ................................................................... 22
B. The Fagen Defendants' Motion To Dismiss.................................23
1. Dismissal for improper venue..........................................23
a. Arguments of the parties .......................................23
b. Applicable standards ............................................25
i. The applicable venue statute...............................26ii. Venue based on § 1391(a)(2).............................27
iii. Standards for dismissal for improper venue..........29
c. Application of the standards...................................32
i. Venue with Turley present .................................33
ii. Venue with Turley absent .................................33
d. Summary...........................................................36
C. Failure To State A Claim.......................................................37
1. Arguments of the parties................................................37
2. Analysis .................................................................... 39
a. Applicable standards ............................................39
b. Application of the standards...................................42
i. Elements of the claim.......................................42
ii. Pleading of the claim ......................................44
iii. The Fagen Defendants' further challenges...........45
c. Summary...........................................................47
III. CONCLUSION............................................................................47

A former Iowa resident seeks to recover damages for breach of contract and unjust enrichment from an Irish citizen, and damages for unjust enrichment from a Minnesota citizen and a Minnesota company, arising from the failure of an alleged partnership to develop ethanol production facilities in Eastern Europe. The Irish defendant has moved to dismiss pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, for lack of personal jurisdiction over him, and the Minnesota defendants have moved to dismiss pursuant to Rule 12(b)(3), for improper venue, and Rule 12(b)(6), for failure to state a claim on which relief can be granted. Thus, the pendingmotions turn, at least in the first instance, on whether this forum is the proper one in which the plaintiff may bring his claims.

I. INTRODUCTION
A. Factual Background

Ordinarily, "when ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). Thus, the factual background to a motion to dismiss must ordinarily be drawn solely from the plaintiffs' factual allegations. See Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012) ("[M]atters outside the pleading may not be considered in deciding a Rule 12[(b)(6)] motion to dismiss"). However, on a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, if the court does not conduct a hearing, the court may consider the pleadings, any affidavits, and any exhibits supporting or opposing the motion. See K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir. 2011); Pangaea, Inc. v. Flying Burrito, L.L.C., 647 F.3d 741, 745 (8th Cir. 2011). Thus, where indicated, I have included pertinent facts from sources other than the pleadings in this statement of the factual background to the parties' dispute.

Plaintiff Branimir Catipovic is a naturalized citizen of the United States who was born in Croatia. At the times relevant to this dispute, he was domiciled in Iowa, and working as a medical doctor specializing in internal medicine, allergy/immunology, at the Veteran's Administration Hospital (VA Hospital) in Mason City, Iowa. In his Amended Complaint and a Declaration (docket no. 20-1) filed in resistance to one of the pending motions to dismiss, Catipovic avers that he is now domiciled inMassachusetts. Defendant Mark Turley is a citizen of Ireland who, among other business activities, provides start-up capital to and invests in new business ventures. Defendant Roland Fagen is a citizen of and domiciled in Minnesota, and defendant Fagen, Inc., (FI), is a Minnesota corporation, headquartered in Granite Falls, Minnesota, engaged in commercial and industrial contracting and engineering services, focusing primarily on the ethanol plant industry. In the motion to dismiss by Fagen and FI, Fagen asserts that he is the executive vice president of FI.

Catipovic alleges that, while working as a medical doctor at the VA Hospital in Mason City in 2005-2006, he became aware of an ethanol production facility located in Mason City. He then began to study ethanol production, in part, because of his knowledge and understanding of the agricultural and environmental similarities between Iowa and Eastern Europe. In 2006, he toured the Mason City ethanol plant with its CEO, Walter Wendland. Catipovic alleges that he and Wendland recognized the potential to replicate the ethanol production success of the Mason City plant in Eastern Europe, so they gathered critical operational and financial information in Iowa, then they traveled to Croatia in July 2006. While in Croatia, they selected a site to build an ethanol production facility. They also worked with a sophisticated financial model designed to validate the viability of producing ethanol in Eastern Europe and created initial financial and business plans.

Catipovic alleges that, in the late fall of 2006, he and Wendland traveled to Granite Falls, Minnesota, to offer the opportunity to build ethanol plants in Eastern Europe to Fagen and FI. Catipovic and Wendland discussed with Fagen the financial viability of the project and shared the information that they had gathered. Fagen and FI allegedly agreed to work with Catipovic and Wendland. Catipovic alleges that, in April of 2007, he met with Turley in Ireland to try to obtain start-up capital for the project.In May 2007, Turley met with Catipovic's brother, Hrvoje Catipovic, in Croatia to gain more information about the investment opportunity. Then, in June 2007, Turley, Catipovic, and Wendland met in Mason City, Iowa, to visit ethanol plants. During that visit, Catipovic alleges that the three entered into an agreement (the 2007 Agreement) to build ethanol plants in Eastern Europe, with the first plant to be built in Osijek, Croatia. Pursuant to the 2007 Agreement, Wendland and Catipovic were to receive a 20% interest in the ethanol plant. The parties to the 2007 Agreement agreed that the venture would be known as Ethanol Europe B.V. The day after Turley, Catipovic, and Wendland reached the 2007 Agreement, they were joined by Fagen in Mason City, and they retained FI as the builder for the Osijek plant. In an e-mail to Catipovic and Wendland dated July 3, 2007, Turley confirmed details of the 2007 Agreement. See Complaint (docket no. 1), Exhibit A (unsigned proposed agreement identifying Catipovic and Wendland as the "promoters," and granting them a 20% interest, and identifying Turley and Chris McHugh as the "investors," and granting them an 80% interest).

Catipovic alleges that Turley subsequently sent "numerous" communications to Catipovic and Wendland in Iowa regarding their agreement. More specifically, in his Declaration, Catipovic avers that Turley and his representatives "constantly" communicated with him and with Wendland in Iowa, via e-mail, telephone, etc., to discuss the status of the Eastern Europe ethanol project from June 2007 forward, and that this communication included extensive negotiations, sent to the promoters in Iowa, concerning a possible shareholders agreement. Catipovic has attached examples of these communications to his Declaration.

Catipovic alleges that, in reliance on the agreements with Turley, Fagen, and FI, and Turley's promise to fund a subsistence package for him, Catipovic took a leave ofabsence from his employment with the VA Hospital and moved to Croatia to focus his full energies on the Ethanol Europe project. FI entered into a Preliminary Services Agreement with Ethanol Europe B.V. on October 18, 2007, and, in early 2008, Fagen traveled to Croatia. Also in early February 2008, Catipovic met with Turley again, this time in Ireland, to address and negotiate issues that had arisen regarding the Ethanol Europe project. Catipovic alleges that, at this time, work was progressing on a shareholders agreement, pursuant to the 2007 ...

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