Lgt Enterprises, LLC v. Hoffman
| Decision Date | 14 May 2009 |
| Docket Number | No. 1:08-cv-578.,1:08-cv-578. |
| Citation | 614 F.Supp.2d 825 |
| Parties | LGT ENTERPRISES, LLC, d/b/a Letsgotickets and Let's Go Tickets, Plaintiff, v. Judiah Luke HOFFMAN, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
Craig H. Lubben, Miller Johnson PLC, Kalamazoo, MI, for Plaintiff.
Noah E. Yanich, Noah Eliezer Yanich, Rochester Hills, MI, for Defendant.
Granting in part and Denying in part the Motion to Dismiss for Lack of Personal Jurisdiction; Determining that the Court Lacks Jurisdiction over the Defendant; Transferring the Case to the District of Nevada Pursuant to 28 U.S.C. § 1631; Terminating and Closing the Case
This is a diversity tort action under Michigan state law.1 Plaintiff LGT Enterprises ("LGT") & defendant Judiah Luke Hoffman ("Hoffman") are online merchants who accept credit cards for payment online. These material facts are undisputed: a third party inadvertently wrote the wrong bank account number on LGT's application for an account to receive the proceeds of online orders paid for by credit card; that error caused another third party to deposit nearly $110,000 of LGT's credit-card revenue into Hoffman's bank account; Hoffman withdrew those funds and spent them; and at the time Hoffman withdrew and spent those funds, he did not know or believe that the funds belonged to a Michigan resident. The parties disagree over whether Hoffman knew the funds were not his when he withdrew and spent them, but that factual dispute turns out to be immaterial.
LGT voluntarily dismissed two defendants, the companies who allegedly caused the erroneous deposit, whom it had sued for negligence and breach of contract. That leaves only two counts (statutory conversion and common-law conversion) against Hoffman, who moves to dismiss for lack of personal jurisdiction. For the reasons that follow, the court agrees that it lacks jurisdiction over Hoffman. For reasons of efficiency and fairness to LGT, however, the court will not dismiss the case but instead transfer it to a more suitable district.
LGT does not claim general jurisdiction, nor would Michigan law permit the exercise of general jurisdiction on this record. Michigan statute provides The existence of any of the following relationships between an individual and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise general personal jurisdiction over the individual or his representative and to enable such courts to render personal judgments against the individual or representative.
(1) Presence in the state at the time when process is served.
(2) Domicile in the state at the time when process is served.
(3) Consent, to the extent authorized by the consent and subject to the limitations provided in section 745 [i.e., Mich. Comp. Laws § 600.745].
Mich. Comp. Laws § 600.701. LGT has not alleged that Hoffman was physically present in Michigan when he was served with the complaint and summons in this matter, that he was domiciled in Michigan at that time, or that he gave written or oral consent to be subject to the jurisdiction of Michigan courts. Accordingly, the court determines that general jurisdiction over Hoffman is lacking in Michigan.
Rather, LGT asks the court only to exercise specific (limited) jurisdiction. LGT has the burden of making a prima facie case that (1) Hoffman purposefully availed himself of the privilege of acting in Michigan or of causing a consequence in Michigan;2 (2) LGT's causes of action arose from Hoffman's Michigan-related activities; and (3) Hoffman's acts, or their consequences, must have a sufficiently substantial connection with Michigan to make the exercise of jurisdiction over Hoffman reasonable. Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 889 (6th Cir.2002). Although this burden is "relatively slight", State Farm Mut. Auto. Ins. Co. v. Carter, 2008 WL 5740100, *3 (W.D.Mich. Oct. 28, 2008) (Maloney, C.J.) (quoting Gagnon v. Emerson Elec. Benefit Health Plan & Trust Fund, 2001 WL 34399192, *1 (W.D.Mich. Aug. 13, 2001) (Bell, C.J.)), LGT has not carried it.
Opposing jurisdiction, Hoffman emphasizes that he lives and operates his business from Nevada, and has not physically been in Michigan in 20 years. The court notes, but does not decide, that LGT may have a colorable argument on the first element of specific personal jurisdiction, "purposeful availment of the privilege of acting in Michigan or of causing a consequence in Michigan", based on Hoffman's sales (through his interactive website) to Michigan customers and for Michigan events.3 But purposeful availment alone is not enough. LGT must also make a prima facie showing that its claims arise out of Hoffman's Michigan activities, and ultimately it cannot.
Hoffman originally claimed that he never made any sales to Michigan residents, then he stated that he remembered selling eight tickets as a favor to friends. Generally, Hoffman emphasizes that he does not particularly advertise or appeal to Michigan residents on his website or otherwise, and he contends that his online ticket sales to Michigan residents constitute a negligible portion of his business. LGT counters with evidence that Hoffman made at least the following three sales: $600 in tickets to an Ann Arbor event in May 2007, then $400 in tickets to a Detroit event in September 2007, and $360 in tickets to a Michigan customer for a Red Wings game in Nashville in March 2007. But the court need not get entangled in that disagreement, because it is immaterial to a determination of specific jurisdiction.
No matter how many tickets Hoffman sold to Michigan residents or for Michigan events, no reasonable factfinder could find that his withdrawal and spending of LGT's funds "arose out of" those sales. The funds which Hoffman withdrew and spent did not derive from or relate to his Michigan sales. There was neither a conceptual nor a causal relation between the two. If Hoffman had never sold one ticket to a Michigander or for a Michigan event— indeed, even if he had a policy of refusing sales to Michigan residents or for Michigan events—the dismissed defendants' use of the wrong account number still would have caused LGT's money to be erroneously deposited into Hoffman's account. In turn, Hoffman's ability and willingness to withdraw and spend the funds were nowise dependent on the existence or extent of his Michigan sales.
Plaintiff LGT Enterprises, LLC ("LGT"), founded by Mark DeLaurence in 2006 and doing business as "Letsgotickets" and "Let's Go Tickets", is a ticket broker. LGT purchases tickets to entertainment shows and events and sells those tickets to its customers, who usually use credit cards for the purchase by mail, telephone, and the Internet. See First Amended Complaint filed June 18, 2008 ("Am Comp") ¶¶ 10. LGT has an account agreement with non-party Elavon, doing business as NOVA Information Systems ("Nova"), which gathers the credit card information of LGT's customers and either charges the cards itself or sends the information to the credit-card companies to process the charges. See Original Complaint filed June 18, 2008 ("Comp") ¶ 9. A ticket broker that applies for an account with Nova is assigned a merchant identification ("ID")number; when a customer buys the ticket broker's ticket with a credit card, Nova credits the ticket broker's merchant ID number with the appropriate amount. Comp ¶ 12.
LGT hired former defendants MerchantWarehouse.com, Inc. ("MerchantWarehouse") and Ticket Software doing business as TicketNetwork Direct, Inc. ("TicketNetwork") to help it prepare its application for a NOVA processing account. See Am Comp ¶¶ 10-11. In January 2007, LGT filled out most, but not all, of a Nova account application. TicketNetwork Program Manager Ann Burke allegedly instructed LGT not to complete the lower portion of the second page of the application, which requests LGT's merchant ID numbers, saying that TicketNetwork or MerchantWarehouse would fill in those numbers. See Am Comp ¶¶ 12 & 14 and Exs. 1 & 2.
TicketNetwork's Burke also told LGT to open a business bank account within one month, and LGT did so. See Am Comp ¶¶ 13 & 15. LGT gave the business bank account number to TicketNetwork's Burke to forward to MerchantWarehouse. See Am Comp ¶ 15. Burke advised LGT to call a particular customer-service representative at MerchantWarehouse to make sure that the latter had the correct bank account number. LGT did so, and MerchantWarehouse forwarded LGT's merchant account application form to Nova; the application had merchant ID numbers filled in. See Am Comp ¶¶ 15-17 and Ex. 3.
After accepting LGT's merchant account application, NOVA sent a monthly statement to Mark DeLaurence as the principal of LGT. Am Comp ¶ 18 and Ex. 4. The monthly statement had a "Sales Recap" section (which listed that month's ticket sales through MasterCard, Visa, American Express ("Am Ex"), and Discover) and a "Deposits" heading (which listed groups of deposits and stated the total amount of deposits for the month). Am Comp ¶ 18. The statements, however, did not specify how much money each credit-card company had deposited. Am Comp ¶ 18.
In February 2008, a single customer ordered over $5,000 of Eric Clapton concert tickets from LGT, using an AmEx card. See Am Comp ¶ 20. The credit-card companies typically deposited money into the merchant's account within 48 hours of the transaction, but LGT did not see that amount deposited into its account. Accordingly, LGT's DeLaurence called AmEx and learned that AmEx had indeed deposited the money into an account corresponding to the merchant account number that AmEx had on file for LGT. The account so numbered, however, did not belong to LGT. See Am Comp ¶ 19-21. The AmEx representative looked up LGT's actual merchant account number and found that it had made no deposits into...
To continue reading
Request your trial
-
N. Atl. Operating Co. v. Dunhuang Grp. (In re Subpoena Duces Tecum to Dunhuang Grp.)
...378 (6th Cir 2003). The validity of any court order depends upon the court having jurisdiction over the parties. LGT Enters., LLC v. Hoffman, 614 F. Supp. 2d 825, 832-33 (citing Days Inns Worldwide, Inc. v. Patel, 445 F.3d 899, 903 (6th Cir.2006) (citation omitted)); see also Oberlies v. Se......