Near v. Crivello

• Decision Date: 25 November 2009
• Docket Number: Case No. 09-2233-JWL.
• Citation: 673 F.Supp.2d 1265
• Parties: Phillip L. NEAR, Plaintiff, v. Frank CRIVELLO; Titan Global Holdings, Inc.; David Marks; Bryan Chance; Greystone Business Credit, LLC; and Goldberg Kohn Bell Black Rosenbloom & Moritz, Ltd., Defendants.
• Court: U.S. District Court — District of Kansas

673 F.Supp.2d 1265

Phillip L. NEAR, Plaintiff, v. Frank CRIVELLO; Titan Global Holdings, Inc.; David Marks; Bryan Chance; Greystone Business Credit, LLC; and Goldberg Kohn Bell Black Rosenbloom & Moritz, Ltd., Defendants.

Case No. 09-2233-JWL.

United States District Court, D. Kansas.

November 25, 2009.

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John M. Edgar, Michael D. Pospisi, Edgar Law Firm, LLC, Kansas City, MO, for Plaintiff.

Jeremy M. Suhr, Kirk T. May, Rouse Hendricks German May, PC, Jacqueline Sexton, William Clayton Crawford, Jr., Foland Wickens, P.C., Kansas City, MO, Jose A. Isasi, II, Greenberg Traurig LLP, Paul A. Del Aguila, Greenberg Traurig LLP, Chicago, IL, for Defendants.

MEMORANDUM AND ORDER

JOHN W. LUNGSTRUM, District Judge.

Plaintiff Phillip Near brings this diversity action alleging state-law claims against Titan Global Holdings, Inc. ("Titan") and three individuals associated with Titan, Frank Crivello, David Marks, and Bryan Chance (collectively, "the Titan defendants"); Greystone Business Credit, LLC ("Greystone"); and Goldberg Kohn Bell Black Rosenbloom & Moritz, Ltd. ("Goldberg Kohn"). The case revolves around Titan's agreement to purchase Crescent Fuels, Inc. ("Crescent"), a fuel distributor located in Kansas, from plaintiff. Greystone was involved as a potential lender for the transaction, and Goldberg Kohn, a Chicago law firm, acted as Greystone's counsel. Plaintiff asserts a claim against Titan for breach of contract, and claims against the Titan defendants for fraudulent misrepresentation, fraud by silence, fraudulent inducement, and negligent misrepresentation. Plaintiff also asserts claims against all defendants for conversion and for conspiracy to effect a conversion, and against Goldberg Kohn for breach of fiduciary duty, all stemming from plaintiff's allegation that Goldberg Kohn refused to return to plaintiff a stock certificate issued by Crescent to Titan. Titan asserts counterclaims against plaintiff for fraudulent misrepresentation, fraud by silence, fraudulent inducement, and negligent misrepresentation.

This matter is presently before the Court on motions to dismiss filed by Greystone (Doc. # 20), Goldberg Kohn (Doc. # 14), and plaintiff (Doc. # 25); a motion for judgment on the pleadings filed by the Titan defendants (Doc. # 27); and a motion for leave to conduct jurisdictional discovery filed by Greystone (Doc. # 41). The motions to dismiss by Greystone and Goldberg Kohn are denied, based on the Court's conclusions that it may exercise personal jurisdiction over those defendants and that plaintiff has sufficiently pleaded his conspiracy claim against Greystone. Greystone's discovery motion is also denied. Plaintiff's motion to dismiss Titan's counterclaims is denied, based on the Court's conclusion that Titan has sufficiently pleaded its claims against plaintiffs, including with respect to the particularity requirement of Rule 9(b). Finally, the Titan defendants' motion for judgment on the pleadings on plaintiff's tort claims is granted in part and denied in part. Plaintiff's claim for negligent misrepresentation is dismissed to the extent based on representations concerning promises of future action, and plaintiff's claim for punitive damages is also dismissed to the extent based on his claim for negligent misrepresentation. The Court also concludes that plaintiff has not adequately pleaded his reliance on post-agreement representations, his reasonable diligence as an element of his claims for fraud by silence, the existence of an agreement among the Titan defendants in support of his conspiracy claim, and the details of most of the alleged misrepresentations as required by Rule 9(b); those claims are therefore subject to dismissal, although plaintiff is granted leave to amend his complaint by December 11, 2009, to cure those pleading deficiencies.

I. Greystone's Motions

Greystone moves to dismiss the claims against it for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). Greystone also seeks leave to conduct jurisdictional discovery prior to the Court's ruling on its motion to dismiss. In addition, Greystone moves to dismiss plaintiff's conspiracy claim pursuant to Fed.R.Civ.P. 12(b)(6), on the basis that plaintiff has failed to allege sufficient facts concerning the existence of an agreement among the alleged conspirators to support a plausible conspiracy claim.

A. Personal Jurisdiction Standards

Although a plaintiff bears the burden of establishing personal jurisdiction over a defendant, see OMI Holdings, Inc. v. Royal Ins. Co., 149 F.3d 1086, 1091 (10th Cir.1998), in the preliminary stages of litigation this burden is "light." Intercon, Inc. v. Bell Atlantic Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir. 2000) (quoting Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir.1995)). Where, as here, there has been no evidentiary hearing, and the motion to dismiss for lack of personal jurisdiction "is decided on the basis of affidavits and other written material, the plaintiff need only make a prima facie showing that jurisdiction exists." See id. The allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits. Id. Moreover, if the parties present conflicting affidavits, "all factual disputes must be resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party." Id. Only the well pled facts of plaintiff's complaint, however, as distinguished from mere conclusory allegations, must be accepted as true. Id. In addition, an affidavit submitted by a party must comply with the requirements of Fed. R.Civ.P. 56(e), i.e., it must be based on personal knowledge, set forth admissible facts, and show affirmatively that the affiant is competent to testify to the matters stated therein. See FDIC v. Oaklawn Apts., 959 F.2d 170, 175 n. 6 (10th Cir. 1992).

To obtain personal jurisdiction over a nonresident defendant in a diversity action, "a plaintiff must show both that jurisdiction is proper under the laws of the forum state and that the exercise of jurisdiction would not offend due process." Intercon, Inc. v. Bell Atlantic Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir. 2000). Because Kansas's long-arm statute permits the exercise of any jurisdiction that is consistent with the United States Constitution, the personal jurisdiction inquiry under Kansas law collapses into the single due process inquiry. See OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1090 (10th Cir.1998).

The Due Process Clause permits the exercise of personal jurisdiction over a nonresident defendant so long as the defendant purposefully established "minimum contacts" with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); accord Intercon, Inc. v. Bell Atlantic Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir.2000) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). This standard may be met in two ways. First, a court may exercise specific jurisdiction if a defendant has "purposefully directed his activities at residents of the forum, and the litigation results from alleged injuries that arise out of or relate to those activities." Intercon, 205 F.3d at 1247 (quoting Burger King Corp., 471 U.S. at 472, 105 S.Ct. 2174); accord Doering v. Copper Mountain, Inc., 259 F.3d 1202, 1210 (10th Cir.2001). Second, a court may exercise general jurisdiction if the defendant's contacts with the forum state, while unrelated to the alleged activities upon which the claims are based, are nonetheless "continuous and systematic." Intercon, 205 F.3d at 1247 ("When a plaintiff's cause of action does not arise directly from a defendant's forum-related activities, the court may nonetheless maintain general personal jurisdiction over the defendant based on the defendant's business contacts with the forum state."); accord Doering, 259 F.3d at 1210.

Even if a defendant's actions created sufficient minimum contacts, the court must still consider whether the exercise of personal jurisdiction "would offend traditional notions of `fair play and substantial justice.'" Intercon, 205 F.3d at 1247 (quoting Burger King Corp., 471 U.S. at 476, 105 S.Ct. 2174). This inquiry requires a determination of whether the "exercise of personal jurisdiction over [the] defendant is reasonable in light of the circumstances surrounding the case." Id. (citing Burger King Corp., 471 U.S. at 477-78, 105 S.Ct. 2174); accord Peay v. BellSouth Medical Assistance Plan, 205 F.3d 1206, 1212 (10th Cir.2000).

B. Jurisdiction Analysis

Greystone, a limited liability company formed in Delaware with its headquarters in New York, argues that plaintiff has not shown that it had sufficient contacts with Kansas to support personal jurisdiction in this case. According to its affidavit, Greystone does not conduct business and does not have any property or employees in Kansas. Greystone concedes that it sent two employees to Kansas on one occasion to conduct due diligence for a possible loan to Titan for the purchase of Crescent, that it hired an appraiser who performed work in Kansas for that due diligence work, that it received due diligence documents sent from Kansas, and that it directed a very small number of documents and communications into Kansas. Greystone argues, however, that such contacts are not sufficient to confer specific jurisdiction in this case.

The Court disagrees with Greystone that it did not have sufficient minimum contacts with Kansas in connection with plaintiff's claims. According to the uncontroverted allegations of the complaint and the facts properly submitted by plaintiff through the affidavit of an officer of Crescent, Greystone had the following contacts...