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Frank Vandersloot, and the Frank L. Vandersloot Trust v. Bmw Properties

May 1, 2013

FRANK VANDERSLOOT, AND THE FRANK L. VANDERSLOOT TRUST
PLAINTIFFS,
v.
BMW PROPERTIES, LLC, ROBERT BAXTER, AND BLAIR WALKER,
DEFENDANTS.



The opinion of the court was delivered by: Honorable Edward J. Lodge U. S. District Judge

MEMORANDUM ORDER RE: DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' COMPLAINT PURSUANT TO FED. R. CIV. P. 12(b)(2) OR, IN THE ALTERNATIVE, TO TRANSFER VENUE UNDER 28 U.S.C. § 1404(a)

INTRODUCTION

Pending before the Court in the above-entitled matter is Defendants' Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction or, in the alternative, to transfer venue under 28 U.S.C. § 1404(a). Plaintiffs have responded to the Motion and the matter is ripe for the Court's review. Having fully reviewed the record herein, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the court conclusively finds that the decisional process would not be significantly aided by oral argument, this Motion shall be decided on the record before this Court without oral argument.

FACTUAL AND PROCEDURAL BACKGROUND

This case arises from a failed investment venture between the parties. The Plaintiffs, Frank VanderSloot and the Frank L. VanderSloot Trust ("the Trust"), are both Idaho residents. (Dkt. 1-2.) The Defendants, BMW Properties, LLC ("BMW Properties"), Robert Baxter, and Blair Walker, are all residents of Utah. (Dkt.1-2.)

On or about 2002, Mr. Walker and Mr. Baxter became aware of an opportunity to purchase shares in a company known as SightSound Technology, Inc. ("SightSound"). In conjunction with that option, Mr. Baxter and Mr. Walker incorporated an entity entitled BMW Technology, Inc. ("BMW Technology") under the laws of Delaware. (Dkt. 9-1, 4).*fn1 BMW Technology was created to serve as an investment vehicle for the acquisition of shares in SightSound. (Dkt. 1-2.) Mr. Baxter and Mr. Walker then sought out additional investors in BMW Technology. (Dkt. 1-2.) Elizabeth Grayden, Mr. Baxter's secretary and Mr. VanderSloot's sister-in-law, informed Mr. VanderSloot about the potential to invest in BMW Technology. The Parties disagree as to whether Mr. Baxter or Mr. Walker directed Ms. Grayden to call Mr. VanderSloot, or whether she contacted him without their knowledge. (Dkt. 12 at 4-5, ¶¶ 6, 8) (Dkt., 9-1 at 5, ¶ 11.) Regardless, after Ms. Grayden made Mr. VanderSloot aware of the investment possibility, the parties had a telephone discussion regarding the business proposition.

After that phone conversation, Mr. VanderSloot traveled to Salt Lake City, Utah on August 13, 2002 to meet with Mr. Baxter and further discuss the business opportunity ("Utah Meeting"). (Dkt. 9-1 at 5) (Dkt. 12 at 5.) Although no formal written agreement was finalized at the Utah Meeting, the parties appear to have agreed to enter into some kind of business relationship with Mr. VanderSloot agreeing to invest a substantial sum of money in BMW Technology in exchange for a number of shares. (Dkt. 1-2.) Following the Utah Meeting, the parties worked remotely, each in their home states, to develop the Stockholders' Agreement governing the terms of their relationship. This involved the exchanging of emails, phone calls, faxes, and other documents between Utah and Idaho as well as requests for funds to be wired to Defendants in Utah from the Plaintiffs' Idaho accounts.

Eventually, the parties' relationship deteriorated. As a result, on June 27, 2012, BMW Properties filed a lawsuit in Utah state court against Mr. VanderSloot and the Trust ("Utah Litigation"). (Dkt. 9-1 at 6) (Dkt. 12-1 at 11.) Six weeks later, Plaintiffs filed this lawsuit against the Defendants in Idaho state court alleging claims for: 1) Common Law Fraud; 2) Breach of Fiduciary Duty; 3) Civil Conspiracy; 4) Aiding and Abetting; 5) Negligent Misrepresentation; 6) Misappropriation of Corporate Opportunity; and 7) Unjust Enrichment/Constructive Trust. (Dkt. 1-2.) The Defendants have since removed the case to federal court. (Dkt. 1.)

Defendants then filed the instant Motion to Dismiss arguing personal jurisdiction over them is not proper in Idaho because the actions giving rise to all of the claims in this case occurred at the Utah Meeting. (Dkt. 9.) Plaintiffs, on the other hand, argue the personal jurisdiction is appropriate here because there were numerous contacts between the parties, both before and after the Utah Meeting, via email and telephone with the Plaintiffs and/or their representatives who were located in Idaho. The Court has considered the parties' arguments and finds as follows.

DISCUSSION

1. Defendants' Motion to Dismiss for Lack of Personal Jurisdiction

In a motion to dismiss under Rule 12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of proving jurisdiction is appropriate. Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). The plaintiff "need only make a prima facie showing of jurisdictional facts." Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). The Court must take the plaintiff's uncontroverted allegations as true and conflicts between the parties over statements in affidavits are resolved in plaintiff's favor. Dole Food, Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). Where a motion to dismiss is based on written materials rather than an evidentiary hearing, Plaintiffs need only establish a prima facie showing of jurisdictional facts to withstand the motion to dismiss. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995).

Where there is no applicable federal statute governing personal jurisdiction, as in this case, the law of the state in which the district court sits applies. Boschetto, 539 F.3d at 1015. The Idaho Supreme Court has determined that Idaho's long-arm statute (Idaho Code § 5-514) allows a broader application of personal jurisdiction than permitted under the Due Process Clause of the United States Constitution. See Smalley v. Kaiser, 950 P.2d 1248 (Idaho 1997); Saint Alphonsus v. State of Washington, 852 P.2d 491 (Idaho 1993).

A. Types of Personal Jurisdiction: General and Specific

There are two types of personal jurisdiction-general and specific. Lake v. Lake, 817 F.2d 1416, 1420 (9th Cir. 1987). General jurisdiction is exercised by a state when personal jurisdiction is asserted over a "defendant in a suit not arising out of or related to the defendant's contacts with the forum." Helicoptores Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 n. 9 (1984). This occurs when the defendant has "substantial" or "continuous and systematic" contacts with the state to the extent that these contacts approximate physical presence. Bancroft & Masters, Inc. v. Augusta Nat. Inc., 223 F.3d 1082 (9th Cir. 2000). Here, the Plaintiffs do not seek to invoke general jurisdiction in this case, but rather argue this Court can exercise specific jurisdiction over the Defendants.

B. Requirements for Specific Jurisdiction

Specific jurisdiction is exercised by a state when it asserts personal jurisdiction over a defendant in a lawsuit arising out of or related to the defendant's contacts with the forum state. Helicoptores, 466 U.S. at 414 n. 8. Specific jurisdiction depends on the quality and nature of the defendant's contacts with the forum state in relation to the cause of action. Lake, 817 F.2d at 1421. The Ninth Circuit has established a three-part test to determine whether a court may exercise specific personal jurisdiction over a nonresident defendant:

(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

Id. (emphasis added). See also Ballard v. Savage, 65 F.3d 1495 (9th Cir. 1995). The Ninth Circuit has also noted that these "contacts" requirements can be lessened if considerations of reasonableness so demand. Haisten v. Grass Valley Med. Reimbursement Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986). The plaintiff has the burden of satisfying the first two factors. Lake, 817 F.2d at 1421. ...


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