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finding that a complaint improperly grouped defendants in violation of Rule 9(b) where there were seven defendants, consisting of both individuals and entities, and it was unclear who the plaintiff contended was responsible for the misrepresentations alleged in the complaint
Summary of this case from TTCP Energy Fin. Fund Ii, LLC v. Ralls Corp.Opinion
CIVIL ACTION NO. 1:15-CV-4074-AT
08-17-2016
TECHJET INNOVATIONS CORP., Plaintiff, v. Kamal BENJELLOUN et al., Defendants.
Stephen M. Katz, The Katz Law Group, LLC, Marietta, GA, for Plaintiff. Emily Jones Chancey, Walter Brad English, Maynard Cooper & Gale, Huntsville, AL, Joseph Charles Staak, Smith Currie & Hancock, LLP, Atlanta, GA, for Defendant.
Stephen M. Katz, The Katz Law Group, LLC, Marietta, GA, for Plaintiff.
Emily Jones Chancey, Walter Brad English, Maynard Cooper & Gale, Huntsville, AL, Joseph Charles Staak, Smith Currie & Hancock, LLP, Atlanta, GA, for Defendant.
ORDER
Amy Totenberg, United States District Judge
This case is before the Court on Defendants VieTech, LLC's unopposed Motion to Dismiss for Lack of Personal Jurisdiction [Doc. 20], Defendant Kamal Benjelloun's ("Defendant Benjelloun") Motion to Dismiss for Lack of Personal Jurisdiction [Doc. 22], Defendants Bio-Cellular Design Aeronautics, Inc.'s ("BDA"), Earth & Water Consulting, Inc.'s ("EWC"), Roderick Hynes', and Joseph M. Mitchells' (collectively, the "Corporate Defendants") Motion to Dismiss or, in the alternative, Motion to Transfer [Doc. 24], and Corporate Defendants' Motion to Strike. [Doc. 36.]
VieTech's Unopposed Motion to Dismiss is GRANTED [Doc. 20]. For the reasons described in this Order, Defendant Benjelloun's Motion is DENIED . The Corporate Defendants' have withdrawn their request to transfer this matter (Corporate Defendants" Reply in Support of Motion to Transfer and to Dismiss, Doc. 34 at 3 ("Defendants respectfully withdraw their request that this matter be transferred to the United States District Court for the Northern District of Florida").) The remainder of Corporate Defendants' Motion to Transfer and to Dismiss is GRANTED IN PART and DENIED IN PART [Doc. 34]. The Court declines to abstain from exercising jurisdiction, but agrees with Corporate Defendants that Plaintiff's fraud claims and conspiracy claims are insufficiently pled. Finally, Corporate Defendants' Motion to Strike is DENIED, but the Court GRANTS Defendants' request in the alternative that the Court not consider the objected-to exhibits in connection with these Motions. [Doc. 36.]
I. Standard for a Motion to Dismiss for Lack of Personal Jurisdiction.
A plaintiff's complaint is subject to dismissal if there is a lack of personal jurisdiction over the defendant. Fed. R. Civ. P. 12(b)(2). Plaintiff bears the burden of establishing jurisdiction in this Court. Consolidated Dev. Corp. v. Sherritt, Inc. , 216 F.3d 1286, 1291 (11th Cir.2000) ; Diamond Crystal Brands, Inc. v. Food Movers Intern., Inc. , 593 F.3d 1249, 1257 (11th Cir.2010). "In the context of a motion to dismiss for lack of personal jurisdiction in which no evidentiary hearing is held, the plaintiff bears the burden of establishing a prima facie case of jurisdiction over the movant, non-resident defendant." Morris v. SSE, Inc. , 843 F.2d 489, 492 (11th Cir.1988). Plaintiff may establish a prima facie case by presenting sufficient evidence to withstand a motion for directed verdict. Madara v. Hall , 916 F.2d 1510, 1514 (11th Cir.1990) ; Allegiant Physicians Serv., Inc. v. Sturdy Memorial Hospital , 926 F.Supp. 1106, 1112 (N.D.Ga.1996). A party presents enough evidence to withstand a motion for directed verdict by putting forth "substantial evidence ... of such quality and weight that reasonable and fair-minded persons in the exercise of impartial judgment might reach different conclusions." Walker v. NationsBank of Florida , 53 F.3d 1548, 1554 (11th Cir.1995) ; see also Polskie Linie Oceaniczne v. Seasafe Transport A/S , 795 F.2d 968, 972 (11th Cir.1986) (noting that, if the defendant makes a showing of the inapplicability of the long arm statute, "the plaintiff is required to substantiate the jurisdictional allegations in the complaint by affidavits or other competent proof, and not merely reiterate the factual allegations in the complaint.")
The Court construes the allegations in the complaint as true to the extent that they are uncontroverted by defendant's evidence. Morris v. SSE, Inc. , 843 F.2d at 492 ; Allegiant Physicians Serv., Inc. , 926 F.Supp. at 1112 ; Foxworthy v. Custom Tees, Inc. , 879 F.Supp.1200, 1207 n. 10 (N.D.Ga.1995). If, however the defendant submits affidavits challenging the allegations in the complaint, the burden shifts back to the plaintiff to produce evidence supporting jurisdiction. Diamond Crystal Brands, Inc. , 593 F.3d at 1257 ; Meier ex rel. Meier v. Sun Int'l Hotels, Ltd. , 288 F.3d 1264, 1269 (11th Cir.2002). If the plaintiff's complaint and supporting evidence conflict with the defendant's affidavits, the court must construe all reasonable inferences in favor of the plaintiff. Diamond Crystal Brands, Inc. , 593 F.3d at 1257 ; Meier , 288 F.3d at 1269.
II. Discussion
The Court first addresses Benjelloun's Motion to Dismiss for Lack of Personal Jurisdiction. The Court next addresses the Corporate Defendants' arguments that the Court should abstain from exercising jurisdiction because a parallel state court action is pending in Alabama. The Court then turns to Defendants' arguments that Plaintiff's fraud, conspiracy, and unjust enrichment claims are insufficiently pled or barred as a matter of law. Finally, the Court addresses the Corporate Defendants' Motion to Strike.
A. Jurisdictional Allegations and Evidence
Plaintiff alleges the following jurisdictional facts about Benjelloun. Benjelloun is President, CEO, and majority shareholder of Defendants BDA and EWC. (Compl. ¶¶ 18-19, 30.) FinanceCom Asset Management, which is owned by Benjelloun's family, is the minority shareholder in BDA and EWC.
In June of 2013, EWC sent to Plaintiff Techjet Innovations Corporation ("TJIC") "an Initiation Phase Proposal & Concept Definition" for an unmanned aircraft (basically, a drone). (Id. ¶ 33.) This project was named the Entomon Program. (Id. ) Benjelloun personally participated in the solicitation of Plaintiff to work on this project because he "wanted to leverage [Plaintiff's CEO Ratti's] relationship with Georgia Tech" and because Ratti "could assemble a team of engineers from different disciplines to complete the project." (Declaration of Jayant Ratti, Doc. 30-1 ¶ 8 ("Ratti Decl.").) "Throughout the contract[s] and [Ratti's] relationship with EWC and BDA, [Ratti] dealt directly with Benjelloun and his assistants Roderick Hynes and Joseph Mitchell." (Id. ¶ 9.)
Plaintiff agreed to participate in the project and Benjelloun "in his capacity as President of [EWC] executed and delivered to [Plaintiff Techjet Innovations Corporation ... a contract under which [EWC] (sic) retained TIJC to complete initial services related to the Entomon Program." (Compl. ¶ 34.) Work under this first contract was conducted in Atlanta, Georgia. (Id. ¶ 35.) The contract was successfully completed, and so BDA and TJIC entered into a second contract in February of 2014 for "Conceptual Design" and "Preliminary Testing" for the Entomon Program. (Id. ¶ 41.) Benjelloun signed this contract in his capacity as managing member of BDA LLC (Id. ¶ 41.) Again the work was conducted in Georgia. (Id. ¶ 42.) Pursuant to the second contract's requirements, TJIC retained "experienced, highly-educated ... aerospace, software, electronic and other engineers and technical personnel." (Id. ¶ 46.) TJIC implemented a management plan and provided detailed bi-weekly reports. TJIC billed $621,619.32 and received $547,758.00 under the second contract, leaving a balance of $73,861.32 due. (Ratti Decl. ¶ 13.)
After the second contract was signed, EWC and Benjelloun converted Bio-Cellular Design Aeronautics from a LLC to a corporation to "serve as the conduit through which EWC and Benjelloun conduct[ed] business." (Compl. ¶ 53.) BDA was allegedly "deliberately undercapitalized," though the Complaint provides no details about this claim. (Id. ¶ 54.)
In December of 2014, EWC, BDA, and Benjelloun executed a third contract with TJIC regarding the Entomon Program. (Id. ¶ 57.) The contract was for services and materials in the amount of $778,583.19. (Id. ¶ 60.) Plaintiff allegedly complied with its obligations, while Defendants allegedly defaulted, leaving a total balance of $170,074.10 owing on the second and third contracts combined. (Id. ¶ 63.) This led to a dispute about the unpaid invoices. In April of 2015, Defendants sent a letter to Georgia, signed by Defendant Hynes, stating that BDA had experienced "administrative delays" in receiving corporate funds from oversees, which had delayed BDA's payment of invoices. However, BDA promised to expedite payment once the funds were received. (Id. ¶ 66.) This payment never materialized, despite the fact that BDA allegedly retained new employees during this time. (Id. ¶ 67.)
In July of 2015, Benjelloun personally requested that Dr. Ratti travel to Arizona to discuss their dispute about the unpaid invoices. (Id. ¶ 69; Ratti Decl. ¶ 19) (Ratti Decl. ¶ 20.) Benjelloun and Ratti also corresponded by e-mail in the weeks immediately preceding this meeting. (Doc. 30-3.) Benjelloun, Mitchell, Hynes, and two other individuals were present at the meeting. Plaintiff alleges that during the meeting Benjelloun verbally attacked Ratti, accused Ratti of hiding the fact that he had more than one company named "TechJet," threatened Ratti that "people get shot and buried out here in the desert for lying," claimed that Ratti had been hired to design a helicopter but had instead designed an airplane, threatened to exert legal pressure to force Ratti to submit to Benjelloun's will, and refused to allow Ratti to leave the room until he signed a document releasing TJIC's IP for $10. (Compl. ¶ 73; Ratti Decl. ¶ 23.) Ratti left the meeting without signing anything. The next day, Ratti and Benjelloun again met, where Benjelloun again allegedly threatened Ratti and his family with physical and sexual violence. (Compl. ¶¶ 80-81.) Ratti immediately left Arizona after the meeting. In September of 2015, BDA sued Ratti in state court in Alabama, alleging that Ratti and his companies had failed to live up to their end of the contracts and were wrongfully holding onto intellectual and physical property related to the project that allegedly belonged to Defendants.
Plaintiff did not attach the e-mails (or identify the telephone calls) where Benjelloun actually invited Ratti to Arizona. These items would be relevant to jurisdiction and would have assisted the Court in making its determination.
According to the Complaint, the intellectual and tangible property generated from the Entomon Program is worth $29.37 million, some or all of which is subject to Plaintiff's liens and security interests. (Compl. ¶ 9.)
Benjelloun, in response, avers that he never entered into any contract with Plaintiff in his "personal capacity." (Benjelloun Decl., Doc. 22-3 ¶ 5.) He was also not "primarily responsible" for negotiating contracts between BDA and TJIC, though his use of the qualifier "primarily" suggests he had some responsibility. (Id. ¶ 6.) He also asserts that he never travelled to Georgia in connection with the contracts, and that all meetings with Plaintiff were held outside of Georgia. (Id. ¶ 9.)
In addition, Benjelloun's biography in BDA's Business Plan states he is responsible for "establishing partnerships" and "reviewing and approving agreements." (Doc. 31-1 at 21.)
The rest of Benjelloun's assertions in his affidavit are conclusory or vague. He alleges he does not "solicit or engage in business in the State of Georgia in [his] personal capacity" and does not "personally receive significant revenue from goods or products sold or used in Georgia." (Benjelloun Decl. ¶ 12.) But the Court has no indication as to what he considers "significant." He also asserts it would be "inconvenient" for him to litigate in Georgia but provides no factual support for that conclusion. (Id. ¶ 16.)
B. Personal Jurisdiction over Benjelloun
Benjelloun argues that the Court lacks personal jurisdiction over him for two primary reasons. First, Benjelloun argues he is not an alter ego of the Corporate Defendants. Second, he claims he does not "solicit or engage in business in the State of Georgia in his personal capacity." (Doc. 22-1 at 6) (emphasis added).
The biggest problem with Benjelloun's argument is that it appears to talk past the theory of jurisdiction that Plaintiff is actually pursuing. While Plaintiff does include allegations concerning veil-piercing in its Complaint, it makes scant mention of that or an alter ego theory of jurisdiction in its response to Benjelloun's motion.
Instead, Plaintiff's chief argument in favor of personal jurisdiction is that Benjelloun was a "primary participant in an alleged wrongdoing intentionally directed at a resident" of Georgia, even if his participation was in his "corporate capacity." Amerireach.com, LLC et al. v. Walker , 290 Ga. 261, 719 S.E.2d 489 (2011). According to Plaintiff, Benjelloun is subject to jurisdiction in Georgia so long as he had a major role in the events leading to this litigation – even if that role was not in his "personal" capacity. This, according to Plaintiff, means that Benjelloun is subject to jurisdiction under the prong of Georgia's long-arm statute that provides for jurisdiction over any individual who "[t]ransacts any business within" Georgia. O.C.G.A. § 9–10–91(3).
The Court agrees. Several years ago, the Supreme Court of Georgia held that an individual who is a "primary participant" in the underlying facts of a lawsuit may be subject to personal jurisdiction in this state under the "transacting business" provision of Georgia's long-arm statute, even if all of his contacts with the state were made solely in his "corporate capacity." Amerireach , 719 S.E.2d at 494.
In Amerireach , a doctor sued three individual defendants who were founding members of a LLC. After the doctor terminated a contract with the LLC to sell nutritional supplements, he demanded that the LLC repurchase some of the unsold supplements under Georgia's Sale of Business Opportunities Act, O.C.G.A. § 10–1–415(d)(1). The LLC refused and the parties filed separate suits regarding the alleged breach. The doctor alleged that the individual defendants had "directly facilitated [the LLC's] transaction in business in Georgia resulting in the unlawful conduct set forth" and had been "physically present in Georgia facilitating the unlawful conduct ... in furtherance of [the LLC's] business activities." Id . at 496. The individual defendants argued they were only present in their corporate capacity, not their personal capacities and were not subject to personal jurisdiction under the "fiduciary shield" doctrine that "a nonresident individual cannot be subject to personal jurisdiction in Georgia courts based solely upon acts taken in his capacity as a corporate officer." Id. at 493.
The Georgia Supreme Court rejected this argument, holding that "employees of a corporation that is subject to the personal jurisdiction of the courts of the forum may themselves be subject to jurisdiction if those employees were primary participants in the activities forming the basis of jurisdiction over the corporation." Id. at 495 (citations and quotations omitted). The court explained that the "primary participant requirement is itself a sufficient constitutional due process protection of corporate employees and officers" because it "meets the mandate that [e]ach defendant's contacts with the forum State ... be assessed individually." Id.
Since Amerireach , state and federal district courts in Georgia state and federal district courts have found personal jurisdiction under circumstances similar to those present here. For example, in Gregory v. Preferred Financial Solutions , 5:11–CV–422 MTT, 2013 WL 5725991, at *5 (M.D.Ga. Oct. 21, 2013), the plaintiffs filed a class action against a defendant corporation and a handful of its officers and shareholders, alleging that the defendants engaged in illegal debt adjustment services. The officers challenged personal jurisdiction, claiming that they never spoke to the plaintiffs or any customers in Georgia, did not personally attempt to settle a customer's debts, and did not physically transact any business on behalf of the corporation. However, they failed to "address whether they were primary participants in the activities forming the basis for jurisdiction" over the corporation. Id. at *4. The plaintiffs, on the other hand, submitted evidence showing that the officers "initiated and implemented the debt adjustment program" and were "responsible for and exercised control over significant aspects of the program," including directing websites and advertisements by which plaintiffs learned of the debt adjustment company. This was sufficient to show these defendants were "primary participants" in the events leading to the suit and not "passive officers." Id. at *6. They were therefore subject to personal jurisdiction.
Similarly, in J&D Int'l Trading Ltd. v. MTD Equip., LLC , the court found that an individual defendant transacted business in Georgia on behalf of his corporate employer and was therefore subject to personal jurisdiction. The defendant never visited Georgia, but had solicited and negotiated contracts for the purchase of scrap metal on behalf of a Georgia-based company, arranged for pickup of the metal, finalized the sale of a product in Georgia, and arranged for payment to a Georgia-based company. No. 1:13–CV–2526–RWS, 2014 WL 1683375, at *5 (N.D.Ga. Apr. 28, 2014). He also was vice president of the defendant company, and held an ownership interest in it and a sister company. Id.
Finally, in Meyn Am., LLC v. Tarheel Distributors, Inc. , 36 F.Supp.3d 1395, 1404 (M.D.Ga.2014), the court found that a defendant company's president acted as a "primary decision-maker" for the company in a trade secrets theft case. The president had hired the plaintiff's past employee, was copied on correspondence where that employee shared the allegedly stolen trade secrets, and had remarked that the company was going to "make a lot of money" because of the employee's access to plaintiff's trade secrets. The defendants responded by emphasizing their lack of contacts with Georgia, but did "not rebut the Plaintiff's accusations that he was a driving force behind [the defendant corporation's] alleged misappropriation of trade secrets." Id. ; see also Kipperman v. Onex Corp. , 411 B.R. 805, 885 (N.D.Ga.2009) (asserting personal jurisdiction over defendant CEO because he was "the ultimate parent of [a number of corporate defendants] and he purposefully sought to acquire a Georgia business, drain its value for himself and his various entities, and leave it bereft for its creditors").
Benjelloun seeks to distinguish Amerireach (and by extension, its progeny) by arguing that the defendant officers there "were the primary participants in the subject negotiations" of the contract at issue and "were physically present in the state of Georgia facilitating the unlawful conduct." (Reply at 7.) Both of these objections are misguided.
First, contrary to Benjelloun's argument in his Reply, the Supreme Court did not find that the individual defendants in Amerireach had negotiated the contract at issue, only that they had "directly facilitated [the LLC's] transaction of business in Georgia." Id. at 496. Moreover, Benjelloun never really rebuts the evidence or allegations that he played a substantial role in the formation of the business relationship between the parties and the subsequent breach of the contracts at issue other than denying that he was "primarily responsible" for negotiating the contracts. Instead, most of his evidence focuses on his lack of any physical presence in Georgia, his argument that BDA and EWC obeyed corporate formalities, and his claim that he never transacted business in Georgia in his "personal capacity." For example, he avers that he never entered into agreements with Plaintiff in his "personal capacity" (Benjelloun Decl. ¶ 5) and does not "solicit or engage in business in the State of Georgia in [his] personal capacity." (Id. ¶ 12.) These facts may be relevant post-Amerireach , but they are definitely not dispositive. What Benjelloun does not show is that he had no role in the alleged breach and misrepresentations that are the basis of the lawsuit. (See generally Benjelloun Decl.) Nor does he deny that he sought to do business with Plaintiff specifically because of its ties to a Georgia institution (Georgia Tech University). Finally, he does not deny that he communicated with the Georgia-based Plaintiff in connection with the contracts and the alleged breach, and does not deny that he authorized the April 2015 letter that purportedly promised that payment was forthcoming and which induced Plaintiff to continue working and incurring expenses under the contracts. (See Ratti Aff., Doc. 30-1 ¶ 20.)
The only mention of the word "negotiation" in the opinion is the court's general remark that a court may consider "negotiations" as one element among many when assessing personal jurisdiction. Amerireach.com, LLC v. Walker, 290 Ga. 261, 719 S.E.2d 489, 495 (2011), as amended on denial of reconsideration (Dec. 8, 2011) ("We also note that, in breach-of-contract cases, evaluation of minimum contacts may include examination of the individual officer's ‘prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing.’ ") The Court of Appeals did not mention that the defendants had negotiated the contract at issue either, instead finding personal jurisdiction based on the allegations that "Cocheu, Gallardo, and Redman were founding members of the company and were respectively the company's CEO, operating chairman, and general counsel when Walker became an AmeriSciences marketer ..." and "Walker's cancellation rights under Georgia law were "generally known" to them." Walker v. Amerireach.com, 306 Ga.App. 658, 663, 703 S.E.2d 100, 104 (2010), aff'd in part, rev'd in part sub nom. Amerireach.com, LLC v. Walker, 290 Ga. 261, 719 S.E.2d 489 (2011), as amended on denial of reconsideration (Dec. 8, 2011), and vacated sub nom., Walker v. Amerireach.com, LLC, 313 Ga.App. 584, 722 S.E.2d 201 (2012).
Second, Benjelloun's argument that he never set foot in Georgia is not dispositive. Amerireach itself noted that an individual defendant's physical presence in a state is not a prerequisite for personal jurisdiction. 719 S.E.2d at 496. And other case law illustrates this clearly. Several of the cases cited above involved individual defendants who never set foot in Georgia but were nevertheless subject to jurisdiction. For example, in Kipperman , there was no dispute that a defendant corporation was subject to jurisdiction in Georgia. See 411 B.R. at 884. But the plaintiff also sued the corporation's CEO individually. The CEO contested jurisdiction on the basis that the plaintiff "presented no evidence that [the individual defendant CEO] personally visited Georgia or conducted any business here." However, the CEO was "the company's founder, leader, and majority shareholder," played an "essential [role] in approving [the corporation's] transactions," and "purposefully sought to acquire a Georgia business, drain its value for himself and his various entities, and leave it bereft for its creditors." Id. Under these circumstances, the CEO was subject to personal jurisdiction in Georgia despite never having set foot in the state.
Next, in J&D Int'l Trading Ltd. , Judge Story held that personal jurisdiction over an corporation's vice president was proper even though he did not commit any improper acts in Georgia, made no communications to, from, or in Georgia, "did not come into Georgia to conduct business with Plaintiff," and "did not come to Georgia for any reason related to the transactions in th[e] case." However, because the vice president did "solicit and negotiate business" on behalf of a Georgia-based company and arranged for the pick-up of goods in Georgia, he "transacted business" within the meaning of Georgia's long-arm statute. 2014 WL 1683375, at *5.
In a slightly different context, other courts have found that out-of-state corporations who never "entered" Georgia may still be subject to jurisdiction in a Georgia court. In Aflac, Inc. v. SDT Air, LLC , Judge Land found it appropriate to exercise personal jurisdiction over an out-of-state corporation that had attempted to purchase an aircraft located in Georgia. 978 F.Supp.2d 1304, 1308 (M.D.Ga.2013). Judge Land concluded that the corporate defendant had transacted business in Georgia because it sent a letter of intent to purchase the aircraft, engaged in "extensive discussions, correspondence, and negotiations (both directly and through an intermediary) with Aflac and its Georgia-based employees" concerning a multi-million dollar airplane located in Georgia, and because purchase of the plane depended on an inspection that was to occur in Georgia (though the inspection never in fact happened). Id. at 1313. Though the contacts were "restricted to this single attempted transaction, the transaction was a substantial one and the course of conduct necessary to consummate it was significant and purposefully directed to the state of Georgia." Id. While Aflac involved a corporate defendant as opposed to an individual one, it too demonstrates that personal jurisdiction over a person or entity may be appropriate even if the defendant never sets foot in the forum state.
Thus, while the facts of this case do not neatly line up with any of the cases discussed above, they bear something in common with each of them and, in the aggregate, convince the Court that jurisdiction is appropriate. Like Preferred Financial Solutions , and Meyn , Benjelloun has failed to rebut Plaintiff's allegations and evidence that he was a primary participant in the business relationship that gave rise to this suit, and the breach of contract at issue in particular. The best he can say is that he did not "primarily" negotiate the contracts – though even there Plaintiff provided evidence that Benjelloun retained responsibility for "establishing partnerships," "reviewing and approving agreements," and "overseeing overall project management." (Response, Ex. 1, Doc. 31-1 at 21.) He was thus no "passive officer." Gregory , 2013 WL 5725991 at * 6.
And like the individual defendants in Kipperman and J&D Intl. Trading, Ltd. , Benjelloun never set foot in Georgia but allegedly directed his and his business' conduct at and communicated with Georgia residents in connection with a significant contractual relationship over an extended period of time. 411 B.R. at 884 ; 2014 WL 1683375, at *5 ; see also Meyn America, LLC , 36 F.Supp.3d at 1405 ("[g]iven the allegations that [the individual defendant CEO] exercised substantial control over Tarheel operations and was a primary participant in the harm it directed at a Georgia company, he is subject to essentially the same minimum contacts analysis as Tarheel would be"). In addition, Benjelloun allegedly made threats of violence against Plaintiff's CEO – also a Georgia resident – in connection with the contractual relationship at the heart of this lawsuit.
In other words, Benjelloun leaves unrebutted Plaintiff's allegations that he had a substantial role in the circumstances that led to this lawsuit, and that he "transacted business" in the state in his corporate capacity but "personally participated" in the decision to breach the contracts, not pay Plaintiff, and attempt to extract intellectual property rights from Plaintiff under duress. Accordingly, Plaintiff established a prima facie case for personal jurisdiction over Benjelloun.
Having found that jurisdiction is appropriate under Amerireach and subsection (1) of Georgia's long-arm statute, the Court turns to whether or not jurisdiction would comport with due process. While this analysis is separate, it encompasses many of the concerns discussed above. The Court finds the evidence of Benjelloun's contacts is sufficient to indicate he could reasonably expect to be haled into court here. He communicated with Georgia residents; solicited business from a Georgia company because of its ties to Georgia Tech; his foreign corporation's only partner was a Georgia corporation; all of the work done in connection with the contracts was done in Georgia; and he allegedly personally participated in a significant number of events surrounding, leading up to, and following the alleged breach by BDA and EWC. Consistent with Calder , Plaintiff alleged that "[Benjelloun] himself create[d] [these contacts] with" Georgia. Walden v. Fiore , –––U.S. ––––, 134 S.Ct. 1115, 1118, 188 L.Ed.2d 12 (2014).
Calder v. Jones, 465 U.S. 783, 788, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984).
The Court also finds that the exercise of jurisdiction here would not violate traditional notions of fair play and substantial justice. This requires the Court to examine the fairness factors enunciated by Burger King Corp. v. Rudzewicz : (1) the burden on the defendant; (2) the forum state's interest in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several states in furthering fundamental substantive social policies. 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).
Benjelloun avers that litigating in Georgia would be "inconvenient" for him, but offers no additional facts to support this conclusory assertion. This is insufficient to present the "compelling case" to prevent jurisdiction. Gregory , 2013 WL 5725991, at *7 (argument that "it would be extremely burdensome" for defendants to defend a lawsuit was insufficient without factual support). Benjelloun also appears to have sufficient resources that address any possible concerns regarding the financial hardship of litigating here. Accordingly, the Court finds that personal jurisdiction is proper under the Due Process Clause of the Fourteenth Amendment.
Plaintiff must still prove these jurisdictional facts at trial. If it turns out Benjelloun had much less of a role in the contracts and communications with Plaintiff than Plaintiff's allegations and evidence suggest, then dismissal would be appropriate at that time.
C. First to File Bar
Next, the Corporate Defendants argue that the first-to-file bar should dissuade this Court from exercising jurisdiction over this case. The first to file bar permits a Court to abstain from exercising jurisdiction based on the pragmatic considerations of "wise judicial administration ... conservation of judicial resources and comprehensive disposition of litigation." Ambrosia Coal & Const. Co. v. Pages Morales , 368 F.3d 1320, 1328 (11th Cir.2004). Thus "when multiple federal district courts might contemporaneously [exercise] concurrent jurisdictions ... the general principle is to avoid duplicative litigation." Id.
"This general principle does not apply, however, when the duplicative litigation arises between state and federal courts." Id. Instead, "as between state and federal courts, the rule is that the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction [...] because Federal courts have a ‘virtually unflagging obligation ... to exercise the jurisdiction given them.’ " Id. (citing Colorado River Water Conservation District v. United States , 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) ).
Defendants argue that Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Haydu , 675 F.2d 1169, 1171 (11th Cir.1982) controls and that Ambrosia did not overrule it. In Haydu , the parties litigated a business tort case regarding stock options in both federal and state courts for three years. The two courts came out the opposite way on an order compelling arbitration. The Eleventh Circuit found that "comity concerns" compelled it to allow the case to proceed in state court, where it was scheduled for trial "within a week." Id. at 1174.
The Court finds that Haydu has no application here. First, it does not even mention the words "first to file," and instead is primarily a case about abstention. To the extent Haydu can be construed as a first-to-file case (and the Court acknowledges that some courts have read it that way), the Court finds that the more recent Ambrosia case is controlling. Ambrosia could not be more clear: the first-to-file bar does not apply to pending state and federal actions.
Other district courts have followed this approach and applied Ambrosia. E.g. , Atl. Mut. Ins. Co. v. Killearn, Inc. , No. 1:06–CV–0308–JEC, 2007 WL 2422041, at *4 (N.D.Ga. Aug. 21, 2007) ("Thus the general rule is that the pendency of an action in ... state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction."); Sini v. Citibank, N.A. , 990 F.Supp.2d 1370, 1375 (S.D.Fla.2014) (finding Haydu irreconcilable with Colorado River and declining to impose first-to-file bar to federal case in light of Ambrosia Coal ).
And while Defendants cite two New Jersey cases for the proposition that "cases decided after Ambrosia Coal continue to recognize the holding of Haydu and to consider [the] same in their own decisions," one of those decisions rejected Haydu as inconsistent with Colorado River,Spellman v. Express Dynamics, LLC, 150 F.Supp.3d 378, 387 (D.N.J.2015) and the other only stayed an action because of the lack of guidance from the Third Circuit. Catlin Specialty Ins. Co. v. Plato Const. Corp., No. CIV. 10–5722 RBK/AMD, 2012 WL 924850, at *3 (D.N.J. Mar. 19, 2012).
D. Abstention
In the alternative, the Corporate Defendants argue that the Court should abstain from exercising jurisdiction. The abstention doctrine permits a district court to postpone the exercise of jurisdiction when there is a concurrent state court action concerning the same matter. District courts weigh the following factors when determining whether to abstain from hearing a case: "(1) whether one of the courts has assumed jurisdiction over property, (2) the inconvenience of the federal forum, (3) the potential for piecemeal litigation, (4) the order in which the fora obtained jurisdiction, (5) whether state or federal law will be applied, and (6) the adequacy of the state court to protect the parties' rights." Ambrosia Coal & Const. Co. v. Pages Morales , 368 F.3d 1320, 1331 (11th Cir.2004). These factors are applied pragmatically and flexibly, but the abstention inquiry must be "weighed heavily in favor of jurisdiction." AFC Enterprises, Inc. v. Rest. Grp. LLC , No. 1:10–CV–1772–TWT, 2010 WL 4537812, at *3 (N.D.Ga. Nov. 3, 2010) (declining to abstain in a trademark case when a parallel action was proceeding in a Georgia superior court).
Here, the Court finds that the above factors do not weigh in favor of abstention. The first factor does not apply because no court has taken jurisdiction over any piece of property.
The second factor does not weigh in favor of abstention because a significant number of the events that gave rise to this action are located in this district. Plaintiff is located here, it performed the services under the contracts here, and the parties conducted business here.
The third factor also does not apply. In Ambrosia Coal , the Eleventh Circuit also examined the abstention doctrine, and noted that the third factor "does not favor abstention unless the circumstances enveloping those cases will likely lead to piecemeal litigation that is abnormally excessive or deleterious. " 368 F.3d at 1333 (emphasis added). The Eleventh Circuit acknowledged that parallel litigation will always result in some duplication in the "vast majority [of] federal cases with concurrent state counterparts," and so only under unusual or "abnormal" circumstances will this compel abstention. Id. Here, Defendants have not shown that there is likely to be anything special about the duplication of efforts between this Court and the state court. AFC Enterprises, Inc. , 2010 WL 4537812, at *4 (rejecting abstention when Defendants failed to show "there is a greater risk of piecemeal litigation than ‘in the vast majority [of] federal cases with concurrent state counterparts' ").
More, Plaintiff in this case (defendant in the state court case) filed a petition for a writ of mandamus to the Supreme Court of Alabama seeking reversal of the state court's determination that personal jurisdiction is proper in the state court case. The state court case has been stayed pending that appeal, at least as of April 12, 2016. (Doc. 39 at 4.) And no action has been taken by the Supreme Court of Alabama at least as of the current date, to the Court's knowledge. Therefore it appears that case is hardly farther along than this one (and may be soon be behind in its posture). Moreover, if the Supreme Court of Alabama grants the writ, then the state court case may disappear entirely – eliminating the risk of duplicate litigation.
Counsel for each of the parties informed the Court that no decision had been rendered in the appeal as of August 16, 2016.
These facts play into the fourth factor: the order in which the respective courts obtained jurisdiction. This factor is not weighed by the timing of the complaints (and, in any event, these complaints were filed mere months apart), but by the level of progress in the respective cases. The state court denied Plaintiff's motion to dismiss in March, then promptly stayed the case. Thus, as of the date of this Order, the parties appear to be in much the same position in each case.
The fifth factor also does not apply. The parties are litigating in this district and in Alabama, but the contracts at issue appear to require the application of Florida law. (Doc. 22-2 at 56.) It does not appear that Alabama law will have any bearing on substantive issues in this matter. Neither this Court nor an Alabama state court has an advantage in applying Florida law.
The sixth factor does not apply, as neither party has given the Court any reason to doubt that both courts are capable of protecting the parties' rights. For the foregoing reasons, the Court rejects the Motion to Dismiss based on abstention.
Finally, the Court does not view the present litigation as vexatious, despite some of the admittedly inflamed allegations presented by Plaintiff. Part of Plaintiff's claims is that Benjelloun physically threatened its CEO in an attempt to extort Plaintiff's intellectual property. Those allegations may be ugly, but they may be fairly part of the case. And, as Plaintiff apparently hotly contests personal jurisdiction in Alabama, and as Defendants allegedly forced the issue by proactively filing the state court case in Alabama, the Court sees no problem with Plaintiff filing suit here.
Instead, the Court sees several compelling reasons to exercise jurisdiction. First, as mentioned above, substantive Alabama tort and contract law has little relevance to this matter. Instead, it appears Florida law will be applied. (Doc. 22-2 at 56 ("The Agreement shall be governed by and construed in accordance with the laws of the State of Florida")). Second, it appears some of the witnesses are located in Georgia, and much of the work done under the contract was done here in Atlanta. No work under the contracts or events relating to the issues in this case transpired or occurred in Alabama. Third, it appears that this case may be able to progress more quickly than the Alabama case, because that case is on appeal and is presently stayed. Finally, it is important to note that Defendants withdrew their motion to transfer this case to the United States District Court for the Northern District of Florida. Abstention would therefore be improper.
E. Pleading Requirements
Finally, Defendants allege Plaintiff failed to adequately plead its fraud, conspiracy, and unjust enrichment claims. The Court addresses each claim in turn.
1. Fraud
Defendants argue two primary points in support of their argument that Plaintiff's fraud claim is insufficiently pled under Fed. R. Civ. P. 9(b). First they note that "a false promise[ ] to perform an act in the future is not a false pretense or false representation, and does not constitute the basis for an action for fraud" unless "the defendant knows that the future event will not take place." (Motion to Transfer at 16) (case citations omitted). But here, Plaintiff alleged that Defendants had no "present intention" to follow through with their promise of future payment – meaning they have stated a claim for a fraudulent future promise. That is all Plaintiff must do given that "intent, knowledge, and other conditions of the mind of a person may be averred generally." Kipperman v. Onex Corp. , No. CIV.A. 1:05–CV–1242, 2007 WL 2872463, at *9 (N.D.Ga. Sept. 26, 2007).
Second, Defendants argue that TJIC's fraud claim insufficiently identifies the "time and place of each such statement and the person responsible for making" it. (Id. at 17) (case citations and emphasis removed). According to Defendants, "[t]he allegations of fraud in the Complaint do not specify which of Defendants made the alleged statements or the place of their alleged making, and TJIC has provided an alleged date for only one of the allegedly fraudulent statements." (Id. ) Defendants cite Edwards v. Wisconsin Pharmacal Co., LLC , 987 F.Supp.2d 1340, 1347 (N.D.Ga.2013) in support of this argument.
In Edwards , the plaintiff identified only "a single affirmative statement" that the defendant corporation's repellent worked against mosquitoes that "may carry" the West Nile Virus, and generally alleged that Defendants knew their product was unsafe but failed to disclose those risks. Neither statement was sufficient because the plaintiff failed to identify when and where the advertisement was placed or what information was withheld. The district court therefore dismissed the claim. 987 F.Supp.2d 1340, 1346–47 (N.D.Ga.2013). Compare with Raven Hill Partners, Inc. v. BASF Corp. , No. 5:12–CV–411 MTT, 2014 WL 2117046, at *9 (M.D.Ga. May 21, 2014) ("Raven Hill's complaint sets forth specific dates of the alleged fraud, where the alleged fraud occurred, the substance of the Defendants' alleged fraud, and the Defendants' representatives who engaged in the alleged fraud").
The Court agrees that Plaintiff lumped together several defendants and therefore failed to identify with sufficient particularity "who" exactly made the statements that they allege to be fraudulent. This is a surprising omission given that Plaintiff actually attaches to its Response to Benjelloun's motion a letter containing one of the purportedly fraudulent statements that Defendants' payment to Plaintiff was forthcoming. (Doc. 31-4.) However, the Court cannot consider the entirety of this letter – which identifies who it is from –because Plaintiff did not attach it to its Complaint and did not specify in the Complaint who sent it or who directed it to be sent.
The Court acknowledges that a substantial portion of the letter is quoted in Plaintiff's Complaint. (Compl. ¶ 66.)
It appears from the April 21, 2015 letter attached to Plaintiff's Response to Benjelloun's Motion and quoted in Plaintiff's Complaint that Plaintiff may have a plausible fraud claim. (Compl. ¶ 66.) But attaching this letter to a brief and lumping in all the Defendants in the Complaint is insufficient to meet the requirements of Rule 9(b). The Court therefore GRANTS Defendants' Motion to Dismiss Plaintiff's fraud claims as to all Defendants. However, the Court GRANTS Plaintiff leave to amend its Complaint to attempt to state a fraud claim against Defendants.
The Court has no indication that Mitchell made any fraudulent statements other than the fact that he was copied on the April 21, 2015 letter. Unless Plaintiff can present some concrete allegations as to Mitchell in its Amended Complaint, he will be permanently dismissed from this case.
In particular, Plaintiff is DIRECTED as follows. First, it should attach the April 21, 2015 letter to its potential Amended Complaint. Second, it should specify within its fact section who it contends made the statements in this letter (and if they were directed to make the statements by someone else). Third, it should specify what other "material misrepresentations of fact" Defendants made "[t]hroughout 2014 and 2015," when they were made, and who made them. (See Compl. ¶ 65.) Fourth, it should specify if it claims that any of the alleged conduct that occurred in Arizona was fraudulent or intended to defraud. Fifth, it should refer to specific factual allegations, identified by paragraph number, as supporting its fraud claim located in Count II.
If one or more of those individuals or entities cannot be tied to a particular fraudulent statement, Plaintiff should exercise discretion and omit those defendants from this claim in its Amended Complaint.
If Plaintiff does identify those individuals who actually made or authorized the allegedly false statements, the Court's view is that such a claim, when supported by allegations similar to those already present in the Complaint, would satisfy Rule 9(b)'s standard. Defendants should refrain from seeking to dismiss the re-pleaded fraud claim under such circumstances and instead combat it at summary judgment or trial.
2. Civil Conspiracy.
Plaintiff also advances, in one paragraph, "a claim for civil conspiracy against all Defendants." (Compl. ¶ 94.) The only other mention of the word "conspiracy" in the Complaint is in its introductory sections titled "Nature of this Action" and "Subject Matter Jurisdiction."
The Court's discussion of this issue will be similarly brief: there is no way that pleading this minimal averment complies with the Federal Rules. And in any event, this claim is predicated on Plaintiff's fraud claim, which is also being dismissed. The Court therefore DISMISSES Plaintiff's conspiracy claim, with leave to re-plead. If Plaintiff does amend and re-plead the facts supporting this claim, it must plead this claim with particularity because the underlying tort is fraud. Am. United Life Ins. Co. v. Martinez , 480 F.3d 1043, 1067–68 (11th Cir.2007) ("where a conspiracy claim alleges that two or more parties agreed to commit fraud, the plaintiffs must plead this act with specificity"); U.S. ex rel. Grubbs v. Kanneganti , 565 F.3d 180, 193 (5th Cir.2009) ("a plaintiff alleging a conspiracy to commit fraud must "plead with particularity the conspiracy as well as the overt acts ... taken in furtherance of the conspiracy.' ") (quoting FC Inv. Group LC v. IFX Markets, LTD. , 529 F.3d 1087, 1097 (D.C.Cir.2008).
As with the fraud claim, Plaintiff must provide some specifics as to Defendant Mitchell or he will be dismissed from this case entirely.
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3. Unjust Enrichment
The Court also GRANTS Defendants' motion to dismiss Plaintiff's unjust enrichment claim. Typically a party may plead unjust enrichment as an alternative to a breach of contract claim, even though it may not recover under both theories. Clark v. Aaron's, Inc. , 914 F.Supp.2d 1301, 1309 (N.D.Ga.2012). However, Aaron's noted that "courts have held that a plaintiff may not plead an unjust enrichment claim in the alternative to a claim for breach of contract when it is undisputed (or when the court has found) that a valid contract exists. Id.
Plaintiff argues that "[t]hroughout its complaint, Techjet alleged that Defendants obtained extra services outside of the contract," and points to paragraph 67 of the Complaint. That paragraph alleges that Defendants made fraudulent statements without an intention to pay "any outstanding charges and were attempting to extract additional work, forbearance, and the assignment of intellectual property from TJIC without remitting payment under the contract. " (Compl. ¶ 67.) This does not suggest to the Court that Plaintiff is alleging that any sort of non-contractual relationship exists between the parties and is insufficient on its own.
However, Plaintiff also argues in its briefs that it is owed $90,000 in overtime. This does appear to be the kind of extra-contractual conduct that could support an unjust enrichment claim. But as Defendants point out, that allegation is nowhere in the actual Complaint. The Court therefore DISMISSES the unjust enrichment claim, with leave to re-plead.
F. Motion to Strike
Defendants also seek to strike from the record a number of exhibits attached to Plaintiff's opposition to Defendants Motion to Dismiss, "and all citations thereto in the Opposition to Defendants' Motion, the Declaration of Jayant Ratti submitted in support thereof (the "Ratti Decl."), and TJIC's Memorandum of Law in Opposition to Defendant Kamal Benjelloun's Motion to Dismiss." (Motion to Strike at 2.) (Docs. 30-2 through 30-9, 30-12, and 30-13.)
Four of the documents related to two separate lawsuits filed against Benjelloun by a former BDA employee named Alex Von Kruguer. Mr. Von Kruguer apparently filed two lawsuits against Benjelloun and BDA in Florida alleging employment claims and stalking violence. (Docs. 30-2, 30-3, 30-12, and 30-13.)
The remainder are a set of e-mails allegedly sent by Benjelloun that "contain incessant profanity, offensive scenarios, and graphic descriptions of sexual situations [but] do not mention, at any point, TJIC, BDA, the subject contracts, or UAV technology." (Motion to Strike at 4.)
Fed. R. Civ. P. 12(f) permits a court to strike from a "pleading" any "immaterial, impertinent or scandalous" matter. As Plaintiff correctly observes, courts in this district have routinely held that a motion to strike an exhibit does not fall within the ambit of Rule 12(f). Lesman v. Mortgage Elec. Registration Sys., Inc. , No. 2:12–CV–00023–RWS, 2012 WL 3065422, at *1 (N.D.Ga. July 27, 2012) ("The terms of the rule make clear that ‘[o]nly material included in a "pleading" may be subject of a motion to strike.... Motions, briefs or memoranda, objections, or affidavits may not be attacked by the motion to strike.’ ") (rejecting motion to strike surreply but declining to consider it); Trammell v. Paxton , No. CIV.A. 2:06–CV–193, 2008 WL 7514367, at *3 (N.D.Ga. Sept. 29, 2008), aff'd , 322 Fed.Appx. 907 (11th Cir.2009) ("By its terms, Rule 12(f) applies to a "pleading," not an exhibit filed in support of a pleading.") (rejecting motion to strike exhibit).
The Court does not need to decide whether or not Rule 12(f) could be applied to exhibits under these circumstances, because Defendants propose an alternative: the Court should "refuse to consider the Subject Exhibits when ruling" on the pending Motions. The Court DECLINES the Motion to Strike but GRANTS this request and declines to consider the objected-to exhibits in connection with the pending Motions.
III. Conclusion
For the foregoing reasons, the Court DENIES Benjelloun's Motion [Doc. 22], GRANTS IN PART and DENIES IN PART Defendants' Motion [Doc. 24], GRANTS VieTech's Motion [Doc. 20], and DENIES the Motion to Strike [Doc. 36] but GRANTS Defendants' request that the Court not consider the allegedly prejudicial exhibits. Plaintiff's claims for fraud, civil conspiracy, and unjust enrichment are DISMISSED with leave to amend. Plaintiff is DIRECTED to file an Amended Complaint within ten (10) days of this Order if it wishes to pursue any of these claims. Defendants are DIRECTED to respond within ten (10) days of the filing of the Amended Complaint.
It is so ORDERED this 17th day of August, 2016.