The opinion of the court was delivered by: Marianne O. Battani United States District Judge
OPINION AND ORDER DENYING WOUDENBERG'S AND SPECTRE INVESTORS, LLC'S MOTIONS TO DISMISS AND GRANTING IN PART AND DENYING IN PART FLAGSTAR'S MOTION FOR SUMMARY JUDGMENT
Plaintiff Flagstar Bank ("Flagstar") alleges in its complaint that Intercoastal Financial Group ("Intercoastal") brokered a loan from Flagstar to Dana Woudenberg and Spectre Investors, and that the loan was obtained by fraud. Intercoastal subsequently filed cross-claims against Spectre Investors and Woudenberg, and third-party claims against Spectre Powerboats and Scot Conrad.
Now before the Court are (1) Defendant/Cross-Defendant Woudenberg's Motion to Dismiss Flagstar's Complaint for Lack of Personal Jurisdiction, (doc. 14); (2) Woudenberg's Motion to Dismiss Intercoastal's Cross-Complaint for Lack of Personal Jurisdiction, (doc. 24); (3) Defendant/Cross-Defendant Spectre Investors' Motion to Dismiss Flagstar's Complaint for Lack of Personal Jurisdiction, (doc. 26); (4) Spectre Investors' Motion to Dismiss Intercoastal's Cross-Complaint for Lack of Personal Jurisdiction, (doc. 27); and (5) Plaintiff Flagstar Bank's Motion for Summary Judgment against Defendant Woudenberg, (doc. 29). For the reasons that follow, the Court denies Woudenberg and Spectre Investors' four Motions to Dismiss and grants in part and denies in part Flagstar's Motion for Summary Judgment.
According to Flagstar's complaint, Intercoastal is a non-exclusive broker for Flagstar. (Doc. 1). Intercoastal brokered a March 11, 2008, loan from Flagstar to Woudenberg, an Arizona resident, and Spectre Investors, an Arizona corporation. This money was to be used to purchase a racing boat from Spectre Powerboats in California ("the Boat"). A First Preferred Ship Mortgage for the Boat was executed in favor of Flagstar. In addition, Woudenberg and Spectre Investors signed a Collateral Delivery Receipt in which they affirmed that "the collateral has been delivered and is in satisfactory condition." Subsequently, Flagstar discovered that the Boat had never been built.
Flagstar attached to its complaint a California state court complaint filed by "The Smith Family Real Estate Investors Limited Partnership, LLLP" against, among others, Woudenberg, Flagstar, Spectre Powerboats, and Spectre Investors. In that complaint, the plaintiff contends that it entered into a number of Promissory Notes and Security Agreements with, among others, Conrad and Spectre Powerboats. One of the forms of relief that the plaintiff seeks is a declaration that it possesses right, title, and/or interest in the Boat over which Woudenberg, Spectre Investors, and Flagstar also claim an interest.
According to Intercoastal's cross-complaint, its agreement with Flagstar called for it to originate, process, underwrite, close secured loans, and offer loan applications to Flagstar, which Flagstar could then agree to accept, underwrite, approve, close, and fund. (Doc. 12). Spectre Investors and Woudenberg asked Intercoastal to procure financing for the purchase of the Boat. Intercoastal requested certain financial information from Woudenberg and Spectre Investors and subsequently forwarded it to Flagstar. Flagstar then approved the loan and distributed money pursuant to a note.
In an affidavit from Woudenberg, he states that Conrad approached him and requested $450,000 in financial assistance to build a power boat from a previously constructed boat hull. (Doc. 49, exh. B). Conrad told him that, once built, the Boat would be sold with the profits of the sale being split. Woudenberg stated that he was willing to offer financial assistance if, in order to allocate the financial risk, a corporation was formed with one or two other creditworthy individuals. Spectre Investors, an Arizona was subsequently created by Conrad, Woudenberg, and Mike DeLoach, a friend of Conrad's, as an Arizona limited liability company. The sole purpose of Spectre Investors was to obtain the $450,000 loan needed to complete construction of the Boat.
Woudenberg's affidavit goes on to state that Conrad coordinated the required loan through Calder McNab, Conrad's friend and an employee of Intercoastal in California. Woudenberg received the loan application documents from McNab in March 2008 with instructions that he should sign the documents on behalf of Spectre Investors and in his personal capacity. McNab explained that Conrad and DeLoach would also sign the loan documents once Woudenberg returned them. Woudenberg signed the documents and returned them to McNab in California, but Conrad and DeLoach never signed the documents. The loan was subsequently approved, and the loan proceeds were paid directly to Conrad. Throughout the loan application process, McNab was aware that the Boat was under construction, and Woudenberg believed that McNab and Intercoastal were acting as agents of Flagstar. Woudenberg also states in this affidavit that he had no direct contact with Michigan throughout the loan application process. Conrad subsequently used some of the loan proceeds for his personal use without Woudenberg's knowledge or consent.
It appears that Conrad stopped making payments on the loan at some point in time, and Woudenberg began personally keeping the loan paid up by making payments to Flagstar.
A motion to dismiss for lack of personal jurisdiction leaves the Court with three options: "it may decide the motion upon the affidavits alone; it may permit discovery in aid of deciding the motion; or it may conduct an evidentiary hearing to resolve any apparent factual questions." Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). Regardless of how the court proceeds, the plaintiff always bears the burden of establishing that jurisdiction exists. Id. "Where the court relies solely on the parties' affidavits to reach its decision, the plaintiff must make only a prima facie showing that personal jurisdiction exists in order to defeat dismissal." Id.
Federal Rule of Civil Procedure 56(c) authorizes the Court to grant summary judgment "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." There is no genuine issue of material fact if there is not a factual dispute that could affect the legal outcome on the issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether to grant summary judgment, this Court "must construe the ...