The opinion of the court was delivered by: Hon. Lawrence P. Zatkoff
AT A SESSION of said Court, held in the United States Courthouse, in the City of Port Huron, State of Michigan, on March 31, 2010
PRESENT: THE HONORABLE LAWRENCE P. ZATKOFF UNITED STATES DISTRICT JUDGE
This matter is before the Court on Defendants Debbas and Griffiths' motion to dismiss [dkt 18] and Defendant Campbell's motion to dismiss or transfer [dkt 23]. Plaintiff has responded to each of the motions. Defendant Campbell has filed a reply brief; Defendants Debbas and Griffiths have not. The Court finds that the facts and legal arguments are adequately presented in the parties' papers such that the decision process would not be significantly aided by oral argument. Therefore, pursuant to E.D. Mich. L.R. 7.1(e)(2), it is hereby ORDERED that the motions be resolved on the briefs submitted. For the following reasons, the motions are DENIED.
This lawsuit arises from a complicated series of business ventures and transactions that culminated in a July 2008 loan from Wachovia Bank ("Wachovia") to SJH Capital Partners, LLC, ("SJH"), and the subsequent default on that loan.
Defendant Gregory Campbell ("Campbell") is a resident of Pennsylvania. Campbell ran a small charter-jet company that, following several acquisitions, operated under the name of Sentient Jet Holdings, LLC ("Sentient")*fn1 .
Defendants Christopher Debbas ("Debbas") and James Griffiths ("Griffiths") are investment bankers and residents of Pennsylvania. Debbas and Griffiths are partners in a private investment firm known as Julip Run Capital, LLC. Along with Campbell, Debbas and Griffiths are also partners in an investment firm called CD Ventures, which invests in Sentient.
Third-party Defendant Scott Seligman ("Seligman") was the owner of Presidential Aviation, LLC. Presidential Aviation was acquired by Sentient, and Seligman subsequently became an investor in Sentient. Seligman is a Michigan resident and is the majority owner of Presidential, LLC ("Presidential"). Presidential is a "Michigan-based company"*fn2 with its principal place of business in Southfield, Michigan.
Sentient had several investors, including CD Ventures (i.e., Campbell, Debbas, and Griffiths), Presidential, and Defendant Robert Pinkas (through an entity known as Brantley Partners V)*fn3 . Despite these resources, Sentient still faced mounting financial troubles. In January 2008, Presidential increased its investment in Sentient by $5 million. CD Ventures also increased its investment at that time. In April and May 2008, Presidential invested an additional $1.5 million in Sentient.
Notwithstanding the additional capital infusions, Sentient continued to struggle financially. One of the parties involved in Sentient apparently had a "connection" with Wachovia that would allow Sentient to secure a substantial loan. Wachovia, however, would not lend directly to Sentient due to that entity's significant existing debt. Therefore, SJH was created for the sole purpose of securing the loan from Wachovia. SJH's membership included CD Ventures and Pinkas/Brantley Partners V. It also included Plaintiff Presidential Facility, LLC ("Plaintiff"), an entity specifically created by the principals of Presidential to participate in SJH and facilitate the Wachovia loan. Plaintiff is incorporated under the laws of Nevada and has its principal place of business in Southfield, Michigan.
Wachovia required additional protection for the loan. To entice Wachovia to make the loan, Plaintiff offered Wachovia an unconditional guarantee to repay 24.231%, not to exceed $3 million, of the approximately $12.4 million loan in the event of default. Shortly thereafter, the loan amount was amended to make available to SJH an additional $10 million. In support of the amended loan, Plaintiff again gave Wachovia an unconditional guarantee, this time for 59.348% of the total loan amount, not to exceed $13 million.
Plaintiff proffered its unconditional guarantees to Wachovia based on separate guarantee agreements (the "Agreements") between Plaintiff and Defendants. The Agreements guaranteed reimbursement to Plaintiff of any amount in excess of $3 million that Plaintiff expended under its unconditional guarantee to Wachovia. Defendants Campbell, Debbas, and Griffiths executed one such Agreement, and Defendant Pinkas executed a separate Agreement. As part of the Agreements, each Defendant pledged a certain commitment amount, as follows: (1) Defendant Pinkas-$5 million; (2) Defendant Campbell-$2.5 million; (3) Defendants Debbas and Griffiths-$1 million each; and (4) Third-Party Defendant Peter Sinatra ("Sinatra")-$500,000. The Agreements also provided that all of the guarantors were jointly-and-severally liable for any default of the Agreement. Plaintiff maintains that it would not have agreed to the additional $10 million unconditional guarantee to Wachovia if not for the Agreements with Defendants.
SJH defaulted on the Wachovia loan. Wachovia sought payment from Plaintiff under the terms of the unconditional guarantee, and Plaintiff satisfied that demand. In turn, Plaintiff demanded reimbursement from Defendants under the terms of the Agreements. Plaintiff alleges that Defendants have failed to remit payment in violation of the Agreements, and it filed this diversity action to recoup said obligations.
Defendants Debbas and Griffiths have moved for dismissal on the basis of personal jurisdiction under Fed. R. Civ. P. 12(b)(2). Defendant Campbell filed a similar motion and has also requested that the Court transfer the case.
The plaintiff has the burden of proving the Court's personal jurisdiction over a defendant. Theunissen v Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). When, as in the present case, the court does not hold an evidentiary hearing in deciding a Rule 12(b)(2) motion, "the court must consider the pleadings and affidavits in a light most favorable to the plaintiff[.]" CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996). "In sharp contrast to summary judgment procedure . . . the court disposing of a 12(b)(2) motion does not weigh the controverting assertions of the party seeking dismissal. Theunissen, 935 F.2d at 1458.
The plaintiff "need only make a prima facie showing of jurisdiction." CompuServe, 89 F.3d at 1262. "The burden upon a plaintiff to respond to a 'properly supported' motion to dismiss is not particularly demanding." Turi v. Main St. Adoption Servs., LLP, No. 08-14511, 2009 WL 2923248, at *7 (E.D. Mich. Sept. 9, 2009)
The Due Process Clause protects an individual from "not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471--72 (1985) (citing Int'l Shoe Corp. v. Washington, 326 U.S. 310, 319 (1945)). This allows "potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
Therefore, in a case dependant on diversity of citizenship, the Court's exercise of jurisdiction "must be both (1) authorized by the law of the state in which it sits, and (2) in accordance with the Due Process Clause of the Fourteenth Amendment." Neogen ...