United States District Court, E.D. Michigan, Southern Division
PHILLIP S. STENGER, Plaintiff,
David Keith Freeman, et. al., Defendants.
REPORT AND RECOMMENDATION
R. STEVEN WHALEN, Magistrate Judge.
Before the Court is Defendant David Keith Freeman's and Defendant Jedburgh Group International, LLC's Motion to Dismiss Plaintiff's Complaint and/or Motion to Transfer Venue [Doc. #18], which has been referred for a Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For the reasons discussed below, I recommend that the Motion be DENIED.
The present case is ancillary to Commodity Futures Trading Commission ("CFTC") v. Alan James Watson, et al., E.D. Mich. No. 11-10949 ("the CFTC action), in which present Plaintiff Phillip S. Stenger ("Stenger") was appointed receiver for the assets of Cash Flow Financial, LLC ("CFF"). In that action, the CFTC alleged that CFF engaged in illegal activities that violated the Commodity Exchange Act. (The order appointing Stenger as receiver and the reappointment order, which incorporated the terms of the original, are appended to Plaintiff's response [Doc. #23] as Exhibits A and C, respectively). Copies of the CFTC complaint and order appointing receiver were filed in the District Court for the Middle District of Florida on March 18, 2011, within 10 days of the March 11, 2011 appointment of receiver. See Plaintiff's Exhibit D.
Part IV-B of the appointment order authorizes the Receiver (Stenger) to collect money owed to CFF, and to "[i]nitiate, defend, compromise, adjust, intervene in, dispose of, or become a party to any actions or proceedings in state, federal or foreign court necessary to preserve or increase the assets of [CFF] or to carry out his...duties pursuant to this Order." See Plaintiff's Exhibit A.
Which brings us to the present case. In the CFTC action, the CFTC alleged that the Jedburgh Group International, LLC ("Jedburgh") received money or property by virtue of CFF's unlawful conduct. Defendant Freeman is (or was) president of the Jedburgh group. Freeman filed this motion pro se, on behalf of himself and Jedburgh. In an affidavit attached to his motion, Freeman states that he resides in Florida, and Jedburgh is both incorporated in Florida and has its principal place of business in Florida. Also attached to Freeman's motion is an unsigned escrow agreement between CFF and Jedburgh, which provides that "[e]xclusive jurisdiction and venue" as to "any action brought by the Parties with respect to" the agreement would be "the state or federal courts located in Seminole County, Florida."
On July 31, 2014, co-Defendant David Toler died. See Suggestion of Death [Doc. #33].
II. STANDARD OF REVIEW
A. Rule 12(b)(6)
Fed.R.Civ.P. 12(b)(6) provides for dismissal of a complaint "for failure of the pleading to state a claim upon which relief can be granted." The United States Supreme Court has modified the standard for determining whether a complaint is subject to dismissal under Fed.R.Civ.P. 12(b)(6). In Bell Atlantic Corp. v. Twombley, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Court, construing the requirements of Fed.R.Civ.P. 8(a)(2), held that although a complaint need not contain detailed factual allegations, its "[f]actual allegations must be enough to raise a right to relief above the speculative level...on the assumption that all the allegations in the complaint are true." Id., 127 S.Ct. at 1964-65 (internal citations and quotation marks omitted). Further, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (Internal citations and quotation marks omitted). See also Association of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007). Stated differently, a complaint must "state a claim to relief that is plausible on its face." Twombley, at 1974. See also Ashcroft v. Iqbal, 556 U.S. 662 (2009)(facts pled must show a "plausible" claim for relief).
B. Rule 12(b)(2)
Fed.R.Civ.P. 12(b)(2) provides for dismissal of a complaint based on lack of personal jurisdiction over a party. Dismissal is appropriate only if the facts a plaintiff asserts "collectively [fail] to state a prima facie case for jurisdiction." Market/Media Research, Inc. v. Union Tribune Publishing Co., 951 F.2d 102, 105 (6th Cir. 1992).
C. Rule 12(b)(3)
A plaintiff has the burden of showing proper venue. However, a court must draw all reasonable inferences and resolve factual conflicts in favor of the plaintiff. Audi AG and Volkswagen of America, Inc. ...