BPI Development Group, L.C. v. Grange

Citations: 181 F. Supp. 3d 604; 2016 U.S. Dist. LEXIS 81870; 2016 WL 3265708Docket: No. 3:15-cv-00136-JEG

Court: District Court, S.D. Iowa; March 28, 2016; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

A Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue has been filed by Defendants David Grange and Osprey Global Solutions, LLC, against Plaintiffs BPI Development Group and Scott Pearce. The Court has determined that a hearing is unnecessary and is ready to rule on the motion. 

The case involves a disputed $250,000 fund transfer from Plaintiffs to Defendants in September 2011, which Plaintiffs claim was a loan with a 5% interest rate due by December 31, 2012. Defendants counter that the transfer was a reimbursement for prior payments Osprey Global made on behalf of BPI. 

BPI is an Iowa LLC, and Pearce is an Iowa citizen. Grange resides in North Carolina, while Osprey Global is a Delaware LLC based in North Carolina. Grange, a retired Army officer, had prior connections with Pearce dating back to 2004, and they collaborated on business ventures leading to the formation of Osprey Global in 2011. 

Plaintiffs allege that while Pearce was involved in a related entity, Osprey Air Group, LLC, he had no ownership or compensation ties to Osprey Global. The disputed funds were wired to Grange, with Defendants claiming this was a reimbursement for a deposit made by Osprey Global for an aircraft purchase, contrary to Plaintiffs' assertion that the funds represented a loan. The parties disagree on the nature of this transaction and the obligations it created.

Plaintiffs assert that a wire transfer is unrelated to an Aircraft deposit, claiming that either Pearce or BPI initiated the transfer in response to a demand for funds from Grange on August 31. They characterize this demand as soliciting a loan contract with terms of 5% annual interest and full repayment by December 2012. Plaintiffs allege Defendants partially performed the contract by making an interest payment in Iowa and submitting two invoices to Osprey Global—one dated March 7, 2012, and another on September 25, 2012, which included interest due under the loan. Osprey Global paid the interest due on the March invoice on August 11, 2012, but no further payments were made, and Pearce severed ties with Osprey Air on September 7, 2012. Plaintiffs filed a lawsuit on November 30, 2015, claiming breach of contract and unjust enrichment for the alleged $250,000 loan, seeking $279,511.30, which comprises unpaid interest and costs.

Defendants moved to dismiss the claims for lack of personal jurisdiction under Fed. R. Civ. P. 12(b)(2) and for improper venue in the Southern District of Iowa under Fed. R. Civ. P. 12(b)(3) and 28 U.S.C. 1391, arguing minimal contacts with Iowa and that the transaction pertains to North Carolina. The court notes that to withstand a motion to dismiss for lack of personal jurisdiction, Plaintiffs must provide a prima facie case showing sufficient facts to reasonably infer that Defendants can be subjected to jurisdiction in Iowa. The inquiry is primarily focused on whether exercising personal jurisdiction aligns with federal due process standards, which require Defendants to have established "minimum contacts" in Iowa, ensuring that asserting jurisdiction does not violate traditional notions of fair play and substantial justice.

A defendant must purposefully avail itself of the privileges of conducting activities within a forum state to establish personal jurisdiction, invoking the benefits and protections of its laws. The defendant’s contact must allow for reasonable anticipation of being brought into court in that state. To determine if minimum contacts are established, the nature, quality, and quantity of the defendant’s contacts with the forum, as well as the connection between those contacts and the cause of action, are examined. In contract cases, this includes evaluating prior negotiations, future consequences, contract terms, and the parties’ actual dealings.

Personal jurisdiction may be classified as general or specific. General jurisdiction permits courts to hear any claims against a defendant whose contacts in the state are continuous and systematic, rendering the defendant essentially at home there. Conversely, specific jurisdiction arises when a defendant’s contacts with the forum state are directly related to the cause of action. The Eighth Circuit assesses five factors for specific jurisdiction: the nature and quality of contacts, their quantity, the relation of the cause of action to those contacts, the interests of the forum state, and the convenience of the parties, with the first three being primary.

In the case discussed, a North Carolina citizen and a Delaware corporation based in North Carolina lack sufficient ties to Iowa to be considered essentially at home there. Plaintiffs argue that certain contacts, such as the use of an airport and emails sent to them, establish general jurisdiction, but these are deemed too sporadic. The submission of affidavits and exhibits transforms the motion to dismiss into a motion for summary judgment regarding personal jurisdiction. Ultimately, while Plaintiffs bear the burden of proof, dismissal should not occur if evidence, viewed favorably to them, supports a conclusion that exercising personal jurisdiction is appropriate.

A complaint cannot be dismissed for lack of jurisdiction prior to trial if there is any genuine factual dispute regarding the jurisdictional issue. Defendants contend they lack personal jurisdiction in Iowa, asserting their interactions with Plaintiffs did not stem from purposeful contacts with the state. Although they acknowledge sending numerous communications to Pearce in Iowa and collaborating on business ventures while Plaintiffs were in Iowa, they argue these actions were influenced by the Plaintiffs' unilateral decisions. Defendants reference case law to assert that communication directed at an individual in a state does not establish jurisdiction, claiming their relationship with Plaintiffs was primarily based in North Carolina. 

In opposition, Plaintiffs present evidence, including an affidavit from Scott Pearce, asserting that Defendants solicited a loan from them in Iowa and maintained significant business interactions, including extensive communication and partial performance of a loan agreement in Iowa. They argue that these actions justify the exercise of jurisdiction, citing a precedent where solicitation of a business relationship within the forum state constituted a relevant contact. Despite Defendants denying the loan agreement's existence, the Court finds that Plaintiffs have sufficiently raised factual questions to establish a prima facie case for personal jurisdiction, supported by evidence of an email from Grange preceding a $250,000 wire transfer and an invoice related to the alleged loan. A jury could reasonably conclude that these actions demonstrate Defendants' solicitation of a loan from Iowa and that they partially fulfilled their obligations under that agreement.

A contractual provision requiring a defendant to make payments to a company in the forum state constitutes purposeful contact with that state. In this case, Plaintiffs assert that Defendants have a contract mandating repayment in Iowa, supported by an alleged interest payment made there. Defendants contend that the precedent set in *Creative Calling* is distinguishable due to the Hong Kong defendant’s extensive interaction with Iowa, including shipping product samples, which was central to that case's dispute. In contrast, the relevant dispute in *Digi-Tel Holdings* involved a Singapore company's breach of contract for delivering phones to a Minnesota corporation, where contract performance was to occur in Singapore, undermining any substantial connection to Minnesota.

The distinction between *Creative Calling* and *Digi-Tel* lies not in the quantity of samples but in the relationship of the cause of action to the contacts. In this instance, Plaintiffs' claims do not involve product shipping but rather the repayment of a loan. The case of *State Central* supports the argument for personal jurisdiction in similar financial contexts, where an out-of-state defendant borrowed money from an Iowa bank. While *State Central* highlighted the defendant's intent to fund an Iowa investment, Plaintiffs here claim the loan was for a North Carolina business. Nonetheless, the alleged contract requiring payments to Iowa and Defendants' nonperformance are central to this lawsuit.

*Viasystems* illustrates an example of insufficient contacts leading to the absence of specific jurisdiction, where a German corporation's only links to Missouri involved communications regarding product defects and a partial reimbursement, with no substantial business performed in Missouri.

The alleged agreement in this case necessitated performance in Iowa, contrasting with the Viasystems case. Defendants claim this case aligns more closely with Twaddle v. Twaddle, where an out-of-state defendant did not actively seek a loan from an in-state plaintiff, leading the court to determine that the defendant had not purposefully engaged in business in Iowa. However, the current case suggests that Defendants solicited a loan from Iowa plaintiffs with an obligation to repay in Iowa, indicating a purposeful availment of Iowa's laws and protections. The court concludes that Plaintiffs have met their burden of proof regarding personal jurisdiction, as the alleged effects of Defendants' actions occurred in Iowa, and the inconvenience to Defendants does not warrant dismissal.

Regarding venue, Defendants move to dismiss or transfer the case, arguing that the Southern District of Iowa lacks a substantial connection to the lawsuit since they are residents of North Carolina and conducted all relevant activities there. The law states that venue is appropriate in any district where a substantial part of the events leading to the claim occurred, without needing to determine the "best" venue. The focus should be on Defendants’ activities rather than Plaintiffs’. Drawing on precedent from Steen v. Murray, where venue was deemed improper because the alleged wrongful actions took place outside the forum, Defendants argue that all actions related to the loan agreement occurred in North Carolina.

The case involves a breach of contract claim against Defendants who allegedly solicited a loan from an Iowa resident and agreed to remit payments to Plaintiffs in Iowa. Citing Cortez Byrd Chips, Inc. v. Bill Harbert Const. Co., the court affirms that venue is proper under 28 U.S.C. § 1391(a)(2) in the district where the contract was performed. It references Advanced Logistics Consulting, Inc. v. C. Enyeart LLC, which supports that venue can be appropriate in the plaintiff's location even if the defendants are from another state. The court concludes that there is a "substantial connection" to Iowa, justifying the venue despite potentially stronger ties elsewhere.

The court denies Defendants’ Motion to Dismiss based on lack of personal jurisdiction and improper venue. It addresses a discrepancy regarding the aircraft's location, noted in the Defendants' brief and exhibits. Comparisons are drawn to Digi-Tel, where no part of the contract was performed in Minnesota, and to Weise v. Legend Air Suspensions, Inc., where the plaintiff's contacts with Florida were insufficient to establish jurisdiction in Iowa due to the lack of ongoing business relations. In contrast, the present case demonstrates that Defendants solicited a financial loan from Plaintiffs in Iowa, creating a repayment obligation that extended over a year.