929 F. Supp. 2d 924
D.S.D.2013Background
- Larson asserts breach of purchase agreement and multiple warranties, plus fraud and fraudulent transfers related to door closers sold by Greenstar/CGI; Luca is a Connecticut resident accused of fraud and fraudulent transfers.
- Larson alleges Luca signed the purchase agreement on Greenstar as president; Luca communicated with Larson via emails, calls, and meetings in SD; Luca traveled to SD eight times between 2007-2011 to solicit business and discuss defects.
- Greenstar/Touch ‘n Hold are alleged to be related entities; Greenstar was dissolved in 2009 but continued business with Larson; transfers of funds to Luca during Greenstar’s insolvency are alleged.
- Court addresses personal jurisdiction over Luca, finding sufficient minimum contacts and rejecting fiduciary-shield defense for alleged intentional fraudulent actions.
- Court denies Rule 12(b)(6) motions as to Counts 1-4 (contract and warranties) and counts 5-6 (fraud and fraudulent transfer), and denies transfer/dismissal for venue.
- Court also allows continuation against Greenstar/Touch ‘n Hold and declines to transfer venue to Connecticut, keeping South Dakota as the forum under the contract’s substantial nexus with the dispute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over Luca | Larson: Luca's SD visits, communications, and directing acts related to the contract establish minimum contacts. | Luca: fiduciary shield bars jurisdiction based on corporate acts alone; limited CT residence. | Denied; jurisdiction proper based on totality of circumstances and Luca’s targeted conduct. |
| Failure to state a claim under Rule 12(b)(6) | Counts 1-4 plead facts showing damages and breach of contract/warranties with factual specifics. | Defendants: insufficient facts to support damages and liability. | Denied; counts plead facial plausibility and adequate damages. |
| Fraud pleading standards (Rule 9(b)) | Fraud allegations meet specificity with time/place/participation, even via information-and-belief if justified. | Rule 9(b) requires particularity; Rule 408 could bar some settlement-related evidence. | Fraud claim against Luca satisfied; Rule 408 exception applies to misrepresentations linked to fraud. |
| Fraudulent transfer pleading (Rule 9(b) vs Rule 8) | Constructive transfers fall under Rule 8; actual transfers subject to Rule 9(b) particularity. | Rule 9(b) applies to MUFTA claims for actual fraud; constructive claims can be plead with Rule 8. | Majority rule applied: constructive transfer claim under Rule 8; actual transfer claim requires Rule 9(b) particularity. |
| Venue and distinguishability of Greenstar/Touch ‘n Hold | South Dakota venue appropriate due to choice-of-law and witnesses; Connecticut venue not superior. | Connecticut-based defendants favor transfer for convenience. | Denied transfer; South Dakota venue maintained. |
Key Cases Cited
- K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588 (8th Cir. 2011) (minimum contacts and pleadings tested against affidavits)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (U.S. 1980) (due process and minimum contacts standard)
- International Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (establishes fundamental minimum contacts requirement)
- Calder v. Jones, 465 U.S. 783 (U.S. 1984) (personal jurisdiction requires targeted actions toward the forum)
- Keeton v. Hustler Magazine, Inc., 465 U.S. 770 (U.S. 1984) (jurisdiction over employees may be separate from corporate jurisdiction)
- Oriental Trading Co., Inc. v. Firetti, 236 F.3d 938 (8th Cir. 2001) (officers’ personal jurisdiction for misrepresentations)
- Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (U.S. 1947) (forum choice for governing law matters)
- Pangaea, Inc. v. Flying Burrito LLC, 647 F.3d 741 (8th Cir. 2011) (aggregate contacts; forum–litigation relationship)
- Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100 (8th Cir. 1996) (five-factor test for due process jurisdiction)
- Terra Int’l, Inc. v. Mississippi Chem. Corp., 119 F.3d 688 (8th Cir. 1997) (case-by-case transfer considerations)