United States District Court, D. North Dakota
Raymond Chabert, et. al., Plaintiffs,
Michael Francois Bujaldon, VM Invest LLC, Big3 Property LLC, and JMIIMMO Invest LLC Defendants.
ORDER DENYING DEFENDANT BIG3 PROPERTY, LLC'S
MOTION TO DISMISS AMENDED COMPLAINT FOR LACK OF PERSONAL
L. HOVLAND DANIEL L. HOVLAND, CHIEF JUDGE UNITED STATES
the Court is "Defendant Big3 Property, LLC's Motion
to Dismiss Amended Complaint for Lack of Personal
Jurisdiction and Request for Oral Argument" filed on
February 3, 2017. See Docket No. 63. For the reasons
set forth below, the motion is denied.
Plaintiffs filed this action in the wake of proceedings filed
against North Dakota Developments, LLC ("NDD"),
Robert Gavin, Daniel Hogan, and relief Defendants by the
United States Securities and Exchange Commission, alleging
NDD, Gavin, and Hogan fraudulently raised more than $62
million from investors through the sale of interests in North
Dakota man camps. See Case No. 4:15-cv-053 (D.N.D.
May 5, 2015). In their amended complaint, the Plaintiffs
allege Michael Francois Bujaldon; VM Invest, LLC; JMI IMMO
Invest, LLC; and Big3 Property, LLC (collectively referred to
as "Defendants") actively assisted NDD in offering
and selling, unregistered, nonexempt, and fraudulent
securities from May 2012 to April 2015. See Docket
No. 61, p. 1. Specifically, the Plaintiffs allege claims
against Defendants for violations of Section 12(a)(2) of the
Securities Act of 1933 (15 U.S.C. § 771(a)(2)) as well
as violations of N.D.C.C. § 10-04-17 by offering and
selling unregistered securities and selling securities as an
their amended complaint, the Plaintiffs allege the Defendants
communicated with North Dakota-based agents of NDD, traveled
to North Dakota to meet with NDD, urged investors to purchase
"North Dakota-issued securities, " directed NDD
investors to send paperwork related to their investment to
agents of NDD who were located in North Dakota, and received
sales commissions from investor funds wired to North Dakota.
See Docket No. 61, pp. 3-4. Further, the Plaintiffs
specifically allege this Court has jurisdiction over all
Defendants because they
actively recruited investors to invest in a North Dakota
company; brokered the sale of interests in North Dakota real
property and of North Dakota-issued securities; received
fraudulent offering documents from North Dakota and directed
communications to North Dakota, pertaining to their
fraudulent sales of NDD securities; received commissions from
North Dakota in connection with their sales; directed
investor funds and investment-related paperwork to be sent to
a North Dakota law firm in connection with the sales; and,
acted as a necessary intermediary in connection with a fraud
emanating from North Dakota.
See Docket No. 61, p. 5. According to the amended
complaint, the Defendant Big3 Property, LLC ("Big3
Property") is a Michigan limited liability company with
its principal place of business in Detroit, Michigan, with
Defendant Bujaldon as a member. Id. at p. 9.
Bujaldon "conducted extensive business and engaged in
numerous communications with North Dakota entities, and
traveled to North Dakota, in connection with his sale of NDD
securities to Plaintiffs and others." Id. at p.
response to the Plaintiffs amended complaint, Big3 Property
filed a motion to dismiss for lack of personal jurisdiction.
See Docket No. 63. In its brief in support of its
motion, Big3 Property contends it has had no contact with
North Dakota and any action of Bujaldon relating to the sale
or solicitation of the unregistered, fraudulent securities on
behalf of NDD was outside the scope of Bujaldon's agency
with Big3 Property.
memorandum in support of its motion to dismiss, Big3 Property
contends the Court lacks personal jurisdiction over it and
the claims against Big3 Property should be dismissed pursuant
to Rule 12(b)(2) of the Federal Rules of Civil Procedure. To
defeat a motion to dismiss for lack of personal jurisdiction,
the Plaintiffs need only establish a prima facie showing of
personal jurisdiction over Big3 Property. Epps v. Stewart
Info. Servs. Corp., 327 F.3d 642, 647 (8th Cir. 2003).
The Plaintiffs' prima facie showing is analyzed "not
by the pleadings alone, but by the affidavits and exhibits
presented with the motions and in opposition thereto."
Dever v. Hentzen Coatings. Inc.. 380 F.3d 1070, 1072
(8th Cir. 2004). The party seeking to establish that a court
has in personam jurisdiction carries the burden of proof, and
the burden does not shift to the party challenging
jurisdiction. Epps, 327 F.3d at 647.
Court may properly exercise personal jurisdiction over a
party if a two-step inquiry is satisfied. First, the party
must be "amenable to service of process under the
appropriate long-arm statute." Int'l Shoe Co. v.
Washington. 326 U.S. 310. 316 (1945). Second, the party
challenging personal jurisdiction must have engaged in
activities which satisfy the minimum contacts requirement of
the Due Process Clause. Id. The jurisdiction of
North Dakota courts is governed by the North Dakota long-arm
statute set forth in Rule 4(b)(2) of the North Dakota Rules
of Civil Procedure. The North Dakota Supreme Court has held
that Rule 4(b)(2) "authorizes North Dakota courts to
exercise jurisdiction over nonresident defendants to the
fullest extent permitted by due process." Hansen v.
Scott, 2002 ND 101, ¶ 16, 645 N.W.2d 223. The
Eighth Circuit Court of Appeals has held that when a state
construes its long-arm statute to grant jurisdiction to the
fullest extent permitted by the Constitution, the Court must
determine whether the exercise of personal jurisdiction
comports with due process. Johnson v. Woodcock, 444
F.3d 953, 955 (8th Cir. 2006).
Process requires 'minimum contacts' between [a]
non-resident defendant and the forum state such that
'maintenance of the suit does not offend traditional
notions of fair play and substantial justice.'"
Dever, 380 F.3d at 1073 (quoting World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92
(1980). A non-resident defendant's contacts with a forum
state, for example, must be sufficient to cause the defendant
to "reasonably anticipate being haled into court
there." Epps, 327 F.3d at 648. There are two
categories of minimum contacts with a state that may subject
a defendant to jurisdiction in that forum: general
jurisdiction and specific jurisdiction. With respect to
general personal jurisdiction over a defendant, "a
defendant may be subject to the forum state's exercise of
personal jurisdiction if contacts with the state are
continuous and systematic." Id. A state has
specific personal jurisdiction over a defendant when the suit
arises out of, or is related to, the defendant's contacts
with the forum state. Johnson, 444 F.3d at 956.
Eighth Circuit has established a five-factor test for
measuring minimum contacts for purposes of asserting ...