Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-00339/USCOURTS-casd-3_11-cv-00339-0/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TANGIERS INVESTORS, L.P.,

Plaintiff,

CASE NO. 11CV339 JLS BGS

ORDER GRANTING

DEFENDANT’S MOTION TO

DISMISS FOR LACK OF

PERSONAL JURISDICTION

(ECF No. 16.)

vs.

AMERICHIP INTERNATIONAL, INC., et

al.,

Defendants.

Presently before the Court is Defendant Drew Mouton’s motion to dismiss for lack of

personal jurisdiction. (Mot. to Dismiss, ECF No. 16.) Also before the Court is Plaintiff’s

opposition. (O’ppn, ECF No. 18.) After consideration, the Court GRANTS Mouton’s motion. 

BACKGROUND

Plaintiff Tangiers Investors, L.P. is a limited partnership organized under Delaware law

and with a principal place of business in California. (FAC ¶ 2, ECF No. 7.) In March 2008

Plaintiff entered into a contract with Americhip. (Id. ¶ 8.) Plaintiff agreed to loan Americhip

$75,000 for two years. (Id.) In return, Americhip agreed that Plaintiff could convert up to 100

percent of the loan principal into shares of Americhip stock at any point during the term of the

contract. (Id.) Plaintiff alleges Americhip breached the contract by refusing to timely honor

Plaintiff’s several attempts to convert principal into stock. (Id. ¶ 10.) From this conduct, Plaintiff

asserts four causes of action. Three of the four apply to Drew Mouton, a former CEO and former

board member of Americhip: fraud and deceit, securities fraud, and unfair business practices. (Id.)

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Case 3:11-cv-00339-JLS-BGS Document 20 Filed 08/01/11 Page 1 of 4
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LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(2) allows district courts to dismiss an action for lack

of personal jurisdiction. “Where defendants move to dismiss a complaint for lack of personal

jurisdiction, plaintiffs bear the burden of demonstrating that jurisdiction is appropriate.” Dole

Food Co. Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). “The court may consider evidence

presented in affidavits to assist it in its determination and may order discovery on the jurisdictional

issues.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001). “When a district court acts on

the defendant’s motion to dismiss without holding an evidentiary hearing, the plaintiff need make

only a prima facie showing of jurisdictional facts to withstand a motion to dismiss.” Id. (citing

Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)). 

“Unless directly contravened, [Plaintiff’s] version of the facts is taken as true, and

‘conflicts between the facts contained in the parties’ affidavits must be resolved in [Plaintiff’s]

favor for purposes of deciding whether a prima facie case for personal jurisdiction exists.’” Harris

Rutsky & Co. Ins. Services, Inc. v. Bell & Clements Ltd, 328 F.3d 1122, 1129 (9th Cir. 2003)

(citing Doe, 248 F.3d at 922); see also Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223 F.3d

1082, 1087 (9th Cir. 2000) (“Because the prima facie jurisdictional analysis requires us to accept

the plaintiff’s allegations as true, we must adopt [plaintiff]’s version of events for purposes of this

appeal.”). However, a court “may not assume the truth of allegations in a pleading which are

contradicted by affidavit.” Alexander v. Circus Enters., Inc., 972 F.2d 261, 262 (9th Cir. 1992)

(internal quotations omitted).

ANALYSIS

Mouton’s motion to dismiss for lack of personal jurisdiction argues that jurisdiction over

his person would be improper because he lacks any contact with the state of California. Plaintiff’s

opposition asserts that this Court has specific personal jurisdiction over Mouton. (Opp’n 5.) 

 “Specific jurisdiction exists where the cause of action arises out of or has substantial

connection to the defendant’s contact with the forum.” ChemRisk, LLC v. Chappel, 2011 WL

1807436, at *3 (N.D. Cal. May 12, 2011) (internal quotations and citations omitted). Because

Mouton is a corporate employee of Americhip, the Court’s analysis is informed by the fiduciary

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shield doctrine. Under the fiduciary shield doctrine, this Court’s jurisdiction over Americhip, the

corporation, does not directly translate into jurisdiction over Mouton, Americhip’s one-time CEO

and board member. See Davis v. Metro Prods., Inc., 885 F.2d 515, 520 (9th Cir. 1989) (“[A]

person’s mere association with a corporation that causes injury in the forum state is not sufficient

in itself to permit that forum to assert jurisdiction over the person.”). 

The corporate structure does not provide absolute protection, however. For instance, a

court may assert personal jurisdiction over an individual based upon “the individual’s control of,

and direct participation in the alleged activities” of the corporation. Wolf Designs, Inc. v. DHR &

Co., 322 F. Supp.2d 1065 (C.D. Cal. 2004). This is known as the “guiding spirit” theory. See

Davis, 885 F.2d at 523, n.10. The fiduciary shield doctrine also does not apply when the

corporation is the alter ego of the individual defendant. Flynt Distrib. Co., Inc. v. Harvey, 734

F.2d 1389, 1393 (9th Cir. 1984). There is no basis for the alter ego theory here, so the Court

focuses on the guiding spirit theory.

Under the guiding spirit theory, this Court may assert personal jurisdiction over Mouton if

he was “a primary participant or guiding spirit in the alleged wrongdoing intentionally directed at

California.” Wolf Designs, 322 F. Supp. 2d at 1072. The injurious activities center around

Americhip and the individual defendants’ allegedly fraudulent representations that Plaintiff could

convert the money Plaintiff loaned to Americhip into shares of Americhip stock.

The question then becomes whether Mouton was the primary participant or the guiding

spirit behind the fraudulent representations. Plaintiff alleges that in March 2008, the Americhip

CEO, with Mouton’s knowledge and support, fraudulently promised Plaintiff that Americhip

would allow Plaintiff to convert the money Plaintiff loaned to Americhip into shares of Americhip

stock. (FAC ¶ 13.) Then in early 2009, when Mouton was CEO, Mouton allegedly refused to

timely allow said conversions. (Id. ¶ 16.)

These assertions do not allow the Court to conclude that Mouton was the driving force or

primary participant in the alleged wrongdoing. That Mouton knew of the March 2008 promise

does not imply that he was driving force or the primary participant behind that promise. See

Brown v. Gen. Steel Domestic Sales, LLC, 2008 WL 2128057, at *11 (C.D. Cal. May 19, 2008)

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(explaining that the allegation that defendant “knew or should have known of the sales practices

used by the salespeople on his . . . behalf” was insufficient to suggest that the defendant was the

“guiding spirit” behind the activities giving rise to the plaintiffs’ claims). Moreover, simply being

the CEO is not enough to establish that Mouton was the “guiding spirit” behind the injurious

activities. See id.

Plaintiff also asserts in its opposition that Mouton “is alleged to have communicated

directly with Plaintiff’s general partner in connection with several of the Plaintiff’s attempts to

convert principal on the note into shares of [Americhip] stock.” (Opp’n 6.) This assertion is

insufficient to establish Mouton’s minimum contacts with California. First, Plaintiff fails to

explain what occurred during these communications and how they relate to the claims. Second,

Mouton asserts that his actions “arose only through action of the Board of Directors of the

Corporation, never by [him] alone.” (Mot. Dismiss 2.) Plaintiff provides no evidence to the

contrary and fails to establish that Mouton was the guiding force or primary participant. See

Winery v. Graham, 2007 WL 963252, at *6 (N.D. Cal. Mar. 29, 2007) (holding the defendant’s

participation in making fraudulent representations during negotiations with the plaintiff were

insufficient to subject to him to personal jurisdiction when the defendant demonstrated that he

was not in control of his actions and was acting on another’s behalf.) 

Plaintiff’s fails to make a prima facie showing that this Court can assert personal

jurisdiction over Defendant Drew Mouton. Mouton was not the primary participant or guiding

spirit behind the allegedly injurious activity. 

CONCLUSION

The Court GRANTS Defendant’s motion to dismiss for lack of personal jurisdiction. 

Plaintiff’s first amended complaint is DISMISSED WITHOUT PREJUDICE. Any amended

complaint SHALL BE FILED within 21 days of this order being electronically docketed. 

IT IS SO ORDERED. 

DATED: August 1, 2011

Honorable Janis L. Sammartino

United States District Judge

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