Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-00035/USCOURTS-azd-2_10-cv-00035-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

---

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

WOODCO DYNAMIC, LLC, )

a Wyoming Limited Liability Co., )

)

Plaintiff, ) 2:10-cv-00035 JWS

)

vs. ) ORDER AND OPINION

)

VENETIAN INVESTMENTS, LLC, ) [Re: Motion at Docket 9]

a Maryland Limited Liability Co., )

)

Defendant. )

)

I. MOTION PRESENTED

At docket 9, defendant Venetian Investments, LLC (“Venetian”) moves to dismiss

this action for lack of personal jurisdiction pursuant to Federal Rule of Civil

Procedure 12(b)(2), or alternatively on grounds of forum non conveniens. At docket 14,

plaintiff WoodCo Dynamics, LLC (“WoodCo”) opposes the motion. Venetian replies at

docket 17. Oral argument was not requested, and it would not assist the court.

II. BACKGROUND

On September 15, 2008, 3536, LLC (“3536"), an Arizona limited liability company

with its principal office in Phoenix, Arizona, entered into a Sale and Assignment

Agreement (“Sale Agreement”), in which 3536 acquired rights to Region Bank’s interest

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Doc. 1-1 at p. 3.

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Doc. 1 at p. 2

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in a certain promissory note secured by commercial real property located in Florida. On

September 16, 2008, 3536 and Venetian, a Maryland limited liability company with its

principal office in Gaithersburg, Maryland, executed a Conditional Assignment of Sale

and Assignment Agreement (the “Assignment Agreement”), in which Venetian acquired

3536's right, title, and interest in the Sale Agreement. 

As consideration for the Assignment Agreement, Venetian agreed to pay an

assignment fee of $900,000 to 3536. The Assignment Agreement provided that

Venetian was to pay 3536 in the following manner: “(I) $300,000 by wire transfer to

Assignor by 12:00 p.m. E.D.T. September 19, 2008, and (ii) $600,000 on October 15,

2009 together with simple interest at the rate of 6.5% per annum.”1

 The Assignment

Agreement by its terms was governed by the laws of the State of Florida. 

On September 19, 2008, Venetian paid 3536 $300,000 by wire transfer. 

Venetian made additional payments in the amounts of $25,000 on October 28, 2008,

$25,000 on November 19, 2008, and $15,000 on January 12, 2009.2 On March 4,

2009, Venetian executed a Promissory Note in 3536's favor, which provided in pertinent

part:

FOR VALUE RECEIVED, the undersigned Venetian Investments, LLC, a

Maryland limited liability company, (hereinafter, the “Maker”) promises to pay to

the order of 3536, LLC, an Arizona limited liability company or its assignee

(hereinafter, “Holder”) at P.O. Box 427 Naples, FL 34106, or at such other place

as the holder of this Note may from time to time designate, in lawful money of the

United States of America, the principal sum of FIVE HUNDRED FORTY SEVEN

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Doc. 1-1 at p. 9.

4

Id.

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Doc. 9-1 at p. 8.

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Doc. 1 at p. 3.

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Doc. 1 at p. 3.

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THOUSAND FIFTY ONE DOLLARS ($547,051.00) upon the terms hereinafter

provided.3

The Promissory Note further stated, “This Note is executed in and shall be governed,

construed and enforced in accordance with the laws of the State of Maryland.”4

On June 28, 2009, 3536 and WoodCo Dynamics, LLC (“WoodCo”), a Wyoming

limited liability company with its principal office in Cheyenne, Wyoming, entered into an

assignment agreement (“Beneficiary Assignment”), assigning all of 3536's right, title,

and interest in the September 16, 2008 Assignment Agreement and Promissory Note

with Venetian to WoodCo. The Beneficiary Assignment was signed by Gregory Jarrett,

Managing Member of 3536, and Woodrow Jarrett, Managing Member of WoodCo. 

WoodCo was formed on June 4, 2009. Woodrow Jarrett is Gregory Jarrett’s son. 5

As of October 15, 2009, the balance due WoodCo under the Beneficiary

Assignment, Promissory Note, and Assignment Agreement was $574,376.10, including

interest. Venetian paid WoodCo the sum of $50,000 on December 14, 2009.6

 

On January 8, 2010, WoodCo filed a complaint against Venetian for breach of

contract. The complaint alleges that the “Assignment [Agreement] and Beneficiary

Assignment constitute a valid and enforceable contract” between WoodCo and Venetia,

and that Venetian breached the express terms of that contract.7

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8

Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001).

9

Bauman v. DaimlerChrysler Corp., 579 F.3d 1088, 1094 (9th Cir. 2009) (quoting Fields

v. Sedgwick Assoc. Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986)).

10Brayton Purcell LLP v. Recordon & Recordon, 575 F.3d 981, 985 (9th Cir. 2009)

(quoting Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002).

11Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004).

12C.E. Distribution, LLC v. New Sensor Corp., 380 F.3d 1107 (9th Cir. 2004); Bauman,

579 F.3d at 1094.

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III. STANDARD OF REVIEW

“It is the plaintiff’s burden to establish the court’s personal jurisdiction over a

defendant.”8 “Where, as here, the district court ‘rel[ies] on affidavits and discovery

materials without holding an evidentiary hearing, dismissal is appropriate only if the

plaintiff has not made a prima facie showing of personal jurisdiction.’”9 In ruling on a

motion to dismiss for lack of personal jurisdiction, uncontroverted facts in plaintiff’s

complaint must be taken as true, and “conflicts between the facts contained in the

parties’ affidavits must be resolved in [plaintiff’s] favor.”10

IV. DISCUSSION

Venetian moves to dismiss this action pursuant to Federal Rule of Civil

Procedure 12(b)(2) for lack of personal jurisdiction. In order to establish jurisdiction,

WoodCo must establish that Arizona’s long-arm statute provides personal jurisdiction

over non-resident defendant Venetian and that the exercise of jurisdiction does not

violate federal constitutional principles of due process.11 Because Arizona’s long-arm

statute confers jurisdiction to the same extent permitted by the Due Process Clause of

the United States Constitution, the court applies the federal due process framework.12

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13Bauman, 579 F.3d at 1094.

14Doc. 14 at p. 4.

15Schwarzenegger, 374 F.3d at 802 (citation omitted).

16Brayton Purcell, 575 F.3d at 985.

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“Due process requires that a nonresident defendant have certain minimum

contacts with the forum state so that the exercise of jurisdiction does not offend

traditional notions of fair play and substantial justice.”13 Depending on the type and

extent of defendant’s contacts, a plaintiff may assert either general or specific

jurisdiction. Here, WoodCo concedes that there is no general jurisdiction over Venetian,

but argues that the court has specific jurisdiction over Venetian.14

The court employs a three-prong test to determine whether Venetian has

sufficient minimum contacts to be susceptible to specific personal jurisdiction:

(1) The non-resident defendant must purposefully direct his activities or

consummate some transaction with the forum or resident thereof; or perform

some act by which he purposefully avails himself of the privilege of conducting

activities in the forum, thereby invoking the benefits and protections of its laws;

(2) the claim must be one which arises out of or relates to the defendant’s forumrelated activities; and 

(3) the exercise of jurisdiction must comport with fair play and substantial justice,

i.e. it must be reasonable.15

Purposeful Availment or Purposeful Direction

The first prong is satisfied by either purposeful availment or direction. A

purposeful availment analysis is most often used in suits, such as the one at bar, which

sound in contract.16 The purposeful availment prong requires a “qualitative evaluation”

of Venetian’s contact with the State of Arizona in order to determine whether Venetian’s

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17Harris Tursky & Co., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1130 (9th Cir.2003)

(citations and quotations omitted). 

18Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206

(9th Cir. 2006) (en banc).

19See, e.g., Burger King, 471 U.S. at 478 (“However, an individual’s contract with an outof-state party alone [cannot] automatically establish sufficient minimum contacts to support

personal jurisdiction.”) (internal quotation marks and citations omitted).

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conduct and connection with Arizona “are such that [Venetian] should reasonably

anticipate being haled into court there.”17 In a breach-of-contract action, the court

“typically inquire[s] whether a defendant ‘purposefully avails itself of the privilege of

conducting activities’ or ‘consummate[s] [a] transaction’ in the forum, focusing on

activities such as delivering goods or executing a contract.”18

Crediting WoodCo’s version of the facts as contained in the affidavits and

documentary evidence, it appears that Venetian’s contacts with Arizona consist of

entering into a contract with 3536, an Arizona limited liability company, and sending

payments to a Bank of American account in Arizona. These limited contacts are

insufficient to establish that Venetian purposefully availed itself of the privilege of doing

business in Arizona, particularly when the Assignment Agreement was executed in

Florida, concerned property in Florida, and by its terms was governed by the laws of

Florida.19 

Moreover, Venetian’s limited contacts with Arizona have little relation to the

breach-of-contract claim WoodCo now seeks to bring based on the Promissory Note,

which 3536 assigned to WoodCo. The Promissory Note was executed in Maryland, is

governed by the laws of Maryland, and provides that payments shall be paid to a post

office box in Florida. Consequently, WoodCo fails at step one of the test for specific

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20Boschetto, 539 F.3d at 1016.

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jurisdiction. Because WoodCo failed at the first step, the jurisdictional inquiry ends, and

the court need not address the remaining two prongs.20

V. CONCLUSION

For the reasons set out above, Venetian’s motion to dismiss at docket 9 is

GRANTED. The Clerk of Court is directed to enter judgment dismissing this matter

without prejudice for lack of personal jurisdiction.

DATED this 4th day of May 2010.

/s/ JOHN W. SEDWICK

UNITED STATES DISTRICT JUDGE

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