Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-00913/USCOURTS-azd-2_05-cv-00913-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 15:78m(a) Securities Exchange Act

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The Court will deny Plaintiffs’ request for oral argument because the parties have

submitted memoranda thoroughly discussing the law and evidence and the Court concludes

that oral argument will not aid its decisional process. See Mahon v. Credit Bur. of Placer

County, Inc., 171 F.3d 1197, 1200 (9th Cir. 1999).

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Oceanus Group, CES, LLC, a Delaware

limited liability company; and

Informatics Corporation, a Delaware

corporation, 

Plaintiffs, 

vs.

Vukoslav E. Aguirre and Emma J.

Aguirre, husband and wife; Tonka L.

Aguirre; Sergio E. Aguirre; Courtney L.

Muggli; Andrew Watson; O.C. Tirella;

and L. Edward Wilson and Associates,

Inc., a Tennessee corporation, 

Defendants.

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No. CV-05-913-PHX-DGC

ORDER

Pending before the Court are motions to dismiss for lack of personal jurisdiction and

alternative motions for change of venue filed by Defendants Vukoslav Aguirre, Emma

Aguirre, and Tonka Aguirre. Docs. ##25, 30-31. Plaintiffs have filed responses to the

motions and Defendants have filed replies. Docs. ##36, 44-45, 47-48. For the reasons set

forth below, the Court will deny the motions.1

Case 2:05-cv-00913-DGC Document 49 Filed 02/22/06 Page 1 of 7
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Defendants move to dismiss the claims against them pursuant to Rule 41(b) of the

Federal Rules of Civil Procedure, which provides that a court may dismiss an action for

failure of the plaintiff to prosecute or to comply with the rules or any court order. Because

Defendants seek dismissal for lack of personal jurisdiction, however, the Court will construe

their motions has having been brought under Rule 12(b)(2). See Fed. R. Civ. P. 12(b)

(“[T]he following defenses may . . . be made by motion: . . . (2) lack of jurisdiction over the

person[.]”). 

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Background

Plaintiffs commenced this action by filing a complaint against Defendants on

March 25, 2005. Doc. #1. Plaintiffs allege generally that Defendants made certain

misrepresentations in connection with Plaintiffs’ acquisition of 90% of the stock of Aguirre

Engineers, Inc. (“AEI”), from owner Vukoslav Aguirre in December 2002. Id. Plaintiffs

purport to allege the following claims against Vukoslav Aguirre and his wife, Emma, and

daughter, Tonka: fraud, violation of Rule 10b-5 of the Securities and Exchange Act, and

violation of A.R.S. § 44-1991. Id. ¶¶ 68-90. Plaintiffs also purport to allege breach of

contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary

duty, and conversion claims against Vukoslav Aguirre. Id. ¶¶ 57-67, 91-101.

Discussion

I. The Motions to Dismiss for Lack of Personal Jurisdiction.2

A. Legal Standard.

Because the Court is resolving the motions to dismiss without holding an evidentiary

hearing, Plaintiffs “need make only a prima facie showing of jurisdictional facts to withstand

the motion[s].” Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995); see Brainerd v.

Governors of the Univ. of Alberta, 873 F.2d 1257, 1258 (9th Cir. 1989). That is, Plaintiffs

“need only demonstrate facts that if true would support jurisdiction over [Defendants].”

Ballard, 65 F.3d at 1498; see Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082,

1085 (9th Cir. 2000) (“Where . . . the district court does not hold an evidentiary hearing but

rather decides the jurisdictional issue on the basis of the pleadings and supporting

declarations, we will presume that the facts set forth therein can be proven.”).

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The Ninth Circuit applies a three-part test to determine whether a defendant’s contacts

with the forum state are sufficient to subject him to the state’s specific jurisdiction. Personal

jurisdiction exists if (1) the defendant purposefully directed tortious activities at the forum

or a resident thereof or performed some act by which he purposefully availed himself of the

privileges of conducting activities in the forum, (2) the claims arise out of or result from the

defendant’s forum-related activities, and (3) the exercise of jurisdiction is reasonable. See

Bancroft & Masters, 223 F.3d at 1086; Brainerd, 873 F.2d at 1259.

B. Analysis.

Defendants contend that personal jurisdiction is lacking because they conducted no

activities in Arizona in connection with the sale of AEI stock to Plaintiffs. Docs. ##25 at 11,

30-31 at 3. Plaintiffs argue that Defendants had sufficient minimum contacts with Arizona

such that the Court’s exercise of jurisdiction over Defendants is both constitutional and

reasonable. Docs. ##36 at 12, 44-45 at 2. In support of their argument, Plaintiffs have

presented evidence of the following:

On September 19, 2002, Vukoslav Aguirre’s agent, J. Michael Zika, made

representations regarding AEI and provided Plaintiffs with AEI’s offering memorandum

during a meeting at the Arizona Biltmore Hotel in Phoenix, Arizona. Doc. #36 Exs. 1 ¶¶ 8-9,

10, 11 ¶¶ 5-6. On December 16, 2002, Plaintiffs’ owner, Arnold Whipple, spoke with

Vukoslav Aguirre by telephone from Arizona and was assured by Mr. Aguirre that all

accrued tax liabilities of AEI had been paid and that there were no undisclosed liabilities.

Id. Ex. 1 ¶ 14. Over the course of Plaintiffs’ due diligence investigation of AEI, Emma

Aguirre, AEI’s Vice President, Secretary and Treasurer, and Tonka Aguirre, AEI’s Director

of Human Resources, made representations regarding AEI’s finances and future business

prospects via numerous telephone calls and e-mails to Plaintiffs’ headquarters in Phoenix.

Doc. #44 Exs. B, C ¶¶ 4-5, D ¶ 5, E ¶ 1. Plaintiffs state that the representations made by

Defendants and contained in AEI’s offering memorandum were intentionally false and that

Plaintiffs relied on the misrepresentations in deciding to acquire AEI stock. Docs. ##36

Ex. 1 ¶ 10, 44 Ex. E ¶¶ 1-2.

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Accepting Plaintiffs’ evidence as true, as the Court must at this stage of the litigation,

Plaintiffs have made a prima facie showing of personal jurisdiction. Defendants are alleged

to have committed intentional torts and securities violations. Doc. #1 ¶¶ 68-101. Defendants

directed the alleged misrepresentations at Arizona knowing that the resulting harm would

occur in Arizona, where Plaintiffs’ headquarters was located. Doc. #36 Exs. 1 ¶¶ 3-4, 5, 7,

9 ¶ 1, 12 ¶ 1, 14. Plaintiffs state that but for the misrepresentations they would not have

acquired AEI stock. Doc. #36 at 3, Ex. 1 ¶ 10. Defendants’ contacts with Arizona are

sufficient to support a finding of specific jurisdiction. See Brainerd, 873 F.2d at 1259

(“[Defendant] is alleged to have committed intentional torts. His communications were

directed to Arizona, even though he did not initiate the contact . . . . [Defendant] knew the

injury and harm stemming from his communications would occur in Arizona, where Brainerd

planned to live and work. Those contacts with the forum support personal jurisdiction over

[defendant] in Arizona.”); Metro. Life Ins. Co. v. Neaves, 912 F.2d 1062, 1065 (9th Cir.

1990) (holding that an Alabama resident could be haled into a California court where the

plaintiff alleged that the Alabama resident fraudulently obtained life insurance proceeds

belonging to a California resident by mailing documents from Alabama to California);

Bancroft & Masters, 223 F.3d at 1087-88 (holding that a Georgia golf club that held the

trademark “Masters” could be haled into a California court where the club sent a letter to the

registrar of Internet domain names located in Virginia challenging a California company’s

use of the “masters.com” domain name).

Defendants assert that “the exercise of jurisdiction by this [C]ourt would in no way

be ‘reasonable.’” Doc. #25 at 12. Defendants, however, do not address the seven specific

factors that must be considered in making the reasonableness determination. See Burger

King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985) (setting forth the seven factors and

placing upon the defendant the burden of demonstrating a “compelling case” of

unreasonableness). Defendants have thus failed to meet their burden of demonstrating a

“compelling case” of unreasonableness. See Bancroft & Masters, 223 F.3d at 1088-89

(“[Defendant] attempted no factual showing with regard to the Burger King factors. Instead,

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[defendant] stated without elaboration that jurisdiction would be unreasonable. . . . This is

inadequate to discharge Burger King’s requirement[.]”); Ballard, 65 F.3d at 1500 (“To avoid

jurisdiction, [defendant] must ‘present a compelling case that the presence of some other

considerations would render jurisdiction unreasonable.’ In our view, [defendant] has not

carried its heavy burden of rebutting the strong presumption in favor of jurisdiction.”)

(citations omitted; emphasis in Ballard). The Court will deny Defendants’ motions to

dismiss for lack of personal jurisdiction.

II. The Alternative Motions for Change of Venue.

Defendants move the Court to transfer this action to the District of Colorado pursuant

to 28 U.S.C. § 1404(a). Doc. #25 at 13-14. Section 1404(a) provides that “[f]or the

convenience of the parties and witnesses, in the interest of justice, a district court may

transfer any civil action to any other district or division where it might have been brought.”

Defendants have the burden of showing that the action should be transferred under § 1404(a).

See Jones v. GNC Franchising, Inc., 211 F.3d 495, 499 (9th Cir. 2000); Commodity Futures

Trading Comm’n v. Savage, 611 F.2d 270, 279 (9th Cir. 1979) (“Savage had the burden to

justify by particular circumstances that the transferor forum was inappropriate.”). Indeed,

Defendants “must make a strong showing of inconvenience to warrant upsetting [Plaintiffs’]

choice of forum.” Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843

(9th Cir. 1986); see N. Acceptance Trust v. Gray, 423 F.2d 653, 654 (9th Cir. 1970) (stating

that “substantial weight” should be given to the plaintiff’s choice of forum); Gulf Oil Corp.

v. Gilbert, 330 U.S. 501, 508 (1947) (stating that “the plaintiff’s choice of forum should

rarely be disturbed”).

Defendants contend that a change of venue is appropriate because most of the parties

live outside Arizona, the majority of witnesses live in Colorado, AEI is located in Colorado,

and there is a federal action pending in the District of Colorado involving the same

transactions and occurrences involved in this action. Doc. #25 at 14. Plaintiffs argue that

Defendants simply seek to shift the inconvenience of litigating in a foreign forum onto

Plaintiffs and their witnesses. Doc. #36 at 16. Plaintiffs assert that Defendants have failed

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to make a strong showing that their proposed venue is substantially more convenient than

Plaintiffs’ chosen forum. Id.

The Court agrees. Plaintiffs have presented evidence that their corporate headquarters

and business records are located in Phoenix and that several of their witnesses are Arizona

residents. Id. at 16, Exs. 1 ¶¶ 3, 18, 9 ¶ 2; Doc. #44 Ex. D ¶ 3. Other witnesses apparently

are located throughout the United States, including Washington, California, Texas, Florida,

and Tennessee. Docs. ##36 at 16, 40 at 10-11. Plaintiffs also have presented evidence that

the stock purchase agreement at issue was signed by Mr. Whipple in Phoenix and that

Plaintiffs performed part of their due diligence investigation and received numerous

representations regarding AEI at their headquarters in Phoenix. Id. Exs. 1 ¶¶ 12-15, 9 ¶¶ 3-6,

11¶¶ 4-6, 12 ¶¶ 4-7; Doc. #44 Ex. D ¶ 1-6.

“Section 1404(a) provides for transfer to a more convenient forum, not to a forum

likely to prove equally convenient or inconvenient.” Van Dusen v. Barrack, 376 U.S. 612,

645-46 (1964). Defendants have failed to make a strong enough showing of inconvenience

to warrant upsetting Plaintiffs’ choice of forum. The Court accordingly will deny

Defendants’ motions for change of venue. See Jones, 211 F.3d at 499 (holding that the

district court “did not abuse its discretion in denying the motion to transfer venue under

§ 1404(a)” because the defendant had “failed to meet its burden of showing that

Pennsylvania was the more appropriate forum for the action”); Decker Coal Co., 805 F.2d

at 843 (holding that the district court did not abuse its discretion in denying a motion to

transfer where “the transfer would merely shift rather than eliminate the inconvenience”).

IT IS ORDERED:

1. The motions to dismiss or for change of venue filed by Defendants Vukoslav

Aguirre, Emma Aguirre, and Tonka Aguirre (Docs. ##25, 30-31) are denied.

2. Plaintiffs’ motion for leave to file sur-reply (Doc. #46) is denied as moot.

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3. The Court will schedule a case management conference by separate order.

DATED this 22nd day of February, 2006.

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