UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

FLAGSTAR BANK, FSB,

Plaintiff,

v.

JOHN DANA WOUDENBERG, SPECTRE

INVESTORS, LLC, and INTERCOASTAL

FINANCIAL GROUP, INC.,

Defendants.

INTERCOASTAL FINANCIAL GROUP, INC.,

Cross-Plaintiff/Third-Party Plaintiff,

v.

JOHN DANA WOUDENBERG, and SPECTRE

INVESTORS, LLC,

Cross-Defendants,

and

SPECTRE POWERBOATS, INC., and SCOTT

CONRAD,

Third-Party Defendants.

_____________________________________/

Case No. 09-13437

HON. MARIANNE O. BATTANI

OPINION AND ORDER DENYING WOUDENBERG’S AND SPECTRE INVESTORS,

LLC’S MOTIONS TO DISMISS AND GRANTING IN PART AND DENYING IN PART

FLAGSTAR’S MOTION FOR SUMMARY JUDGMENT
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I. INTRODUCTION

Plaintiff Flagstar Bank (“Flagstar”) alleges in its complaint that Intercoastal

Financial Group (“Intercoastal”) brokered a loan from Flagstar to Dana Woudenberg and

Spectre Investors, and that the loan was obtained by fraud. Intercoastal subsequently

filed cross-claims against Spectre Investors and Woudenberg, and third-party claims

against Spectre Powerboats and Scot Conrad.

Now before the Court are (1) Defendant/Cross-Defendant Woudenberg’s Motion

to Dismiss Flagstar’s Complaint for Lack of Personal Jurisdiction, (doc. 14);

(2) Woudenberg’s Motion to Dismiss Intercoastal’s Cross-Complaint for Lack of

Personal Jurisdiction, (doc. 24); (3) Defendant/Cross-Defendant Spectre Investors’

Motion to Dismiss Flagstar’s Complaint for Lack of Personal Jurisdiction, (doc. 26);

(4) Spectre Investors’ Motion to Dismiss Intercoastal’s Cross-Complaint for Lack of

Personal Jurisdiction, (doc. 27); and (5) Plaintiff Flagstar Bank’s Motion for Summary

Judgment against Defendant Woudenberg, (doc. 29). For the reasons that follow, the

Court denies Woudenberg and Spectre Investors’ four Motions to Dismiss and grants in

part and denies in part Flagstar’s Motion for Summary Judgment.

II. STATEMENT OF FACTS

According to Flagstar’s complaint, Intercoastal is a non-exclusive broker for

Flagstar. (Doc. 1). Intercoastal brokered a March 11, 2008, loan from Flagstar to

Woudenberg, an Arizona resident, and Spectre Investors, an Arizona corporation. This

money was to be used to purchase a racing boat from Spectre Powerboats in California

(“the Boat”). A First Preferred Ship Mortgage for the Boat was executed in favor of
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Flagstar. In addition, Woudenberg and Spectre Investors signed a Collateral Delivery

Receipt in which they affirmed that “the collateral has been delivered and is in

satisfactory condition.” Subsequently, Flagstar discovered that the Boat had never

been built.

Flagstar attached to its complaint a California state court complaint filed by “The

Smith Family Real Estate Investors Limited Partnership, LLLP” against, among others,

Woudenberg, Flagstar, Spectre Powerboats, and Spectre Investors. In that complaint,

the plaintiff contends that it entered into a number of Promissory Notes and Security

Agreements with, among others, Conrad and Spectre Powerboats. One of the forms of

relief that the plaintiff seeks is a declaration that it possesses right, title, and/or interest

in the Boat over which Woudenberg, Spectre Investors, and Flagstar also claim an

interest.

According to Intercoastal’s cross-complaint, its agreement with Flagstar called for

it to originate, process, underwrite, close secured loans, and offer loan applications to

Flagstar, which Flagstar could then agree to accept, underwrite, approve, close, and

fund. (Doc. 12). Spectre Investors and Woudenberg asked Intercoastal to procure

financing for the purchase of the Boat. Intercoastal requested certain financial

information from Woudenberg and Spectre Investors and subsequently forwarded it to

Flagstar. Flagstar then approved the loan and distributed money pursuant to a note.

In an affidavit from Woudenberg, he states that Conrad approached him and

requested $450,000 in financial assistance to build a power boat from a previously

constructed boat hull. (Doc. 49, exh. B). Conrad told him that, once built, the Boat

would be sold with the profits of the sale being split. Woudenberg stated that he was
4

willing to offer financial assistance if, in order to allocate the financial risk, a corporation

was formed with one or two other creditworthy individuals. Spectre Investors, an

Arizona was subsequently created by Conrad, Woudenberg, and Mike DeLoach, a

friend of Conrad’s, as an Arizona limited liability company. The sole purpose of Spectre

Investors was to obtain the $450,000 loan needed to complete construction of the Boat.

Woudenberg’s affidavit goes on to state that Conrad coordinated the required

loan through Calder McNab, Conrad’s friend and an employee of Intercoastal in

California. Woudenberg received the loan application documents from McNab in March

2008 with instructions that he should sign the documents on behalf of Spectre Investors

and in his personal capacity. McNab explained that Conrad and DeLoach would also

sign the loan documents once Woudenberg returned them. Woudenberg signed the

documents and returned them to McNab in California, but Conrad and DeLoach never

signed the documents. The loan was subsequently approved, and the loan proceeds

were paid directly to Conrad. Throughout the loan application process, McNab was

aware that the Boat was under construction, and Woudenberg believed that McNab and

Intercoastal were acting as agents of Flagstar. Woudenberg also states in this affidavit

that he had no direct contact with Michigan throughout the loan application process. 

Conrad subsequently used some of the loan proceeds for his personal use without

Woudenberg’s knowledge or consent.

It appears that Conrad stopped making payments on the loan at some point in

time, and Woudenberg began personally keeping the loan paid up by making payments

to Flagstar.
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III. STANDARD OF REVIEW

A motion to dismiss for lack of personal jurisdiction leaves the Court with three

options: “it may decide the motion upon the affidavits alone; it may permit discovery in

aid of deciding the motion; or it may conduct an evidentiary hearing to resolve any

apparent factual questions.” Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir.

1991). Regardless of how the court proceeds, the plaintiff always bears the burden of

establishing that jurisdiction exists. Id. “Where the court relies solely on the parties’

affidavits to reach its decision, the plaintiff must make only a prima facie showing that

personal jurisdiction exists in order to defeat dismissal.” Id.

Federal Rule of Civil Procedure 56(c) authorizes the Court to grant summary

judgment “if the pleadings, the discovery and disclosure materials on file, and any

affidavits show that there is no genuine issue as to any material fact and that the

movant is entitled to judgment as a matter of law.” There is no genuine issue of

material fact if there is not a factual dispute that could affect the legal outcome on the

issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining

whether to grant summary judgment, this Court “must construe the evidence and draw

all reasonable inferences in favor of the nonmoving party.” Hawkins v. AnheuserBusch, Inc., 517 F.3d 321, 332 (6th Cir. 2008).

IV. ANALYSIS

The Court will first address the four motions to dismiss for lack of personal

jurisdiction from Woudenberg and Spectre Investors. As these motions present virtually
6

identical arguments, they will be addressed together. The Court will then address

Flagstar’s Motion for Summary Judgment.

1. Personal Jurisdiction over Woudenberg and Spectre Investors

“Personal jurisdiction over an out-of-state defendant arises from ‘certain

minimum contacts with the forum such that maintenance of the suit does not offend

traditional notions of fair play and substantial justice.’” Air Products and Controls, Inc. v.

Safetech Int’l, Inc., 503 F.3d 544, 549 (6th Cir. 2007) (alteration omitted) (quoting Int’l

Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). A court sitting in diversity will only

have personal jurisdiction over a defendant if the law of the forum state authorizes

jurisdiction and the exercise of jurisdiction comports with Due Process.

Michigan’s long-arm statute provides for jurisdiction up to the limits permitted by

due process so long as the defendant’s actions or status fit within the long-arm statute. 

Green v. Wilson, 455 Mich. 342, 350 (1997). Michigan’s long-arm statute states that

either the transaction of any business within the state or the doing or causing any act to

be done, or consequences to occur, in the state resulting in an action for tort will give

rise to specific jurisdiction. MICH. COMP. LAWS §§ 600.705 and 600.715.

The Due Process Clause permits the exercise of both general and specific

personal jurisdiction. City of Monroe Employees Ret. Sys. v. Bridgestone Corp., 399

F.3d 651, 665 (6th Cir. 2005). None of the parties contend that the Court has general

jurisdiction over Spectre Investors and Woudenberg. Specific jurisdiction exists if the

following three-part test is satisfied:
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First, the defendant must purposefully avail himself of the privilege of

acting in the forum state or causing a consequence in the forum state.

Second, the cause of action must arise from the defendant’s activities

there. Finally, the acts of the defendant or consequences caused by the

defendant must have a substantial enough connection with the forum state

to make the exercise of jurisdiction over the defendant reasonable.

S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968).

i. Michigan’s Long-Arm Statute

As just stated, Michigan’s long-arm statute grants specific jurisdiction when any

business is transacted, any act is done, or any consequences are caused within the

state resulting in an action for tort. See MICH. COMP. LAWS §§ 600.705 and 600.715. 

The Michigan Court of Appeals has found that to transact business is to carry or

conduct business to a conclusion or settlement. Oberlies v. Searchmont Resort, Inc.,

246 Mich. App. 424, 430 (2001). The court went on to state, “Our Legislature’s use of

the word ‘any’ to define the amount of business that must be transacted establishes that

even the slightest transaction is sufficient to bring a corporation within Michigan’s

long-arm jurisdiction.” Id. (citing Sifers v. Horen, 385 Mich. 195, 199, n.2 (1971) (stating

that M.C.L. § 600.715(1)’s use of the word “any” refers to “each” and “every” business

transaction and contemplates even “the slightest” act of business in Michigan), and

Viches v. MLT, Inc., 127 F.Supp.2d 828, 830 (E.D. Mich. 2000) (“The standard for

deciding whether a party has transacted any business under § 600.715(1) is

extraordinarily easy to meet. The only real limitation placed on this long arm statute is

the due process clause.” (quotation and alteration omitted))). 
8

As Woudenberg and Spectre Investors sought and obtained a loan from a

Michigan-based bank, they transacted business within the state, and Michigan’s longarm statute permits the exercise of specific jurisdiction. Therefore, it is necessary to

determine whether the exercise of specific jurisdiction is also permitted by the Due

Process Clause.

ii. Due Process

a. Did Woudenberg and Spectre Investors Purposefully Avail

Themselves of the Privilege of Acting in Michigan?

“Th[e] purposeful availment requirement ensures that a defendant will not be

haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts,

or of the unilateral activity of another party or a third person.” Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 475 (1985) (citations and quotations omitted). Accordingly,

this requirement ensures that the defendant’s contacts with the forum state “are such

that he should reasonably anticipate being haled into court there.” World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). The Sixth Circuit has stated

that the mere existence of a contract between the defendant and a citizen of the forum

state is insufficient to confer specific personal jurisdiction. Calphalon Corp. v. Rowlette,

228 F.3d 718, 722 (6th Cir. 2000). But, where a defendant creates a “substantial

connection” with the forum state, jurisdiction is proper. Burger King Corp., 471 U.S. at

475 (citing McGee v. Int’l Life Insurance Co., 355 U.S. 220, 223 (1957)).

After review of the case, the Court finds that Woudenberg and Spectre Investors

(acting through Woudenberg) purposefully availed themselves of the privilege of acting
9

in Michigan. Their substantial connection to Michigan is evidenced most clearly by the

fact that they applied for, and obtained, a $450,000 loan from a Michigan bank. 

Furthermore, this relationship between the parties was to be relatively long lasting

because the loan was to be paid off over 12 years. 

Although Spectre Investors and Woudenberg correctly note that they had no

direct contact with Michigan during the application process because they only dealt with

Intercoastal, the note clearly indicated the loan’s substantial connection to Michigan. In

particular, the Marine Consumer Note prominently stated that the lending bank was

Flagstar in Michigan. In addition, the note indicated that payment was to be sent to

Flagstar in Michigan. Finally, the note stipulated that the application for the loan, the

making of the loan, and the disbursement of all proceeds were made in Michigan and

that the note was to be governed by federal law and the law of Michigan. Cf. Burger

King Corp. v. Rudzewicz, 471 U.S. 462, 473 (1985) (stating that “parties who reach out

beyond one state and create continuing relationships and obligations with citizen of

another state are subject to regulation and sanctions in the other State for the

consequences of their activities” (quotation omitted)). 

Woudenberg and Spectre Investors dispute that the loan was actually disbursed

in Michigan in light of the fact that the money loan was received in California. But, the

loan was disbursed from a Michigan bank and although the money was received in

California, the note’s language nevertheless provides support for the contention that the

agreement had a substantial connection with Michigan. Accordingly, the Court finds

that Woudenberg and Spectre Investors purposefully availed themselves of the privilege

of acting in Michigan.
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b. Does the Cause of Action Arise from the Michigan Contacts?

As the cause of action arises out of the loan agreement with Flagstar, the cause

of action does arise out of Woudenberg’s and Spectre Investor’s Michigan contacts.

c. Is the exercise of jurisdiction reasonable?

The Court finds that Woudenberg’s and Spectre Investors’ contacts with

Michigan were substantial enough to make the exercise of jurisdiction reasonable as

this was a substantial loan from Michigan bank that was to be paid over 12 years. See

S. Mach. Co., 401 F.2d at 381. The Court notes that an inference of reasonableness

arises when the first two due process criteria are met such that “only the unusual case

will not meet this third criteria.” See Theunissen v. Matthews, 935 F.2d 1454, 1461 (6th

Cir. 1991).

Woudenberg and Spectre Investors argue that the exercise of jurisdiction would

be unreasonable because it is more burdensome to litigate this case in Michigan, as

opposed to California – where Intercoastal and Spectre Powerboats are located and

which is near to Arizona, the home of Spectre Investors and Woudenberg. They also

contend that Flagstar’s and Intercoastal’s rights could be asserted in the California state

suit that is currently proceeding.

As an initial matter, the Court does not find persuasive the argument that the

burden of litigating this case will be significantly greater in Michigan as the facts of the

case are largely undisputed. Furthermore, the fact that Flagstar and Intercoastal might

be able to assert their rights in another forum does not, in and of itself, make the
11

exercise of personal jurisdiction in this forum unreasonable. As such, the Court finds

that this is not the type of unusual case where the exercise of personal jurisdiction is so

unreasonable that it would violate due process. See id. Accordingly, the Court finds

that it has specific personal jurisdiction over Woudenberg and Spectre Investers. 

Therefore, the four motions to dismiss for lack of personal jurisdiction over Spectre

Investors and Woudenberg are denied.

2. Flagstar’s Motion for Summary Judgment

Flagstar argues that it is entitled to summary judgment against Woudenberg as

to its claims of breach of contract and acceleration of the debt (Count 1); common-law

fraud (Count 3); negligent misrepresentation (Count 4); and silent fraud (Count 5). In

particular, Flagstar contends that Woudenberg’s admission that the Boat was not built

when he obtained the loan from Flagstar shows that it is entitled to summary judgment

on these counts.

Woudenberg responds that summary judgment is inappropriate because (1) he

was not actually a borrower on the loan, as only Spectre Investors owned the Boat;

(2) Flagstar knew the Boat was not completed through its agent, Intercoastal; (3) it is

not clear whether the loan agreement related to a completed boat, such that

Woudenberg misrepresented that the Boat was completed by signing the agreement

and obtained the loan; and (4) Flagstar cannot maintain separate torts for causes of

action that are really only breaches of contract. Woudenberg also asserts that he needs

additional discovery to oppose Flagstar’s Motion for Summary Judgment, but after

review of the motion, the Court finds that additional discovery is not necessary.
12

As an initial matter, the Court finds that Woudenberg was a borrower on the loan

agreement. Woudenberg signed the Marine Consumer Note twice: once as a member

of Spectre Investors, and once as an individual. Woudenberg contended at oral

argument that there was some ambiguity because he only signed the First Preferred

Ship Mortgage as a member of Spectre Investors, not as an individual. The fact that he

only signed the mortgage as a member of Spectre Investors, however, simply means

that it was only Spectre Investors that granted the bank a security interest in the Boat. 

This is a separate question from who was a borrower on the loan. Thus, in light of the

fact that Woudenberg signed the Marine Consumer Note both as a member of Spectre

Investors and as an individual, the Court finds that he was a borrower on the loan.

Woudenberg’s argument that the Court should impute knowledge that the Boat

was unbuilt to Flagstar because Intercoastal was Flagstar’s agent fails because the

evidence shows that Intercoastal was not Flagstar’s agent. Agency is defined as “a

fiduciary relationship created by express or implied contract or by law, in which one

party (the agent) may act on behalf of another party (the principal) and bind that other

party by actions or words.” Breighner v. Michigan High School Athletic Ass’n, 255 Mich.

App. 567, 582-83 (2003). The evidence in this case indicates that Intercoastal was not

the agent of Flagstar. In particular, the brokerage agreement between the parties

reserved for Flagstar the sole discretion in approving or rejecting submitted applications

and stated that Intercoastal was not to represent to anyone that it was “the agent,

representative, partner, or co-venturer of Flagstar, or has the authority to issue

commitments for Loans on behalf of Flagstar or to bind or commit Flagstar to any other

contract or transaction.” (Doc. 48, exh. K); cf. Mills v. Equicredit Corp., 344 F.Supp.2d
13

1071, 1078 (E.D. Mich. 2004) (finding that a loan broker was not the agent of the

lender). As Intercoastal was not Flagstar’s agent, Intercoastal’s alleged knowledge

concerning the Boat cannot be imputed to Flagstar.

Woudenberg contends that he did not breach the loan agreement because he did

not provide any false or misleading information to Flagstar when he procured the loan

for an unbuilt boat. In particular, he claims that the terms of the Marine Consumer Note

did never required that the Boat be completed. A review of the note, however, reveals

that although it did not explicitly require a completed boat, it would be unreasonable to

read the agreement as contemplating an unbuilt boat. As an initial matter, the note asks

for the port or marina where the property is anchored and requires that the property be

“properly licensed and registered” within 15 days of the note being signed. 

Woudenberg has not explained how the unbuilt Boat could have been either anchored,

licensed, or registered.

Although Woudenberg is correct that the note never explicitly requires a

completed boat, the note also never makes any reference to an unbuilt boat. It is hard

to imagine that the parties intended for the loan to cover an unbuilt boat, but never

made any reference to this fact in the loan documents despite the fact that much of the

note’s language indicates that a completed, operating boat was being contemplated. 

For example, in addition to the aforementioned language concerning the Boat being

anchored and licensed and registered, the note also indicates that the person receiving

the loan agrees that the property is “in proper operating order and fit for all intended

purposes.” Furthermore, the note lists a hull identification number for the Boat. At oral

argument, Woudenberg and Flagstar agreed that the Coast Guard only assigns such
14

numbers to completed boats, and they stated that they do not know how one could have

been assigned to this unbuilt boat. As such, the presence of a hull identification number

on the note would certainly, at a minimum, mislead Flagstar as to whether the loan was

for the purchase of a completed boat. In light of these considerations, the Court finds

that Woudenberg breached the agreement by providing misleading information to

Flagstar when he signed the note despite the fact that the boat was unbuilt; no

reasonable jury could find otherwise. Accordingly, Flagstar is entitled to summary

judgment as to its breach of contract claim against Woudenberg.

Woudenberg argues that Flagstar cannot maintain tort actions for what was really

only a breach of contract. In Fulz v. Union-Commerce Assocs., the Michigan Supreme

Court indicated that there is a distinction between a defendant’s misfeasance (action)

and nonfeasance (inaction). 470 Mich. 460, 465 (2004). The court proceeded to note

“that a tort action will not lie when based solely on the nonperformance of a contractual

duty.” Id. at 466. The court defined a “tort action stemming from misfeasance of a

contractual obligation as the violation of a legal duty separate and distinct from the

contractual obligation.” Id. at 467. The Michigan Court of Appeals has held that a fraud

in the inducement of a contract is a tort that may survive independently of the contract. 

See Huron Tool and Eng’g Co. v. Precision Consulting Servs., 209 Mich. App. 365, 374-

75 (1995).

In this case, Flagstar has sufficiently alleged fraud in the inducement by claiming

that Woudenberg failed to disclose that the Boat was not built. Accordingly, Flagstar

may bring these separate tort actions. See id. Nevertheless, Flagstar is not entitled to

summary judgment relating to its fraud claims because Woudenberg has stated in his
15

affidavit that Intercoastal knew the Boat was unbuilt and told him this would not present

a problem with obtaining the loan from Flagstar. As a fraud claim requires an intent to

deceive, there is an issue of material fact relating to whether Woudenberg had any

intent to deceive Flagstar. See Roberts v. Saffell, 280 Mich. App. 397, 403-04 (2008). 

Similarly, there also is an issue of material fact relating to Flagstar’s negligent

misrepresentation claim. A claim of negligent misrepresentation requires “proof that a

party justifiably relied to his detriment on information prepared without reasonable care

by one who owed the relying party a duty of care.” Law Offices of Lawrence J. Stockler,

P.C. v. Rose, 174 Mich. App. 14, 30 (1989). Because Woudenberg knew that

Intercoastal was aware that the Boat was unbuilt, there is an issue of fact regarding

whether Woudenberg acted without reasonable care when he obtained the loan for the

unbuilt boat. As such, the Court finds that Flagstar is not entitled to summary judgment

as to its claims of fraud, silent fraud, and negligent misrepresentation. 

V. CONCLUSION

Accordingly, IT IS HEREBY ORDERED that Woudenberg’s and Spectre

Investors’ Motions to Dismiss, (docs. 14, 24, 26, and 27), are DENIED, and Flagstar’s

Motion for Summary Judgment, (doc. 29), is GRANTED IN PART AND DENIED IN

PART.

IT IS SO ORDERED.
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s/Marianne O. Battani 

MARIANNE O. BATTANI

UNITED STATES DISTRICT JUDGE

DATED: March 17, 2010

CERTIFICATE OF SERVICE

Copies of this Order were served upon counsel of record on this date by ordinary

mail and/or electronic filing.

 s/Bernadette M. Thebolt

 Case Manager