1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Nexa M ortgage LLC, ) No. CV-23-00410-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Smart Mortgage Centers Incorporated, ) 12 et al., ) 13 ) ) 14 Defendants. ) 15 Before the Court is Defendant Wilton A. Person’s Motion to Dismiss (Doc. 28), in 16 which he seeks dismissal for lack of personal jurisdiction. This Motion is fully briefed (28, 17 32, 33). For the reasons that follow, the Motion will be granted. 18 I. BACKGROUND 19 On December 22, 2022, Plaintiff Nexa Mortgage, LLC (“Plaintiff”) initiated this 20 action against Defendants Smart Mortgage Centers, Inc. (“Smart Mortgage”) and Wilton 21 A. Person (“Defendant Person”) in Maricopa County Superior Court alleging one cause of 22 action—tortious interference with business expectancy and relations. (Doc. 1-6 at 2–16; 23 Doc. 26). Plaintiff is an Arizona limited liability company that offers mortgage programs 24 and services. (Doc. 26 at 1). Smart Mortgage is an Illinois for-profit corporation providing 25 mortgage services in several states, including Arizona. (Id.). Defendant Person is an Illinois 26 resident who is admitted to practice law in Illinois. (Doc. 26 at 2; Doc 4-1 ¶¶ 2, 4). 27 Between February 20, 2020 and December 14, 2021, Defendant Person filed four 28 allegedly frivolous lawsuits in Illinois courts on behalf of his client, Smart Mortgage. (See 1 Doc. 26). Smart Mortgage sued a variety of defendants in those lawsuits, including 2 Plaintiff; Plaintiff’s CEO, Mike Kortas; and Mr. Kortas’s wife’s company—all residents 3 or citizens of Arizona—as well as some of Plaintiff’s employees. (Id.). Plaintiff alleges that 4 within the four lawsuits, Defendant Person purposefully filed eighteen total complaints and 5 three pre-filing discovery requests on behalf of Smart Mortgage to delay the resolution of 6 the lawsuits. (Id. at 14–15). Plaintiff further claims that these legal actions place its business 7 operations in jeopardy because it has interfered with its and its brokers’ ability to acquire 8 and maintain licensure in Texas and Massachusetts. (Id. at 13–15). 9 On March 8, 2023, Defendant Person removed the case to this Court (Doc. 1) and 10 filed a Motion to Dismiss the Complaint for lack of personal jurisdiction. (Docs. 4, 14, 17). 11 On June 29, 2023, the Court dismissed this action against Defendant Person but granted 12 Plaintiff leave to amend its Complaint. (Doc. 25). On July 12, 2023, Plaintiff filed an 13 Amended Complaint. (Doc. 26). On July 26, 2023, Defendant Person filed this Motion to 14 Dismiss Plaintiff’s Amended Complaint (“Motion”) for lack of personal jurisdiction. (Doc. 15 28). 16 II. LEGAL STANDARDS 17 When a defendant moves to dismiss for lack of personal jurisdiction under the 18 Federal Rule of Civil Procedure (“Rule”) 12(b)(2), “the plaintiff bears the burden of 19 demonstrating that jurisdiction is appropriate.” Schwarzenegger v. Fred Martin Motor Co., 20 374 F.3d 797, 800 (9th Cir. 2004) (citation omitted). When the motion is based on written 21 materials rather than an evidentiary hearing, as here, the Court must determine “whether 22 [the plaintiff’s] pleadings and affidavits make a prima facie showing of personal 23 jurisdiction.” Id. (alteration in original) (citation omitted). “Uncontroverted allegations in 24 the complaint must be taken as true, and conflicts between parties over statements 25 contained in affidavits must be resolved in the plaintiff’s favor.” Will Co., Ltd. v. Lee, 47 26 F.4th 917, 921 (9th Cir. 2022); Mattel, Inc. v. Greiner & Hausser GmbH, 354 F.3d 857, 27 862 (9th Cir. 2003) (“[C]onflicts between the facts contained in declarations submitted by 28 the two sides must be resolved in [Plaintiff’s] favor for purposes of deciding whether a 1 prima facie case for personal jurisdiction exists.”). 2 III. DISCUSSION 3 “An exercise of personal jurisdiction in federal court must comport with both the 4 applicable state’s long-arm statute and the federal Due Process Clause.” Burri L. PA v. 5 Skurla, 35 F.4th 1207, 1212 (9th Cir. 2022). “Arizona’s long-arm statute permits 6 jurisdiction over non-resident defendants to the full extent allowable under the United 7 States Constitution.” Id. (citating Ariz. R. Civ. P. 4.2(a)). The federal Due Process Clause 8 “requires that non-resident defendants have sufficient ‘minimum contacts’ with the forum 9 state such that exercising jurisdiction would not offend ‘traditional notions of fair play and 10 substantial justice.’” Id. (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). 11 Personal jurisdiction can be general or specific. Biliack v. Paul Revere Life Ins. Co., 265 12 F. Supp. 3d 1003, 1007 (D. Ariz. 2017). It is undisputed that the Court does not have 13 general personal jurisdiction over Defendant Person in Arizona. (Doc. 28; Doc. 32). Thus, 14 the Court only needs to review whether specific jurisdiction applies. 15 The Ninth Circuit applies a three-prong test for specific personal jurisdiction: 16 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or 17 resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the 18 forum, thereby invoking the benefits and protections of its laws; 19 (2) the claim must be one which arises out of or relates to the 20 defendant’s forum-related activities; and 21 (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 22 Schwarzenegger, 374 F.3d at 802. Plaintiff bears the burden of establishing each of the first 23 two prongs. Id. If Plaintiff satisfies them, the burden shifts to Defendant Person “to ‘present 24 a compelling case’ that the exercise of jurisdiction would not be reasonable.” Id. (quoting 25 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476–78 (1985)). In considering whether 26 the parties have met their respective burdens, the Court takes the allegations in Plaintiff’s 27 Complaint as true, except to the extent they are controverted by facts contained in 28 1 Defendant Person’s declaration (Doc. 4-1; Doc. 28-1). See Will Co., Ltd., 47 F.4th at 921; 2 Mattel, Inc., 354 F.3d at 862. 3 Turning to the first prong of the specific personal jurisdiction analysis, the plaintiff 4 must demonstrate that the defendant “either (1) ‘purposefully availed’ himself of the 5 privilege of conducting activities in the forum, or (2) ‘purposefully directed’ his activities 6 toward the forum.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006) 7 (quoting Schwarzenegger, 374 F.3d at 802). “In tort cases, we typically inquire whether a 8 defendant ‘purposefully direct[s] his activities’ at the forum state, applying an ‘effects’ test 9 that focuses on the forum in which the defendant’s actions were felt, whether or not the 10 actions themselves occurred within the forum.” Mavrix Photo, Inc. v. Brand Techs., Inc., 11 647 F.3d 1218, 1228 (9th Cir. 2011) (alteration in original) (citation omitted). Here, 12 Plaintiff has alleged a single claim for tortious interference with business expectancy and 13 relations. (See Doc. 26 at 8).
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Nexa M ortgage LLC, ) No. CV-23-00410-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Smart Mortgage Centers Incorporated, ) 12 et al., ) 13 ) ) 14 Defendants. ) 15 Before the Court is Defendant Wilton A. Person’s Motion to Dismiss (Doc. 28), in 16 which he seeks dismissal for lack of personal jurisdiction. This Motion is fully briefed (28, 17 32, 33). For the reasons that follow, the Motion will be granted. 18 I. BACKGROUND 19 On December 22, 2022, Plaintiff Nexa Mortgage, LLC (“Plaintiff”) initiated this 20 action against Defendants Smart Mortgage Centers, Inc. (“Smart Mortgage”) and Wilton 21 A. Person (“Defendant Person”) in Maricopa County Superior Court alleging one cause of 22 action—tortious interference with business expectancy and relations. (Doc. 1-6 at 2–16; 23 Doc. 26). Plaintiff is an Arizona limited liability company that offers mortgage programs 24 and services. (Doc. 26 at 1). Smart Mortgage is an Illinois for-profit corporation providing 25 mortgage services in several states, including Arizona. (Id.). Defendant Person is an Illinois 26 resident who is admitted to practice law in Illinois. (Doc. 26 at 2; Doc 4-1 ¶¶ 2, 4). 27 Between February 20, 2020 and December 14, 2021, Defendant Person filed four 28 allegedly frivolous lawsuits in Illinois courts on behalf of his client, Smart Mortgage. (See 1 Doc. 26). Smart Mortgage sued a variety of defendants in those lawsuits, including 2 Plaintiff; Plaintiff’s CEO, Mike Kortas; and Mr. Kortas’s wife’s company—all residents 3 or citizens of Arizona—as well as some of Plaintiff’s employees. (Id.). Plaintiff alleges that 4 within the four lawsuits, Defendant Person purposefully filed eighteen total complaints and 5 three pre-filing discovery requests on behalf of Smart Mortgage to delay the resolution of 6 the lawsuits. (Id. at 14–15). Plaintiff further claims that these legal actions place its business 7 operations in jeopardy because it has interfered with its and its brokers’ ability to acquire 8 and maintain licensure in Texas and Massachusetts. (Id. at 13–15). 9 On March 8, 2023, Defendant Person removed the case to this Court (Doc. 1) and 10 filed a Motion to Dismiss the Complaint for lack of personal jurisdiction. (Docs. 4, 14, 17). 11 On June 29, 2023, the Court dismissed this action against Defendant Person but granted 12 Plaintiff leave to amend its Complaint. (Doc. 25). On July 12, 2023, Plaintiff filed an 13 Amended Complaint. (Doc. 26). On July 26, 2023, Defendant Person filed this Motion to 14 Dismiss Plaintiff’s Amended Complaint (“Motion”) for lack of personal jurisdiction. (Doc. 15 28). 16 II. LEGAL STANDARDS 17 When a defendant moves to dismiss for lack of personal jurisdiction under the 18 Federal Rule of Civil Procedure (“Rule”) 12(b)(2), “the plaintiff bears the burden of 19 demonstrating that jurisdiction is appropriate.” Schwarzenegger v. Fred Martin Motor Co., 20 374 F.3d 797, 800 (9th Cir. 2004) (citation omitted). When the motion is based on written 21 materials rather than an evidentiary hearing, as here, the Court must determine “whether 22 [the plaintiff’s] pleadings and affidavits make a prima facie showing of personal 23 jurisdiction.” Id. (alteration in original) (citation omitted). “Uncontroverted allegations in 24 the complaint must be taken as true, and conflicts between parties over statements 25 contained in affidavits must be resolved in the plaintiff’s favor.” Will Co., Ltd. v. Lee, 47 26 F.4th 917, 921 (9th Cir. 2022); Mattel, Inc. v. Greiner & Hausser GmbH, 354 F.3d 857, 27 862 (9th Cir. 2003) (“[C]onflicts between the facts contained in declarations submitted by 28 the two sides must be resolved in [Plaintiff’s] favor for purposes of deciding whether a 1 prima facie case for personal jurisdiction exists.”). 2 III. DISCUSSION 3 “An exercise of personal jurisdiction in federal court must comport with both the 4 applicable state’s long-arm statute and the federal Due Process Clause.” Burri L. PA v. 5 Skurla, 35 F.4th 1207, 1212 (9th Cir. 2022). “Arizona’s long-arm statute permits 6 jurisdiction over non-resident defendants to the full extent allowable under the United 7 States Constitution.” Id. (citating Ariz. R. Civ. P. 4.2(a)). The federal Due Process Clause 8 “requires that non-resident defendants have sufficient ‘minimum contacts’ with the forum 9 state such that exercising jurisdiction would not offend ‘traditional notions of fair play and 10 substantial justice.’” Id. (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). 11 Personal jurisdiction can be general or specific. Biliack v. Paul Revere Life Ins. Co., 265 12 F. Supp. 3d 1003, 1007 (D. Ariz. 2017). It is undisputed that the Court does not have 13 general personal jurisdiction over Defendant Person in Arizona. (Doc. 28; Doc. 32). Thus, 14 the Court only needs to review whether specific jurisdiction applies. 15 The Ninth Circuit applies a three-prong test for specific personal jurisdiction: 16 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or 17 resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the 18 forum, thereby invoking the benefits and protections of its laws; 19 (2) the claim must be one which arises out of or relates to the 20 defendant’s forum-related activities; and 21 (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 22 Schwarzenegger, 374 F.3d at 802. Plaintiff bears the burden of establishing each of the first 23 two prongs. Id. If Plaintiff satisfies them, the burden shifts to Defendant Person “to ‘present 24 a compelling case’ that the exercise of jurisdiction would not be reasonable.” Id. (quoting 25 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476–78 (1985)). In considering whether 26 the parties have met their respective burdens, the Court takes the allegations in Plaintiff’s 27 Complaint as true, except to the extent they are controverted by facts contained in 28 1 Defendant Person’s declaration (Doc. 4-1; Doc. 28-1). See Will Co., Ltd., 47 F.4th at 921; 2 Mattel, Inc., 354 F.3d at 862. 3 Turning to the first prong of the specific personal jurisdiction analysis, the plaintiff 4 must demonstrate that the defendant “either (1) ‘purposefully availed’ himself of the 5 privilege of conducting activities in the forum, or (2) ‘purposefully directed’ his activities 6 toward the forum.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006) 7 (quoting Schwarzenegger, 374 F.3d at 802). “In tort cases, we typically inquire whether a 8 defendant ‘purposefully direct[s] his activities’ at the forum state, applying an ‘effects’ test 9 that focuses on the forum in which the defendant’s actions were felt, whether or not the 10 actions themselves occurred within the forum.” Mavrix Photo, Inc. v. Brand Techs., Inc., 11 647 F.3d 1218, 1228 (9th Cir. 2011) (alteration in original) (citation omitted). Here, 12 Plaintiff has alleged a single claim for tortious interference with business expectancy and 13 relations. (See Doc. 26 at 8). Thus, the purposeful direction analysis applies. See id. The 14 effects test, which determines if the purposeful direction element is met, requires that “the 15 defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the 16 forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum 17 state.” Id. 18 Again, the Court addresses the second element of the effects test, to see whether 19 Plaintiff has cured deficiencies previously identified in its Complaint. (Doc. 1-6 at 2–16; 20 Doc. 26; Doc. 25 at 4–5). Therefore, the Court reviews whether the Amended Complaint 21 demonstrates that Defendant Person expressly aimed an intentional act at Arizona. 22 Schwarzenegger, 374 F.3d at 806. In doing so, the Court must apply the analysis applicable 23 to tort cases—which is “look[ing] to the defendant’s ‘own contacts’ with the forum, not to 24 the defendant’s knowledge of a plaintiff’s connections to a forum.” Axiom Foods, Inc. v. 25 Acerchem Int’l, Inc., 874 F.3d 1064, 1070 (9th Cir. 2017) (quoting Walden v. Fiore, 571 26 U.S. 277, 289 (2014)). In its Amended Complaint, Plaintiff claims that Defendant Person 27 subjected himself to personal jurisdiction in Arizona because he knowingly sent process 28 servers and various correspondence and communications to Arizona residents to litigate 1 the Illinois lawsuits. (Doc. 26 at 2–3 ¶¶ 7–10). This is an individualized targeting argument. 2 See Axiom Foods., 874 F.3d at 1069 (“A theory of individualized targeting alleges that a 3 defendant ‘engaged in wrongful conduct targeted at a plaintiff whom the defendant knows 4 to be a resident of the forum state.’” (citation omitted)). An argument of individualized 5 targeting alone, however, is insufficient to establish personal jurisdiction. See id. at 1070 6 (“[W]hile a theory of individualized targeting may remain relevant to the minimum 7 contacts inquiry, it will not, on its own, support the exercise of specific jurisdiction . . . .”). 8 Plaintiff has failed to cure the deficiencies in its Complaint, and more importantly, 9 is unable to show that Defendant Person is subject to personal jurisdiction in Arizona. The 10 only contact Defendant Person has with the state of Arizona is linked to the judicial actions 11 in Illinois. However, the lawsuits Defendant Person filed in Illinois does not support a 12 finding that Defendant Person subjected himself to personal jurisdiction in Arizona. See 13 Adobe Sys. Inc. v. Tejas Rsch., LLC., No. C-14-0868 EMC, 2014 WL 4651654, at *4 (N.D. 14 Cal. Sept. 17, 2014) (“a number of district courts have rejected personal jurisdiction 15 premised solely on prior judicial actions in other states even when brought against a forum 16 resident.”). Plaintiff further alleges that Defendant Person purposefully directed his actions 17 at the state of Arizona because he knew that the Illinois lawsuits would impact Plaintiff’s 18 ability to get a mortgage broker license in Massachusetts and expand its operations. (Doc. 19 26 at 13 ¶¶ 77–83, 96–97). This argument is not enough to satisfy the purposeful direction 20 element because the injury suffered is not tethered to Arizona in a meaningful way. 21 Gonzalez v. US Hum. Rts. Network, 512 F. Supp. 3d 944, 959 (D. Ariz. 2021) (“The final 22 component of the purposeful direction tests requires that the injury suffered by the plaintiff 23 be ‘tethered’ to the forum state in some ‘meaningful way.’” (quoting Picot v. Weston, 780 24 F.3d 1206 (9th Cir. 2015))). Therefore, the Court finds that Plaintiff has failed to show 25 that Defendant Person’s actions were “expressly aimed” at the state of Arizona. Thus, 26 specific jurisdiction does not apply, and the Court need not address the remaining 27 28 1 | elements.! 2 IV. CONCLUSION 3 In sum, Plaintiff has failed to make a prima facie showing of jurisdictional facts. 4| Thus, Defendant Person’s Motion to Dismiss will be granted. 5 Accordingly, 6 IT IS ORDERED that Defendant Person’s Motion to Dismiss (Doc. 28) is granted. 7| Plaintiffs claim against Defendant Wilton A. Person is dismissed without prejudice. 8 IT IS FURTHER ORDERED that the Clerk of Court shall terminate Defendant 9 | Wilton A. Person as a party to this action. 10 Dated this 2nd day of November, 2023. 11 12 Honorable Teven P. Légan B United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ' The Court rejects Plaintiff's argument that Defendant Person’s Motion fails to 28 | Conferral for a motion to dismiss tor 23.5 of personal jurisdiction.