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Mongler v. Knight

United States District Court, E.D. Missouri, Northern Division

July 10, 2017

ROBERT MONGLER, Plaintiff,
v.
BRIAN KNIGHT, et al., Defendants.

          MEMORANDUM AND ORDER

          CATHERINE D. PERRY, UNITED STATES DISTRICT JUDGE

         Plaintiff Robert Mongler was the sole member of RGM Properties, LLC, which owned real property in Georgia. Mongler claims defendants Brian Knight, Michael Loprieno, Ty Kirkpatrick, Consulting Direct, Inc., CapGain Holdings, Inc., CapGain Properties, Inc., Strategic Lending Solutions, LLC, and LOP Capital, LLC fraudulently divested him of his membership interest in RGM. According to the complaint, defendants then transferred the real property held by RGM to their defendant companies, leaving Mongler with nothing. Mongler asserts claims of civil conspiracy and fraud against defendants.

         This action is before me now on certain defendants' motion to dismiss plaintiff's complaint, as well as their motion to disqualify plaintiff's counsel, and Mongler's motions to strike. I held oral argument on the motions, and both parties have attached documents and other evidence to their briefs. The moving defendants[1] argue the complaint should be dismissed for lack of personal jurisdiction and lack of standing. The essence of Mongler's complaint is that defendants intentionally targeted him, in Missouri, to fraudulently obtain Georgia property that he owned through RGM Properties, LLC. I conclude that this court has personal jurisdiction over defendant Loprieno and his associated companies, but not over defendant Knight and Strategic Lending Solutions, LLC. Mongler has made a sufficient showing of tortious conduct by Loprieno, acting as agent for LOP Capital, LLC and CapGain Properties, to satisfy Missouri's long arm statute and due process, but Knight's contacts with Missouri are so limited that due process would be offended by allowing suit to proceed against him here. I also conclude that Mongler has Article III standing as he has demonstrated the elements of a case and controversy.

         Background

         This dispute has a long and complicated history. In 2011, Mongler was the sole member of RGM Properties, LLC. RGM owned real property in Georgia valued at over $3, 000, 000. While Mongler is a Missouri citizen and RGM is a Missouri LLC, none of the defendants are citizens or residents of Missouri.[2]Mongler names three individuals and their related companies as defendants in his lawsuit. Defendant Ty Kirkpatrick owns Consulting Direct, Inc., and both are in default, as is defendant CapGain Holdings, Inc. Knight and his company Strategic Lending Solutions, LLC (“SLS”), are based primarily in Illinois. Loprieno and his company, LOP Capital, LLC, are also based in Illinois. Defendant CapGain Properties, Inc., a Canadian company, was incorporated by Knight and Loprieno. Additionally, Loprieno is the attorney representing himself and all the other non-defaulting defendants.

         In his complaint, Mongler sets forth the following allegations: Mongler's LLC, RGM, owned property in Georgia that it wanted to sell or trade. During 2011, Kirkpatrick and Consulting Direct began negotiations with Mongler for the purchase of Mongler's membership interest in RGM. Knight and Loprieno drafted and induced Mongler to sign a “Purchase and Sale Agreement.” Mongler received no compensation for his interest in RGM.

         Shortly after Mongler signed the Purchase and Sale Agreement, Loprieno and Knight induced Kirkpatrick to sign deeds on behalf of RGM granting one-third interests in the property to CapGain Properties, LOP, and SLS. Defendants knew that no consideration had been paid to RGM or Mongler for the property. To document Kirkpatrick's authority to execute these deeds and transfer the property from RGM, Loprieno drafted and falsely induced Mongler to sign an Amendment to RGM's Articles of Organization.

         LOP and SLS subsequently deeded their one-third interests in the property to CapGain Properties. CapGain Properties recorded the deeds in March 2012. By this mechanism, Loprieno and Knight vested over $3, 000, 000 in real property - free and clear of all liens - in CapGain. CapGain then mortgaged the property to Statesman Financing Corporation for $1, 750, 000. Loprieno and Knight dissipated the Statesman loan proceeds and rendered CapGain Properties insolvent.

         The complaint includes counts against all defendants for various Missouri common-law intentional torts related to fraud and conspiracy. In addition to this case, the parties and related entities have filed a number of other suits. In their motion papers and at the hearing, counsel for Mongler and Loprieno attempted to explain those suits, but their explanations were confusing and contradictory. Based on what I understand from those explanations and the documents provided, it appears that there are suits currently pending in Florida state and federal courts. Mongler had at one time been party to one or both of those suits, and they are brought by the same attorney he has here (Donald Shultz) against the same defendants. Mongler is no longer a party to those suits, but the remaining plaintiff is a different client of Shultz's who alleges the same defendants engaged in a similar scheme to deprive him of real estate in Florida. Statesman Financing, the lender who ended up with the Georgia property after CapGain Properties defaulted, filed a quiet title action in Georgia state courts. Although that case resulted in a judgment adverse to Mongler, he and Statesman (who is not a party here) ultimately settled the case and Mongler now has title to the Georgia property, although apparently he will owe money to Statesman when he sells the property. Additionally, CapGain Properties' stock has been suspended from trading by the Canadian stock exchange.

         In addition to the motion to dismiss for lack of standing and lack of personal jurisdiction, both lawyers have filed motions challenging the other's right to appear in this court and to represent the parties they claim to represent, and Mongler has filed motions to strike certain of the defendants' papers. The lawyers accuse one another of unethical practices, fraud and/or conflicts of interest.

         Personal Jurisdiction

         To survive a motion to dismiss for lack of personal jurisdiction brought under Fed.R.Civ.P. 12(b)(2), a plaintiff must make a prima facie showing of personal jurisdiction by pleading sufficient facts to support a “reasonable inference that the defendants can be subjected to jurisdiction within the state.” K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591-92 (8th Cir. 2011). “Although the evidentiary showing required at the prima facie stage is minimal, the showing must be tested, not by the pleadings alone, but by the affidavits and exhibits supporting or opposing the motion.” Id. at 592 (internal citation and quotation marks omitted). I must view the evidence in a light most favorable to the plaintiff and resolve factual conflicts in the plaintiff's favor; however, plaintiff carries the burden of proof and that burden does not shift to defendants. Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 647 (8th Cir. 2003).

         In order to subject a defendant to a court's personal jurisdiction, due process requires that the defendant have certain minimum contacts with the state, such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945). There are two types of personal jurisdiction: general and specific. Daimler AG v. Bauman, 134 S.Ct. 746, 754 (2014). General, or “all-purpose, ” jurisdiction exists over a defendant where that defendant resides; for a corporation or other entity general jurisdiction exists when the forum state is its place of incorporation or the location of its principal place of business. Id. at 760; see also Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011). However, in an “exceptional case, ” an additional state could have general jurisdiction if the corporation's activities in that state are “so substantial and of such a nature as to render the corporation at home in that State.” Daimler, 134 S.Ct. at 761 n.19. Mongler does not assert that any defendants are subject to general jurisdiction in Missouri; none of the defendants are “at home” here.

         Specific, or “conduct-linked, ” jurisdiction involves suits “arising out of or related to the defendant's contacts with the forum.” Daimler, 134 S.Ct. at 751; Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984). For a Missouri court to exercise specific jurisdiction over an out-of-state defendant, two requirements must be met: 1) jurisdiction must be allowed by the Missouri long-arm statute; and 2) the reach of the long-arm statute must comport with due process. Viasystems, Inc. v. EBM-Papst St. George Gmbh & Co., 646 F.3d 589, 593-94 (8th Cir. 2011). Missouri's long-arm statute authorizes, inter alia, ...


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