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LearSchmidt Investment Group, LLC v. AB-Alpine SPE, LLC

United States District Court, W.D. Missouri, Central Division

May 28, 2019

LEARSCHMIDT INVESTMENT GROUP, LLC, Plaintiff,
v.
AB-ALPINE SPE, LLC., et al., Defendants.

          ORDER

          NANETTE K. LAUGHREY UNITED STATES DISTRICT JUDGE

         Defendant AB-Alpine SPE, LLC (“AB-Alpine”) moves to dismiss plaintiff LearSchmidt Investment Group, LLC's (“LearSchmidt”) First Amended Complaint. Doc. 53. For the following reasons, AB-Alpine's motion to dismiss is denied.

         I. Background

         In January 2017, LearSchmidt entered into an Asset Purchase Agreement (“APA”) with IQ Payment Systems, LLC doing business as Alpine Payment Systems (“Alpine”), in which LearSchmidt purchased the revenues produced by a portfolio of merchant accounts, described more fully in Section 1.1 of the APA (the “Accounts”). See Doc. 38-1 (APA). Under the terms of the APA, Alpine was to transfer all of its interests in the Accounts to LearSchmidt, and LearSchmidt was to receive notice and right of first refusal to purchase the rights or interests in the Accounts from Alpine, should Alpine elect to sell or dispose of any of its rights. LearSchmidt alleges, upon information and belief, that Alpine “sold its rights and interests in the Accounts to [AB-Alpine], ” without notice pursuant to its right of first refusal. Doc. 38 (First Amended Complaint), ¶ 26. LearSchmidt asserts that “the obligations and covenants of Alpine under the [APA] are binding upon [AB-Alpine] as the successor and assign of Alpine.” Id. at ¶ 62.

         II. Discussion

         AB-Alpine moves to dismiss LearSchmidt's claims for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2).[1] LearSchmidt carries the burden of proof and, at this stage in the case, must “make a prima facie showing that personal jurisdiction exists.” K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591 (8th Cir. 2011). Although “[t]he evidentiary showing required at the prima facie stage is minimal, ” Johnson v. Arden, 614 F.3d 785, 794 (8th Cir. 2010) (quotations omitted), it “must be tested, not by the pleadings alone, but by the affidavits and exhibits” supporting or opposing the motion to dismiss, Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004) (quotations omitted). K-V Pharm. Co., 648 F.3d at 592. The Court “must view the evidence in the light most favorable to [LearSchmidt] and resolve all factual conflicts in its favor in deciding whether [LearSchmidt] made the requisite showing.” Id.

         It is uncontested that AB-Alpine is not a signatory to the APA forming the basis of LearSchmidt's claims, see Doc. 38-1, nor does AB-Alpine, a Florida limited liability company located in Boca Raton, Florida, maintain offices, own property, or operate facilities in Missouri, Doc. 10-1, ¶¶ 3-10. However, LearSchmidt asserts that personal jurisdiction is proper in this Court because AB-Alpine (1) is a mere “continuation of” or corporate “successor to [Alpine]” and (2) “engaged in business transactions” in Missouri, sufficient to satisfy the Missouri long-arm statute and due process. Doc. 55, pp. 3, 5; Doc. 38 at ¶ 12.

         A. Mere Continuation

         Jurisdictional contacts of a corporate predecessor may be imputed to its successor without offending due process where the successor is “merely a continuation” of its predecessor. Koch Supplies, Inc. v. Charles Needham Indust., 1990 WL 274485, *3 (W.D. Mo. 1990); see also Lakota Girl Scout Council, Inc. v. Havey Fund-Raising Mgmt., Inc., 519 F.2d 634, 637 (8th Cir. 1975) (explaining that “if the corporation is [the defendant's] alter ego, its contacts are [the defendant's] and due process is satisfied”); Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640, 653 (5th Cir. 2002) (“[F]ederal courts have consistently acknowledged that it is compatible with due process for a court to exercise personal jurisdiction over an individual or a corporation that would not ordinarily be subject to personal jurisdiction in that court when the individual or corporation is an alter ego or successor of a corporation that would be subject to personal jurisdiction in that court.”); Massi v. Holden, No. 09-cv-1821, 2011 WL 6181258, at *5 (D. Minn. Dec. 13, 2011) (“[P]ersonal jurisdiction over a corporate successor may be based on its predecessor's contacts with the forum, provided the successor would be liable for its predecessor's acts under the forum's law.” (quotation omitted)). The theory is that because the predecessor and successor are the same entity, the jurisdictional contacts of one are the jurisdictional contacts of the other for purposes of the due process analysis. Patin, 294 F.3d at 653; see also Green v. Montgomery Ward & Co., 775 S.W.2d 162, 166 (Mo.Ct.App. 1989) (“The rationale for this is quite simple. It would be all too easy for a corporation to immunize itself from liability by utilizing such a device as a change of name.”).

         To determine whether a successor company is “merely a continuation” of its predecessor the Court considers whether there has been “a transfer or sale of all, or substantially all” of the predecessor's assets. Med. Shoppe Int'l, Inc. v. S.B.S. Pill Dr., Inc., 336 F.3d 801, 804 (8th Cir. 2003) (quoting Grand Labs v. Midcon Labs, 32 F.3d 1277, 1281 n.5 (8th Cir. 1994)). Where such a transfer of assets has taken place, the Court then considers whether: (1) there is “common identity of officers, directors and stockholders”; (2) the incorporators of the successor also incorporated the predecessor; (3) the “business operations are identical”; (4) the transferee uses the same equipment, labor force, supervisors, and name of the transferor; and (5) notice has been given of the transfer to employees or customers. Med. Shoppe Int'l, Inc., 336 F.3d at 804 (citing Roper Elec. Co. v. Quality Castings, Inc., 60 S.W.3d 708, 711-13 (Mo. App. 2001)). Although no single factor is determinative, the first factor-common identity of officers, directors, and stockholders- is a “key” factor. Helms v. Prime Tanning Corp., 2010 WL 1935952, *10 (W.D. Mo. May 11, 2010).

         LearSchmidt argues that AB-Alpine “is a continuation of Alpine, ” Doc. 17, ¶ 36, because “some or all of the assets of Alpine were sold and purchased by . . . ‘AB Alpine.'” Doc. 17-1 (Affidavit of Andrew Lear), ¶ 9. AB-Alpine acknowledges purchasing “many of the assets and liabilities of [Alpine], ” but denies assuming any liabilities pursuant to the APA[2] and denies acting as a mere continuation of Alpine. Doc. 54-1 (Affidavit of Darrell Dirks), ¶ 4; see also Doc. 50-1 (2018 APA). For purposes of this motion to dismiss, LearSchmidt has made a prima facia showing that there has been a substantial transfer of assets. Thus, the Court turns to its analysis of the five Roper factors. See Med. Shoppe Int'l, Inc., 336 F.3d at 804 (finding a “substantial transfer of assets” sufficient to invoke mere continuation doctrine).

         First, AB-Alpine acknowledges that when this lawsuit was initiated, until sometime after its removal to federal court, defendant Brian McDevitt was a part owner of AB-Alpine. Doc. 1 (Notice of Removal), p. 3 (identifying Brian J. McDevitt as one of three members of AB-Alpine). Mr. McDevitt was also a part owner of Alpine and one of two members of Alpine to execute the APA on its behalf. Doc. 38-1, p. 11 (identifying Mr. McDevitt as a member of Alpine). AB-Alpine asserts that Mr. McDevitt is no longer a member of AB-Alpine. Doc. 54-1, ¶ 21. However, this does not negate the fact that at the time of the asset transfer and alleged breach, as well as for the first few months of this lawsuit, Alpine and AB-Alpine shared common identity amongst their members. Thus, the first factor weighs in favor of finding that AB-Alpine is a mere continuation of Alpine.

         Next, AB-Alpine asserts that “[Alpine] and AB-Alpine SPE were formed by different individuals and/or entities.” Doc. 54, p. 6 (“[Robert] Ensminger and [Mr.] McDevitt formed [Alpine]; they did not form AB-Alpine.”). However, it is unclear from AB-Alpine's briefing whether neither Mr. Ensminger nor Mr. McDevitt formed AB-Alpine or simply that this combination of individuals alone did not form AB-Alpine. Thus, the Court is unable to determine whether the second factor weighs in favor or against a finding of a mere continuation.

         Third, AB-Alpine asserts, without further explanation, that its “business operations are distinguishable from [Alpine]'s.” Id. at pp. 6-7. However, based on the allegations in the First Amended Complaint, AB-Alpine continued the exact same business operations, at least with respect to its assistance with maintenance of the Accounts and interactions with LearSchmidt. See generally, Doc. 38. Absent further explanation from AB-Alpine of the ...


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