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Pinnacle Fitness and Recreation Management v. the Jerry and

December 13, 2010

PINNACLE FITNESS AND RECREATION MANAGEMENT LLC, A DELAWARE LIMITED LIABILITY COMPANY,
THIRD- PARTY DEFENDANT MARSHA PLAINTIFF,
v.
THE JERRY AND VICKIE MOYES FAMILY TRUST, AN ARIZONA TRUST DEFENDANT.
THE JERRY AND VICKIE MOYES TRUST, AN ARIZONA TRUST ON BEHALF OF ITSELF AND DERIVATIVELY ON BEHALF OF AND FOR THE BENEFIT FOR MFC INVESTMENTS, LLC, A NEVADA LIMITED LIABILITY COMPANY, COUNTERCLAIMANT,
v.
PINNACLE FITNESS AND RECREATION MANAGEMENT, LLC, A DELAWARE LIMITED LIABILITY COMPANY, COUNTERDEFENDANT.
THE JERRY AND VICKIE MOYES TRUST, AN ARIZONA TRUST ON BEHALF OF ITSELF AND DERIVATIVELY ON BEHALF OF AND FOR THE BENEFIT FOR MFC INVESTMENTS, LLC, A NEVADA LIMITED LIABILITY COMPANY, THIRD-PARTY PLAINTIFF,
v.
MARSHA , AN INDIVIDUAL, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court

ORDER GRANTING FORSYTHE-FOURNIER'S MOTION TO DISMISS

On September 14, 2010, Third-Party Defendant Marsha Forsythe-Fournier ("Forsythe-Fournier") filed a motion to dismiss for lack of subject matter and personal jurisdiction. (Doc. No. 73.) On November 15, 2010, Plaintiff The Jerry and Vickie Moyes Trust ("the Trust") filed its response in opposition. (Doc. No. 85.) On December 6, 2010, Forsythe-Fournier filed her reply to the opposition. (Doc. No. 92.) On December 13, 2010, the Court held a hearing on the matter. Kellye Lynn Fabian appeared telephonically on behalf of Third-Party Defendant Forsythe-Fournier. Cindy C. Albracht-Crogan and Laura H. Kennedy appeared on behalf of the Trust. After due consideration, the Court GRANTS Forsythe-Fournier's motion to dismiss.

BACKGROUND

This action centers around an agreement between the Trust and Pinnacle Fitness and Recreation Management, LLC ("Pinnacle Fitness") to jointly provide funding for and invest in a number of fitness facilities owned by Xeptor, LLC ("Xeptor"). On July 29, 2010, Pinnacle Fitness brought the original action against the Trust, alleging causes of action including breach of contract, fiduciary duty, and covenant of good faith and fair dealing. (Doc. No. 1.) On July 6, 2010, the Trust filed its answer to the original complaint and its counterclaims against Pinnacle Fitness. (Doc. No. 50.) On August 6, 2010, the Trust filed a third-party complaint against Marsha Forsythe-Fournier, alleging causes of action for breach of fiduciary duty and interference with contract and business advantage. (Doc. No. 61 ("Compl.").) Third-Party Defendant Marsha Forsythe-Fournier is the sole member of Pinnacle Fitness. (Compl. ¶ 2.)

Both Pinnacle Fitness and the Trust were approached to help assist Xeptor, which owned and operated struggling fitness and gym facilities in Arizona. (Compl. ¶ 7.) The Trust and Pinnacle Fitness both agreed and jointly formed MFC Investments, LLC ("MFC") to provide funding and assistance to Xeptor. (Id. ¶ 21.) On August 6, 2007, Pinnacle Fitness and the Trust entered into the Operating Agreement of MFC Investments, LLC ("Operating Agreement"). (Id. ¶ 22.) The Operating Agreement stated that Pinnacle Fitness and the Trust each owned a 50% interest in MFC. (Id. ¶ 23.) The Trust alleges that the day-to-day management of MFC was vested in the Trust's representative. (Id. ¶ 7.) The Trust alleges that Forsythe-Fournier and Pinnacle Fitness through Forsythe-Fournier failed to make capital contributions as required under the agreement, micromanaged and destroyed relationships between MFC and its business affiliates, and acted in her self-interest and to the detriment of MFC. (Id. ¶¶ 7-8.)

The Operating Agreement included a forum selection clause, which stated that: "Any initiation of legal proceedings arising out of, related to, or in connection with the interpretation or enforceability of the Agreement or rights or remedies under the Act, shall be brought in a U.S. District Court located in San Diego, California." (Id. ¶ 5.) The Trust alleges this Court has jurisdiction over Forsythe-Fournier based on this clause of the Operating Agreement. (Id. at 6.)

DISCUSSION

I. Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to 12(b)(2)

A. Standard of Review

Federal Rule of Civil Procedure 12(b)(2) provides that a court may dismiss a claim for lack of personal jurisdiction over the person. When a "defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate." Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). When a district court rules on a defendant's motion to dismiss based on only pleadings, the plaintiff only needs to make a prima facie showing of jurisdictional facts to withstand the motion to dismiss. Data Disc., Inc. v. Sys. Technology Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1997); Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). In other words, the plaintiff only needs to demonstrate facts that, if true, would support jurisdiction over the defendant. Ballard, 65 F.3d at 1498. However, the allegations must not be conclusory, but must allege specific acts connecting the defendant with the forum. Greenspun

v. Del E. Webb Corp., 634 F.2d 1204, 1208 n.5 (9th Cir. 1980).

B. Personal Jurisdiction Pursuant to the Operating Agreement

The Trust alleges in the third-party complaint that the Court can exercise personal jurisdiction over Forsythe-Fournier based on the Operating Agreement. (Compl. ¶ 6.) In particular, they allege that she "as an agent of Pinnacle, agreed to be bound by the forum selection clause in the MFC Operating Agreement by negotiating the Operating Agreement on behalf of Pinnacle, including the choice of venue clause." (Id.)

In Manetti-Farrow, Inc. v. Gucci America, Inc., the Ninth Circuit rejected the argument that only signatories to a contract can be bound by a forum selection clause. 858 F.2d at 514 n.5 (9th Cir. 1988). Instead, they recognized that "a range of transaction participants, parties and non-parties, should benefit from and be subject to forum selection clauses." Id. In the context of personal jurisdiction challenges, non-signatories could be bound by a forum selection clause if the defendant "agree[d] to be so bound." Holland Am. Line, Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 458 (9th Cir. 2006) ("Under general contract principles, a forum selection clause may give rise to waiver of objections to personal jurisdiction . . . provided that the defendant ...


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