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Strobel v. Rusch

United States District Court, D. New Mexico

February 1, 2019

VOLKER STROBEL, HEIKE STROBEL, and HANS BAUR, in their individual capacities and on behalf of UNC Holdings LLC, Plaintiffs,
v.
UWE RUSCH and DR. MABEL RUSCH, Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. BRACK SENIOR U.S. DISTRICT JUDGE

         This matter is before the Court on the Motion to Dismiss of Defendants Uwe Rusch and Mabel Rusch Pursuant to Fed.R.Civ.P. 12(b)(2) and Fed.R.Civ.P. 12(b)(3), filed on August 13, 2018. (Doc. 7.) Having considered the motion, briefs, attached documents, and relevant law, the Court finds that the motion should be denied.

         In 2012, Defendant Uwe Rusch (Mr. Rusch) was the sole owner and member of a Florida limited liability company called UNC-FL. In furtherance of this business, Mr. Rusch's wife, Defendant Dr. Mabel Rusch (Dr. Rusch), registered a trademark in her name. In 2013, Plaintiffs entered into an agreement with Defendants to become part owners of UNC-FL, and Plaintiff Volker Strobel (Mr. Strobel) took an active role in advancing the Florida business. Soon thereafter, the parties became concerned about Florida's regulatory framework and decided to dissolve UNC-FL and re-establish the business in New Mexico under the name UNC-NM. Mr. Strobel and Mr. Rusch were managers of UNC-NM. In 2015, Mr. Strobel announced to the parties that the business was struggling and in need of capital. Thereafter, Defendants took actions that violated the parties' agreement. Plaintiffs now bring suit for a variety of tort and contract claims. Defendants argue that neither jurisdiction nor venue is proper in New Mexico.

         I. Factual Background[1]

         Defendants are residents of Florida. (Doc. 1 (Compl.) at 1 & ¶¶ 5-6.) In 2012 Mr. Rusch formed UNC-FL, a limited liability company created to produce and sell cordials (a type of after-dinner drink). (Id. ¶ 11.) Years before, Defendants had organized a business in Germany and registered the trademark CORDIALS V.I.P. DRINKS (the “V.I.P. Mark” or the “trademark”). (Id. ¶¶ 12-13.) After forming UNC-FL, Defendants transferred registration of the trademark from the German company to Dr. Rusch in her own name. (Id. ¶ 13.)

         Mr. Strobel and Plaintiff Heike Strobel (Mrs. Strobel) are residents of New Mexico. (Id. at 1 & ¶¶ 1-2.) The Strobels met Defendants while vacationing in Florida in 2012. (Id. ¶ 14.) Defendants told the Strobels “about the business of UNC-FL and invited them to invest in UNC-FL's business . . . .” (Id.; see also Doc. 18-1 ¶ 6.) At that time, “Mr. Rusch was the sole record owner and member of UNC-FL . . . .” (Compl. ¶ 11; see also Doc. 18-6 at 1.) After the Strobels returned to New Mexico, Mr. Rusch began to email and call Mr. Strobel to encourage him to invest in the business. (Doc. 18-1 ¶ 7.) Mr. Rusch visited New Mexico in “April 2012 to discuss several business opportunities, one of which involved the cordials business . . . .” (Id. ¶ 8.) In June 2012, both Mr. and Dr. Rusch visited New Mexico to speak with Mr. and Mrs. Strobel about investing in the cordials business. (Id. ¶¶ 10-11.) During this visit, Dr. Rusch stated that she would transfer registration of the V.I.P. Mark from her name to UNC-FL. (Id. ¶ 11.) Dr. Rusch's consent to transfer registration of the trademark is memorialized in the parties' Partnership Agreement. (See Doc. 18-6 at 2 (“Mrs. Mabel Rusch hereby undertakes to convey to the Holding all rights to the CORDIALS trademark and all rights to the design and logos of CORDIALS products . . . . The transfer of ownership of these rights will be initiated after the signing of this agreement.” The transfer is “part of the package of CORDIALS rights that Mr. and Mrs. Rusch are contributing to the Holding.”).) She also told Plaintiffs that Mr. Rusch “had authority to speak for her with respect to her ownership of the trademark and participation in the business.” (Doc. 18-1 ¶ 11.)

         Mr. Rusch, Mr. Strobel, and Plaintiff Hans Baur (Mr. Baur) met in Arizona in early 2013 to discuss the terms of Plaintiffs' investment in UNC-FL. (Id. ¶ 12.) Thereafter, Mr. and Dr. Rusch, Mr. and Mrs. Strobel, Mr. Baur, and another individual who is not a party to this lawsuit, entered into an agreement to invest in UNC-FL. (Id.; Compl. ¶ 15.) Over the next year, Mr. Strobel often traveled to Florida to help Mr. Rusch develop the business. (Doc. 18-1 ¶ 13.)

         The parties soon became concerned that Florida's “regulatory climate was not favorable for the development and operation of” UNC-FL; therefore, they decided to dissolve the business in Florida and reestablish it in New Mexico. (Id.; Compl. ¶ 18.) In 2014, Mr. Rusch formally terminated UNC-FL, and Mr. Strobel formed UNC-NM-a continuation of the cordials business- in New Mexico. (Doc. 18-1 ¶ 14.) Both Mr. Strobel and Mr. Rusch were managers of UNC-NM, and Mr. Rusch continued to communicate with Mr. Strobel via phone and email to manage the business. (Id. ¶¶ 14, 16.) The business utilized a certified public accountant (CPA) located in New Mexico, who “had been preparing tax returns for UNC-FL . . . since 2013, both before and after the” company relocated to New Mexico. (Id. ¶ 16.)

         Approximately one year later, Mr. Strobel told the other parties that UNC-NM needed new capital or the business would fail. (Compl. ¶ 20.) Defendants then ceased communicating with Plaintiffs about the business. (Id.) Plaintiffs learned that Dr. Rusch had transferred registration of the trademark to UNC-NM, but had later transferred it back to her own name without informing Plaintiffs.[2] (See Doc. 18-1 ¶ 15; see also Doc. 18-1, Ex. 11.) Plaintiffs also discovered that, since learning that UNC-NM was failing, Defendants “have sought investment or business opportunities from others, based on the representation that [Dr. Rusch] owned the V.I.P. Mark and they owned the beverage business associated with the V.I.P. Mark.” (Compl. ¶ 21.) Plaintiffs assert that Defendants' actions have infringed upon UNC-NM's rights in the trademark and caused damage to Plaintiffs. (Id.) Plaintiffs filed suit against Defendants in this Court in July 2018. (See Compl.) Defendants now move to dismiss for lack of personal jurisdiction and venue. (See Doc. 7.)

         II. Legal Standard

         “Motions to dismiss brought under Federal Rule of Civil Procedure 12(b)(2) test a plaintiff's theory of personal jurisdiction as well as the facts supporting personal jurisdiction. . . . When a defendant challenges the court's jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction exists.” Davis v. USA Nutra Labs, No. CV 15-01107 MV/SCY, 2016 WL 9774945, at *3 (D.N.M. Dec. 21, 2016) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995)). “Plaintiff's burden is light in the early stages of litigation before discovery.” Arnold v. Grand Celebration Cruises, LLC, No. CV 17-685 JAP/KK, 2017 WL 3534996, at *3 (D.N.M. Aug. 16, 2017) (citing Wenz, 55 F.3d at 1505).

         “[W]here there is no evidentiary hearing and the jurisdictional question is decided on the parties' affidavits and written materials, Plaintiff need only make a prima facie showing of personal jurisdiction.” Id. (citing Wenz, 55 F.3d at 1505). “The plaintiff may make the required prima facie showing by coming forward with facts, via affidavit or other written materials, that would support jurisdiction over the defendant if true.” Davis, 2016 WL 9774945, at *3 (citing OMI Holdings, Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086, 1091 (10th Cir. 1998)). “The Court accepts as true all well-pleaded facts (that are plausible, non-conclusory, and non-speculative) alleged by Plaintiff unless Defendant controverts those facts by affidavit.” Arnold, 2017 WL 3534996, at *3 (citing Shrader v. Biddinger, 633 F.3d 1235, 1248 (10th Cir. 2011)). “The Court resolves factual disputes in the parties' affidavits in Plaintiff's favor.” Id. (citing Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008)).

         III. Plaintiffs have met their burden to show that the Court may exercise personal jurisdiction over Defendants.

         “The Fourteenth Amendment's Due Process Clause requires that a defendant be subject to a court's personal jurisdiction before a judgment can be rendered against it.” Davis, 2016 WL 9774945, at *3 (citing World-Wide Volkswagen v. Woodson, 444 U.S. 286, 301 (1980)). “To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment.” Id. (quoting Far W. Capital, Inc. v. Towne, 46 F.3d 1071, 1074 (10th Cir. 1995) (internal citation omitted)).

         “In New Mexico, a federal court has personal jurisdiction over a nonresident defendant only to the extent that the state's long-arm statute permits.” Id. (citing Fid. & Cas. Co. v. Phila. Resins Corp., 766 F.2d 440, 442 (10th Cir. 1985), cert. denied, 474 U.S. 1082 (1986)). New Mexico's long-arm statute “‘extends the jurisdictional reach of New Mexico courts as far as constitutionally permissible,' such that jurisdiction is authorized by the long-arm statute only if it is permitted under the Due Process Clause.” Id. (quoting Tercero v. Roman Catholic Diocese, 48 P.3d 50, 54 (N.M. 2002) (internal citation omitted); citing Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir. 2006)). “To satisfy Due Process requirements, the defendant must have (1) sufficient minimum contacts with the forum state (2) such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” McManemy v. Roman Catholic Church of Diocese of Worcester, 2 F.Supp.3d 1188, 1198 (D.N.M. 2013) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal citations omitted)).

         A. Defendants have sufficient minimum contacts with New Mexico.

         “A plaintiff satisfies the ‘minimum contacts' standard by showing that the court may exercise either general or specific jurisdiction over the defendant.” Id. at 1199 (citing Helicopteros Nacionales de Colom., S.A. v. Hall, 466 U.S. 408, 414 (1984)). “Plaintiffs rely on specific jurisdiction as a basis for satisfying their burden . . . .” (Doc. 18 at 12.) “In contrast to general, all-purpose jurisdiction, specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (quotation marks and citation omitted). “[T]o exercise specific jurisdiction over a defendant, (1) the defendant must have ‘minimum contacts' with the forum state such that he ‘should reasonably anticipate being haled into court' there, and (2) jurisdiction must comport with ‘traditional notions of fair play and substantial justice.'” Segovia v. Rodriguez, No. 2:17-cv-00609-BRB-GBW, 2017 WL 4480131, at *2 (D.N.M. Oct. 6, 2017) (quoting Monge v. RG Petro-Mach. (Grp.) Co., 701 F.3d 598, 613 (10th Cir. 2012) (internal quotation omitted)).

         To determine whether a defendant has minimum contacts with the forum state in the tort context, courts consider “whether the nonresident defendant ‘purposefully directed' its activities at the forum state . . . .” Dudnikov, 514 F.3d at 1071 (citations omitted). “[I]n contract cases, meanwhile, [courts] sometimes ask whether the defendant ‘purposefully availed' itself of the privilege of conducting activities or consummating a transaction in the forum state.” Id. (citations omitted). Regardless of context, “the shared aim of [the] ‘purposeful direction' doctrine . . . [is] to ensure that an out-of-state defendant is not bound to appear to account for merely ‘random, fortuitous, or attenuated contacts' with the forum state.” Id. (quoting Burger King v. Rudzewicz, 471 U.S. 462, 475 (1985) (internal quotations omitted) (alteration in original)). The Court must also determine “whether the plaintiff's claim arises out of or results from ‘actions by the defendant himself that create a substantial connection with the forum state.'” OMI, 149 F.3d at 1091 (quoting Asahi Metal Ind. Co. v. Super. Ct. of Cal., 480 U.S. 102, 109 (1987) (internal quotations omitted)).

         Here, Plaintiffs bring claims sounding in tort and in contract. (See Compl.) Under either standard-purposeful direction or purposeful availment-the Court finds that Defendants have minimum contacts with New Mexico sufficient to exercise personal jurisdiction over them.

         Plaintiffs assert that Dr. Rusch purposefully directed her activities at the state because she:

• traveled to New Mexico to meet with Plaintiffs “specifically for the purpose of securing their investment and participation in the cordials business” (Doc. 18 at 13; Compl. ¶ 9);
• “participated in the organization and management of UNC-NM”[3] and “consciously availed [herself] of the advantages of transacting business in ...

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