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Stifel, Nicolaus & Co., Inc. v. Firemoon Energy, LLC

United States District Court, D. Maryland

October 28, 2016

STIFEL, NICOLAUS & COMPANY, INC., Plaintiff,
v.
FIREMOON ENERGY, LLC, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          GEORGE J. HAZEL United States District Judge

         Pending before the Court are Plaintiff Stifel, Nicolaus & Company. Inc.'s (hereinafter. Plaintiff or "Stifel") Motions for Leave to Conduct Limited Jurisdictional Discovery of Defendants Longs Peak Resources. LLC ("LPR") and Vertex Energy Partners. LLC ("Vertex"). ECF Nos. 24 and 39. A hearing on these motions was held on October 24, 2016. See Local Rule 105.6 (D. Md.). for the reasons that follow. Plaintiffs Motion for Leave to Conduct Limited Jurisdictional Discovery of Defendant LPR is denied and Plaintiff's Motion for Leave to Conduct Limited Jurisdictional Discovery of Defendant Vertex is granted.

         I. BACKGROUND

         In 2014, Stifel. an investment banking firm, was engaged, through its Director. James Lee. by Defendant Firemoon Energy LLC ("Firemoon"), to obtain financing for Firemoon's ventures in the oil and gas industry. ECF No. 9 ¶¶ 8-11: ECF No. 9-1. According to Plaintiff. Stifel introduced Firemoon and its owners to Juniper Capital Advisors ("Juniper"), a potential investor. ECF No. 9 ¶ 22. A little over a year later, two of the equity owners of Firemoon. Everett Toombs and David Clarkson. created a new entity called Vertex. Id. ¶ 28. Vertex was allegedly formed for the purpose of investing in various oil and gas properties, through a new entity to be formed and owned jointly by Vertex and Juniper. Id. ¶ 32. This new entity would be funded with $65 million in equity capital from Juniper. Id.

         Defendant LPR was added to the case in the Amended Complaint. ECF No. 9. Plaintiff alleges that LPR was the Vertex-Juniper joint venture envisioned when Vertex was formed and is the recipient of the $65 million in financing from Juniper. Id. ¶ 39. Plaintiff now claims that, despite successfully obtaining the financing based on Stifel's connections and efforts. Defendants never paid Plaintiff for their services. Id. ¶¶ 49-52.

         Defendants LPR and Vertex have each filed a Motion to Dismiss in this case asking, in part, for the case to be dismissed for lack of personal jurisdiction. ECF Nos. 18 and 32. Prior to responding to the Motions. Plaintiff has requested permission to conduct limited jurisdictional discovery relating to the Court's personal jurisdiction over LPR and Vertex.

         II. DISCUSSION

         A. Personal Jurisdiction

         "[T]o assert personal jurisdiction over a nonresident defendant, two conditions must be satisfied: (1) the exercise of jurisdiction must be authorized under the state's long-arm statute: and (2) the exercise of jurisdiction must comport with the due process requirements of the Fourteenth Amendment." Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers. Inc., 334 F.3d 390. 397 (4th Cir. 2003). Plaintiff relies upon section (b)(1) of Maryland's Long-Arm Statute as the basis for the Court's personal jurisdiction over Defendants. That section provides, in relevant part, that "[a] court may exercise personal jurisdiction over a person, who directly or by an agent, [t]ransacts any business or performs any character of work or service in the State." Md. Code. Cts. & Jud. Proc. § 6-103(b)(1). If Plaintiff can establish that the Maryland Long-Arm statute is satisfied, the Court then considers whether the exercise of jurisdiction over Defendants would violate the Due Process Clause. This inquiry may proceed under a theory of general or specific jurisdiction.

         Mere. Plaintiff asserts that the Court has specific jurisdiction over Defendants, which permits a court to exercise jurisdiction over a non-resident defendant when a cause of action arises out of the defendant's minimum contacts with the forum. See ECF No. 24 at 11; ECF No. 39 at 16.[1] There are three factors that Courts have reviewed to guide decision making regarding a showing of specific jurisdiction: "(1) whether the non-forum defendant purposely directed its activities toward residents of the forum state or purposely availed itself of the privilege of conducting activities therein; (2) whether plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and (3) whether the forum's exercise of personal jurisdiction in the case is reasonable, i.e. is consistent with 'fair play and substantial justice.'" Pharmabiodevice Consulting. LLC v. Evans. No. GJH-14-00732. 2014 WL 3741692. at *7 (D. Md. July 28. 2014)(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462. 477-78 (1985)). It is the Plaintiffs burden to prove personal jurisdiction by a preponderance of the evidence. Combs v. Bakker, 886 F.2d 673. 676 (4th Cir. 1989).

         B. Jurisdictional

         Discovery The Court may. as Plaintiff has requested, permit limited discovery on the issue of personal jurisdiction. See Mylan Labs., Inc. v. Akzo. N. V., 2 F.3d 56, 64 (4lh Cir. 1993). The decision to permit jurisdictional discovery is within the discretion of the District Court. See e.g. Base Metal Trading. Ltd. v. OJSC "Novokuznetsk Aluminum Factory", 283 F.3d 208, 216 n.3 (4th Cir. 2002).

         In order to demonstrate that they are entitled to jurisdictional discovery. Plaintiff must, as a threshold matter, make assertions regarding Defendants" contact with the forum state that are more than speculative or conclusory. See Carefirst of Maryland, Inc. v. Careftrst Pregnancy Centers. Inc.. 334 F.3d 390. 402- 03 (4th Cir. 2003) ("'When a plaintiff offers only speculation or conclusory assertions about contacts with a forum state, a court is within its discretion in denying jurisdictional discovery.'*); see also ALS Scan. Inc. v. Digital Serv. Consultants. Inc.. 293 F.3d 707. 716 n 3 (4th Cir. 2002). Additionally. Plaintiff must make a further, concrete proffer of the facts they wish to ascertain and a showing of how those facts would alter the personal jurisdiction analysis. See ALS Scan. Inc., 293 F.3d at 716 n. 3 (upholding denial of jurisdictional discovery where "ALS Scan has failed...to proffer any further facts that it could demonstrate that would be material to the limited jurisdictional ruling.").

         Here, in regards to Defendant Vertex. Plaintiff asserts that Vertex's affiliation with Firemoon establishes jurisdiction over Vertex: specifically, that the contractual provision through which Firemoon consented to jurisdiction applies to Vertex[2] and that the contacts of Firemoon's agents with Stifel. are in effect contacts made by Vertex. ECF No. 39 at 2. In support of this argument. Plaintiff points to an email sent by Clarkson to Stifel in Bcthesda, Maryland from what appears to be a Vertex email account, suggesting contact by Vertex with Stifel in this jurisdiction. See, e.g., ECF No. 39-4 at 3. Toombs, via his Firemoon email account, was also included by Clarkson on the same above-referenced email chain, raising additional questions about the level of affiliation, if any, between the two corporations. Id. Plaintiff proffers that discovery may reveal further information regarding the formation of Vertex, its affiliation with Firemoon and its contact with Stifel ...


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