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Payments IP PTY Ltd. v. B52 Media LLC

United States District Court, D. Maryland

February 23, 2018

PAYMENTS IP PTY LTD., Plaintiff,
v.
B52 MEDIA LLC et al., Defendants

          MEMORANDUM OPINION

          Ellen Lipton Hollander United States District Judge.

         On February 10, 2017, Payments IP Pty. Ltd. (“Payments IP”), an Australian company, sued B52 Media, LLC (“B52”) and Jonathan W. Bierer, as personal representative of the Estate of Lonnie Borck (collectively, the “B52 Defendants”). ECF 1. Borck had been the owner of B52. Id. ¶ 5. The suit is rooted in a dispute as to the ownership of the domain name “Funding.com” (the “Domain”).

         Payments IP alleged that, in the summer of 2016, it contracted with the B52 Defendants to purchase the Domain. Id. ¶¶ 15-25. In December of 2016, however, Payments IP noticed that the Domain had been placed on an “administrative freeze” by the domain registrar, eNom.com, because the Domain was the subject of litigation. Id. ¶ 26. It was at that time that Payments IP discovered that a third party, Suraj Kumar Rajwani, was asserting ownership of Funding.com, and had filed suit in the Superior Court of California, County of San Francisco, against the B52 Defendants and three other parties related to the Domain's registration. Id; see Rajwani v. B52 Media LLC et al, Case CGC-16-554684 (Cal. Super. Ct.) (the “California case”).

         Payments IP filed for leave to intervene in the California case on February 3, 2017. The California court granted that motion on February 7, 2017. See ECF 43-9 at 4 (California case docket). Three days later, on February 10, 2017, Payments IP filed this suit, alleging six causes of action against the B52 Defendants. ECF 1. Four days after that, Payments IP filed its complaint in intervention in the California state court, asserting claims very similar to those alleged in this Court. See ECF 43-7 (Complaint in Intervention in the California case).

         In particular, in the Maryland case, Payments IP's Complaint sought a declaratory judgment as to its ownership of the Domain. ECF 1 at 7-8. In addition, plaintiff alleged breach of contract; fraud and deceit; rescission and restitution; conversion; and unjust enrichment. Id. at 8-14. In May 2017, Payments IP filed an Amended Complaint, adding Mr. Rajwani as a defendant as to the declaratory judgment claim only. ECF 31.

         Jurisdiction is alleged on the basis of diversity of citizenship. Id. ¶¶ 11-15. Plaintiff alleges that B52 is a Maryland limited liability company with its principal office in Maryland; Mr. Bierer is a citizen of Maryland; Mr. Borck had lived in Maryland and his Estate is administered in Maryland; Payments IP is a foreign company; and Mr. Rajwani is a citizen of California. Id. ¶¶ 11-14. The amount in controversy allegedly exceeds $75, 000. Id. ¶ 14.

         Four motions are pending. With regard to ECF 1, the B52 Defendants filed a motion to stay this case, pending the resolution of the California case. ECF 13 (“First Motion”). Payments IP opposed the First Motion. ECF 18. The B52 Defendants replied. ECF 22. Payments IP subsequently sought leave to file a surreply (ECF 23, “Motion for Surreply”), which the B52 Defendants opposed. ECF 26.

         After plaintiff filed the Amended Complaint, the B52 Defendants renewed their motion to stay. ECF 34 (“Second Motion”). Payments IP opposes the Second Motion. ECF 40. Mr. Rajwani also filed a motion to dismiss or stay. ECF 43. His motion is supported by a memorandum of law (ECF 43-1) (collectively, the “Rajwani Motion”), and several exhibits. Payments IP opposes the Rajwani Motion. ECF 51. Rawjani has replied. ECF 54 (“Reply”).

         On December 6, 2017, counsel for Payments IP informed the Court that the California case had been removed to federal court. ECF 69; see Rajwani v. B52 Media LLC et al., Case 3:17-cv-06848-VC (N.D. Cal.). Mr. Rajwani moved to remand the case to state court, see Case 3:17-cv-06848-VC at ECF 13, and the motion to remand was granted on February 9, 2017. See Id. at ECF 22. Counsel for Payments IP informed the Court of the remand on February 14, 2018. ECF 70.

         The drafting of this Memorandum Opinion was almost completed when, on February 16, 2018, B52 filed a Suggestion of Bankruptcy. ECF 71. Pursuant to 11 U.S.C. § 362, “all legal proceedings against Defendant B52 are automatically stayed.” Id. B52's bankruptcy filing, attached to the Suggestion of Bankruptcy as an exhibit, lists as creditors every other party in this case: Payments IP; Suraj Kumar Rajwani; and Jonathan Bierer. ECF 71-1 at 5. Although the case is stayed as to B52, both B52 and Bierer filed joint motions. Therefore, I shall refer to them collectively in the discussion of their submissions.

         No hearing is necessary to resolve the pending motions. See Local Rule 105.6. As indicated, this case must be stayed as to B52. And, as discussed, infra, a stay of the case is appropriate.

         For the reasons that follow, I shall GRANT the Rajwani Motion in part and DENY it in part. This Court is satisfied that defendants have made a prima facie showing of personal jurisdiction over Mr. Rajwani. However, the declaratory judgment count shall be stayed as to Mr. Rajwani and all other claimants, so long as the California court retains jurisdiction over the Domain. I shall GRANT the Second Motion as to Bierer, in his capacity as representative of the Estate of Lonnie Borck, pending resolution of the California case. And, I shall DENY the Motion for Surreply and DENY the First Motion, as moot.

         I. Rajwani Motion

         Mr. Rajwani has moved to dismiss the Amended Complaint under Rule 12(b)(1) and 12(b)(2), asserting that this Court lacks jurisdiction over the Domain; that this Court lacks personal jurisdiction over him; or, in the alternative, that the case should be stayed pending the resolution of the California case. ECF 43. He also claims that he moves to dismiss under Rule 12(b)(6) (id. at 1), but his memorandum does not address the alleged failure of the Amended Complaint to state a claim. Because the motion to dismiss for lack of personal jurisdiction would, if granted, remove him from the case, I shall consider it first.

         A. Motion to Dismiss for Lack of Personal Jurisdiction

         Mr. Rajwani's motion to dismiss for lack of personal jurisdiction is predicated on Fed.R.Civ.P. 12(b)(2). ECF 43. “[A] Rule 12(b)(2) challenge raises an issue for the court to resolve, generally as a preliminary matter.” Grayson v. Anderson, 816 F.3d 262, 267 (4th Cir. 2016). Under Rule 12(b)(2), the burden is “on the plaintiff ultimately to prove the existence of a ground for jurisdiction by a preponderance of the evidence.” Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989); see Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 558 (4th Cir. 2014).

         “If the existence of jurisdiction turns on disputed factual questions the court may resolve the [jurisdictional] challenge on the basis of a separate evidentiary hearing, or may defer ruling pending receipt at trial of evidence relevant to the jurisdictional question.” Combs, 886 F.2d at 676. A court may also, in its discretion, permit discovery as to the jurisdictional issue. See Mylan Laboratories, Inc. v. Akzo, N.V., 2 F.3d 56, 64 (4th Cir. 1993). However, neither discovery nor an evidentiary hearing is required to resolve a motion under Rule 12(b)(2). See generally 5B C. Wright & A. Miller, Federal Practice & Procedure § 1351 (3d ed. 2004, 2011 Supp.). Rather, the district court may address the question of personal jurisdiction as a preliminary matter, ruling solely on the basis of motion papers, supporting legal memoranda, affidavits, and the allegations in the complaint. Consulting Engineers Corp. v. Geometric Ltd., 561 F.3d 273, 276 (4th Cir. 2009).

         In that circumstance, the plaintiff need only make “a prima facie showing of a sufficient jurisdictional basis to survive the jurisdictional challenge.” Id.; see Grayson, 816 F.3d at 268. Of import here, “‘[a] threshold prima facie finding that personal jurisdiction is proper does not finally settle the issue; plaintiff must eventually prove the existence of personal jurisdiction by a preponderance of the evidence, either at trial or at a pretrial evidentiary hearing.'” New Wellington Fin. Corp. v. Flagship Resort Development Corp., 416 F.3d 290, 294 n.5 (4th Cir. 2005) (citation omitted).

         “In deciding whether the plaintiff has made the requisite showing, the court must take all disputed facts and reasonable inferences in favor of the plaintiff.” Carefirst of Maryland, Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003). But, “district courts are not required to look solely to the plaintiff's proof in drawing those inferences.” Mylan Laboratories, 2 F.3d at 62.

         Fed. R. Civ. P. 4(k)(1) authorizes a federal district court to exercise personal jurisdiction over a defendant in accordance with the law of the state in which the district court is located. Carefirst of Maryland, 334 F.3d at 396. Therefore, “to 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.” Id.

         1. Maryland's Long-Arm Statute

         Maryland's long-arm statute is codified at Md. Code (2013 Repl. Vol., 2017 Supp.), § 6-103(b) of the Courts & Judicial Proceedings Article (“C.J.”). It authorizes “personal jurisdiction over a person, who directly or by an agent, ” id.:

(1) Transacts any business or performs any character of work or service in the State;
(2) Contracts to supply goods, food, services, or manufactured products in the State;
(3) Causes tortious injury in the State by an act or omission in the State;
(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, services, or manufactured products used or consumed in the State;
(5) Has an interest in, uses, or possesses real property in the State; or
(6) Contracts to insure or act as surety for, or on, any person, property, risk, contract, obligation, or agreement located, executed, or to be performed within the State at the time the contract is made, unless the parties otherwise provide in writing.

         When interpreting the reach of Maryland's long-arm statute, a federal district court is bound by the interpretations of the Maryland Court of Appeals. See Snyder v. Hampton Indus., Inc., 521 F.Supp. 130 (D. Md. 1981), aff'd, 758 F.2d 649 (4th Cir. 1985); accord Mylan Laboratories, 2 F.3d at 61. Regarding the interaction between the two conditions for personal jurisdiction, the Maryland Court of Appeals has stated: “Because we have consistently held that the reach of the long arm statute is coextensive with the limits of personal jurisdiction delineated under the due process clause of the Federal Constitution, our statutory inquiry merges with our constitutional examination.” Beyond Systems, Inc. v. Realtime Gaming Holding Co., 388 Md. 1, 15, 878 A.2d 567, 576 (2005) (citing Mohamed v. Michael, 279 Md. 653, 657, 370 A.2d 551, 553 (1977)).

         In Mackey v. Compass Marketing, Inc., 391 Md. 117, 141 n.5, 892 A.2d 479, 493 n.5 (2006), the Maryland Court of Appeals clarified that it “did not, of course, mean by this that it is now permissible to simply dispense with analysis under the long-arm statute.” Rather, courts must still engage in the two-step analysis: “First, we consider whether the requirements of Maryland's long-arm statute are satisfied.” CSR, Ltd. v. Taylor, 411 Md. 457, 472, 983 A.2d 492, 501 (2009) (citations omitted). “Second, we consider whether the exercise of personal jurisdiction comports with the requirements imposed by the Due Process Clause of the Fourteenth Amendment.” Id.

         In its Amended Complaint, Payments IP alleges that this Court has personal jurisdiction over Mr. Rajwani because he “purposefully availed himself of the privilege of conducting activities in Maryland by directly contacting and thereafter contracting” with the B52 Defendants, and that Payments IP's claim arises out of these events. ECF 31, ¶ 13. Furthermore, Payments IP alleges that “Mr. Rajwani's actions have caused and continue to cause tortious injury in ...


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