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NABAS Group, Inc. v. Nanoclear, LLC

United States District Court, D. Maryland

November 20, 2019

NABAS GROUP, INC., et al., Plaintiffs,
NANOCLEAR, LLC, et el. Defendants.


          Paula Xinis United States District Judge

         Pending before the Court is Defendants NanoClear, NABAS H20, LLC, Frederick Alderson, and Steve Gareleck's motion to dismiss for lack of personal jurisdiction. ECF No. 10. The motion is fully briefed, and no hearing is necessary. See Loc. R. 105.6. For the following reasons, Defendants' motion is denied.

         I. Background

         This breach of contract and misappropriation action concerns Plaintiff NABAS Group, Inc.'s (“NGI's”) development of the Nano Air Bubble Aeration System (“NABAS”). ECF No. 1-1 ¶¶ 14, 18, 25. NABAS uses “ultrafine nano bubbles and Hydroxyl Radicals” to clean water without using chemicals or leaving a significant ecological footprint. Id. ¶ 14. In 2018, NGI President and CEO, Benjamin Lee, began looking for business partners to invest in and market NABAS. ECF No. 1-1 ¶¶ 17, 20-23. In August 2018, Defendants Alderson and Gareleck, members of NanoPure, LLC, attended a demonstration of NABAS in Fort Myers, Florida. ECF No. 1-1 ¶ 23; ECF No. 27-1 ¶¶ 2-3. Afterward, Alderson and Gareleck discussed with Lee the possibility of forming a joint venture with NGI. ECF No. 27-1 ¶ 4.

         Two weeks later, Alderson was driving to Florida from New York when bad weather derailed his travel plans. ECF No. 10-2 ¶ 7. Alderson contacted Lee who booked a hotel for Alderson in Gaithersburg, Maryland. Lee met Alderson the next morning to ride with him to South Carolina. ECF No. 27-1 ¶ 5-8; ECF No. 10-2 ¶ 7. As to what transpired during the trip from Maryland to South Carolina, the two gentlemen disagree.

         Lee attests that during the car ride, he and Alderson discussed the terms under which each respective business would form the joint venture involving NABAS. ECF No. 27 ¶¶ 8-10. Specifically, Lee and Alderson spoke with Gareleck by phone about the joint venture's budget, research and development, and such logistics as leasing physical space in Maryland for a manufacturing facility. ECF No. ¶¶ 9-11. Alderson, in contrast, attests that no business was conducted with Lee during his stay in Maryland and that “the only reason [he] interacted with Lee at all within this State was solely to drive him to South Carolina.”[1] ECF No. 10-2 ¶ 7.

         In any case, both sides agree that NGI, NanoClear, and Mustard Seed, LLC (a Maryland company owned by Lee's wife, Elizabeth Lee, a Maryland citizen) eventually memorialized a formal joint venture agreement involving the development and marketing of NABAS (“the Agreement”). ECF No. 1-1 ¶ 26; ECF No. 10-2 ¶¶ 9-10; ECF No. 27-1 ¶ 13; see ECF No. 10-3. Pursuant to the Agreement, the signatories formed NABAS H20, LLC, (“H20”), which would become the “sole and exclusive sales, marketing, distribution, and product assembly agent for NGI” both in and outside of the United States. ECF No. 10-3 at 1. Under the Agreement, the parties stipulated that H20's “primary role” was to “provide assembly or light manufacturing support for the NABAS” technology, and that the “physical location of the Company's assembly location” was to be “in close proximity to NGI's current location in Maryland.” ECF No. 10-3 ¶¶ 4, 8. Further, NGI, also located in Maryland, would provide significant support to H20 by selling NABAS technology as well as managing “all aspects of NABAS intellectual property” to include “ongoing research and development, ” “patent filing, ” and “technical support.” ECF No. 10-3 ¶ 4. In return, H20 would hire “NGI technician personnel” including Lee, and would also sublease its Maryland property to NGI. ECF No. 10-3 at 1, ¶ 8.

         H20 was to be controlled equally by NGI and Mustard Seed on the one hand and NanoClear on the other. Per the Agreement, NanoClear and Mustard Seed would select an equal number of H20's managers, ECF No. 10-3 ¶ 6, and would each possess equal ownership in H20, ECF No. 10-3 ¶ 5. As to funding, NanoClear would provide $250, 000 in “initial capitalization” to H20, which in turn would pay NGI $250, 000 as consideration for the use of NABAS technology. Id.[2]

         In short order, this relationship as memorialized in the Agreement deteriorated. The Complaint avers that Alderson and Gareleck, through NanoClear, entered the Agreement only to steal NABAS technology for their own personal benefit and use. ECF No. 1-1 ¶ 25. In furtherance of this plan, Alderson became H20's sole manager instead of the parties hiring “an equal number of managers selected by both NanoClear and Mustard Seed” as provided in the Agreement. ECF No. 1-1 ¶¶ 31, 35; ECF No. 10-1 at 12. Nor did H20 open its physical facility in Maryland, near NGI. ECF No. 10-4 ¶¶ 6, 8.

         Instead, the Complaint maintains that Alderson and Gareleck began marketing NABAS technology to the Saudi Royal family in contravention of the Agreement. ECF No. 1-1 ¶¶ 51- 52; ECF No. 27-1 ¶¶ 27-28. Accordingly, Plaintiffs brought this suit in the Circuit Court for Montgomery County, Maryland, alleging breach of contract, fraud, unfair competition, and deceptive advertising in violation of the Lanham Act. ECF No. 1-1 ¶¶ 57-166. Defendants noted removal and now move to dismiss the Complaint, arguing that the Court lacks personal jurisdiction over all Defendants. ECF Nos. 1, 10.

         II. Standard of Review

         On motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence. Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003). In deciding whether personal jurisdiction exists, the Court accepts all facts averred in the Complaint as true and most favorably to the plaintiffs. Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 558 (4th Cir. 2014) (quoting Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). The Court may also consider evidence outside the pleadings, construing such evidence in the light most favorably to Plaintiffs and in favor of jurisdiction when possible. All Risks, Ltd. v. Butler, No. GLR-15-3146, 2016 WL 4435477, at *2 (D. Md. Aug. 22, 2016) (internal citations omitted); see, e.g., Wolf v. Richmond Cty. Hosp. Auth., 745 F.2d 904, 908 (4th Cir. 1984).

         III. Discussion

         Defendants seek dismissal solely on the grounds that personal jurisdiction is lacking. Defendants specifically contend that Maryland's long-arm statute does not confer jurisdiction, and even if it had, ...

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