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Private Reserve Financial, LLC v. Borenstein

United States District Court, W.D. Washington, Tacoma

May 28, 2014



RONALD B. LEIGHTON, District Judge.

THIS MATTER is before the Court on Abraham Borenstein's motion to dismiss for lack of personal jurisdiction. [Dkt. 38]. Borenstein is a New Jersey attorney. Plaintiff PRF sued him, his law firm (Abraham Borenstein & Associates, P.C.), and a variety of other defendants for RICO violations after an investment deal went south, for reasons that remain unclear. Borenstein argues that he has had virtually no contact with this state and that the Court does not have personal jurisdiction over him or his law firm. PRF's claim of personal jurisdiction is based primarily on a RICO-specific expansion of personal jurisdiction to include out of jurisdiction entities who acted in concert with ones over which the court does have jurisdiction. But that rule does not apply where, as here, there are no other defendants in the case. PRF cannot meet its burden of demonstrating jurisdiction, and its claims against Borenstein are dismissed for lack of personal jurisdiction.


PRF claims that it participated in what turned out to be a fraudulent investment scheme. Borenstein's involvement was limited (even in the Plaintiff's version of the facts) to accepting a phone call from Washington and drafting an escrow agreement in New Jersey. When the money was lost, PRF sued most of the individuals involved, including Borenstein. It has since dismissed the other defendants, leaving only its RICO, fraud, and malpractice claims against Borenstein. [Dkt. 25].

Borenstein challenges this court's personal jurisdiction over him. He does not have an office, employee, or any other presence in the state of Washington, and never travelled here in connection with the transaction. PRF generally alleges that there were ongoing and continuous communications between it, Borenstein and the other various defendants. As for specific contact, PRF's claim of personal jurisdiction over Borenstein appears to arise from a single call that its president, Alisha Mazur, made to him in New Jersey to check on since-dismissed defendant Marino's background. Borenstein denies that this communication ever took place.

Borenstein claims that this court lacks either specific or general personal jurisdiction over him. PRF argues that personal jurisdiction exists under RICO's nationwide service provision, but also that personal jurisdiction exists independent of that statute. Because PRF relies on an inaccurate application of RICO, and because this Court cannot support exercise of either general or personal jurisdiction, Borenstein's motion to dismiss is GRANTED.


A. 12(b)(2) Personal Jurisdiction Standard

The Court must dismiss an action if it determines that it lacks personal jurisdiction over a defendant. Fed.R.Civ.P. 12(b)(2). Jurisdiction is a threshold issue, and courts must address jurisdictional challenges before considering the merits of a case. Steel co. v. Citizens for a Better Env't, 523 U.S. 83, 93-94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (rejecting approach by various lower courts in assuming jurisdiction for purpose of deciding on the merits). Unlike a Rule 12(b)(6) motion, a Rule 12(b)(2) motion to dismiss for lack of subject matter jurisdiction enables a court to consider "affidavits or any other evidence properly before the court, " including material extrinsic to the pleadings. Doe v. Unocal Corp., 248 F.3de 915, 922 (9th Cir. 2001).

In the context of a challenge to the Court's jurisdiction, a plaintiff's factual allegations are construed in the light most favorable to him. Plaintiff is required only to make a prima facie showing of personal jurisdiction. See Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1082, 1087 (Fed. Cir. 2003).

Washington's long-arm statute (RCW 4.28.185) represents legislative intent to assert personal jurisdiction over a foreign entity to the full extent permitted by due process. Byron Nelson Co. v. Orchard Mgmt. Corp., 95 Wn.App. 462, 465 (1999). "[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

In Washington, courts use three criteria to determine specific jurisdiction: (1) the nonresident defendant or foreign corporation must purposefully do some act or consummate some transaction in the forum state; (2) the cause of action must arise from, or be connected with, such act or transaction; and (3) the assumption of jurisdiction by the forum state must not offend traditional notions of fair play and substantial justice, consideration being given to the quality, nature, and extent of the activity in the forum state, the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded the respective parties, and the basic equities of the situation. Perry v. Hamilton, 51 Wn.App. 936, 939 (1988); see also Freestone Capital Partners, L.P. v. MKA Real Estate Opportunity Fund, 155 Wash.App. 643, 652-53 (2010) (quoting Shute v. Carnival Cruise Lines, 113 Wash.2d 763, 767 (1989)).

1. Purposeful Direction

To determine whether it has personal jurisdiction to hear tort claims, the Court applies the purposeful direction, Calder -effects test. Calder v. Jones, 465 U.S. 783 (1983); Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010). To satisfy the purposeful direction test, the plaintiff must allege that the defendant "(1) committed an intentional act, (2) expressly aimed at the ...

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