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C.D. Acquisition Holdings, Inc. v. Meinershagen

January 22, 2007

C.D. ACQUISITION HOLDINGS, INC., PLAINTIFF,
v.
ROBERT E. MEINERSHAGEN, DOUGLAS B. BAUMGARTNER, AND, AS TRANSFEREES, HELEN MEINERSHAGEN, WASHBURN ENDOWMENT ASSOCIATION, H & B INVESTMENT, LP, MARGARET BAUMGARTNER, JAS LLC, TECUMSEH PROPERTIES, LP, AND BAUMGARTNER ENTERPRISES, INC., DEFENDANT.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM OPINION

Introduction

Before the Court are several motions: (i) the Renewed Motion to Dismiss for Lack of Personal Jurisdiction (doc. no. 69) filed on behalf of defendants Douglas B. Baumgartner, Margaret Baumgartner, JAS LLC, Tecumseh Properties, LP, and Baumgartner Enterprises, Inc.; (ii) the same defendants' Renewed Motion to Transfer or Dismiss for Improper Venue or to Change Venue (doc. no. 71); and (iii) plaintiff CD Acquisition Holdings, Inc.'s Motion for Partial Summary Judgment (doc. no. 76) based upon discovery permitted by the former District Judge assigned to this case for the limited purpose of resolving the jurisdictional dispute.*fn1

The Complaint

The Complaint alleges the following facts regarding the Baumgartner related defendants.*fn2

Plaintiff CD Acquisition is a Delaware corporation with its principal place of business in Pittsburgh, Pennsylvania. It is a wholly-owned subsidiary of Fisher Scientific International, Inc., a Pittsburgh, Pennsylvania corporation, formed for the sole purpose of facilitating Fisher Scientific's acquisition of Columbia Diagnostics, Inc., a distributor of laboratory supplies to the health care industry. Defendants Robert E. Meinershagen and Douglas B. Baumgartner, along with one other man, were the sole shareholders and owners of Columbia.

On January 21, 1999, CD Acquisition purchased the assets of Columbia pursuant to an Asset Purchase and Sale Agreement between CD Acquisition, Columbia and the three individual shareholders. The Agreement required that any disputes arising from the transaction would be presented to the American Arbitration Association in Pennsylvania, and the signatories agreed to jurisdiction in Pennsylvania courts.

All of the Meinershagen defendants are citizens of New Mexico, with the exception of Washburn Endowment Association, a citizen of Kansas. All of the Baumgartner defendants are citizens of Tennessee. Complaint, ¶¶ 8-12. The Complaint claims federal court jurisdiction on the basis of diversity of citizenship pursuant to 28 U.S.C. § 1332, and claims venue in the Western District of Pennsylvania on the basis of the Agreement and subsequent litigation in this district which resulted in the judgment entered by the Court of Common Pleas of Allegheny County that is the focus of this lawsuit.

Shortly after consummation of the Agreement [in fact, the day after], plaintiff became aware that Columbia was in substantial breach of contract with two government agencies, the Department of Veteran's Affairs and the General Services Administration, involving fake invoices, and plaintiff alleged that by failing to disclose the potential liability from these contract violations, Columbia and the prior owners were in material breach of their Agreement with CD Acquisition. Complaint, ¶ 2, 21-22. CD Acquisition notified Columbia and the prior owners immediately.

To make a long story short, the starting point of this lawsuit was probably on December 1, 2003, when, following hearings in Pittsburgh in August 2003, AAA Arbitrator Roslyn M. Litman issued an award in favor of CD Acquisition against Columbia and its prior owners, jointly and severally, in the amount of $1,366,984.60. Complaint, ¶¶ 32-34. When defendants did not voluntarily pay, CD Acquisition entered the AAA award as a judgment in the Court of Common Pleas of Allegheny County on April 19, 2004, and when defendants still would not pay, CD Acquisition instituted this lawsuit claiming that Baumgartner and Meinsershagen had fraudulently transferred virtually all of their assets to the named transferees in the suit in order to avoid the judgment that had been entered in the Court of Common Pleas of Allegheny County, Pennsylvania. Complaint, ¶¶ 35-42.

Count I states claims against the settling Meinershagen defendants under the Pennsylvania Uniform Fraudulent Transfers Act ("PUFTA"), 12 Pa.C.S. § 5101(b). Complaint, ¶¶ 44-59. Count II states PUFTA claims against the remaining Baumgartner defendants. Complaint, ¶¶ 60-75. Specifically, the Complaint alleges that Douglas Baumgartner transferred virtually all of his assets (rendering him insolvent) following notification of CD Acquisition's claims against him to his wife, Margaret, and to the Tennessee business entities JAS, Tecumseh, and BEI, not in exchange for assets of reasonably equivalent value. Complaint, ¶¶ 68-71. The Complaint further alleges that the transfers were intended to, and in fact did, hinder, delay and avoid the judgment entered in the Court of Common Pleas of Allegheny County, Pennsylvania, in violation of the PUFTA, 12 Pa.C.S. §§ 5104 and 5105, and that they should be voided under section 5107 of that Act. Complaint, ¶¶ 72-75. The Complaint seeks equitable relief, including setting aside the allegedly fraudulent transfers, the appointment of a receiver to take charge of Douglas Baumgartner's property, authorization for CD Acquisition to attach, levy and/or execute on the transferred property to pay what remains unpaid on the judgment, fees and costs.

Renewed Motion to Dismiss for Lack of Personal Jurisdiction.

In their renewed motion to dismiss for lack of personal jurisdiction, Douglas Baumgartner's transferees assert that this Court has no jurisdiction to entertain plaintiff's claims against them because they have had no forum-related activities in connection with the cause of action, and lack the minimum contacts required before a state may, consistent with due process, exercise jurisdiction over citizens of other states. The Baumgartner business entities also insist that they are separate, independent corporate "persons" and that the forum-related activities of an officer or employee (namely, Douglas Baumgartner) cannot be imputed to the business entities.

Rule 12(b)(2) Standards

In general. Once a defendant has raised a lack of personal jurisdiction defense, the burden shifts to the plaintiff to prove that jurisdiction exists in the forum state. IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 257 (3d Cir. 1998); Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996). A court must construe all facts in the light most favorable to the plaintiff when determining ...


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