United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO
DISMISS AND MOTION TO TRANSFER
Dennis Saylor IV United States District Judge
an action arising out of a failed business arrangement
concerning the development of farmland in Arizona. Plaintiff
Boston Post Partners II, LLP ("BPP") has filed a
nine-count complaint against defendants Michael Paskett; Todd
Hines; Charles Newman; Nopal Cactus Farms, LLC; and Golden
Sands Partnership alleging, among other things, breach of
contract and fraud.
have filed three sets of motions, all but one concerning
personal jurisdiction or venue. Defendant Paskett has moved
to dismiss the entire action for improper venue under Fed R.
Civ. P. 12(b)(3), or, in the alternative, to transfer the
case to the District of Arizona under 28 U.S.C. §
1404(a). He has also moved to dismiss Count Six under
Fed.R.Civ.P. 12(b)(6) for failure to state a claim. Defendant
Hines has moved to dismiss the entire action for lack of
personal jurisdiction under Fed.R.Civ.P. 12(b)(2) and
improper venue under Fed.R.Civ.P. 12(b)(3), or, in the
alternative, to transfer the case pursuant to § 1404(a).
Defendants Newman, Nopal, and Golden Sands have moved to
dismiss the entire action for lack of personal jurisdiction
under Fed.R.Civ.P. 12(b)(2).
following reasons, the Court will grant Paskett's motion
to dismiss Count Six; transfer the matter to the District of
Arizona under 28 U.S.C. § 1404(a); and deny the motions
to dismiss for lack of personal jurisdiction or improper
venue as moot.
Boston Post Partners II, LLP ("BPP") is a limited
liability company registered in Delaware. (Pl. Opp.
All of its members are residents of Massachusetts.
Michael Paskett resides in Idaho, defendant Todd Hines
resides in the state of Washington, and defendant Charles
Newman resides in Arizona. (Id. ¶¶ 3-5).
Defendant Nopal Cactus Farms, LLC is a limited liability
company, apparently organized under the laws of Arizona.
(Id. ¶ 8). Defendant Golden Sands Partnership is a
partnership organized under the laws of Arizona, where it has
its principal place of business. (Id. ¶ 9).
Defendant Newman is the general partner of Golden Sands.
(Id.). Each member of Nopal and each partner of
Golden Sands resides in Arizona. (Id. ¶¶
8-9). It appears that Newman controls Nopal and Golden Sands.
beginning of 2015, Nopal owned 160 acres of farmland in
Maricopa County, Arizona. (Id. ¶ 15). Arizona
homestead rights provided Nopal the opportunity to lease
surrounding state-owned land, at a fixed rate, for use as
farmland. (Id. ¶ 16). Golden Sands exercised
that right, on behalf of Nopal, leasing an additional 3, 502
acres of state-owned land (the "Leasehold Lands").
(Id. ¶17). Nopal also had the right, again due
to Arizona homestead rights, to lease an additional 12, 000
acres of surrounding state-owned land (the "Additional
Leasehold Lands"). (Id. ¶
to the complaint, Paskett and Hines own and control an entity
called GSJV. (Id. ¶ 23). On February 13,
2015, GSJV contracted to purchase Nopal's 160 acres and
to assume Golden Sands's lease for the Leasehold Lands
for $10, 270, 000. (Id. ¶ 23). Hines purportedly
made a "good faith payment" of $350, 000 on behalf
of GSJV. (Id.). According to the complaint, the
closing date for the transaction was set for April 30, 2015.
(Id. ¶ 23).
and Hines then "contacted BPP, with whom both had prior
business dealings, to solicit its involvement to raise
capital to purchase and lease the Nopal Lands, Leasehold
Lands, and Additional Leasehold Lands and to develop the
lands for agriculture." (Id. ¶ 24).
February 23, 2015, Paskett (as "representative" of
GSJV) executed a Letter Agreement with BPP. (Pl. Opp. Ex.
The Letter Agreement defined "GSJV" as
"Michael Paskett, John Boley, & Doug Larsen."
(Id.). It provided that "BPP will identify and
source third party capital on an exclusive basis for GSJV for
the purpose of acquiring and developing farmland in Arizona .
. . starting with the Wilcox and Golden Sands
properties." (Id.). An existing Massachusetts
corporation would become the "Acquisition Vehicle";
the Acquisition Vehicle would be owned by members of GSJV and
BPP. (Id.). The Acquisition Vehicle would "make
best efforts to acquire via merger the assets of the Wilcox
property and the Golden Sands property." (Id.).
Although the Letter Agreement is not entirely clear, it
appears that GSJV and BPP would share equally in any equity
of the Acquisition Vehicle that was not held by third-party
capital investors. (See id.).
agreement stated that its terms were "enforceable"
in Massachusetts and "subject to the laws of
Massachusetts." (Id.). The agreement further
provided that it "shall continue for  days after the
date of execution" (that is, until May 10, 2015) and
"shall terminate" unless both parties extend the
agreement in writing or the closing date of the property
acquisition is extended. (Id.; Am. Compl. ¶
did not sign the Letter Agreement and was not mentioned in
it. However, according to the complaint, Paskett, "on
behalf of [ ] Hines, orally discussed with BPP that [ ] Hines
would participate in the partnership and joint venture."
(Id. ¶ 30). It alleges that "[u]pon
information and belief, defendants Paskett and Hines and
Boley and Larsen agreed that defendant Hines would be an
equal partner with defendant Paskett and that Boley and
Larsen would not be partners" and that Hines "was
recognized as a fully active participant in the partnership
and joint venture by all parties." (Id. ¶
30). According to the complaint, "Hines did not want his
name listed on the Agreement because he was in the process of
a divorce." (Id.).The Letter Agreement does not
contain an integration clause.
to the complaint, over the following months, BPP engaged
experts and Arizona state regulators, and developed a plan
for potential investors that detailed the homestead rights,
water rights, farming potential, and the potential demand for
agricultural products. (Id. ¶ 32). In addition,
it developed marketing materials and began meeting with
investors, and "worked to raise $25 million to $28
million in capital, " which was "sufficient"
to make the purchase and develop the property. (Id.
¶ 38). BPP projected that the Arizona land could be
developed and sold for up to $175 million in the next three
to five years, and it estimated it would receive up to $30
million as a result. (Id.).
to the complaint, throughout this period, Paskett, Hines, and
Newman had "many communications with BPP in
Massachusetts by telephone, text message, and email on their
own behalf and on behalf of entities that they owned and/or
controlled." (Id. ¶ 13).
March 26, 2015, the Stahl Hutterian Brethren, a nonprofit
apostolic corporation, contacted Paskett and offered him $550
per acre per year, for a term of six years, to lease the
lands and leaseholds GSJV had agreed to purchase from Nopal
and Golden Sands. (Id. ¶¶ 11, 43). Paskett
told BPP about the offer. (Id. ¶ 43). Hines
appears to have been aware of the offer, as well.
(Id. ¶ 46).
told Paskett that he would prefer to lease the Nopal-owned
property, rather than sell it. (Id.). Paskett
informed BPP of Newman's preference in an e-mail dated
April 13, 2015. (Id.). In the same e-mail, somewhat
ambiguously, Paskett told BPP:
This is a crazy turn of events I realize. Bear with me
though. I'm going to close it. Then we can run down the
road together without worry.
(Id.). According to the complaint, Paskett
"continued for the following weeks to make similar
representations - that there would be a closing on the land,
BPP would still be involved after the closing, and BPP would
be needed to refinance the balance sheet at closing with [$25
million]." (Id.). It further alleges that
"[b]ased on those representations, BPP continued to work
diligently to find an investor." (Id.).
fact, however, according to the complaint, "Paskett,
Hines, and Newman were conspiring against BPP to exclude BPP
from the deal for their own benefit." (Id.
¶ 49). On April 13, Paskett registered FTW, LLC as a
limited liability company in Arizona. (Id. ¶
50).Two weeks later, on April 29, defendants
Nopal and Golden Sands signed closing documents transferring
the Arizona land and leaseholds to FTW. (Id. ¶
53). At the same time, FTW's operating agreement was
finalized. (Id. ¶ 54). According to the
complaint, Paskett, Hines, and Newman "received a
greater share of FTW than they would have for any proposal
made with BPP, " and "[t]hey were able to
accomplish this only by excluding BPP from the
transaction." (Id. ¶ 56). Paskett
allegedly "continued the ruse that BPP would be involved
in a second stage of the transaction, " and thus
"BPP continued to work to find an arrangement for
further investment" until the end of June 2015.
(Id. ¶¶ 57-59).
summary, BPP alleges that "[d]efendants Newman, Paskett,
and Hines, acting through entities that they controlled,
implemented [a] scheme to exclude BPP from the
transactions." (Id. ¶ 52).
filed the original complaint in this case on November 10,
2015. It asserts nine claims: breach of
fiduciary duty against Paskett, Hines, Newman, Nopal, and
Golden Sands (Count One); breach of contract against Paskett
(Count Two); breach of contract against Hines (Count Three);
breach of the implied covenant of good faith and fair dealing
against Paskett (Count Four); breach of the implied covenant
of good faith and fair dealing against Hines (Count Five);
violation of Mass. Gen. Laws ch. 93A against Paskett (Count
Six); civil conspiracy against Paskett, Hines, Newman, Nopal,
and Golden Sands (Count Seven); unjust enrichment against
Paskett and Hines (Count Eight); and fraud against Paskett
(Count Nine). It seeks, among other relief, money damages, a
constructive trust "over the assets of BPP held by
Defendants, " and pre-judgment attachment of assets of
the defendants. (Am. Compl. at 7).
Paskett has moved to dismiss Count Six under Fed.R.Civ.P.
12(b)(6), and has also moved to dismiss the entire action for
improper venue under to Fed R. Civ. P. 12(b)(3), or to
transfer the case to the District of Arizona under 28 U.S.C.
§ 1404(a). Defendant Hines has moved to dismiss the
entire action for lack of personal jurisdiction under
Fed.R.Civ.P. 12(b)(2) and improper venue under Fed.R.Civ.P.
12(b)(3), or, in the alternative, to transfer the case to
Arizona pursuant to § 1404(a). Defendants Newman, Nopal
and Golden Sands have moved to dismiss the entire action for
lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2).
Mass. Gen. Laws ch. 93A (Count Six)
has moved to dismiss Count Six of the complaint, which
asserts a claim under Mass. Gen. Laws ch. 93A for unfair and
deceptive trade practices. Paskett is the only defendant
named in Count Six.
Supreme Judicial Court has construed Chapter 93A as applying
to actions that arise "between discrete, independent
business entities, " but not to transactions between
joint venturers or fiduciaries within a single company.
Szalla v. Locke, 421 Mass. 448, 451 (1995); see
also Zimmerman v. Bogoff, 402 Mass. 650, 662 (1988)
(dispute between owners of a close corporation held to be
"principally private in nature, " and therefore did
"not fall within the purview of" Chapter 93A);
Riseman v. Orion Research, Inc., 394 Mass. 311,
313-14 (1985) (Chapter 93A does not apply to disputes between
corporate shareholders and the corporation concerning the
internal governance of the corporation).
complaint expressly alleges that "Defendant Paskett and
BPP entered into a partnership and joint venture, which they
memorialized in [the Letter Agreement] . . . ." (Am.
Compl. ¶ 25). The substance of BPP's claim against
Paskett is that he failed to follow through on his
obligations under the joint venture agreement. Indeed, Count
One alleges a breach of fiduciary duty by Paskett (and
others) that he owed to BPP as a joint venturer.
well-established that Chapter 93A does not apply to a dispute
of that nature. Cf. Szalla, 421 Mass. at 452
("The association between the plaintiff and the
defendant in the interests of forming a business venture
together is not the kind of commercial transaction regulated
by the statute."). Paskett and BPP were allegedly
partners in a business venture, and the dispute concerns
their respective rights and relationships in that venture.
Count Six will therefore be dismissed.
Motions to Dismiss for Lack of Personal
Hines, Newman, Nopal, and Golden Sands have all moved to
dismiss the case for lack of personal jurisdiction under Rule
Standard of Review
plaintiff bears the burden of establishing that the court has
personal jurisdiction over defendants. Daynard v. Ness,
Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42,
50 (1st Cir. 2002). Upon a motion to dismiss under Rule
12(b)(2), the court may employ several standards to assess
whether plaintiff has carried this burden: the
"prima facie" standard; the
"preponderance-of-the-evidence" standard; or the
"likelihood" standard. See Id. at 50-51,
n. 5; Foster-Miller, Inc. v. Babcock & Wilcox Can.,
46 F.3d 138, 145-47 (1st Cir. 1995). Where, as here, the
court is called to make this assessment without first holding
an evidentiary hearing, the prima facie standard is
applied. United States v. Swiss Am. Bank, Ltd., 274
F.3d 610, 618 (1st Cir. 2001). Under this standard, the court
takes the plaintiffs "properly documented evidentiary
proffers as true and construe[s] them in the light most
favorable to [plaintiff's] jurisdictional claim."
A Corp. v. All American Plumbing, Inc., 812 F.3d 54,
57 (1st Cir. 2016) (citing Phillips v. Prairie Eye
Ctr., 530 F.3d 22, 26 (1st Cir. 2008). A plaintiff may
not "rely on unsupported allegations in [its]
pleadings." A Corp., 812 F.3d at 54 (internal
quotations omitted). "Rather, [plaintiff] must put
forward ‘evidence of specific facts' to demonstrate
that jurisdiction exists." Id. (quoting
Foster-Miller, 46 F.3d at 145).
forum selection clauses, often described as ‘consent to
jurisdiction' clauses, authorize jurisdiction and venue
in a designated forum, but do not prohibit litigation
elsewhere." Rivera v. Centro Medico de Turabo,
Inc., 575 F.3d 10, 17 (1st Cir. 2009) (quoting 14D
Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,
Federal Practice and Procedure § 3803.1 (3d ed. 1998)).
The Letter Agreement between Paskett (as a representative of
GSJV) and BPP clearly states that "[t]his Agreement is
subject to the laws of and is enforceable in the
Commonwealth of ...