United States District Court, E.D. Wisconsin
JAMES G. FORRET, Plaintiff,
JAMES L. DAVIS, Defendant.
STADTMUELLER, U.S. DISTRICT JUDGE.
action was originally filed in Waukesha County Circuit Court,
and was removed to this Court on October 20, 2017. (Docket
#1). According to his Complaint, Plaintiff loaned money to
Defendant's start-up business, with Defendant personally
guaranteeing the investment. When Plaintiff called in the
loan, Defendant refused to pay, leading to Plaintiff filing
this breach of contract action. Defendant maintains that this
Court lacks personal jurisdiction over him, as he is a
Minnesota resident. Defendant filed a motion to dismiss on
that ground on October 27, 2017. (Docket #4). That motion is
now fully briefed. (Response, Docket #11; Reply, Docket #14).
For the reasons explained below, the motion must be granted.
Federal Rule of Civil Procedure 12(b)(2), a party may move to
dismiss on the ground that the court lacks jurisdiction over
him. Fed.R.Civ.P. 12(b)(2). The plaintiff bears the burden of
establishing personal jurisdiction when the defendant
contests it. N. Grain Mktg., LLC v. Greving, 743
F.3d 487, 491 (7th Cir. 2014). However, in cases such as this
one, where the matter is decided on a motion to dismiss and
without an evidentiary hearing, the plaintiff
“‘need only make out a prima facie case
of personal jurisdiction.'” Id. (quoting
Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713
(7th Cir. 2002)).
some other challenges to a plaintiff's complaint, when
questions of personal jurisdiction arise, the Court may
consider affidavits and other evidence outside the pleadings.
Purdue Research Found. v. Sanofi-Synthelabo, S.A.,
338 F.3d 773, 782 (7th Cir. 2003). Indeed, it can
“accept as true any facts contained in the
defendant's affidavits that remain unrefuted by the
plaintiff.” GCIU-Employer Ret. Fund v. Goldfarb
Corp., 565 F.3d 1018, 1020 n.1 (7th Cir. 2009).
Nevertheless, the court will “accept as true all
well-pleaded facts alleged in the complaint and resolve any
factual disputes in the affidavits in favor of the
plaintiff.” Purdue, 338 F.3d at 782;
Felland v. Clifton, 682 F.3d 665, 672 (7th Cir.
operative facts, drawn from Plaintiff's Complaint, the
exhibits thereto, and the parties' affidavits, are as
follows. Plaintiff is a citizen of Wisconsin, while
Defendant is a citizen of Minnesota. Both parties are
successful businessmen, each with substantial personal net
worth, who attained their wealth in the manufacture and
distribution of lighting fixtures. The parties have known
each other for forty years through their work in this field.
As part of this relationship, Defendant knew that Plaintiff
lived and worked in Wisconsin. Defendant does not live, work,
or own property in Wisconsin. He does not have a business
office or advertise any services here.
point, Defendant created a company called Cachet Financial
Solutions, Inc. (“Cachet”). Defendant is on the
board of Cachet and, owning 22% of its common stock, is its
single largest shareholder. Cachet is a Minnesota company
with its principal place of business in Chanhassen, Minnesota
(a suburb of Minneapolis). While he is a board member for
Cachet, he does not actually perform any services for the
2012, Cachet was in need of $3 million in debt financing. At
that time, during conversations relating to the lighting
business, Defendant casually mentioned to Plaintiff the
possibility of investing in Cachet. Defendant solicited a
$100, 000 investment from Plaintiff during those
conversations. Plaintiff was reluctant to invest because it
seemed like a risky venture and he was nearing retirement.
Defendant ultimately convinced Plaintiff by offering him a
personal, written guarantee that he would repay the loan if
Cachet could not (the “Guarantee”). The Guarantee
provided that if Cachet could not repay the loan by January
15, 2015, Defendant would do so. Defendant executed the
Guarantee in Minnesota. Upon receipt of the written
Guarantee, Plaintiff made the $100, 000 payment to Cachet
from his home in Wisconsin.
2013, Cachet asked Plaintiff to convert his loan into Cachet
stock. Plaintiff was reluctant to convert his loan into
stock, but Defendant persuaded him by offering to amend the
Guarantee (the “Amendment”). According to the
Amendment, Plaintiff agreed to convert his loan into Cachet
stock. The conversion contemplated by the Amendment occurred
while Plaintiff was located in Wisconsin. If Plaintiff's
stock was worth less than $100, 000 as of March 15, 2015,
Defendant would nevertheless be obligated to pay that amount
to Plaintiff to buy his shares. Like the Guarantee, the
Amendment was signed in Minnesota. When the time came,
Plaintiff's stock was only worth about $21, 000.
Plaintiff demanded the full $100, 000 price from Cachet, but
it would not redeem his shares. Plaintiff then turned to
Defendant and his Guarantee, but he too refused to
and Defendant exchanged an unspecified number of e-mails
relating to the Cachet investment. From 2013 to the filing of
this lawsuit, Plaintiff has had communications with Defendant
about Cachet and recoupment of Plaintiff's investment. In
2017, Defendant attempted to arrange repayment through Cachet
but Plaintiff never received the money.
asserts one claim against Defendant-breach of contract.
Plaintiff alleges that he performed his obligations under
both the Guarantee and the Amendment, by making the initial
loan, and by converting his loan into Cachet stock.
Defendant, however, failed to abide by those agreements when
he would not repay the loan to Plaintiff after March 15,