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Ahkeo Labs LLC v. Plurimi Investment Managers LLP

United States District Court, N.D. Ohio

February 27, 2018

AHKEO LABS LLC, Plaintiff,

          OPINION & ORDER RESOLVING DOCS. 19, 33, 40, 50, 64


         Plaintiff Ahkeo Labs LLC sues Defendant Plurimi Investment Managers LLP, claiming that Plurimi Investment breached a contract by failing to make a number of loans to Ahkeo.[1]Plaintiff Ahkeo has also moved to amend Plaintiffs Complaint to additionally sue Plurimi Wealth, a related company.

         Plurimi Investment has filed two motions to dismiss, arguing that: (1) the Court lacks personal jurisdiction over Plurimi Investment, (2) the Northern District of Ohio is an inconvenient forum for resolving the dispute, and (3) Ahkeo has failed to join an indispensable party in violation of Rule 19 of the Federal Rules of Civil Procedure.[2] Plurimi Investment has also moved for summary judgment.[3] Ahkeo, for its part, opposes both motions and moves to amend its complaint.[4]

         For the reasons that follow, the Court GRANTS Plurimi Investment's motion to dismiss for lack of jurisdiction. The Court DENIES as futile Ahkeo's motion to amend. And the Court DENIES AS MOOT Plurimi Investment's motion to dismiss under Rule 19, its motion for summary judgment, and its request that the Court dismiss this case based on the doctrine of forum non conveniens.[5]

         I. BACKGROUND

         With this decision, this Court considers whether it has jurisdiction over a lawsuit against a British investment manager who does not have any American clients, offices, or investments but whose related company employed a junior employee who entered into a contract to provide a credit facility to an Ohio-sited company.

         A. Skoda's Relationship with Dupee

         Some years ago, Brent Skoda, Plaintiff Ahkeo's chairman and CEO, met Alexander Dupee in Dallas through a friend of a friend.[6] At the time of the first meeting, Skoda tried to convince Dupee and Dupee's father to invest in a venture called[7] Dupee and his father weren't interested.[8]

         Nonetheless, Skoda kept in touch with Dupee.[9] In the Fall of 2016, Skoda and Dupee again met in London.[10] Skoda was in London on other business, but had dinner with Dupee.[11] Dupee lived and worked in London. At that London dinner, Dupee allegedly represented that Dupee had "clients" who might invest in a marijuana vaporizer venture that Ahkeo hoped to grow.[12]

         B. Dupee and the Plurimi Entities

         When Skoda and Dupee met in London, Dupee was working for Plurimi Wealth LLP. Plurimi Wealth employed Dupee as an associate director, which was nominally a "partner"-level position but was in reality a lower-level position with the company.[13]

         Although Dupee was nominally a partner at Plurimi Wealth, [14] Plurimi Wealth's partnership structure differs from Ohio partnership law. Dupee had no voting rights in Plurimi Wealth, held no equity in the firm, and had no authority to sign contracts on Plurimi Wealth's behalf[15] Under Plurimi Wealth's structure, only its "designated partner" could bind Plurimi Wealth to contracts or sign contracts on Plurimi Wealth's behalf[16] In essence, Dupee was nothing more than an ordinary employee subject to a special compensation arrangement.[17]

         Plurimi Wealth provides investment advice to individuals and families.[18] It gives investment advice on roughly $3 billion, but is not the custodian for any of that money.[19] Instead, Plurimi Wealth's clients hold their money in their own bank accounts and Plurimi Wealth advises them regarding investments.[20] If the clients agree with a Plurimi Wealth recommendation, Plurimi Wealth will give transfer instructions to the clients' banks to make the recommended investments.[21] In most cases, the custodian banks then confirm the investment transfers with the bank customer.[22] Plurimi Wealth makes money by receiving a percentage of the money under management.[23]

         Plurimi Wealth is headquartered in London; has no offices, employees, or clients in the United States; and is not licensed to give investment advice in the United States.[24] It does, however, sometimes advise its clients to purchase publicly traded U.S. securities.[25] Plurimi Wealth does not lend money. Under British law, Plurimi Wealth is not licensed to make loans.[26]

         Although Dupee was an employee of Plurimi Wealth, he was never authorized to give investment advice because Dupee had not passed the United Kingdom's licensure exams.[27]Instead of giving advice, Dupee performed administrative tasks-such as directing banks to transfer money at a clients' instruction-and helped market the firm to clients.[28]

         Plurimi Wealth is a sister company to the Defendant, Plurimi Investment.[29] At one time, "Plurimi Investment Managers" was a trade name for Plurimi Wealth.[30] But that was before Plurimi Investment was organized as a separate legal entity.[31] Presently, Plurimi Investment manages two global micro-hedge funds.[32]

         Dupee has never held any position with Plurimi Investment.[33] Like its sister company, Plurimi Investment does not lend money, and is not licensed to make loans.[34] It does not do business in the United States; it has no American offices, bank accounts, employees, or clients; and it is not licensed to market its funds in the United States.[35]

C. Dupee Arranges Several Loans to Ahkeo

         After Dupee expressed interest in Ahkeo at the London dinner, he and Skoda continued to communicate. Phone records and text messages show conversations and loan negotiations.[36] A number of these telephone conversations apparently involved calls between Skoda who was in Ohio and Dupee who was in London.[37] Skoda testified that, throughout their exchanges, Dupee represented that he was acting on behalf of the Plurimi entities.[38]

         The tone of the text messages is not what one might expect in a transaction involving million dollar loans.[39] For instance, Skoda repeatedly refers to Dupee as "brother, " and Dupee at one point refers to Skoda as "bro."[40] This short excerpt of the lengthy text message chain between the two men shows the informality of their "negotiations":

DUPEE: Think you should make your way to dubai [sic].
SKODA: See you in NY next weekend
DUPEE: Or Abu Dhabi
SKODA: I'm ready
DUPEE: For the Grand Prix
SKODA: Let's roll!
DUPEE: Meet my clients
DUPEE: And some others
SKODA: Let's roll
DUPEE: Party
SKODA: Let's roll
SKODA: Let's rock and roll sir[41]

         And so on.

         In any event, by October 2016, these negotiations had hardened into actual financing. On October 18, Dupee arranged for one of his clients to make a $500, 000 loan to Ahkeo and both he and Skoda executed a note for Ahkeo to repay the money.[42] The October 18, 2016, note obligated Ahkeo to pay Alexander Dupee.[43] The note does not mention the Plurimi entities and does not require Ahkeo to make any loan payments to the Plurimi entities.

         A Dupee client funded this $500, 000 October 18, 2016, loan.[44] Dupee used his Plurimi Wealth email account to instruct his client's bank to transfer the money.[45]

         On October 25, 2016, Ahkeo received another loan facilitated by Dupee.[46] In this October 25, 2016, ninety day loan, Nabeel Basaddiq loaned Ahkeo $1 million.[47] Nabeel Basaddiq is a Plurimi Wealth client that Dupee worked with at the firm.[48] The October 25, 2016, note does not mention the Plurimi entities and does not obligate Ahkeo to pay the Plurimi entities. Dupee again used his Plurimi Wealth email account to direct the client's bank to transfer the money to Ahkeo.[49]

         On November 8, 2016, Ahkeo received another loan facilitated by Dupee.[50] In this November 8, 2016, ninety day loan, Samih Basaddiq loaned Ahkeo $3 million.[51] Samih Basaddiq is also a Plurimi Wealth client that Dupee worked with at the firm.[52] The November 8, 2016, note does not mention the Plurimi entities and does not obligate Ahkeo to pay the Plurimi entities. Just as with the earlier loans, Dupee used his Plurimi Wealth email to send directions to his client's bank.[53]

         In each of these loans, the later loan repaid the earlier loan-essentially consolidating Ahkeo's debt from all three loan agreements.[54] The increasing loans also gave Ahkeo working capital. Skoda executed notes promising Ahkeo would repay the October 25, 2016, and November 8, 2016, loans.[55] For his troubles, Dupee apparently received $52, 500 in commissions for arranging these loans.[56] None of these notes were payable to Plurimi Wealth. No evidence showed that Dupee paid any of this $52, 500 commission to any Plurimi entity.

         D. The Credit Revolver Agreement

         On February 7, 2017, Skoda and Dupee met to complete negotiations on a credit revolver agreement that would formalize the series of revolving loans that began in October 2016.[57] The meeting took place in a conference room in Plurimi Wealth's London office.[58]

         At the end of the negotiations, both Skoda and Dupee signed the credit revolver agreement.[59] Skoda and his attorney had prepared the initial draft of the agreement.[60] Under this agreement, Dupee and his "affiliates" agreed to provide two loans to Ahkeo: a $6 million loan to be made on February 7, 2017, and repaid on March 9, 2017; and a $9 million loan to be made on March 9, 2017, and repaid on April 9, 2017.[61] Dupee was to receive $105, 000 in commissions for securing these two loans.[62]

         When Dupee signed this agreement, he hand wrote Plurimi's headquarters as his address.[63]But neither the credit revolver agreement nor the promissory notes mentions either Plurimi entity.[64]Instead, the Credit Revolver Agreement said it was an agreement "between Ahkeo Labs, LLC, . . . and Alexander Dupee and such person's affiliates."[65]

         Ahkeo never received any of the money promised in the revolver agreement.[66] Likely, Dupee could not find anyone willing to fund the next loan. And Ahkeo defaulted on the November 8, 2016, $3 million loan from Samih Basaddiq.[67] Samih Basaddiq is pursuing collection of the $3 million load from Ahkeo.

         Things didn't work out well for Dupee either. His supervisors at Plurimi Wealth were unaware that Dupee had helped facilitate Plurimi client loans to Ahkeo.[68] When his supervisors learned of Dupee's Ahkeo efforts, they were understandably upset.[69] Plurimi Wealth and Plurimi Investment were not licensed to extend credit and lower-level-employee Dupee was not licensed to give investment advice.[70] Dupee resigned before he could be fired.[71]

         E. Procedural History

         In June 2017, Ahkeo filed this lawsuit against Dupee and Plurimi Investment.[72] The Complaint alleged that Dupee and Plurimi Investment breached the revolver agreement by failing to provide the financing promised in that agreement.[73] Ahkeo also brought a promissory estoppel claim and sought injunctive relief[74]

         Ahkeo later voluntarily dismissed its claims against Dupee.[75]

         Plurimi Investment moves to dismiss for lack of personal jurisdiction.[76] In addition, because the claims against Dupee have been dismissed, Plurimi Investment moves to dismiss because of Ahkeo's failure to join an indispensable party.[77] Ahkeo opposes both motions.[78]Plurimi Investment alternatively asks the Court to dismiss this case based on the forum non conviens doctrine.[79] Plurimi Investment has also moved for summary judgment.[80]

         Ahkeo has moved to amend its complaint to add Plurimi Wealth as a defendant and to supplement its original factual allegations.[81] Plurimi Investment opposes.[82]

         On February 7, 2018, the Court held an evidentiary hearing on the motion to dismiss for lack of personal jurisdiction.[83]


         A. Legal Standard

         "The plaintiff bears the burden of establishing the existence of jurisdiction."[84] When, as in this case, the Court holds an evidentiary hearing on personal jurisdiction, the plaintiff must prove the existence of jurisdiction by a preponderance of the evidence.[85]

         To establish personal jurisdiction, a plaintiff in a diversity jurisdiction case must prove two things. First, the plaintiff must show that personal jurisdiction exists under the law of the forum state-in this case Ohio.[86] If the exercise of personal jurisdiction is permissible under state law, the plaintiff must then show that the exercise of personal jurisdiction would be consistent with the Fourteenth Amendment's due process guarantee.[87]

         Ohio Revised Code § 2307.382, Ohio's long-arm statute, controls Ohio courts' personal jurisdiction.[88] That section gives nine circumstances in which Ohio courts may exercise personal jurisdiction over a defendant.[89] Those circumstance include cases where a defendant "transact[s] any business in th[e] state" or "contract[s] to supply services or goods in th[e] state."[90]

         The Fourteenth Amendment permits the courts of a State (and by extension federal courts sitting in diversity) to exercise personal jurisdiction only where the defendant has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'"[91] That test is satisfied in two situations.

         First, a court might have general jurisdiction over a defendant. "A court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State."[92] If a jurisdiction has general jurisdiction over a defendant, it can be sued in that jurisdiction by any plaintiff based on any claim, no matter where the events giving rise to that claim occurred.[93]

         Second, in some circumstances, a court can exercise specific jurisdiction over a defendant. Specific jurisdiction exists where: (1) the "defendant purposefully availed [itself] of the privilege of acting in Ohio or causing a consequence in Ohio, " (2) "the cause of action arises out of [the] defendant's activities in Ohio, " and (3) "the exercise of jurisdiction over [the d]efendant is reasonable."[94]

         B. Ohio Long-Arm Statute

         The parties dispute whether Ohio's long-arm statute permits the exercise of personal jurisdiction over the Plurimi entities.[95] The Court does not address that question, because-even if Ohio's statute did allow for the exercise of personal jurisdiction-doing so would violate the Due Process Clause's guarantees.[96]

C. Due Process Analysis

         Defendant Plurimi Investment contends that the Due Process Clause prohibits the Court from exercising either general or specific jurisdiction over the Plurimi entities.[97] Plurimi Investment is correct. Both Plurimi Investment and Plurimi Wealth do not have sufficient connections to Ohio to support specific jurisdiction.

         1. General Jurisdiction

         Establishing that the Court has general jurisdiction over a defendant is an exceedingly difficult task. "[O]nly a limited set of affiliations with a forum will render a defendant amenable to all-purpose jurisdiction there."[98] For a corporate defendant like Plurimi, the paradigmatic grounds for general jurisdiction are its (1) place or places of incorporation and (2) principal place of business.[99] While those are not the only bases of general jurisdiction, they do give a sense of the depth and breadth of contacts required to force a corporation to defend itself from all suits from all comers in a particular forum.[100]

         To the extent that several vague statements in its complaint and proposed amended complaint were meant to do so, [101] Ahkeo does not show contacts even approaching the requirements to establish general jurisdiction.

         Ahkeo does not contend that either Plurimi entity is incorporated in Ohio. Nor does Ahkeo contend that Plurimi Investment or Plurimi Wealth has its principal place of business here. Indeed, it admits that both are incorporated and based in the United Kingdom.[102]

         Ahkeo alleges only that the Plurimi entities "had continuous and systematic contacts with Plaintiff while Plaintiff was in Ohio for the purpose of transacting business."[103] Even if that is true, such "contacts" are not enough to establish general jurisdiction. Contact with a single customer in a State (and Ahkeo has made no allegation that Plurimi had other customers in Ohio) is simply not sufficient to render a defendant "essentially at home" in that State.[104] As a result, the Court cannot exercise general jurisdiction over either Plurimi Wealth or Plurimi Investment.

         2. Specific Jurisdiction

         Ahkeo contends that this Court has specific jurisdiction over Plurimi.[105] It reasons that Ahkeo and its CEO were Ohio based, that Ahkeo is located in Ohio, that Dupee communicated with Ahkeo and its officers while Ahkeo was located in Ohio, and that the money from the loans was destined for Ohio. Ahkeo then argues Plurimi those are sufficient minimum contacts with Ohio to support this Court's exercise of specific personal jurisdiction.[106] It is mistaken.

         a. Dupee's Apparent Authority to Bind the Plurimi Entities

         As a preliminary matter, the parties disagree over whether Dupee's actions, and the resulting connections to the forum, can be attributed to Plurimi Investment or Plurimi Wealth.[107]If they cannot, personal jurisdiction is lacking because the Plurimi entities have no contacts with Ohio-or at least, no contacts that are related to this litigation-and cannot be said to have purposefully availed themselves of the laws of Ohio. The Court finds that Dupee's actions cannot be attributed to either of the Plurimi entities.

         The Court considers agency law when deciding if Dupee's actions can be attributed to either of the Plurimi entities. Specifically, because Dupee did not have actual authority to bind either Plurimi entity to the loan contract, [108] the question is whether he had apparent authority to do so.

         i. Choice of Law

         But before reaching the apparent agency question, however, the Court must first determine which jurisdiction's agency law governs. There are three options: Ohio law (the law of the forum state); English law (the law of the jurisdiction where the revolver agreement was signed); and Delaware law (the law of the jurisdiction named in the contract's choice-of-law clause).

         As this is a diversity case, the Court applies the choice-of-law principles of the State of Ohio.[109] Ohio courts apply Ohio law to contract disputes without undertaking a choice of law analysis unless the party seeking the application of a foreign jurisdiction's law establishes that there is "a genuine conflict between Ohio law and the law of the foreign jurisdiction."[110] This is so even where, as here, the contract at issue contains a choice-of-law clause.[111]

         The parties have not briefed or argued the choice-of-law issue, let alone established a genuine conflict of law. And the Court's brief review of the issue suggests that there is no material difference between the law of Ohio, Delaware, and the United Kingdom as far as apparent authority is concerned.[112] As a result, the Court applies Ohio agency law to this matter.

         ii. Apparent Agency - Plurimi Investment

         "Apparent authority arises when (1) 'the principal held the agent out to the public as possessing sufficient authority to act on his behalf, ' (2) a 'person dealing with the agent knew these facts, ' and (3) the person 'acting in good faith had reason to believe that the agent possessed the necessary authority.'"[113] For apparent agency, the principal must hold the agent out as having authority for the transaction.[114]

         Ahkeo fails to show that either Plurimi entity held Dupee out to the public as an agent empowered to enter the revolver agreement. Dupee was never an employee of Plurimi Investment, [115] so it seems plain to the Court that there was no apparent agency as far as that entity is concerned.[116]

         iii. Apparent Agency - Plurimi Wealth

         Ahkeo has moved to amend its complaint to join Plurimi Wealth (which did actually employ Dupee for a period of time) as a defendant.[117] Plurimi Investment opposes that motion.[118]

         In general, motions for leave to amend a complaint should be freely granted.[119] But the Court may deny a motion to amend where the amendment would be futile-that is, where the complaint would be dismissed even if the amendment were allowed.[120]

         Plurimi Investment argues that leave to amend should be denied because even if Plurimi Wealth were added as a defendant and the factual allegations in the complaint were supplemented, the Court would still lack personal jurisdiction over either of the defendants.[121] The Court agrees.[122] Ahkeo hasn't shown that Dupee was Plurimi Wealth's apparent agent.

         Ahkeo puts great weight on Dupee's alleged representations to Skoda. In those alleged representations, Skoda says Dupee represented that Dupee had the authority to bring Plurimi Wealth clients into the revolver agreement Skoda also testified that Dupee represented that Dupee "ha[d] clients and resources where [he was] working." According to Skoda, "It was always Plurimi clients. His clients and resources at Plurimi. . . . Through Plurimi, he was going to give us access to his clients." Apart from Dupee's alleged representations, Ahkeo argues that Plurimi Wealth itself represented Dupee as having authority when Dupee used a Plurimi Wealth conference room. Ahkeo also argues that Dupee handwritten use of Plurimi's address on the revolver agreement is, somehow, a Plurimi Wealth representation of Dupee's authority.

         At best, the hearing evidence suggests that Dupee represented he could find a Plurimi client who would lend money. But little shows Plurimi Wealth would lend money to Ahkeo. And less shows that Plurimi Wealth itself ever held Dupee out as authorized to commit Plurimi Wealth to $15 millions of dollars of loans.

         For one thing, none of the loan documents mention Plurimi.[123] The credit revolver agreement runs between Ahkeo and Dupee and Dupee's affiliates.[124] Plurimi is not mentioned. And the earlier promissory notes run between Ahkeo and individual lenders-namely Alexander Dupee, Nabeel Bassaddiq, and Samih Bassaddiq.[125] Plurimi is not mentioned in any of the notes. If Plurimi Wealth was itself going to lend money, the Court would expect Plurimi's name to appear somewhere in the loan documents or the credit revolver documents.

         Ahkeo says the Credit Revolver Agreement required Plurimi to loan at least $ 15 million.[126]Skoda and his attorneys created the initial draft of the Credit Revolver Agreement and Skoda negotiated the terms with Dupee.[127] If he actually expected the Plurimi entities to loan such large amounts, logic suggests Plurimi would have been mentioned in the Credit Revolver Agreement.

         The lack of any mention of Plurimi, along with the informal nature of the communications between Skoda and Dupee, leads the Court to believe that Skoda (and by extension Ahkeo) knew he was dealing with Dupee and Dupee's contacts on an individual basis, not negotiating with a sophisticated London financial advising firm. Moreover, Ahkeo transferred $52, 500 in commissions to Dupee's personal account and promised to pay Dupee, $105, 000 in additional commissions on the credit revolver agreement.[128] Ahkeo made no promise to pay a $105, 000 payment to Plurimi Wealth. So the Court finds it unlikely that Dupee represented to Skoda that he was acting on behalf of Plurimi Wealth or that Skoda seriously believed that he was.

         But even if Dupee had made representations to Skoda, they do not establish an apparent agency relationship with Plurimi Wealth. "A belief [in an agent's authority to enter an agreement] that results solely from the statements or other conduct of the agent, unsupported by any manifestations traceable to the principal, does not create apparent authority . . . ."[129]

         Of course, Ahkeo protests that its apparent authority claim doesn't rest solely on Dupee's statements. But the Court find almost no evidence, apart from allowing Dupee to use a conference room for the February 7, 2017 meeting, that Plurimi Wealth held Dupee out as having authority to bind Plurimi Wealth to $6 million and $9 million loans..

         Admittedly, the final revolver agreement negotiations used a Plurimi conference room.[130]But Plaintiff has offered no evidence of any Plurimi Wealth employee statements that Dupee had authority to require Plurimi to lend $15 million. Dupee was the only Plurimi person ...

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