United States District Court, S.D. Ohio, Western Division
OPINION & ORDER
MICHAEL R. BARRETT JUDGE
matter is before the Court upon Defendants' Motion to
Dismiss for Lack of Personal Jurisdiction and Failure to
State a Claim. (Doc. 14). Plaintiffs have filed a Response in
Opposition (Doc. 16) and Defendants filed a Reply (Doc. 19).
Also before the Court is Defendants' Motion to Stay
Discovery Pending Resolution of Motion to Dismiss. (Doc. 20).
matter is related to another case filed before this Court:
Chunhong Jia, et al., v. Gary Chan, et al., No.
1:18-cv-00085-MRB (S.D. Ohio). Defendants Boardwalk Fresh
Burgers & Fries, Inc. (“BFBF”) and David
DiFerdinando are not parties to that case. Both cases stem
from alleged fraudulent scheme perpetrated by Gary Chan,
Terry Chan, and Jacquelyn Chan (“the Chans”) and
businesses controlled by the Chans. The Chans are not parties
to this case.
DiFerdinando is a citizen and resident of the State of
Florida. (Doc. 10, ¶ 3). DiFerdinando is the president
of BFBF. (Id.) BFBF is a Delaware corporation with
its principal place of business in Columbia, Maryland.
(Id. ¶ 2). BFBF is a franchisor of fast casual
restaurants. (Doc. 18-1, David DiFerdinando Dep. at 17, 25).
2013, DiFermando was introduced to Terry Chan by a mutual
friend. (Doc. 10, ¶ 15). Defendants began collaborating
on the development of several BFBF franchises in Ohio.
(Id.) Terry Chan explained that the franchises would
be marketed to EB-5 investors. (DiFerdinando Dep. at 42). The
EB-5 program allows such investors to gain lawful residency
in the United States. (Doc. 10, ¶¶ 1, 11). BFBF
entered into a development agent agreement
(“Development Agreement”) with Jardin Hill, LLC,
an entity controlled by the Chans. (Id. ¶¶
15-16, 70). (DiFerdinando Dep. at 35-36). Jardin Hill agreed
to pay $300, 000 to BFBF in exchange for the exclusive right
to market BFBF franchisees in southern Ohio, plus an
additional $30, 000 for a franchise to be operated by Jardin
Hill. (Doc. 18-1, DiFerdinando Dep. at 34-35).
to the Amended Complaint, Defendants and the Chans agreed to
create Boardwalk Fries Opportunities, L.P. (“BWF
OPP”), an Ohio limited partnership that would market
the franchises; BWF MGMT, LLC (“BWF MGMT”), an
Ohio limited liability company that would act as BWF
OPP's general partner; and Boardwalk Fries, LLC
(“Boardwalk LLC”), an Ohio limited liability
company that would control BWF MGMT. (Doc. 10, ¶¶
2, 16, 33). The Chans and DiFerdinando signed an Operations
Management Agreement on behalf of Boardwalk LLC. (Doc. 10,
¶ 21). Under the Operations Management Agreement, BWF
MGMT was to perform certain duties for BWF OPP, including
providing executive and strategic oversight, restaurant staff
training, assistance in meeting the EB-5 program
requirements, and providing information regarding BWBF
franchises. (Doc. 10, ¶ 22). Defendants agreed that the
first BWF OPP restaurant would be opened in Cincinnati. (Doc.
10, ¶ 20).
are citizens and residents of the People's Republic of
China. (Doc. 10, ¶ 1). Plaintiffs allege that
Defendants, conspiring with the Chans, used the EB-5 program
to lure each Plaintiff into investing $500, 000 in BWF OPP as
part of a development project that was supposed to develop
BWBF restaurant locations in the Cincinnati and Dayton. (Doc.
10, ¶ 14). Instead of investing these funds, Plaintiffs
claims that Gary Chan transferred $500, 000 from each
Plaintiffs' escrow account in October 2015, and
misappropriated these funds. (Doc. 10, ¶¶ 14,
66-67). Even though DiFerdinando came to Cincinnati to tour
the market and scout locations for Ohio BWBF restaurants, a
BFBF franchise was never opened in Ohio. (Doc. 10,
¶¶ 73, 74).
their Amended Complaint, Plaintiffs bring claims for breach
of contract, unjust enrichment/quantum meruit, gross
negligence, breach of fiduciary duty, conversion, fraud,
conspiracy, piercing the corporate veil, and punitive
damages. Defendants move to dismiss the Amended Complaint
pursuant to Federal Rule of Civil Procedure Rule 12(b)(2)
based on lack of personal jurisdiction; and alternatively,
Defendants move to dismiss the Amended Complaint pursuant to
Federal Rule of Civil Procedure 12(b)(6) because the Amended
Complaint fails to state a claim for relief.
Rule of Civil Procedure 12(b)(2) provides that a defendant
may seek dismissal if the court lacks personal jurisdiction
over that defendant. “The party seeking to assert
personal jurisdiction bears the burden of demonstrating that
such jurisdiction exists.” Schneider v.
Hardesty, 669 F.3d 693, 697 (6th Cir. 2012) (quoting
Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002)).
In the face of a supported motion to dismiss, the plaintiff
may not rest on his pleadings, but must, by affidavit or
otherwise, set forth specific evidence supporting
jurisdiction. Theunissen v. Matthews, 935 F.2d 1454,
1458 (6th Cir. 1991) (citing Weller v. Cromwell Oil
Co., 504 F.2d 927, 930 (6th Cir. 1974)). When a court
considers a motion to dismiss pursuant to Rule 12(b)(2)
without an evidentiary hearing, as this Court does here, the
plaintiff “‘need only make a prima facie showing
of jurisdiction.'” Bird v. Parsons, 289
F.3d 865, 871 (6th Cir. 2002) (quoting Neogen, 282
F.3d at 887) (internal citation omitted).
Ohio law, personal jurisdiction over non-resident defendants
is available only if (1) the long-arm statute confers
jurisdiction and (2) jurisdiction is proper under the Federal
Due Process Clause.” Conn v. Zakharov, 667
F.3d 705, 712 (6th Cir. 2012) (citing Kauffman Racing
Equip., L.L.C. v. Roberts, 126 Ohio St.3d 81, 930 N.E.2d
784, 790 (2010); Goldstein v. Christiansen, 70 Ohio
St.3d 232, 638 N.E.2d 541, 543 (1994)).
Ohio's long-arm statute, a court “may exercise
personal jurisdiction over a person who acts directly or by
an agent, as to a cause ...