Ahlgren v. Muller
U.S. District Court, District of Minnesota
Ahlgren v. Muller
Trial Court Opinion
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
ERIK A. AHLGREN, in his capacity as
assignee in the assignment for the benefit
Civ. No. 19-303 (JRT/LIB)
of creditors of Ashby Farmers Co-
Operative Elevator Company,
Plaintiff,
MEMORANDUM OPINION
v. AND ORDER
DIEDERIK MULLER a/k/a DIEKIE MULLER
and DM SAFARIS, a/k/a DIEKIE MULLER
HUNTING SAFARIS,
Defendants.
Erik A. Ahlgren, AHLGREN LAW OFFICE, PLLC, 220 West Washington
Avenue, Suite 105, Fergus Falls, MN 56537, for plaintiff.
Mark G. Schroeder, Adam G. Chandler, and Jason R. Asmus, TAFT
STETTINIUS & HOLLISTER LLP, 80 South Eighth Street, Suite 2200,
Minneapolis, MN, 55402, for defendants.
This case arises out of Jerry Hennessey’s unauthorized use of funds from his prior
employer, the Ashby Farmers Co-Operative Elevator Company (the “Co-Op”). From
2003–2018, Hennessey paid over $5 million of the Co-Op’s funds to himself or directly to
third parties for his personal benefit. Among others, Hennessey paid Defendant DM
Safaris, owned by Defendant Diederik Muller (“Muller”), with checks from the Co-Op to
fund exotic hunting trips for himself and his wife. Upon discovery of the fraud in 2018,
the Co-Op ceased operations and appointed an Assignee, Plaintiff Erik Ahlgren, to pursue
claims and remedies on behalf of the Co-Op and its creditors. Ahlgren brought this action
in January 2019, seeking to void unauthorized payments to Defendants.
Presently before the Court is Defendants’ Motion to Dismiss for lack of personal
jurisdiction under Fed. R. Civ. P. 12(b)(2) and failure to state a claim under Fed. R. Civ. P.
12(b)(6). For the reasons set forth below, the Court will deny Defendants’ Motion to
Dismiss under Rule 12(b)(2), grant in part and deny in part Defendants’ Motion to Dismiss
under Rule 12(b)(6), and will deny Ahlgren leave to amend.
BACKGROUND
I. FACTUAL BACKGROUND
The Co-Op is a grain farmers’ cooperative based in Ashby, Minnesota. (First. Am.
Compl. (“FAC”) ¶ 1, July 11, 2019, Docket No. 47.) The Co-Op purchases grain from local
farmers, who are also owners of the Co-Op, and sells it to grain markets. (Id. ¶ 14.)
In 1989, the Co-Op hired Jerry Hennessey, a resident of Minnesota, as its general
manager. (Id. ¶ 14.) Between June 2003 and September 2018, Hennessey received over
$5.4 million in unauthorized funds from the Co-Op by writing checks from the Co-Op to
himself and directly to third parties, including Defendants. (Id. ¶¶ 15–17.) Hennessey
used the checks for personal bills, home improvement projects, property purchases, and
domestic and international hunting trips unrelated to the business of the Co-Op. (Id. ¶
16.) Hennessey disguised his fraud from the Co-Op by coding the checks as feed
purchases or other ordinary expenses. (Id.) All of the checks identified the Co-Op as the
payor. (Id. ¶ 18.)
Muller is a resident of South Africa and maintains an address in California. (Id. ¶
2; Decl. of Diederik J. Muller (“1st Muller Decl.”) ¶ 2, Feb. 28, 2019, Docket No. 13.) He
owns and operates DM Safaris, which provides guided hunting services and
accommodations in South Africa. (1st Muller Decl. ¶ 3.) DM Safaris is incorporated and
headquartered in South Africa but maintains an office and bank account in California. (Id.;
Decl. of Erik A. Ahlgren (“Ahlgren Decl.”) ¶ 16, Ex. N at 152, Aug. 26, 2019, Docket No.
55.)1 DM Safaris is not licensed to do business in Minnesota, does not have property or
agents in Minnesota, and does not maintain a bank account in Minnesota. (1st Muller
Decl. ¶ 5.) DM Safaris operates a website and Facebook page that generally advertises its
services to an international and United States audience. (2nd Decl. of Diederik J. Muller
(“2nd Muller Decl.”) ¶ 2, Sept. 9, 2019, Docket No. 59.)
Muller met Hennessey for the first time in February 2012 at a Safari Club
International (“SCI”) hunting convention held in Nevada. (FAC ¶ 21; First Muller Decl. ¶¶
6–7.) Hennessey wrote Muller an unauthorized check for $45,000 at the Nevada
convention as down payment for a South African hunting trip later that year. (FAC ¶ 21;
Affidavit of Erik. A. Ahlgren (“Ahlgren Aff.”) ¶ 4, Ex. 1 (“Hennessey Aff.”) ¶ 13, May 30,
1 Page numbers listed in the Ahlgren Declaration refer to the PDF pagination of the
Declaration as a whole rather than the individual exhibit page numbers listed on each
exhibit.
2019, Docket No. 33.) Following the 2012 Nevada convention, Muller and Hennessy
corresponded via telephone and email while Hennessey was in Minnesota to finalize
details for the 2012 trip. (Hennessey Aff. ¶ 12.) Hennessey was responsible for making
his own travel arrangements to and from South Africa. (Id.) Hennessey and his wife then
flew to South Africa in May 2012 for the hunt. (Id. ¶ 14.) After the trip and while still in
South Africa, Hennessey paid Muller for the animals he took and completed appropriate
paperwork to have the animals shipped back to him in Minnesota. (Id. ¶ 15.)
In 2013, Hennessey and Muller again met at the SCI convention in Nevada and,
again, Hennessey wrote Muller and DM Safaris an unauthorized check—this time for
$100,000—to pay for another South African hunting trip with DM Safaris. (Id. ¶ 18.)
Following the 2013 convention, Hennessey and Muller again corresponded by email and
phone while Hennessey was in Minnesota to finalize details for the trip. (Id. ¶ 19–20.)
Like the first trip, Hennessey paid for the animals he took and completed paperwork for
the animals to be shipped to Minnesota. (Id. ¶ 20.) A problem developed, however, when
the skins of the animals taken never arrived in Minnesota. (Id. ¶ 21.)
In 2014, Hennessey met with Muller at the SCI convention in Nevada to discuss the
problem with the 2013 trip. (Id. ¶ 22.) Following the SCI convention, Muller returned to
Minnesota with Hennessey and the pair spent three to four days ice fishing,
snowmobiling, and discussing problems with the 2013 trip. (Id.; Ahlgren Decl. ¶ 19, Ex. Q
at 202.) After Muller left Minnesota, he refunded Hennessey $8,000 for the 2013 trip.
(Hennessey Aff. ¶ 23.)
In January 2015, prior to SCI Convention in Nevada, Muller called Hennessey from
South Africa and requested a $100,000 loan from Hennessey to purchase black impalas
for his business. 2 (Id. ¶ 24; 2nd Muller Decl. ¶ 3.) Muller promised to repay the loan
within one year. (Hennessey Aff. ¶ 24; 2nd Muller Decl. ¶ 3.) Hennessey obliged and sent
Muller an unauthorized check for $100,000. (Hennessey Aff. ¶ 24; 2nd Muller Decl. ¶ 3.)
Later that month, at the 2015 SCI convention in Nevada, Muller gave Hennessey a check
for $20,000 as an additional refund for the problems associated with the 2013 trip.
(Hennessey Aff. ¶ 24.) The $100,000 loan has yet to be repaid. (Id. ¶ 25.)
Hennessey’s fraud was discovered in September 2018. (Id. ¶ 35.) By this time,
Hennessey had obtained a credit line of over $7 million for the Co-Op in his ongoing
efforts to conceal his fraud and cover the Co-Op’s expenses. (Ahlgren Decl. ¶ 4, Ex. C at
24–25.) On February 14, 2019, Hennessey pleaded guilty to mail fraud and income tax
evasion. (Id. at 23.)
As a result of Hennessey’s fraud, the Co-Op was forced to close and has been
unable to pay its debts. (Ahlgren Decl. ¶ 3, Ex. B at 13.) In December 2018, the Co-Op
executed an assignment (the “Assignment”) with Erik Ahlgren for the benefit of the Co-
2 An impala is a “swift-running antelope.” “Impala,” Encyclopedia Britannica Online,
https://www.britannica.com/animal/impala#ref1022159, (last accessed Dec. 19, 2019).
A black impala “is a comparatively rare subspecies coveted by trophy hunters.” Id.
Op’s creditors. (Id.) Pursuant to Minn. Stat. §§ 576-77, Ahlgren has committed to
liquidating and administering the Co-Op’s assets and may pursue any claim or remedy
that could be asserted by the Co-Op or by a creditor of the Co-Op. (FAC. ¶¶ 5–7.)
According to reports filed with the Assignment, the Co-Op has forty-three creditors, most
of which are based in Minnesota. (Ahlgren Decl. ¶ 3, Ex. B at 20–21.)
II. PROCEDURAL BACKGROUND
Ahlgren originally brought this action in Grant County District Court on January 8,
2019, alleging three Counts: (I) actual fraud pursuant to the Minnesota Uniform Voidable
Transactions Act (“MUVTA”), Minn. Stat. §§ 513.44(a)(1), 513.47; (II) constructive fraud pursuant to MUVTA,Minn. Stat. §§ 513.45
(a), 513.47; and (III) unjust enrichment. (Notice
of Removal ¶ 1, Ex. A at 7-8, 14-17, Feb. 8, 2019, Docket No. 1.) Defendants removed the
case to this Court on February 8, 2019. (Id. at 1.)
On February 28, 2019, Defendants moved to dismiss the complaint for lack of
personal jurisdiction pursuant to Rule 12(b)(2) and for failure to state a claim pursuant to
Rule 12(b)(6). (Mot. to Dismiss, Feb. 28, 2019, Docket No. 10.) The Court allowed written
discovery limited to personal jurisdiction before ruling on the motion to dismiss. (Order
on Stipulation, Mar. 22, 2019, Docket No. 19.) On May 30, 2019, Ahlgren moved to amend
the pleadings. (Mot. to Alter Pleadings, May 30, 2019, Docket No. 30.) The Court granted
Ahlgren’s motion and denied Defendants’ motion to dismiss without prejudice. (Order,
June 21, 2019, Docket No. 44.)
On July 11, 2019, Ahlgren filed an amended complaint, which alleges four Counts:
(I) actual fraud pursuant to the MUVTA, Minn. Stat. §§ 513.44(a)(1), 513.47; (II) constructive fraud pursuant to the MUVTA,Minn. Stat. §§ 513.45
(a), 513.47; (III) breach-
of-contract; and (IV) unjust enrichment. (FAC ¶¶ 36–62.) Defendants now move again to
dismiss under Rule 12(b)(2) and 12(b)(6), for lack of personal jurisdiction and failure to
state a claim, respectively. (Mot. to Dismiss, Aug. 5, 2019, Docket No. 50.)
DISCUSSION
I. PERSONAL JURISDICTION
A. Standard of Review
Federal Rule of Civil Procedure 12(b)(2) provides that a party may move to dismiss
claims for lack of personal jurisdiction. “To defeat a motion to dismiss for lack of personal
jurisdiction, the nonmoving party need only make a prima facie showing of
jurisdiction.” Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 647(8th Cir. 2003). “As long as there is ‘some evidence upon which a prima facie showing of jurisdiction may be found to exist,’ the Rule 12(b)(2) motion will be denied.” Pope v. Elabo GmbH,588 F. Supp. 2d 1008, 1014
(D. Minn. 2008) (quoting Aaron Ferer & Sons Co. v. Diversified Metals Corp.,564 F.2d 1211, 1215
(8th Cir. 1977)). The party seeking to establish personal jurisdiction bears the burden of proof, and “the burden does not shift to the party challenging jurisdiction.” Epps,327 F.3d at 647
. For purposes of a prima facie showing, the Court must view the evidence in the light most favorable to the non-moving party. Westley v. Mann,896 F. Supp. 2d 775, 786
(D. Minn. 2012).
B. Due Process and Specific Personal Jurisdiction
The Court may exercise personal jurisdiction over a defendant only if doing so (1)
is consistent with the Minnesota’s long-arm statute, Minn. Stat. § 543.19, and (2) comports with the Due Process Clause of the Fourteenth Amendment. Pope, 588 F. Supp. 2d at 1014–15. Because Minnesota’s long-arm statue extends as far as the Due Process Clause allows, “the Court need only consider whether exercising personal jurisdiction over [Defendants] is consistent with due process.”Id. at 1015
.
“The Due Process Clause of the Fourteenth Amendment constrains a State's
authority to bind a nonresident defendant to a judgment of its courts.” Walden v. Fiore,
571 U.S. 277, 283(2014). “The touchstone of the due-process analysis remains whether the defendant has sufficient ‘minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG,646 F.3d 589, 594
(8th Cir. 2011) (alteration in original) (quoting Int’l Shoe Co. v. Washington,326 U.S. 310, 316
(1945)). “The central question is whether a defendant has purposefully availed itself of the privilege of conducting activities in the forum state and should, therefore, reasonably anticipate being haled into court there.” Pecoraro v. Sky Ranch for Boys, Inc.,340 F.3d 558, 562
(8th Cir. 2003) (citing Burger King Corp. v. Rudzewicz,471 U.S. 462, 475
(1985); World–Wide Volkswagen Corp. v. Woodson,444 U.S. 286, 297
(1980)).
Although personal jurisdiction can be general or specific, this case deals only with
whether Defendants have sufficient minimum contacts to support specific jurisdiction.
“The inquiry whether a forum State may assert specific jurisdiction over a nonresident
defendant focuses on the relationship among the defendant, the forum, and the
litigation.” Walden, 571 U.S. at 283–84 (internal quotations omitted). In addition to
establishing minimum contacts with the forum, for specific personal jurisdiction to be
proper, the complained-of conduct must also arise out of the contacts that defendant
creates with the forum state.3 Id. at 284. “[T]he plaintiff cannot be the only link between
the defendant and the forum. Rather, it is the defendant’s conduct that must form the
necessary connection with the forum State” for jurisdiction to be proper. Id. at 285.
The Eighth Circuit considers five factors in making a personal jurisdiction
determination:
(1) the nature and quality of the contacts with the forum
state;
(2) the quantity of the contacts with the forum state;
(3) the relation of the cause of action to the contacts;
(4) the interest of the forum state in providing a forum for its
residents; and
(5) the convenience of the parties.
3 “This is in contrast to ‘general’ or ‘all purpose’ jurisdiction, which permits a court to
assert jurisdiction over a defendant based on a forum connection unrelated to the
underlying suit (e.g., domicile).” Walden, 571 U.S. at 283n.6. Bell Paper Box, Inc. v. Trans W. Polymers, Inc.,53 F.3d 920, 922
(8th Cir. 1995) (citation omitted). “[T]he first two factors go primarily to whether minimum contacts exist,” the third determines whether the action arises from the contacts, and the last two examine reasonableness. Yellow Brick Road, LLC, v. Childs,36 F. Supp. 3d 855, 864
(D. Minn. 2014).
The five-factor test essentially boils down to three: (1) whether the quality and quantity
of the defendants contacts with the forum State establish minimum contacts; (2) whether
the litigation arises out of those contacts; and finally, if the first two are met, (3) whether
it is reasonable, considering the interest of the forum state and convenience to the
parties, to force an out-of-state litigant to defend itself in the forum state. See 13 Wright
& Arthur R. Miller, Federal Practice and Procedure §1069 (4th ed.).
C. Analysis
Ahlgren argues that Defendants’ contacts, when viewed in totality, show that
Muller and DM Safaris purposefully availed themselves of the privilege of conducting
business in Minnesota and that the cause of action arises out of those contacts. The Court
agrees with Ahlgren.
The quantity and quality of Defendants’ contacts establish purposeful availment.
Pecoraro, 340 F.3d at 562. Muller visited Minnesota in 2014 with the purpose, at least in part, of promoting DM Safaris. Muller acknowledges that business was discussed with Hennessey on the trip and that Muller issued a refund to Hennessey shortly thereafter. Subsequently, Muller solicited a $100,000 loan from Hennessey while Hennessey was in Minnesota for DM Safaris and promised to pay Hennessey back within one year. Additionally, Muller and DM Safaris sent invoices, emails, and animal components to Hennessey in Minnesota. These contacts, considered alongside Muller’s visit to Minnesota and his loan solicitation from Hennessey in Minnesota, show that Muller and DM Safaris “purposefully reached out” to Minnesota with the intention of garnering business in the State. Walden,571 U.S. at 285
(cleaned up). The Court therefore finds
Defendants have sufficient minimum contacts with Minnesota for the Court to exercise
specific personal jurisdiction. Additionally, because this dispute arose from those
contacts and centers around payments Hennessey made to Defendants, the Court finds a
sufficient nexus between the dispute and Defendants’ contacts with Minnesota.
Having found that sufficient minimum contacts and a nexus exist, “it is
presumptively not unreasonable to require [a defendant] to submit to the burdens of
litigation in the forum.” Burger King, 471 U.S. at 476. DM Safaris and Muller have not
presented any facts or law sufficient to rebut this presumption. Minnesota has a high
interest in providing a forum in this matter as Ahlgren is a Minnesota resident and most
of the creditors are located here. The inconvenience to Defendants would also not be so
burdensome as to violate traditional notions of fair play and substantial justice.
Accordingly, the Court finds that Muller and DM Safaris are subject to specific
personal jurisdiction in this case. The Court will deny Defendants’ Motion to Dismiss
under Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction.
II. FAILURE TO STATE A CLAIM
A. Standard of Review
In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the
Court considers all facts alleged in the complaint as true to determine if the complaint
states a “claim to relief that is plausible on its face.” Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 594(8th Cir. 2009) (quoting Ashcroft v. Iqbal,556 U.S. 662, 678
(2009)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal,556 U.S. at 678
. Although the Court accepts the complaint’s factual allegations as true and construes the complaint in a light most favorable to the plaintiff, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain,478 U.S. 265, 286
(1986)). In other words, a complaint “does not need detailed factual allegations” but must include more “than labels and conclusions, and a formulaic recitation of the elements” to meet the plausibility standard. Bell Atl. Corp. v. Twombly,550 U.S. 544, 555
(2007).
“When considering a Rule 12(b)(6) motion, ‘the court generally must ignore
materials outside the pleadings, but it may consider some materials that are part of the
public record or do not contradict the complaint, as well as materials that are necessarily
embraced by the pleadings.’” Smithrud v. City of St. Paul, 746 F.3d 391, 395(8th Cir. 2014) (quoting Porous Media Corp. v. Pall Corp.,186 F.3d 1077, 1079
(8th Cir. 1999)).
Defendants seek dismissal of Count II for constructive fraud, Count III for breach-
of-contract, and Count IV for unjust enrichment. Each is considered in turn below.
B. Count II: Constructive Fraud
“To cover the variety of situations in which debtors may attempt to place assets
beyond the reach of creditors, [MUVTA] allows creditors to recover assets that a debtor
transfers with fraudulent intent . . . as well as those transfers that the law treats as
constructively fraudulent.” Finn v. Alliance Bank, 860 N.W.2d 638, 644(Minn. 2015) (citingMinn. Stat. §§ 513.44
(a), 513.45.) “[C]onstructive fraud[] does not require proof of fraudulent intent.”Id. at 645
. Instead, “a claim for constructive fraud turns on a creditor’s ability to show that the debtor made the transfer ‘without receiving [a] reasonably equivalent value,’ and that the debtor was insolvent, or the transfer made the debtor insolvent or unable to pay its debts.”Id.
(quotingMinn. Stat. §§ 513.42
,
513.44(a)(2), 513.45(a)).
Defendants first argue that Ahlgren has not sufficiently pleaded facts showing that
the Co-Op failed to receive reasonably equivalent value in exchange for the payments
made to Defendants. The Court disagrees. Like the allegations in the related case Ahlgren
v. Link, Ahlgren’s allegations “paint a detailed picture of the circumstances surrounding
Hennessey’s transfers” to Muller and DM Safaris. No. 19-305 (JRT/LIB), 2019 WL 3574598, at *6 (D. Minn. Aug. 6, 2019). “Those allegations, taken as true, establish that Hennessey’s payments to [Defendants] resulted in a transfer of the Co-Op’s funds with no return of value to the Co-Op.”Id.
Defendants next argue that Ahlgren has not sufficiently pleaded facts showing that
the Co-Op was insolvent at the time of the transfers or became insolvent as a result of
the transfers. The Court again disagrees. It is true that Ahlgren must, at some point prior
to trial, show that the Co-Op was either insolvent at the time of each transfer or became
insolvent due to each transfer to Defendants. Finn, 860 N.W.2d at 647–49 (discussing the
“transfer-by-transfer” nature of the MUVTA and noting that “a debtor could have assets
or legitimate business operations aside from the Ponzi scheme . . . that it uses to stave off
insolvency, at least for a while”).
However, insolvency is a factual question that “do[es] not need to be supported
by the sort of detailed facts expected to be uncovered at discovery.” In re: RFC & ResCap
Liquidating Tr. Litig., No. 13-CV-3451 (SRN/HB), 2017 WL 1483374, at *7 (D. Minn. Apr.
25, 2017). At this stage of the proceeding, Ahlgren has met his burden. As noted above,
Ahlgren’s complaint paints a detailed picture of the extensive, multimillion-dollar fraud
that took place. While Hennessey gave the last unauthorized check to Muller roughly
three years prior to discovery of the fraud, the sheer magnitude of the fraud, coupled
with the fact that Hennessey obtained a $7 million line of credit to keep the Co-Op’s
creditors at bay,4 establish plausibility that the Co-Op was insolvent at the time of the last
transfer in 2015 or became insolvent as a result.
Accordingly, the Court finds Ahlgren has adequately pleaded a claim for
constructive fraud and will deny Defendants’ Motion to Dismiss Count II.
C. Count III: Breach-of-Contract
Muller and DM Safaris argue that Ahlgren does not have standing to assert a claim
for breach-of-contract related to the $100,000 loan because the Co-Op was not a party
to the contract between Hennessy and Muller. Muller and DM Safaris argue that “under
Minnesota law, strangers to a contract acquire no rights under the contract.” Wurm v.
John Deere Leasing Co., 405 N.W.2d 484, 486 (Minn. Ct. App. 1987).
Ahlgren, however, is not a stranger. Hennessey assigned all rights and interest he
had in the loan to Ahlgren, the Assignee. Under Minnesota law, “[a] contract to pay
money may be assigned by the person to whom the money is payable, unless there is
something in the terms of the contract manifesting the intention of the parties that it
shall not be assigned.” Wilkie v. Becker, 128 N.W.2d 704, 707(1964) (quoting 6 Am. Jur. (2d) Assignments, s 16). Here, Muller and DM Safaris do not dispute a contract was formed, nor do they argue that the contract included an anti-assignment clause. Therefore Ahlgren, standing in the shoes of Hennessey per Hennessey’s assignment of 4 The Court considers the Plea Agreement here because it is a public record and does not contradict the pleadings. See Smithrud,746 F.3d at 395
.
the contract, has standing to pursue a breach-of-contract claim against Muller and DM
Safaris.
Accordingly, the Court will deny Defendants’ Motion to Dismiss Count III for
breach-of-contract.
D. Count IV: Unjust Enrichment
Defendants seek dismissal of Count IV for unjust enrichment. “[I]t is well settled
in Minnesota that one may not seek a remedy in equity when there is an adequate
remedy at law.” Bartholomew v. Avalon Capital Group, Inc., 828 F. Supp. 2d 1019, 1030(D. Minn. 2009) (quoting Southtown Plumbing, Inc. v. Har-Ned Lumber Co.,493 N.W.2d 137, 140
(Minn. Ct. App. 1992)). Accordingly, a plaintiff “may not simultaneously maintain his claims for avoidance of transfers as fraudulent under statute, and his claims for monetary recovery under the equitable theory of unjust enrichment, as to the same transfers and on the same pleaded facts.” In re Petters Co., Inc.,499 B.R. 342, 375
(Bankr.
D. Minn. 2013).
Ahlgren pleads, on the same facts, both statutory claims under MUVTA and
equitable claims for unjust enrichment. The Court therefore finds that Ahlgren’s claim in
equity for unjust enrichment is precluded by his claim at law under MUVTA.
Bartholomew, 828 F. Supp. 2d at 1030; see also Ahlgren v. Link, Civil No. 19-305,2019 WL 3574598
, at *6 (D. Minn. Aug. 6, 2019) (discussing and dismissing similar claims).
Accordingly, the Court will grant Defendants’ Motion to Dismiss Count IV with
prejudice.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Defendants’ Motion to Dismiss [Docket No. 50] is GRANTED in
part and DENIED in part as follows:
1. The Motion is DENIED as to Fed. R. Civ. P. 12(b)(2) as the Court has specific
personal jurisdiction over Defendants;
2. The Motion is DENIED as to Fed. R. Civ. P. 12(b)(6) for Count II for constructive
fraud and Count III for breach-of-contract; and .
3. The Motion is GRANTED with prejudice as to Fed. R. Civ. P. 12(b)(6) for Count
IV for unjust enrichment.
DATED: February 10, 2020 dota K. (cesar
at Minneapolis, Minnesota. JOHN R. TUNHEIM
United States District Judge
17 Trial Court Opinion
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
ERIK A. AHLGREN, in his capacity as
assignee in the assignment for the benefit
Civ. No. 19-303 (JRT/LIB)
of creditors of Ashby Farmers Co-
Operative Elevator Company,
Plaintiff,
MEMORANDUM OPINION
v. AND ORDER
DIEDERIK MULLER a/k/a DIEKIE MULLER
and DM SAFARIS, a/k/a DIEKIE MULLER
HUNTING SAFARIS,
Defendants.
Erik A. Ahlgren, AHLGREN LAW OFFICE, PLLC, 220 West Washington
Avenue, Suite 105, Fergus Falls, MN 56537, for plaintiff.
Mark G. Schroeder, Adam G. Chandler, and Jason R. Asmus, TAFT
STETTINIUS & HOLLISTER LLP, 80 South Eighth Street, Suite 2200,
Minneapolis, MN, 55402, for defendants.
This case arises out of Jerry Hennessey’s unauthorized use of funds from his prior
employer, the Ashby Farmers Co-Operative Elevator Company (the “Co-Op”). From
2003–2018, Hennessey paid over $5 million of the Co-Op’s funds to himself or directly to
third parties for his personal benefit. Among others, Hennessey paid Defendant DM
Safaris, owned by Defendant Diederik Muller (“Muller”), with checks from the Co-Op to
fund exotic hunting trips for himself and his wife. Upon discovery of the fraud in 2018,
the Co-Op ceased operations and appointed an Assignee, Plaintiff Erik Ahlgren, to pursue
claims and remedies on behalf of the Co-Op and its creditors. Ahlgren brought this action
in January 2019, seeking to void unauthorized payments to Defendants.
Presently before the Court is Defendants’ Motion to Dismiss for lack of personal
jurisdiction under Fed. R. Civ. P. 12(b)(2) and failure to state a claim under Fed. R. Civ. P.
12(b)(6). For the reasons set forth below, the Court will deny Defendants’ Motion to
Dismiss under Rule 12(b)(2), grant in part and deny in part Defendants’ Motion to Dismiss
under Rule 12(b)(6), and will deny Ahlgren leave to amend.
BACKGROUND
I. FACTUAL BACKGROUND
The Co-Op is a grain farmers’ cooperative based in Ashby, Minnesota. (First. Am.
Compl. (“FAC”) ¶ 1, July 11, 2019, Docket No. 47.) The Co-Op purchases grain from local
farmers, who are also owners of the Co-Op, and sells it to grain markets. (Id. ¶ 14.)
In 1989, the Co-Op hired Jerry Hennessey, a resident of Minnesota, as its general
manager. (Id. ¶ 14.) Between June 2003 and September 2018, Hennessey received over
$5.4 million in unauthorized funds from the Co-Op by writing checks from the Co-Op to
himself and directly to third parties, including Defendants. (Id. ¶¶ 15–17.) Hennessey
used the checks for personal bills, home improvement projects, property purchases, and
domestic and international hunting trips unrelated to the business of the Co-Op. (Id. ¶
16.) Hennessey disguised his fraud from the Co-Op by coding the checks as feed
purchases or other ordinary expenses. (Id.) All of the checks identified the Co-Op as the
payor. (Id. ¶ 18.)
Muller is a resident of South Africa and maintains an address in California. (Id. ¶
2; Decl. of Diederik J. Muller (“1st Muller Decl.”) ¶ 2, Feb. 28, 2019, Docket No. 13.) He
owns and operates DM Safaris, which provides guided hunting services and
accommodations in South Africa. (1st Muller Decl. ¶ 3.) DM Safaris is incorporated and
headquartered in South Africa but maintains an office and bank account in California. (Id.;
Decl. of Erik A. Ahlgren (“Ahlgren Decl.”) ¶ 16, Ex. N at 152, Aug. 26, 2019, Docket No.
55.)1 DM Safaris is not licensed to do business in Minnesota, does not have property or
agents in Minnesota, and does not maintain a bank account in Minnesota. (1st Muller
Decl. ¶ 5.) DM Safaris operates a website and Facebook page that generally advertises its
services to an international and United States audience. (2nd Decl. of Diederik J. Muller
(“2nd Muller Decl.”) ¶ 2, Sept. 9, 2019, Docket No. 59.)
Muller met Hennessey for the first time in February 2012 at a Safari Club
International (“SCI”) hunting convention held in Nevada. (FAC ¶ 21; First Muller Decl. ¶¶
6–7.) Hennessey wrote Muller an unauthorized check for $45,000 at the Nevada
convention as down payment for a South African hunting trip later that year. (FAC ¶ 21;
Affidavit of Erik. A. Ahlgren (“Ahlgren Aff.”) ¶ 4, Ex. 1 (“Hennessey Aff.”) ¶ 13, May 30,
1 Page numbers listed in the Ahlgren Declaration refer to the PDF pagination of the
Declaration as a whole rather than the individual exhibit page numbers listed on each
exhibit.
2019, Docket No. 33.) Following the 2012 Nevada convention, Muller and Hennessy
corresponded via telephone and email while Hennessey was in Minnesota to finalize
details for the 2012 trip. (Hennessey Aff. ¶ 12.) Hennessey was responsible for making
his own travel arrangements to and from South Africa. (Id.) Hennessey and his wife then
flew to South Africa in May 2012 for the hunt. (Id. ¶ 14.) After the trip and while still in
South Africa, Hennessey paid Muller for the animals he took and completed appropriate
paperwork to have the animals shipped back to him in Minnesota. (Id. ¶ 15.)
In 2013, Hennessey and Muller again met at the SCI convention in Nevada and,
again, Hennessey wrote Muller and DM Safaris an unauthorized check—this time for
$100,000—to pay for another South African hunting trip with DM Safaris. (Id. ¶ 18.)
Following the 2013 convention, Hennessey and Muller again corresponded by email and
phone while Hennessey was in Minnesota to finalize details for the trip. (Id. ¶ 19–20.)
Like the first trip, Hennessey paid for the animals he took and completed paperwork for
the animals to be shipped to Minnesota. (Id. ¶ 20.) A problem developed, however, when
the skins of the animals taken never arrived in Minnesota. (Id. ¶ 21.)
In 2014, Hennessey met with Muller at the SCI convention in Nevada to discuss the
problem with the 2013 trip. (Id. ¶ 22.) Following the SCI convention, Muller returned to
Minnesota with Hennessey and the pair spent three to four days ice fishing,
snowmobiling, and discussing problems with the 2013 trip. (Id.; Ahlgren Decl. ¶ 19, Ex. Q
at 202.) After Muller left Minnesota, he refunded Hennessey $8,000 for the 2013 trip.
(Hennessey Aff. ¶ 23.)
In January 2015, prior to SCI Convention in Nevada, Muller called Hennessey from
South Africa and requested a $100,000 loan from Hennessey to purchase black impalas
for his business. 2 (Id. ¶ 24; 2nd Muller Decl. ¶ 3.) Muller promised to repay the loan
within one year. (Hennessey Aff. ¶ 24; 2nd Muller Decl. ¶ 3.) Hennessey obliged and sent
Muller an unauthorized check for $100,000. (Hennessey Aff. ¶ 24; 2nd Muller Decl. ¶ 3.)
Later that month, at the 2015 SCI convention in Nevada, Muller gave Hennessey a check
for $20,000 as an additional refund for the problems associated with the 2013 trip.
(Hennessey Aff. ¶ 24.) The $100,000 loan has yet to be repaid. (Id. ¶ 25.)
Hennessey’s fraud was discovered in September 2018. (Id. ¶ 35.) By this time,
Hennessey had obtained a credit line of over $7 million for the Co-Op in his ongoing
efforts to conceal his fraud and cover the Co-Op’s expenses. (Ahlgren Decl. ¶ 4, Ex. C at
24–25.) On February 14, 2019, Hennessey pleaded guilty to mail fraud and income tax
evasion. (Id. at 23.)
As a result of Hennessey’s fraud, the Co-Op was forced to close and has been
unable to pay its debts. (Ahlgren Decl. ¶ 3, Ex. B at 13.) In December 2018, the Co-Op
executed an assignment (the “Assignment”) with Erik Ahlgren for the benefit of the Co-
2 An impala is a “swift-running antelope.” “Impala,” Encyclopedia Britannica Online,
https://www.britannica.com/animal/impala#ref1022159, (last accessed Dec. 19, 2019).
A black impala “is a comparatively rare subspecies coveted by trophy hunters.” Id.
Op’s creditors. (Id.) Pursuant to Minn. Stat. §§ 576-77, Ahlgren has committed to
liquidating and administering the Co-Op’s assets and may pursue any claim or remedy
that could be asserted by the Co-Op or by a creditor of the Co-Op. (FAC. ¶¶ 5–7.)
According to reports filed with the Assignment, the Co-Op has forty-three creditors, most
of which are based in Minnesota. (Ahlgren Decl. ¶ 3, Ex. B at 20–21.)
II. PROCEDURAL BACKGROUND
Ahlgren originally brought this action in Grant County District Court on January 8,
2019, alleging three Counts: (I) actual fraud pursuant to the Minnesota Uniform Voidable
Transactions Act (“MUVTA”), Minn. Stat. §§ 513.44(a)(1), 513.47; (II) constructive fraud pursuant to MUVTA,Minn. Stat. §§ 513.45
(a), 513.47; and (III) unjust enrichment. (Notice
of Removal ¶ 1, Ex. A at 7-8, 14-17, Feb. 8, 2019, Docket No. 1.) Defendants removed the
case to this Court on February 8, 2019. (Id. at 1.)
On February 28, 2019, Defendants moved to dismiss the complaint for lack of
personal jurisdiction pursuant to Rule 12(b)(2) and for failure to state a claim pursuant to
Rule 12(b)(6). (Mot. to Dismiss, Feb. 28, 2019, Docket No. 10.) The Court allowed written
discovery limited to personal jurisdiction before ruling on the motion to dismiss. (Order
on Stipulation, Mar. 22, 2019, Docket No. 19.) On May 30, 2019, Ahlgren moved to amend
the pleadings. (Mot. to Alter Pleadings, May 30, 2019, Docket No. 30.) The Court granted
Ahlgren’s motion and denied Defendants’ motion to dismiss without prejudice. (Order,
June 21, 2019, Docket No. 44.)
On July 11, 2019, Ahlgren filed an amended complaint, which alleges four Counts:
(I) actual fraud pursuant to the MUVTA, Minn. Stat. §§ 513.44(a)(1), 513.47; (II) constructive fraud pursuant to the MUVTA,Minn. Stat. §§ 513.45
(a), 513.47; (III) breach-
of-contract; and (IV) unjust enrichment. (FAC ¶¶ 36–62.) Defendants now move again to
dismiss under Rule 12(b)(2) and 12(b)(6), for lack of personal jurisdiction and failure to
state a claim, respectively. (Mot. to Dismiss, Aug. 5, 2019, Docket No. 50.)
DISCUSSION
I. PERSONAL JURISDICTION
A. Standard of Review
Federal Rule of Civil Procedure 12(b)(2) provides that a party may move to dismiss
claims for lack of personal jurisdiction. “To defeat a motion to dismiss for lack of personal
jurisdiction, the nonmoving party need only make a prima facie showing of
jurisdiction.” Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 647(8th Cir. 2003). “As long as there is ‘some evidence upon which a prima facie showing of jurisdiction may be found to exist,’ the Rule 12(b)(2) motion will be denied.” Pope v. Elabo GmbH,588 F. Supp. 2d 1008, 1014
(D. Minn. 2008) (quoting Aaron Ferer & Sons Co. v. Diversified Metals Corp.,564 F.2d 1211, 1215
(8th Cir. 1977)). The party seeking to establish personal jurisdiction bears the burden of proof, and “the burden does not shift to the party challenging jurisdiction.” Epps,327 F.3d at 647
. For purposes of a prima facie showing, the Court must view the evidence in the light most favorable to the non-moving party. Westley v. Mann,896 F. Supp. 2d 775, 786
(D. Minn. 2012).
B. Due Process and Specific Personal Jurisdiction
The Court may exercise personal jurisdiction over a defendant only if doing so (1)
is consistent with the Minnesota’s long-arm statute, Minn. Stat. § 543.19, and (2) comports with the Due Process Clause of the Fourteenth Amendment. Pope, 588 F. Supp. 2d at 1014–15. Because Minnesota’s long-arm statue extends as far as the Due Process Clause allows, “the Court need only consider whether exercising personal jurisdiction over [Defendants] is consistent with due process.”Id. at 1015
.
“The Due Process Clause of the Fourteenth Amendment constrains a State's
authority to bind a nonresident defendant to a judgment of its courts.” Walden v. Fiore,
571 U.S. 277, 283(2014). “The touchstone of the due-process analysis remains whether the defendant has sufficient ‘minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG,646 F.3d 589, 594
(8th Cir. 2011) (alteration in original) (quoting Int’l Shoe Co. v. Washington,326 U.S. 310, 316
(1945)). “The central question is whether a defendant has purposefully availed itself of the privilege of conducting activities in the forum state and should, therefore, reasonably anticipate being haled into court there.” Pecoraro v. Sky Ranch for Boys, Inc.,340 F.3d 558, 562
(8th Cir. 2003) (citing Burger King Corp. v. Rudzewicz,471 U.S. 462, 475
(1985); World–Wide Volkswagen Corp. v. Woodson,444 U.S. 286, 297
(1980)).
Although personal jurisdiction can be general or specific, this case deals only with
whether Defendants have sufficient minimum contacts to support specific jurisdiction.
“The inquiry whether a forum State may assert specific jurisdiction over a nonresident
defendant focuses on the relationship among the defendant, the forum, and the
litigation.” Walden, 571 U.S. at 283–84 (internal quotations omitted). In addition to
establishing minimum contacts with the forum, for specific personal jurisdiction to be
proper, the complained-of conduct must also arise out of the contacts that defendant
creates with the forum state.3 Id. at 284. “[T]he plaintiff cannot be the only link between
the defendant and the forum. Rather, it is the defendant’s conduct that must form the
necessary connection with the forum State” for jurisdiction to be proper. Id. at 285.
The Eighth Circuit considers five factors in making a personal jurisdiction
determination:
(1) the nature and quality of the contacts with the forum
state;
(2) the quantity of the contacts with the forum state;
(3) the relation of the cause of action to the contacts;
(4) the interest of the forum state in providing a forum for its
residents; and
(5) the convenience of the parties.
3 “This is in contrast to ‘general’ or ‘all purpose’ jurisdiction, which permits a court to
assert jurisdiction over a defendant based on a forum connection unrelated to the
underlying suit (e.g., domicile).” Walden, 571 U.S. at 283n.6. Bell Paper Box, Inc. v. Trans W. Polymers, Inc.,53 F.3d 920, 922
(8th Cir. 1995) (citation omitted). “[T]he first two factors go primarily to whether minimum contacts exist,” the third determines whether the action arises from the contacts, and the last two examine reasonableness. Yellow Brick Road, LLC, v. Childs,36 F. Supp. 3d 855, 864
(D. Minn. 2014).
The five-factor test essentially boils down to three: (1) whether the quality and quantity
of the defendants contacts with the forum State establish minimum contacts; (2) whether
the litigation arises out of those contacts; and finally, if the first two are met, (3) whether
it is reasonable, considering the interest of the forum state and convenience to the
parties, to force an out-of-state litigant to defend itself in the forum state. See 13 Wright
& Arthur R. Miller, Federal Practice and Procedure §1069 (4th ed.).
C. Analysis
Ahlgren argues that Defendants’ contacts, when viewed in totality, show that
Muller and DM Safaris purposefully availed themselves of the privilege of conducting
business in Minnesota and that the cause of action arises out of those contacts. The Court
agrees with Ahlgren.
The quantity and quality of Defendants’ contacts establish purposeful availment.
Pecoraro, 340 F.3d at 562. Muller visited Minnesota in 2014 with the purpose, at least in part, of promoting DM Safaris. Muller acknowledges that business was discussed with Hennessey on the trip and that Muller issued a refund to Hennessey shortly thereafter. Subsequently, Muller solicited a $100,000 loan from Hennessey while Hennessey was in Minnesota for DM Safaris and promised to pay Hennessey back within one year. Additionally, Muller and DM Safaris sent invoices, emails, and animal components to Hennessey in Minnesota. These contacts, considered alongside Muller’s visit to Minnesota and his loan solicitation from Hennessey in Minnesota, show that Muller and DM Safaris “purposefully reached out” to Minnesota with the intention of garnering business in the State. Walden,571 U.S. at 285
(cleaned up). The Court therefore finds
Defendants have sufficient minimum contacts with Minnesota for the Court to exercise
specific personal jurisdiction. Additionally, because this dispute arose from those
contacts and centers around payments Hennessey made to Defendants, the Court finds a
sufficient nexus between the dispute and Defendants’ contacts with Minnesota.
Having found that sufficient minimum contacts and a nexus exist, “it is
presumptively not unreasonable to require [a defendant] to submit to the burdens of
litigation in the forum.” Burger King, 471 U.S. at 476. DM Safaris and Muller have not
presented any facts or law sufficient to rebut this presumption. Minnesota has a high
interest in providing a forum in this matter as Ahlgren is a Minnesota resident and most
of the creditors are located here. The inconvenience to Defendants would also not be so
burdensome as to violate traditional notions of fair play and substantial justice.
Accordingly, the Court finds that Muller and DM Safaris are subject to specific
personal jurisdiction in this case. The Court will deny Defendants’ Motion to Dismiss
under Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction.
II. FAILURE TO STATE A CLAIM
A. Standard of Review
In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the
Court considers all facts alleged in the complaint as true to determine if the complaint
states a “claim to relief that is plausible on its face.” Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 594(8th Cir. 2009) (quoting Ashcroft v. Iqbal,556 U.S. 662, 678
(2009)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal,556 U.S. at 678
. Although the Court accepts the complaint’s factual allegations as true and construes the complaint in a light most favorable to the plaintiff, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain,478 U.S. 265, 286
(1986)). In other words, a complaint “does not need detailed factual allegations” but must include more “than labels and conclusions, and a formulaic recitation of the elements” to meet the plausibility standard. Bell Atl. Corp. v. Twombly,550 U.S. 544, 555
(2007).
“When considering a Rule 12(b)(6) motion, ‘the court generally must ignore
materials outside the pleadings, but it may consider some materials that are part of the
public record or do not contradict the complaint, as well as materials that are necessarily
embraced by the pleadings.’” Smithrud v. City of St. Paul, 746 F.3d 391, 395(8th Cir. 2014) (quoting Porous Media Corp. v. Pall Corp.,186 F.3d 1077, 1079
(8th Cir. 1999)).
Defendants seek dismissal of Count II for constructive fraud, Count III for breach-
of-contract, and Count IV for unjust enrichment. Each is considered in turn below.
B. Count II: Constructive Fraud
“To cover the variety of situations in which debtors may attempt to place assets
beyond the reach of creditors, [MUVTA] allows creditors to recover assets that a debtor
transfers with fraudulent intent . . . as well as those transfers that the law treats as
constructively fraudulent.” Finn v. Alliance Bank, 860 N.W.2d 638, 644(Minn. 2015) (citingMinn. Stat. §§ 513.44
(a), 513.45.) “[C]onstructive fraud[] does not require proof of fraudulent intent.”Id. at 645
. Instead, “a claim for constructive fraud turns on a creditor’s ability to show that the debtor made the transfer ‘without receiving [a] reasonably equivalent value,’ and that the debtor was insolvent, or the transfer made the debtor insolvent or unable to pay its debts.”Id.
(quotingMinn. Stat. §§ 513.42
,
513.44(a)(2), 513.45(a)).
Defendants first argue that Ahlgren has not sufficiently pleaded facts showing that
the Co-Op failed to receive reasonably equivalent value in exchange for the payments
made to Defendants. The Court disagrees. Like the allegations in the related case Ahlgren
v. Link, Ahlgren’s allegations “paint a detailed picture of the circumstances surrounding
Hennessey’s transfers” to Muller and DM Safaris. No. 19-305 (JRT/LIB), 2019 WL 3574598, at *6 (D. Minn. Aug. 6, 2019). “Those allegations, taken as true, establish that Hennessey’s payments to [Defendants] resulted in a transfer of the Co-Op’s funds with no return of value to the Co-Op.”Id.
Defendants next argue that Ahlgren has not sufficiently pleaded facts showing that
the Co-Op was insolvent at the time of the transfers or became insolvent as a result of
the transfers. The Court again disagrees. It is true that Ahlgren must, at some point prior
to trial, show that the Co-Op was either insolvent at the time of each transfer or became
insolvent due to each transfer to Defendants. Finn, 860 N.W.2d at 647–49 (discussing the
“transfer-by-transfer” nature of the MUVTA and noting that “a debtor could have assets
or legitimate business operations aside from the Ponzi scheme . . . that it uses to stave off
insolvency, at least for a while”).
However, insolvency is a factual question that “do[es] not need to be supported
by the sort of detailed facts expected to be uncovered at discovery.” In re: RFC & ResCap
Liquidating Tr. Litig., No. 13-CV-3451 (SRN/HB), 2017 WL 1483374, at *7 (D. Minn. Apr.
25, 2017). At this stage of the proceeding, Ahlgren has met his burden. As noted above,
Ahlgren’s complaint paints a detailed picture of the extensive, multimillion-dollar fraud
that took place. While Hennessey gave the last unauthorized check to Muller roughly
three years prior to discovery of the fraud, the sheer magnitude of the fraud, coupled
with the fact that Hennessey obtained a $7 million line of credit to keep the Co-Op’s
creditors at bay,4 establish plausibility that the Co-Op was insolvent at the time of the last
transfer in 2015 or became insolvent as a result.
Accordingly, the Court finds Ahlgren has adequately pleaded a claim for
constructive fraud and will deny Defendants’ Motion to Dismiss Count II.
C. Count III: Breach-of-Contract
Muller and DM Safaris argue that Ahlgren does not have standing to assert a claim
for breach-of-contract related to the $100,000 loan because the Co-Op was not a party
to the contract between Hennessy and Muller. Muller and DM Safaris argue that “under
Minnesota law, strangers to a contract acquire no rights under the contract.” Wurm v.
John Deere Leasing Co., 405 N.W.2d 484, 486 (Minn. Ct. App. 1987).
Ahlgren, however, is not a stranger. Hennessey assigned all rights and interest he
had in the loan to Ahlgren, the Assignee. Under Minnesota law, “[a] contract to pay
money may be assigned by the person to whom the money is payable, unless there is
something in the terms of the contract manifesting the intention of the parties that it
shall not be assigned.” Wilkie v. Becker, 128 N.W.2d 704, 707(1964) (quoting 6 Am. Jur. (2d) Assignments, s 16). Here, Muller and DM Safaris do not dispute a contract was formed, nor do they argue that the contract included an anti-assignment clause. Therefore Ahlgren, standing in the shoes of Hennessey per Hennessey’s assignment of 4 The Court considers the Plea Agreement here because it is a public record and does not contradict the pleadings. See Smithrud,746 F.3d at 395
.
the contract, has standing to pursue a breach-of-contract claim against Muller and DM
Safaris.
Accordingly, the Court will deny Defendants’ Motion to Dismiss Count III for
breach-of-contract.
D. Count IV: Unjust Enrichment
Defendants seek dismissal of Count IV for unjust enrichment. “[I]t is well settled
in Minnesota that one may not seek a remedy in equity when there is an adequate
remedy at law.” Bartholomew v. Avalon Capital Group, Inc., 828 F. Supp. 2d 1019, 1030(D. Minn. 2009) (quoting Southtown Plumbing, Inc. v. Har-Ned Lumber Co.,493 N.W.2d 137, 140
(Minn. Ct. App. 1992)). Accordingly, a plaintiff “may not simultaneously maintain his claims for avoidance of transfers as fraudulent under statute, and his claims for monetary recovery under the equitable theory of unjust enrichment, as to the same transfers and on the same pleaded facts.” In re Petters Co., Inc.,499 B.R. 342, 375
(Bankr.
D. Minn. 2013).
Ahlgren pleads, on the same facts, both statutory claims under MUVTA and
equitable claims for unjust enrichment. The Court therefore finds that Ahlgren’s claim in
equity for unjust enrichment is precluded by his claim at law under MUVTA.
Bartholomew, 828 F. Supp. 2d at 1030; see also Ahlgren v. Link, Civil No. 19-305,2019 WL 3574598
, at *6 (D. Minn. Aug. 6, 2019) (discussing and dismissing similar claims).
Accordingly, the Court will grant Defendants’ Motion to Dismiss Count IV with
prejudice.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Defendants’ Motion to Dismiss [Docket No. 50] is GRANTED in
part and DENIED in part as follows:
1. The Motion is DENIED as to Fed. R. Civ. P. 12(b)(2) as the Court has specific
personal jurisdiction over Defendants;
2. The Motion is DENIED as to Fed. R. Civ. P. 12(b)(6) for Count II for constructive
fraud and Count III for breach-of-contract; and .
3. The Motion is GRANTED with prejudice as to Fed. R. Civ. P. 12(b)(6) for Count
IV for unjust enrichment.
DATED: February 10, 2020 dota K. (cesar
at Minneapolis, Minnesota. JOHN R. TUNHEIM
United States District Judge
17 Reference
- Status
- Unknown