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Martin v. Eide Bailly LLP

United States District Court, S.D. Indiana, Indianapolis Division

August 23, 2016

SHIRLEY MARTIN, RON MARTIN, and MICHAEL SAHARIAN, on their own behalf and on behalf of those similarly situated Plaintiffs,


          Hon. William T. Lawrence, Judge

         This cause is before the Court on the Defendant’s motion to dismiss for lack of personal jurisdiction (Dkt. No. 42).[1] The motion is fully briefed, and the Court, being duly advised, GRANTS the motion for the reasons set forth below.

         I. STANDARD

         The Defendant moves to dismiss this case pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. When a defendant challenges the Court’s personal jurisdiction over it, the plaintiff bears the burden of demonstrating the existence of jurisdiction. Jennings v. AC Hydraulic A/S, 383 F.3d 546, 548 (7th Cir. 2004). Where, as here, a motion to dismiss is resolved without an evidentiary hearing, the plaintiff’s burden is satisfied if it makes a prima facie case of personal jurisdiction. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). “In evaluating whether the prima facie standard has been satisfied, the plaintiff is entitled to the resolution in its favor of all disputes concerning relevant facts presented in the record.” Id. (quotation and citations omitted).

         Where, as here, there is no applicable federal statute providing for nationwide service of process, a federal district court may exercise personal jurisdiction over a defendant if a court of the state in which it sits would have such jurisdiction. Fed.R.Civ.P. 4(k)(1)(A). This Court sits in Indiana, and Indiana Trial Rule 4.4(A) provides for jurisdiction “on any basis not inconsistent with the Constitution of this state or the United States”; in other words, Indiana permits the exercise of personal jurisdiction to the full extent permitted by the Federal Due Process Clause. LinkAmerica Corp. v. Albert, 857 N.E.2d 961, 967 (Ind. 2006).

         There are two forms of personal jurisdiction that a court may exercise over a non-resident defendant: “general” and “specific” jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984).[2] Specific jurisdiction is applicable when the basis of the suit “arises out of or is related to” the defendant’s contacts with the forum state. Jennings, 383 F.3d at 549.

To establish specific jurisdiction under the familiar minimum contacts analysis, a plaintiff must show that the defendant has purposefully availed itself of the privilege of conducting activities within the forum state and that the exercise of personal jurisdiction over that defendant would comport with traditional notions of fair play and substantial justice.

Id. (citations and internal quotation marks omitted).


         The facts alleged by the Plaintiff in the Amended Complaint are as follows. Plaintiffs Shirley Martin, Ron Martin, and Michael Saharian (“Plaintiffs”), individually and on behalf of others similarly situated, filed this suit against Defendant Eide Bailly LLP[3], based on Defendant’s participation in a massive Ponzi scheme of financial fraud involving DBSI Housing Inc., a/k/a DBSI Inc. (hereafter “DBSI Housing”) and its subsidiaries (collectively “DBSI”). DBSI’s fraud bilked hundreds of millions of dollars from investors in DBSI (the “Investors”), including Plaintiffs and others similarly situated. The Defendant is a North Dakota accounting firm that audited some of the DBsI subsidiaries.

         The Amended Complaint alleged that the Defendant aided and abetted DBSI’s material misrepresentations and omissions, including “the financial condition of DBSI Housing and DBSI’s portfolio of entities that were the lessees under the master lease structures at DBSI investment properties (“Master Lease Portfolio”); the capitalization, liquidity, and financial condition of Master LeaseCo; DBSI’s use of Accountable Reserves . . .; and the DBSI notes corporations’ use of investor money, compliance with loan-to-value ratio restrictions, and assets.” Dkt. No. 34 at 2.

         The named Plaintiffs are citizens of Indiana. Plaintiffs Shirley and Ron Martin purchased a DBSI investment, and the sale occurred in Indiana. Likewise, Plaintiff Saharian purchased a DBSI investment, and that sale also occurred in Indiana.


         The Plaintiffs have asserted that the Court has personal jurisdiction over the Defendant under the theory of conspiracy-based personal jurisdiction.[4] The Court will assume, without deciding, that the facts alleged by the Plaintiffs would be sufficient to support the exercise of personal jurisdiction over the Defendant under the conspiracy theory of personal jurisdiction if that theory were recognized in ...

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