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Pohle v. Mitchell

United States District Court, S.D. Indiana, New Albany Division

March 21, 2018




         This matter is before the Court on Motions to Dismiss filed pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6) by Defendants William Moss (“Moss”), Paul Mitchell, and Craig Mitchell (collectively, “Defendants”) (Filing No. 19; Filing No. 24; Filing No. 26). In October 2014, Plaintiffs Daniel L. Pohle (“Pohle”) and Otter Creek Trading Company, Inc. (“Otter Creek”) (collectively, “Plaintiffs”) were sued for breach of contract and conversion by PCM Enviro PTY Limited Partnership (“PCM”), an Australian company operated by Paul Mitchell and Craig Mitchell. That lawsuit was filed in the Jennings County (Indiana) Superior Court. In June 2015, PCM was granted default judgment against the Plaintiffs. After being denied numerous requests for relief from the default judgment and losing on appeal at the Indiana Court of Appeals, the Plaintiffs filed the instant lawsuit against the Defendants, alleging fraudulent civil conspiracy both prior to and during the state court proceedings. The Defendants filed Motions to Dismiss, asserting lack of subject matter jurisdiction under the Rooker-Feldman doctrine, lack of personal jurisdiction, and failure to state a claim. For the following reasons, the Court grants the Defendants' Motions to Dismiss.

         I. BACKGROUND

         The following facts are not necessarily objectively true, but as required when reviewing a motion to dismiss, the Court accepts as true all factual allegations in the Complaint and draws all inferences in favor of the Plaintiffs as the non-moving parties. See Bielansky v. County of Kane, 550 F.3d 632, 633 (7th Cir. 2008).

         Otter Creek is an Indiana corporation that manufactures and sells lead smelting equipment. It has operated for approximately twenty-five years in Jennings County, Indiana. It ships its lead smelting equipment internationally. Pohle operates Otter Creek and is its sole shareholder. He has extensive experience shipping lead smelting equipment internationally having shipped more than one hundred pieces of equipment to thirty different countries (Filing No. 1 at 2-3). Paul Mitchell and Craig Mitchell are citizens of Australia, and they operate PCM. Id. Moss is a citizen of Wisconsin. Id. at 2.

         In July 2014, Plaintiffs entered into a contract with PCM for the sale of a lead smelter. Id. at 3. Otter Creek's invoice noted that the lead smelter would not be released to anyone other than an international shipper because of liability concerns and to protect intellectual property rights. Id. at 3-4. Around that same time PCM purchased a machine belt, which was shipped to Plaintiffs. PCM arranged to have the belt shipped to the Plaintiffs, who agreed to then ship the belt with the smelter to PCM in Australia via international shipper HTX International (Filing No. 1 at 6; Filing No. 25 at 2; Filing No. 37 at 3-4). PCM made the final payment on the smelter in July 2014 (Filing No. 25-11 at 161).

         Ultimately, PCM arranged to have Moss retrieve both the smelter and the belt from the Plaintiffs and ship them to PCM in Australia. In September 2014, Moss arrived in Indiana to pick up the equipment from Pohle (Filing No. 1 at 5; Filing No. 37 at 3). However, when Pohle realized Moss was in the lead reclamation business and Moss told him that he would keep the smelter for a few months before delivering it to PCM, Pohle refused to turn over the smelter to Moss fearing that Moss and PCM were trying to steal his intellectual property. Pohle retained possession of the belt and smelter. Id.

         Around this same time, Pohle became concerned about the identity of the individual or entity in Australia with whom he was dealing. In early July 2014, Pohle conducted an entity search and could not find an entity called PCM in Australia. Pohle also asked Craig Mitchell to verify his identity through the United States Embassy in Australia. Craig Mitchell initially refused but later sent a copy of his new passport. Because the passport was new, Pohle's suspicion surrounding the transaction grew. Pohle retained possession of the smelter, belt, and PCM's payments (Filing No. 37 at 5-6).

         In October 2014, PCM brought suit against Plaintiffs in the Jennings County Superior Court for breach of contract and conversion (Filing No. 25-4). By February 2015, the Plaintiffs had not filed an answer to PCM's complaint, although they had submitted correspondence to the court (Filing No. 25-2 at 2-3). On February 5, 2015, PCM filed a motion for default judgment. Between February 26 and May 26, 2015, the Plaintiffs filed eight different motions to dismiss, all of which were denied. Default judgment was entered against the Plaintiffs. A damages hearing was held. The state court awarded PCM actual damages, punitive damages, and lost profits in the amount of $146, 537.80. Id. at 3-8; Filing No. 25-5. After this judgment was entered, the Plaintiffs filed a motion to correct errors and to set aside the default judgment in the state trial court, arguing that PCM made fraudulent representations to the court in its filings and during the damages hearing (Filing No. 1 at 4-6; Filing No. 25-6). This motion was denied, so the Plaintiffs appealed the decision to the Indiana Court of Appeals (Filing No. 25-2 at 9).

         The Indiana Court of Appeals upheld the trial court's judgment in favor of PCM and against the Plaintiffs. The appellate court affirmed both the default judgment and denial of the Plaintiffs' post-judgment motions. Otter Creek Trading Co. v. PCM Enviro PTY, LTD, 60 N.E.3d 217 (Ind.Ct.App. 2016). The appellate court addressed the Plaintiffs' claims that PCM had made fraudulent representations to the court, explaining that the evidence favored PCM and in any event the purported misrepresentations would not have led to a different outcome in the trial court. Id. at 227-29.

         The Plaintiffs filed additional post-appeal motions and a motion to set aside judgment in the state trial court, attempting to avoid the default judgment and damages award against them. However, each of these motions were denied (Filing No. 25-2 at 10-14). While the post-appeal motions were being litigated in state court, the Plaintiffs filed their Complaint in this Court against Craig Mitchell, Paul Mitchell, and Moss on April 28, 2017, alleging fraudulent civil conspiracy (Filing No. 1). The Plaintiffs' claim is based on the Defendants' alleged misrepresentations to the state trial court as well as representations made to the Plaintiffs during their transactions involving the smelter. Specifically, the Plaintiffs allege that the Defendants fraudulently conspired to gain control of the Plaintiffs' lead smelting equipment in order to infringe on the Plaintiffs' intellectual property rights. Then they fraudulently sued the Plaintiffs when they were unsuccessful in obtaining the smelting equipment, and they made fraudulent representations to the state courts while litigating that action. Id. at 4-6.

         In response to the Plaintiffs' Complaint, the Defendants each filed their Motions to Dismiss, asserting various grounds for dismissal. They each argue that subject matter jurisdiction does not exist based on the Rooker-Feldman doctrine and because the amount in controversy does not exceed $75, 000.00. They additionally argue that the Complaint fails to state a claim and also does not provide sufficient factual allegations for a claim based on fraud. Paul Mitchell and Craig Mitchell also assert that the Court lacks personal jurisdiction over them.


         For the purposes of a motion to dismiss under Rules 12(b)(1), 12(b)(2), or 12(b)(6), district courts accept all well-pleaded factual allegations as true and construe all reasonable inferences in the plaintiff's favor. See Scanlan v. Eisenberg, 669 F.3d 838, 841 (7th Cir. 2012); Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). A Rule 12(b)(1) or 12(b)(2) motion challenges federal jurisdiction, and the party invoking federal jurisdiction bears the burden of establishing the elements necessary for jurisdiction. Scanlan, 669 F.3d at 841-42. In ruling on a motion under Rule 12(b)(1), district courts may look ...

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