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International Association of Certified Home Inspectors v. Lesh

United States District Court, D. Colorado

November 29, 2018

INTERNATIONAL ASSOCIATION OF CERTIFIED HOME INSPECTORS, Plaintiff,
v.
FRANK LESH, Defendant.

          ORDER GRANTING MOTION TO DISMISS

          William J. Martinez United States District Judge

         Plaintiff International Association of Certified Home Inspectors (“InterNACHI”) brings claims against Defendant Frank Lesh (“Lesh”) arising out of an allegedly defamatory article titled “The Badges We Earn” by Lesh published in the American Society of Home Inspectors' (“ASHI”) official publication The ASHI Reporter. (ECF No. 4.) InterNACHI brings claims for defamation, commercial disparagement, tortious interference with existing and prospective business relations, and deceptive trade practices. (Id.) Now before the Court is Lesh's Motion to Dismiss (“Motion”) for lack of personal jurisdiction. (ECF No. 7.) For the reasons explained below, Lesh's Motion is granted and the case is dismissed without prejudice.

         I. LEGAL STANDARD

         The purpose of a motion to dismiss pursuant to Rule 12(b)(2) is to test whether the Court has personal jurisdiction over the named parties. The plaintiff bears the burden of establishing personal jurisdiction over a defendant. Behagen v. Amateur Basketball Ass'n, 744 F.2d 731, 733 (10th Cir. 1984). As is true here, when the court does not hold an evidentiary hearing before ruling on jurisdiction, “the plaintiff need only make a prima facie showing” of personal jurisdiction to defeat a motion to dismiss. Id. (citing Am. Land Program, Inc. v. Bonaventura Uitgevers Maatschappij, N.V., 710 F.2d 1449, 1454 n.2 (10th Cir. 1983)). A plaintiff “may make this prima facie showing by demonstrating, via affidavit or other written materials, facts that if true would support jurisdiction over the defendant.” OMI Holdings, Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086, 1091 (10th Cir. 1998). To defeat the plaintiff's prima facie case, a defendant “must present a compelling case demonstrating ‘that the presence of some other considerations would render jurisdiction unreasonable.'” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).

         To obtain personal jurisdiction over a nonresident defendant, the plaintiff “must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment.” Benton v. Cameco Corp., 375 F.3d 1070, 1075 (10th Cir. 2004) (quoting Soma Med. Int'l v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir. 1999)). Colorado's long arm statute confers the maximum jurisdiction permitted by the due process clauses of the United States and Colorado constitutions. Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005) (referring to Colo. Rev. Stat. § 13-1-124). Thus, the Court need only address the constitutional question of whether the exercise of personal jurisdiction over the defendant comports with due process. Dudnikov v. Chalk & Vermillion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008) (the state jurisdictional analysis in Colorado “effectively collapses into the second, constitutional, analysis”).

         At this stage, the Court accepts the well-pled factual allegations of the complaint as true to determine whether InterNACHI has made a prima facie showing that personal jurisdiction exists. Id. Any factual conflicts arising from affidavits or other submitted materials are resolved in the plaintiff's favor. Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995).

         II. BACKGROUND

         The following summary is drawn from InterNACHI's complaint. (ECF No. 4.)

         InterNACHI and ASHI are large, national trade associations of home inspectors, and each other's main competitors. (ECF No. 4 ¶¶ 6, 8.) They compete for members, who join an association for education, marketing, networking, and accreditation. (Id. ¶¶ 7, 9.) Both associations offer various levels of membership based on continuing education classes and exams. (Id. ¶ 11.) Lesh has been a member of ASHI since approximately 1990 and became ASHI's executive director in 2007.[1] (Id. ¶ 13.)

         In October 2017, ASHI published an article by Lesh titled “The Badges We Earn” in its official publication, The ASHI Reporter. (Id. ¶ 15, Ex. 1.) The article included the following statements (the “Statements”):

• “ASHI is the only home inspector organization that is certified by a third party.”
• “But what inspectors need to watch out for-and savvy consumers are leery about-are ‘purchased designations' that require little more effort than paying a fee and checking a box that says, ‘I fulfilled the requirements.' Especially when the same organization issues a myriad of ‘certifications.' In fact, the inspector doesn't earn the recognition, he or she just buys it.”

(Id. ¶ 15, Ex. 1.)

         InterNACHI contends that the Statements were understood to refer to InterNACHI and implied that InterNACHI certifications are meaningless. (Id. ¶¶ 20-21.) It also maintains that the Statements were made with reckless disregard to their veracity and with malice. (Id. ΒΆΒΆ 23-24.) InterNACHI alleges that the Statements disparaged InterNACHI and the services of its members, harmed the reputation of InterNACHI and its members, deterred existing members from renewing their InterNACHI memberships, ...


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