Service First Permits LLC v. Lightmaker Vancouver Internet Inc.

          ORDER AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          Nina Y. Wang United States Magistrate Judge

         This matter comes before the court on the following motions:

(1) Defendant Adrian Barrett's Motion to Dismiss Pursuant to Fed.R.Civ.P 12(b)(2) (“Motion to Dismiss”), filed October 19, 2018, [#19];

(2) Plaintiff Service First Permits, LLC's Motion for Leave to Conduct Jurisdictional Discovery in Support of Opposition to Motion to Dismiss (“Motion for Jurisdictional Discovery”), filed November 14, 2018, [#30]; and

(3) The Parties' Stipulated Motion to Stay Proceedings Pending Resolution of Motion to Dismiss (Dkt. 19) (“Motion to Stay”), filed December 14, 2018, [#45].

         The undersigned considers the Motions pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure, and the memoranda dated October 22, 2018 [#20], November 15, 2018 [#31], and December 17, 2018 [#46]. This court concludes that oral argument will not materially assist in the resolution of this matter. Accordingly, having reviewed the Motions and associated briefing, the applicable case law, and the entire case file, this court respectfully RECOMMENDS that the Motion to Dismiss be DENIED, and this court further ORDERS that the Motion for Jurisdictional Discovery and Motion to Stay are DENIED.

         BACKGROUND

         This court draws the following facts from the Complaint and presumes they are true for purposes of the instant Motions. Plaintiff Service First Permits, LLC (“Plaintiff” or “Service First”) is a Colorado limited liability company that “provides personalized construction permit management services to its clients, ” including “services rang[ing] from commercial construction permitting to due diligence to regulatory processes, among others.” [#1 at 2, 3]. About June 20, 2017, Plaintiff signed an agreement with Defendants Adrian Barrett (“Defendant Barrett”) and Lightmaker Vancouver (Internet), Inc. (“Lightmaker Vancouver”) for Defendant Barrett and Lightmaker Vancouver's development of a minimal viable product (“MVP”)-“a simpler version of a website that is functional but does not contain all of the features of the final product”-for Service First. See [id. at 4]. “The parties agreed to a six-month timeline with the final stage being the quality assurance, beta testing, and launch of the MVP. Service First agreed to pay Lightmaker [Vancouver] $30, 000 per month for a total of $180, 000 over this six-month period in return for a functional MVP.” [Id.]. Then, sometime in “late June 2017, ” Defendant Barrett traveled to Colorado to meet at Service First's principal offices to begin the “discovery” phase of the development process; this lasted several days. See [id. at 5].

         Service First alleges that development of the MVP did not proceed according to schedule, resulting in a three-month extension of the agreement, through March 2018, for an additional $30, 000 per month. See [#1 at 5]. As of March 2018, Defendant Barrett and Lightmaker Vancouver were not near completion of the MVP so Defendant Barrett transferred Plaintiff's project to its United Kingdom affiliate Lightmaker UK Ltd. (“Lightmaker UK”, and collectively with Defendant Barrett and Lightmaker Vancouver, “Defendants”) and extended the agreement a second time. See [id. at 5-6]. About June 2018, near the conclusion of the second extension, the MVP was not complete or functional. See [id. at 6]. Defendants claimed that they needed more time and money to continue work on the MVP; Plaintiff refused, however, and terminated the relationship. See [id.]. Plaintiff then sought return from Defendants of the $282, 000 Plaintiff had paid for the MVP, to which Defendant Barrett responded that he had dissolved Lightmaker UK due in part to its work with Service First and generally denied any wrongdoing. See [id. at 7].

         Plaintiff initiated this action on August 16, 2018. [#1]. Plaintiff asserts several claims against Defendants based on their failure to develop a functional MVP. These include: (1) breach of contract against Lightmaker Vancouver and Lightmaker UK; (2) breach of the implied covenant of good faith and fair dealing against Lightmaker Vancouver and Lightmaker UK; (3) breach of an implied contract against Defendants; (4) promissory estoppel against Defendants; (5) unjust enrichment against Defendants; and (6) alter ego liability against Defendants. See generally [id.].

         On September 26, 2018, Lightmaker Vancouver filed an Answer and Counterclaim in response to the Complaint. See [#10]. Defendant Barrett filed his Motion to Dismiss on October 19, 2018, arguing that Plaintiff fails to plead Defendant Barrett's minimum contacts with Colorado sufficient for this court to exercise personal jurisdiction over him. See [#19]. Service First opposes the Motion to Dismiss, arguing that it adequately pleads Defendant Barrett's minimum contacts with Colorado; alternatively, in its Response to the Motion to Dismiss and in its Motion for Jurisdictional Discovery, Plaintiff requests limited jurisdictional discovery on the issue of personal jurisdiction over Defendant Barrett. See [#27; #30]. On December 14, 2018, the Parties filed the Motion to Stay, requesting that the court stay this matter pending its resolution of the Motion to Dismiss. See [#45]. The Motions are now ripe for consideration, and I turn to each below.

         LEGAL STANDARDS

         I. Rule 12(b)(2)

         Rule 12(b)(2) of the Federal Rules of Civil Procedure allows a defendant to challenge the court's personal jurisdiction over the named parties. Fed.R.Civ.P. 12(b)(2). Plaintiff bears the burden of demonstrating that the court has personal jurisdiction over Defendant Barrett. See Dudnikov v. Chalk & Vermilion Fine Arts, 514 F.3d 1063, 1069 (10th Cir. 2008). When, as here, the district court decides a Rule 12(b)(2) motion to dismiss without holding an evidentiary hearing, “the plaintiff need only make a prima facie showing of personal jurisdiction to defeat the motion.” AST Sports Sci., Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1057 (10th Cir. 2008). “The 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 Canada, 149 F.3d 1086, 1091 (10th Cir. 1998). The court's focus is upon Defendant Barrett's relationship with the District of Colorado and this litigation; so long as it creates a substantial connection” with this District, even a single act can support jurisdiction. Leachman Cattle of Colorado, LLC v. Am. Simmental Ass'n, 66 F.Supp.3d 1327, 1336 (D. Colo. 2014). In considering whether Defendant Barrett has sufficient contacts with this District to support the court's exercise of personal jurisdiction, the court must accept all well pleaded facts and must resolve any factual disputes in favor of Plaintiff. See Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995).

         A. ...