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Entropy Solutions, LLC v. Stasis Group, Inc.

United States District Court, D. Minnesota

March 13, 2019

Entropy Solutions, LLC, Plaintiff,
v.
Stasis Group, Inc., Michael Cecchini, Robert Morton, and Jose Radzinsky, Defendants.

          Brandon J. Wheeler, Esq., and Ryan A. Olson, Esq., Felhaber, Larson, Fenlon & Vogt, PA, counsel for Plaintiff.

          Laura Brooks, Esq., Loren M. Solfest, Esq., and Matthew J. Schaap, Esq., Dougherty, Molenda, Solfest, Hills & Bauer P.A., counsel for Defendant Michael Cecchini.

          Mark H. Thieroff, Esq., Siegel Brill, P.A., counsel for Defendant Jose Radzinsky.

          MEMORANDUM OPINION AND ORDER

          DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         This matter is before the Court on Defendant Michael Cecchini's (“Cecchini”) Motion to Dismiss for Lack of Personal Jurisdiction or, in the Alternative, to Transfer Venue. (Doc. No. 4.) For the reasons set forth below, the Court denies the motion.

         BACKGROUND

         Plaintiff Entropy Solutions LLC (“Entropy” or “Plaintiff”) is a Minnesota limited liability company with its principal place of business in Plymouth, Minnesota. (Doc. No. 1, Ex. 1 (“Compl.”) ¶ 1.) Plaintiff is in the business of making Entropy PureTemp phase change material (“PCM”). (Id. ¶ 9.) Defendant Stasis Group, Inc. (“Stasis Group”) is a Delaware corporation with its principal place of business in Albuquerque, New Mexico. (Id. ¶¶ 2, 3.) Stasis Group is in the business of developing PCM applications, engineering, and proprietary modeling software, focusing on PCM's use in multi-story building products. (Doc. No. 7 (“Cecchini Decl.”) ¶ 9.) Cecchini is the Executive Vice President (“EVP”), Chief Operating Officer (“COO”), and 50% owner of Stasis Group. (Id. ¶¶ 4-5.)[1] Cecchini resides in Placitas, New Mexico. (Id. ¶ 3; Compl. ¶ 4.)

         In April 2016, Entropy and Stasis Group began discussing a possible business relationship with respect to PCM. (Cecchini Decl. ¶ 11.) Discussions regarding the relationship and potential Project Agreement occurred primarily by phone and e-mail between representatives of Entropy in Minnesota and representatives of Stasis Group outside of Minnesota. (Id. ¶¶ 19-20.)

         On June 7, 2017, Entropy and Stasis Group entered into a formal “Project Agreement.” (Compl. ¶ 9, Ex. A (“Project Agreement”).) Morton signed the Project Agreement on behalf of Stasis Group. (Cecchini Decl. ¶ 14.) The Project Agreement memorialized Entropy's agreement to fund, and continue to provide minimum additional funding, to Stasis Group, who in turn agreed to use the funds for the production of prototypes that incorporate Entropy's PureTemp PCM into new building products, related product testing, and software modeling development for the project. (See Project Agreement ¶ 1.) In addition, the Project Agreement contemplated future negotiations of a mutually exclusive supply agreement, among other things, if final third-party validation testing resulted in “proof of concept” acceptable to Entropy. (Id. ¶ 2.) Finally, the Project Agreement provided that it is to be governed by and construed in accordance with Minnesota law. (Id. ¶ 10.)

         Cecchini submits that he communicated with principals of Entropy over the phone three to four times and via e-mail roughly six times regarding the Project Agreement, and over the course of the relationship with Entropy, he communicated with Entropy in roughly twenty-five e-mails and ten to fifteen telephone calls. (Cecchini Decl. ¶¶ 12, 19, 20.) Cecchini further contends that none of these communications involved his participation in an individual capacity and that he has never been to Minnesota. (Id. ¶¶ 16, 20.) Entropy claims that Cecchini was directly involved in negotiating and overseeing the performance of the Project Agreement, and that Cecchini engaged in more than a dozen phone calls and at least 260 e-mails with Entropy in Minnesota. (Doc. No. 13 (“Servais Decl.”) ¶ 3.) Entropy submits that these communications covered various topics, including the requested delivery of funds, the discussion of test results and budget issues, as well as negotiations following the “proof of concept.” (Id.)

         Upon completion of the validation testing, which was conducted in California and New Mexico, the parties disputed whether the results supported moving forward with the Project Agreement. (Compl. ¶ 13; Cecchini Decl. ¶ 15.) Entropy then sued Defendants, alleging the following claims: (1) Breach of Contract; (2) Breach of Implied Covenant of Good Faith and Fair Dealing; (3) Attorneys' Fees and Costs; (4) Piercing of Corporate Veil/Alter Ego; (5) Money Had and Received; and (6) Unjust Enrichment. (Compl. ¶ 8-37.) Entropy filed this action in state court, and Cecchini removed it to this Court, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332 and venue pursuant to 28 U.S.C. § 1441. (Doc. No. 1 (“Notice of Removal”) ¶ 11, 13.) Cecchini now moves to dismiss for lack of personal jurisdiction or, in the alternative, to transfer the action to the United States District Court for the District of New Mexico. (Doc. No. 4.)

         DISCUSSION

         I. ...


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