United States District Court, D. Minnesota
P. Sheu, Best & Flanagan LLP, Minneapolis, MN, for
Plaintiff Patrick's Restaurant, LLC.
A. Kvinge, Larkin Hoffman Daly & Lindgren, Ltd.,
Minneapolis, MN, for Defendant Sujit Kumar Singh.
OPINION AND ORDER
C. Tostrud United States District Judge
a breach-of-contract case. Patrick's Restaurant, a
Minnesota citizen, alleges that Sujit Kumar Singh, a citizen
of India, agreed to invest $1.3 million in Patrick's in
consideration for part ownership of the business but then
paid nothing and walked away. Patrick's seeks recovery of
an amount close to the $1.3 million it alleges Singh
contracted to invest, plus consequential and incidental
damages. Singh has moved under Federal Rule of Civil
Procedure 12(b)(2) to dismiss the case for lack of personal
jurisdiction. Alternatively, he has moved under Rule 12(b)(6)
to dismiss Patrick's complaint for failing to state a
claim upon which relief may be granted. Both motions will be
denied. Patrick's has demonstrated that Singh's
contract-related contacts with Minnesota coalesce to form a
prima facie showing of personal jurisdiction, and
Patrick's pleads a prima facie case on the merits.
facts leading up to this litigation span approximately eight
months and two continents, and they begin in August 2017.
That month, Singh, a citizen and resident of India,
“approached” Patrick Bernet “for the
exclusive opportunity to invest in Mr. Bernet's
Patrick's Restaurant, Inc.” Am. Compl. ¶¶
3, 7 [ECF No. 27]. Bernet operates several
“Patrick's Group” restaurants in Minnesota,
and today he is the sole member and owner of Patrick's
Restaurant, LLC. Id. ¶ 2; Id. Ex. 1
[ECF No. 27-1]. Singh engaged a Minnesota-based agent, Saul
Mashaal,  to broker his investment. Am. Compl.
alleges that this investment was “part of [Singh's]
plan to emigrate to the United States through the Immigrant
Investor Visa Program.” Id. ¶¶ 7, 9.
Under the Immigrant Investor Visa Program, “a foreign
entrepreneur who makes a capital investment in the United
States can receive a permanent [EB-5] U.S. visa. . . . [and]
the entrepreneur and his dependent family members are
eligible for conditional permanent residency in the United
States.” Vieira v. Korda, Civ. No. 2:17-cv-160-jmc,
2018 WL 2122825, at *2 (D. Vt. May 8, 2018); see also 8
U.S.C. § 1153(b)(5). This “EB-5 visa” is so
named because it is the fifth-preference visa among the
employment-based visas. See U.S. Citizenship &
Immigration Servs., EB-5 Immigrant Investor Program,
https://www.uscis.gov/eb-5 (last visited July 2, 2019).
Patrick's alleges that Singh intended to immigrate to the
United States though he does not allege specifically whether
Singh planned to reside in Minnesota. See Am. Compl.
counsel, at Singh's request, drafted an “Investment
Opportunity offering” that contemplated a $3.5 million
investment in improving four “Patrick's
Group” restaurant divisions in exchange for a 40%
ownership interest in the business. Id. ¶ 10;
id. Ex. 1 at 1 (“The businesses now operating
as Patrick's Group now [sic] has 4 different divisions, .
. . which would be merged into a limited liability company .
. . .”). Singh rejected this initial offering because
it required a greater investment than would be necessary for
Singh to be eligible for an EB-5 visa. Am. Compl. ¶ 11;
see 8 U.S.C. § 1153(b)(5)(C) (requiring an
investment of at least $1 million). Counsel for Patrick's
then prepared a revised offering that contemplated a $1.3
million investment in consideration for a 40% ownership
interest in one Patrick's location, “Patrick's
Restaurant at Arbor Lakes.” Am. Compl. ¶ 11;
id. Ex. 2 at 1 [ECF No. 27-1]. This document further
contemplated that Singh's investment would be used to
expand Patrick's Restaurant at Arbor Lakes “into
adjacent space for a private Event Center, with private
dining space, ” as well as to remodel the existing
restaurant and to add “10 or more additional
staff.” Am. Compl. Ex. 2 at 1; see also 8
U.S.C. § 1153(b)(5)(A)(ii) (requiring that the immigrant
investor's investment will create full-time employment
for ten or more people).
revised offering also addressed that Patrick's “is
currently structured as [a] Subchapter S corporation, ”
but proposed that it “would be restructured” as
an LLC after Singh's investment. Am. Compl. Ex. 2 at 1
(“Investment of $1, 300, 000 . . . will lead to the
following steps . . . .”). Singh allegedly communicated
to Patrick's that he “wanted the type of investment
vehicle that could make immediate distributions back to him,
and with the lowest taxation rate, such as a limited
liability company, rather than an S corporation.”
Second Bernet Decl. ¶ 11 [ECF No. 36]; see also
Id. ¶ 17 (stating that “reorganization,
without Mr. Singh's investment, would make no sense [for
Bernet] and would have adverse tax consequences for
[Bernet]”). Throughout these negotiations and up to the
date this case was commenced, Patrick's existed solely as
a corporation; it had not yet formed an LLC.See
Kvinge Decl. Ex. B [ECF No. 23-1] (Certificate of
Organization for Patrick's Restaurant, LLC, dated March
20, 2018), Ex. D [ECF No. 23-1] (Certificate of Incorporation
for Patrick's Restaurant Inc. dated April 11, 2013).
to Patrick's, there were “significant negotiations
and discussions” between Singh, Mashaal, and Bernet
between August and October 2017, including emails and
telephone calls. Am. Compl. ¶ 13. At some point, Singh
allegedly “accepted Plaintiff's proposed terms,
” and Patrick's counsel prepared two letters of
intent, along with proposed distributions and projections,
wire transfer instructions, a document checklist, and a draft
“Articles of Conversion, ” all of which were sent
to Singh. Id.; id. Ex. 3 [ECF No. 27-1]. At
Singh's instruction, Mashaal traveled to Dubai to have
Singh sign the letters of intent and complete an immigration
attorney's questionnaire relating to the EB-5 visa
process. Am. Compl. ¶¶ 14, 27; id. Ex. 5
[ECF No. 27-1].
letter of intent is entitled “Letter of Intent -
Exclusive Right to Purchase.” First Bernet Decl. Ex. A
at 2 [ECF No. 9-1] (hereinafter “First Letter of
Intent”); see also Am. Compl. ¶ 15. This
First Letter of Intent is on Bernet's personal letterhead
and opens by acknowledging that “it is [Bernet's]
understanding that [Singh] intend[s] to make an investment
totaling $1, 300, 000.” First Letter of Intent at 2.
The opening paragraphs of the letter recite the planned
timeline for two payment “installments”-$300, 000
on or before December 31, 2017, and $1 million on or before
January 31, 2018. Id. The letter then provides:
Please consider this letter an offer to grant you the
exclusive right to purchase a 40% interest in Patrick's
Restaurant, LLC. You will receive your 40% interest in
Patrick's Restaurant, LLC when the entire purchase amount
of US$1, 300, 000 [sic] is received. The exclusive right to
purchase granted herein shall remain open until January
First, a non-refundable payment of U.S. $250, 000 will be
required on or before December 31, 2017 for me to grant you
the exclusive right to invest directly into Patrick's
Second a non refundable [sic] payment of $50, 000 shall be
deposited into a suitable escrow accounts [sic] to be
disbursed to pay [immigration legal fees and costs].
Id. at 2-3. It closes with, “Thank you for
considering this proposal, ” id. at 3, and
attaches instructions for wiring the $300, 000 (the total of
the two “non-refundable” payments of $250, 000
and $50, 000) to Bernet's California bank, id.
other letter of intent is entitled “Letter of Intent to
Invest.” First Bernet Decl. Ex. B at 2 [ECF No. 9-2]
(hereinafter “Second Letter of Intent”); see
also Am. Compl. ¶ 16. This letter from Bernet is on
“Patrick's Restaurant, LLC” letterhead, and
does not mention the $300, 000 portion of the investment.
Second Letter of Intent at 2. The letter states that
“[a]fter Patrick's Restaurant, LLC receives
[Singh's] investment of $1, 000, 000, ” Singh will
have a 40% ownership share of the LLC. Id. It
continues: “We all agree to act in good faith, to
negotiate, approve, execute and deliver the agreements
required to give full effect to the investment transaction
before December 31st, 2017 so that the investment
can be made on or before January 31st 2018.”
Id. The letter closes with, “This letter sets
forth the general terms of your planned investment into
Patrick's Restaurant, LLC.” Id. at 3.
November 2, 2017, Singh signed both letters of intent in
Dubai. First Letter of Intent at 3 (showing Singh signed
below the statement “I agree to the terms and
conditions set forth above”); Second Letter of Intent
at 3 (similar). Singh then called Bernet to tell him that the
initial wire transfer would be made by November 14, 2017. Am.
Compl. ¶¶ 15-17. No. wire transfer was made that
day, but at that time Singh did sign another agreement with
Patrick's: the Capital Contribution Agreement. See
Id. ¶ 19.
Capital Contribution Agreement essentially recites the same
terms from the Second Letter of Intent, but it is styled more
like a traditional contract. See First Bernet Decl.
Ex. C [ECF No. 9-3]. Like the Second Letter of Intent, it
makes no mention of the $300, 000 obligation-only the $1
million. See Id. at 1. It specifies that
“Patrick's Restaurant, LLC . . . will be
re-organized as a Minnesota Limited Liability Company on or
about December, 312017 [sic] when the [required documents]
will be filed with the Minnesota Secretary of State.”
Id. The contract contains two other noteworthy
clauses. First, it provides that “if Mr. Singh does not
make the required contribution on or Before Janaury [sic] 31,
2018, the unpaid amount . . . shall be deemed to be a debt of
Mr[.] Singh which [Patrick's] may collect through legal
action.” Id. at 2. Second, it provides that
the contract “shall in any and all events be governed
by, construed and interpreted in accordance with the laws of
the state of Minnesota.” Id.
that same time, in November 2017, Singh signed an Operating
Agreement for Patrick's Restaurant, LLC. Am. Compl.
¶ 26; id. Ex. 4 [ECF No. 27-1]. Although the
LLC did not exist yet, the Operating Agreement (like the
Capital Contribution Agreement) contemplated that Singh would
have a 40% interest in the LLC and 40% voting power, while
Bernet and Mashaal would have 51% and 9%, respectively. Am.
Compl. Ex. 4 at 21.
after the execution of the two letters of intent, Capital
Contribution Agreement, and Operating Agreement, things took
a turn for the worse. Patrick's alleges that in mid- to
late-November, Singh represented that the initial $300, 000
payment had been wired to Bernet, but “Bernet could
receive no confirmation it had.” Am. Compl. ¶ 30.
Singh represented that the money was forthcoming and would be
issued by mid-December. Id. ¶ 31. But (again)
the money didn't arrive. See Id. ¶¶
32-33. Singh repeatedly assured Bernet that he had wired the
funds, going as far as to send “a purported wire
transfer document from a bank in Russia.” Id.
¶¶ 33, 35; see First Bernet Decl. Ex. E at
11 [ECF No. 9-5]. But (again) the money didn't come.
See Am. Compl. ¶ 37. Emails from Mashaal to
Singh refer to “almost daily communications by text and
phone calls” about the status of the wire transfer,
though only select emails and text messages are attached to
the complaint and affidavits. Id. Ex. 6 [ECF No.
27-1]; see also First Bernet Decl. ¶¶ 7,
10 [ECF No. 9] (“I received many e-mail messages from
Mr. Mashaal and [Singh] . . . . [They] have sent many text
messages to me . . . regarding the foregoing agreements and
the alleged payments.”); id. Ex. E (emails),
Ex. G [ECF No. 9-7] (text messages).
alleges that all along, Singh “knew Patrick's
Restaurant, Inc. would be converted to [an LLC] . . . only
when [Singh] paid the $1 million needed for the
investment.” Am. Compl. ¶ 26. Patrick's
alleges that in late December, “Plaintiff put on hold
Plaintiff's corporate reorganization until confirmation
[of the $300, 000 wire transfer] could be received.”
Id. ¶¶ 33, 42. But plans for the expansion
of Patrick's Arbor Lakes restaurant were already underway
in reliance on Singh's planned investment; these included
negotiating a lease, expanding the restaurant, and
reorganizing the corporation. Id. ¶¶ 29
(“working with brokers, architects, an asset manager, a
landlord, and contractors”), 32, 34, 39
(“work[ing] with Defendant's immigration
counsel”); First Bernet Decl. Ex. D [ECF No. 9-4]
(proposal from landlord for expansion).
early January, Singh “proposed an amendment to [the]
transaction” that involved “delaying and reducing
the payments.” Second Bernet Decl. ¶ 16.
Patrick's agreed and sent a new timeline for payment to
Singh, which Singh further revised, but ultimately Singh did
not sign the proposed amendment. Am. Compl. ¶ 38;
id. Ex. 7 [ECF No. 27-1]. In mid-January,
“[Singh] had Mr. Mashaal send Mr. Bernet a check for
$300, 000, on [Singh's] behalf.” Am. Compl. ¶
40; First Bernet Decl. Ex. F [ECF No. 9-6]. But Singh
“conditioned tender of the check on further delay and
amendments [Patrick's] had not agreed to, ” so
Patrick's never received the money. Am. Compl. ¶ 40;
see also First Bernet Decl. ¶ 9 (“[T]he
check cannot be cashed, and [Patrick's] has received no
payment from either [Singh] or Mr. Mashaal.”).
February and into March 2018, Singh, Mashaal, and Bernet
“continued to communicate.” Am. Compl. ¶ 44.
Ultimately, Singh never made the $300, 000 payment or the $1
million payment. Id. ¶ 45. Patrick's felt
the effects of Singh's alleged breach here in Minnesota.
Patrick's alleges it “lost the ability to expand
and the profits anticipated from the expansion, the lease
negotiations with the Landlord fell through, and [its]
reputation and credibility have been damaged.”
Id. ¶ 46.
commenced this case on March 20, 2018. See Compl. at
4 [ECF No. 1]. After Singh moved to dismiss for, among other
things, a lack of personal jurisdiction, Patrick's filed
an amended complaint that included additional jurisdictional
allegations. See First Mot. [ECF No. 20]; Am. Compl.
Patrick's seeks to recover $1.25 million (presumably for
the $1.3 million investment it alleges Singh contracted to
make minus $50, 000 for immigration-attorney fees and costs,
which were for Singh's benefit), plus “all damages
reasonably foreseeable, consequential, and incidental to
Defendant's breaches.” Am. Compl. ¶ 59. Singh
responded by renewing his motion to dismiss, ...