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Ahlgren v. Link

United States District Court, D. Minnesota

August 6, 2019

ERIK A. AHLGREN, in his capacity as assignee in the assignment for the benefit of creditors of Ashby Farmers CoOperative Elevator Company, Plaintiff,
v.
JAY LINK and LINK'S WILD SAFARIS, Defendants.

          ERIK A. AHLGREN, AHLGREN LAW OFFICE, PLLC, FOR PLAINTIFF.

          MARK G. SCHROEDER, ADAM G. CHANDLER, AND JASON R. ASMUS, BRIGGS & MORGAN, PA, FOR DEFENDANTS.

          MEMORANDUM OPINION AND ORDER

          JOHN R. TUNHEIM CHIEF JUDGE

         Between 2003 and 2018, the manager of the Ashby Farmers Co-Operative Elevator Company (the “Co-Op”), Jerry Hennessey, appropriated millions of dollars of the Co-Op's funds for his personal use. He accomplished this in part by writing unauthorized checks to third parties, including Defendants Jay Link and Link's Wild Safaris. Upon discovery of the fraud in 2018, the Co-Op ceased operations and appointed an Assignee, Plaintiff Erik Ahlgren, to pursue claims and remedies on its behalf and on behalf of its creditors. Ahlgren brought this action in January 2019, seeking to void the unauthorized payments to Defendants. Ahlgren alleges three Counts: (I) Actual Fraud pursuant to Minn. Stat. §§ 513.44(a)(1), 513.47; (II) Constructive Fraud pursuant to Minn. Stat. §§ 513.45(a), 513.47; and (III) Unjust Enrichment.

         Before the Court now is Defendants' Motion to Dismiss for lack of personal jurisdiction and failure to state a claim. Because Link and LWS solicited business in Minnesota and this dispute arises out of that solicitation, the Court will deny the Motion to Dismiss to the extent it is based on lack of personal jurisdiction. Because Ahlgren pled facts sufficient to show fraud and constructive fraud, the Court will deny the Motion to Dismiss to the extent it is based on failure to state a claim on Counts I and II. Finally, because adequate legal remedies exist, the Court will grant Defendants' Motion as to Count III and dismiss Count III with prejudice.

         BACKGROUND

         The Co-Op is a grain farmers' cooperative based in Ashby, Minnesota. (Notice of Removal ¶ 1, Ex. A (“Compl.”) ¶¶ 1, 12-13, Feb. 8, 2019, Docket No. 1-1.) The Co-Op purchases grain from local farmers, who are also owners of the Co-Op, and sells it to grain markets. (Id. ¶ 13.)

         In 1989, the Co-Op hired Jerry Hennessey, a resident of Minnesota, as its general manager. (Compl. ¶ 14.) Between June 2003 and September 2018, Hennessey received over $5.4 million in unauthorized funds from the Co-Op by writing checks from the CoOp to himself and third parties, including Jay Link. (Id. ¶¶ 15-17, 25.) Hennessey used the checks for personal bills, home improvement projects, property purchases, and domestic and international hunting trips. (Id. ¶ 16.) Hennessey disguised the checks by coding them as feed purchases or other ordinary expenses. (Id. ¶ 16.)

         Jay Link is a resident of Wisconsin. (Id. ¶ 2.) He owns and operates Link Wild Safaris (“LWS”) out of Minong, Wisconsin. (Id. ¶ 3; Decl. of Jay Link (“Link Decl.”) ¶ 3, Feb. 28, 2019, Docket No. 12.) LWS connects hunters and fishers with international outfitters, who provide guide services and accommodations to LWS's clients. (Link Decl. ¶ 3.) LWS is not licensed to do business in Minnesota and does not have property or agents in Minnesota. (Id. ¶ 5.) However, LWS does attend exhibitions in Minnesota hosted by the Safari Club International (“SCI”). (Aff. of Erik A. Ahlgren (“Ahlgren Aff.”) ¶ 7 & Ex. G, Mar. 19, 2019, Docket No. 17.) LWS attended Minnesota SCI expos as an exhibitor in 2017, 2018, and 2019, and links to LWS's website appear on SCI Minnesota's webpages where it lists its exhibitors for those years. (Id.) LWS also donated hunting trips at Minnesota SCI events in 2017 and 2019. (Id. ¶¶ 8-9 & Ex. H-I.) Link is also involved with SCI in a personal capacity, including as the founder of the SCI Lake Superior Chapter, which holds events in Minnesota. (Id. ¶ 10 & Ex. J.)

         Link states that he and Hennessey first met in February 2015 at the SCI Convention in Nevada, which Link attended as a representative for LWS. (Link Decl. ¶ 6.) In October of that year, Hennessey wrote an unauthorized check to Link using the Co-Op's funds. (Compl. ¶ 17.) Between October 2015 and February 18, 2018, Hennessey wrote ten unauthorized checks to Link, totaling $312, 150.00. The checks, which identified the CoOp as the payor, paid for Hennessey to go on exotic hunting trips organized by LWS. (Id. ¶ 17.) Hennessey also paid LWS to organize a hunting trip with an outfitter based in Centerville, Minnesota. (Ahlgren Aff. ¶ 22 & Ex. V.) While providing services to Hennessey and his wife, Link and LWS corresponded with the couple to obtain permits for and receive travel information from them. (Compl. ¶ 21.) LWS addressed invoices during this time to Hennessey's P.O. Box in Ashby, Minnesota. (Ahlgren Aff. ¶ 21, Exs. U-V at 134-49.)

         The fraud was discovered in September 2018. (Compl. ¶ 25.) Hennessey pleaded guilty to mail fraud and income tax evasion on February 14, 2019. (Ahlgren Aff. ¶ 14, Ex. O at 83-95.) By the time the fraud was discovered, Hennessey had obtained over $7 million in a credit line for the Co-Op in his ongoing efforts to conceal his fraud and cover up the Co-Op's expenses. (Id. at 84-85.) As a result of Hennessey's fraud, the Co-Op was forced to close and has been unable to pay its debts. (Compl. ¶ 13; Ahlgren Aff. ¶ 18, Ex. R at 112.) The Co-Op has forty-three creditors, most of which are based in Minnesota. (Ahlgren Aff. ¶ 18, Ex. R at 119.)

         In December 2018, the Co-Op executed an assignment (the “Assignment”) with Erik Ahlgren for the benefit of the Co-Op's creditors. (Compl. ¶ 4; Ahlgren Aff. ¶ 18, Ex. R at 112-114.) Pursuant to Minn. Stat. §§ 576-77, Ahlgren has committed to liquidating and administering the Co-Op's assets and may pursue any claim or remedy that could be asserted by the Co-Op or by a creditor of the Co-Op. (Compl. ¶¶ 5, 7.)

         Ahlgren brought this action in Grant County District Court on January 8, 2019, alleging three Counts: (I) Actual Fraud pursuant to Minn. Stat. §§ 513.44(a)(1), 513.47; (II) Constructive Fraud pursuant to Minn. Stat. §§ 513.45(a), 513.47; and (III) Unjust Enrichment. (Compl. ¶¶ 27-49.) Ahlgren seeks recovery of the unauthorized funds paid by Hennessey to Defendants. (Compl. ¶¶ 33, 40, 49.) Defendants removed the case to this Court on February 7, 2019. (Notice of Filing of Notice of Removal, Feb. 8, 2019, Docket No. 1-2.) On February 28, 2019, Defendants moved to dismiss the Complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) and for failure to state a claim pursuant to Rule 12(b)(6). (Mot. to Dismiss, Feb. 28, 2019, Docket No. 9.)

         DISCUSSION

         I. PERSONAL JURISDICTION

         A. Standard of Review

         Federal Rule of Civil Procedure 12(b)(2) provides that a party may move to dismiss claims for lack of personal jurisdiction. “To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving party need only make a prima facie showing of jurisdiction.” Epps v. Stewart Info. Servs. Corp.,327 F.3d 642, 647 (8th Cir. 2003). “As long as there is ‘some evidence upon which a prima facie showing of jurisdiction may be found to exist,' the Rule 12(b)(2) motion will be denied.” Pope v. Elabo GmbH, 588 F.Supp.2d 1008, 1014 (D. Minn. 2008) (quoting Aaron Ferer & Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir. 1977)). The party seeking to establish personal jurisdiction bears the burden of proof, and “the burden does not shift to the party challenging ...


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