United States District Court, D. Minnesota
W. Moen and Joseph A. Wentzell, Wentzell Law Office, PLLC,
2812 Anthony Lane South, Suite 200, Saint Anthony, MN 55418,
Bethany J. Rubis, Ask LLP, 2600 Eagan Woods Drive, Eagan, MN
55121; and Shanna M. Kaminski, Varnum LLP, 160 W. Fort
Street, Suite 5th Floor, Detroit, MI 48226, for Defendant.
MEMORANDUM OPINION AND ORDER
RICHARD NELSON, UNITED STATES DISTRICT JUDGE
the Court is Defendant Radium 2 Capital, Inc.'s
(“Radium2”) Motion to Dismiss, or in the
alternative, Transfer Venue or Stay Case [Doc. No. 10]
seeking either dismissal, transfer, or a stay based on, among
other theories, the first-filed rule. For the reasons set
forth below, the Court grants Radium2's Motion and orders
that the case be stayed pending resolution of the parallel
New York proceedings.
motion-to-dismiss stage, the Court construes the facts in
favor of, and in the light most favorable to, the nonmoving
party (here NDGS, LLC, or “NDGS”). See
Awnings v. Fullerton, 912 F.3d 1089, 1101 (8th Cir.
2019) (presuming the truth of the nonmoving party's
factual allegations in a motion to dismiss).
The Parties and Related Entities
Plaintiff NDGS is a limited liability company organized under
the laws of North Dakota. (See Am. Compl. [Doc. No.
9] at 1.) NDGS operates a small chain of grocery stores known
as “Jack & Jill” in North Dakota.
(Id. at 2.) NDGS is owned by Duane Johnson
(“Johnson”), who owns and operates numerous small
businesses in Minnesota and North Dakota. (Id.)
Radium2 is a New York corporation with its principal place of
business in New York. (Radium2 Mem. in Supp. of Mot.
(“Radium2 Mem.”) [Doc. No. 12] at 1.) It provides
working capital to businesses and bills itself as a
“merchant cash advance company.” (Id. at
1-2; Radium2 Ex. 6 - New York Supreme Court Notice of
Petition (Index No. 801410/2019) (henceforth “NY
Special Proceeding Petition”) [Doc. No. 13-5] at 10.)
in 2018, Dan and Jenna Ross expressed interest in purchasing
NDGS and its assets (namely, the Jack & Jill grocery
stores). (Am. Compl. [Doc. No. 9] at 2.) Accordingly, Johnson
and the Rosses entered into negotiations, during which the
Rosses were provided with access to NDGS's financial and
business records in order to conduct due diligence about a
possible sale. (Id.) Following negotiations,
however, the Rosses decided not to purchase NDGS or its
contends that after negotiations concluded, the Rosses used
the NDGS business and financial documents obtained during
negotiations to secure a $250, 000 payment from Radium2 in
exchange for Radium2's right to $355, 000 of NDGS's
future receivables. (Id. at 3.) NDGS asserts that
Jenna Ross masqueraded as the owner and manager of NDGS, and
altered and falsified NDGS documents in order to strengthen
her misrepresentations and obtain this purchase money.
(Id.) Radium2 generally agrees that the Rosses
appeared to have misrepresented their authority or position
with NDGS, but takes the position that Johnson was working in
tandem with the Rosses to perpetrate fraud on Radium2.
(See Radium2 Mem. [Doc. No. 12] at 1-2, 5; Radium2
Ex. 1 [Doc. No. 13] (purportedly false articles of
organization).) Jenna Ross also executed an Affidavit of
Confession of Judgment in favor of Radium2 in which she
confessed judgment, individually and personally as well as
jointly and severally, against herself and NDGS in the event
of a default under the agreement between Ross, NDGS, and
Radium2. (See Radium2 Ex. 3 [Doc. No. 13-2].) After
purportedly engaging in due diligence, Radium2 approved
Ross's application for payment. (Radium2 Mem. [Doc. No.
12] at 2.)
about September 10, 2018, Radium2 entered into an
“Agreement for the Purchase and Sale of Future
Receipts” (henceforth, the “Future Receipts
Agreement”) with Ross and, allegedly, NDGS.
(See Am. Compl. [Doc. No. 9] at 3 (noting the
agreement's existence but asserting NDGS is not bound by
it); Radium2 Mem. [Doc. No. 12] at 2-3, 5 (contending the
agreement binds NDGS).) Per that agreement, on September 12,
2018, Radium2 wired $242, 475 to a bank account in NDGS's
name. (See Radium2. Ex. 4 [Doc. No. 13-3]; see
also NDGS Mem. in Opp'n to Mot. (“NDGS
Mem.”) [Doc. No. 17] at 4-5 (noting the funds were
wired to an NDGS bank account).) NDGS contends that the
Rosses convinced Johnson that the reason the Rosses were
using NDGS's bank account was to permit them to repay
money that the Rosses owed to Johnson stemming from a prior
loan between a different Johnson-owned company and a
Ross-owned company. (NDGS Mem. [Doc. No. 17] at 4-5.) Per the
Future Receipts Agreement, Radium2 was being repaid through
daily withdrawals from the NDGS bank account in the amount of
$2, 113.10. (Radium2 Ex. 2 [Doc. No. 13-1] at 2.) On about
October 25, 2018, however, Dan Ross purportedly terminated
the payments to Radium2. (NDGS Mem. [Doc. No. 17] at 5.)
Radium2 stopped receiving repayments, it filed the Confession
of Judgment executed by Jenna Ross in New York state court.
(Id. at 6.) On November 9, 2018, based on the
confession and other evidence, Radium2 obtained a judgment in
its favor against NDGS and Jenna Ross in the amount of $363,
868.99 (See Radium2 Ex. 5 - New York Supreme Court
Judgment (Index No. 18-817680) (henceforth “NY
Judgment”) [Doc. No. 13-4] at 2.) On January 29, 2019,
Radium2 commenced a special proceeding against NDGS, Jenna
Ross, several other NDGS-named entities, Johnson, and Daniel
Wessman in New York state court in order to execute and
recover under its November 2018 judgment. (See
Radium2 Ex. 6 NY Special Proceeding Petition [Doc. No.
13-5].) On March 5, 2019, NDGS removed the special proceeding
to the United States District Court for the Western District
of New York. (See Radium2 Ex. 8 ...