United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
ST. EVE UNITED STATES DISTRICT COURT JUDGE
YellowParts Europe SL, YellowParts SL, Yellow Rent SL,
Pintura Y Reparaciones Work SL, Juan Jose Jorge Sebastia,
Jose Maria Chilet, and Mark Drexler (collectively,
“Defendants”) have moved the Court to dismiss the
Amended Complaint of Plaintiff YP Recovery, Inc. (R.30).
Defendants move to dismiss on four grounds: (1) insufficient
service of process under Federal Rule of Civil Procedure
12(b)(5); (2) lack of subject matter jurisdiction under
Federal Rule of Civil Procedure 12(b)(1); (3) lack of
personal jurisdiction under Federal Rule of Civil Procedure
12(b)(2); and (4) failure to state a claim under Federal Rule
of Civil Procedure 12(b)(6). The Court now considers
Defendants' Rule 12(b)(1) challenge. For the following
reasons, the Court grants Defendants' motion and
dismisses this case without prejudice to Plaintiff's
ability to pursue its claims in the proper court.
case concerns a business dispute between several foreign
companies regarding the procurement and shipment of heavy
construction equipment from Europe to Africa. According to
Plaintiff YP Recovery, Inc. (“YP Recovery”),
Defendants induced it and its agents to transfer $700, 000 to
Defendant YellowParts Europe SL (“YP Europe”) and
Defendant YellowParts SL (“YPSL”) (together,
“Yellow Parts”) based on promises to deliver
heavy machinery to Cameroon and Ghana and to create a joint
venture entity called “Locam Yellow Parts” (the
“JVCo”). (R.6, Compl. ¶¶ 37, 41, 52-53,
57, 60, 63). Plaintiff brings claims for (i) fraudulent
inducement, (ii) fraud, (iii) unjust enrichment, and (iv)
conspiracy to commit fraud arising out of Defendants'
alleged misstatements. (See id.).
YP Recovery purports to bring this action as assignee of two
companies, (i) Diamond International, Inc.
(“Diamond”), and (ii) Locam Global, Inc.
(“Locam”). (R.6-2, Assignment of Rights). YP
Recovery is an Illinois corporation with its principal place
of business in Illinois. (R.6, Compl. ¶ 1). Diamond is
an Illinois corporation with its principal place of business
in Illinois. (Id. ¶ 17). Locam is a Cameroonian
company with its registered office in Yaoundé,
Cameroon. (Id. ¶ 18). Diamond, Caterpillar
International, and the United States Trade and Development
Agency (“USTDA”) sponsored Locam in its corporate
formation. (Id.). Ms. Beatrice Tayui
(“Tayui”) signed the assignment instrument as
“President” of Diamond, “Agent &
Representative” of Locam, and “Director” of
YP Recovery. (R.6-2, Assignment).
YP Europe, YPSL, Yellow Rent SL (“Yellow Rent”),
and Pintura Y Reparaciones Work SL (“Pintura SL”)
are Spanish companies with registered offices in Valencia,
Spain. (R.6, Compl. ¶¶ 5-8, 10). Defendants Juan
Jose Jorge Sebastia (“Sebastia”) and Jose Maria
Chilet (“Chilet”) are citizens of Spain and
residents of Valencia, Spain. (Id. ¶¶ 2-3,
11). Sebastia is the Managing Director of YP Europe, sole
proprietor of YPSL, sole administrator of Yellow Rent, and
joint administrator and manager of Pintura SL. (Id.
¶¶ 5-8). Chilet is the Management Assistant of YP
Europe. (Id. ¶ 5). Defendant Mark Drexler
(“Drexler”) is a United States citizen
purportedly “domiciled in the state of Florida [who]
currently resides in Spain.” (Id. ¶¶
4, 12). Drexler is an International Sales Consultant for YP
Europe. (Id. ¶ 5).
The Joint Venture Negotiations
following facts guide the Court's determination on
Defendants' Rule 12(b)(1) motion. The Court may consider
evidence outside of the pleadings in analyzing this factual
challenge. See Apex Digital, Inc. v. Sears, Roebuck &
Co., 572 F.3d 440, 443 (7th Cir. 2009).
Meeting In Spain (September 2012)
a July 2012 business trip to Africa on behalf of Yellow
Parts, Sebastia met Mr. Joe Biney (“Biney”) of MJ
Limited (“MJL”). (R.31-1, Sebastia Decl.
¶¶ 9-10). Biney, in turn, introduced Sebastia to
Mr. Christian Ibeagha (“Ibeagha”), who informed
Sebastia that he worked for a “Cameroonian company
called Locam” which was “looking to acquire heavy
equipment for shipment to Cameroon.” (Id.
¶ 11). Sebastia suggested that Yellow Parts “might
be able to help” and offered to continue business
discussions once he returned to Spain. (Id.
¶¶ 12-13). Sebastia then asked Drexler to conduct
the negotiations on Yellow Parts' behalf because he was
its International Sales Consultant and he spoke fluent
English. (Id. ¶ 14; R.6, Compl. ¶ 37).
parties continued discussions throughout August 2012. In
particular, they discussed equipment orders, potential deal
structures (including equity participation, agency
establishment, and direct sales), and a potential meeting in
Valencia, Spain. (R.6-3, Aug. 2012 E-mail Correspondence
between Drexler and Ibeagha, attached as Exhibit B to the
Compl.). Ultimately, the parties agreed to meet in Valencia
in September. Ibeagha sent Drexler travel itineraries
reflecting that he would arrive from Madrid with Biney, while
Locam representative Zacharie Mbajon (“Mbajon”)
and Tayui would arrive from Paris. (R.35-1, Ibeagha Decl. Ex.
1C-1D, Aug. and Sept. 2012 E-mail Correspondence).
Tayui's itinerary, in particular, reflected her initial
departure city as Chicago, Illinois. (Id.).
September 12-16, 2012, Ibeagha, Tayui, Mbajon, Biney,
Drexler, and Sebastia met “to discuss Yellow Part's
role in providing machinery to Locam.” (R.35-1, Ibeagha
Decl. ¶ 9). At the beginning of this meeting, the
attendees exchanged business cards. (R.38-1, Supp. Drexler
Decl. ¶ 6). Tayui's card-provided to Drexler-
identified her as “Locam Global President/CEO, 980
North Michigan Avenue, Chicago, Illinois 60611.”
(R.38-1, Supp. Drexler Decl. Ex. A). According to Tayui, in
“all stages of the discussions and negotiations between
Locam and Yellow Parts regarding the creation of the [JVCo.],
” she “notified all parties that [she] was acting
both in [her] capacity as agent and director of Locam and in
[her] capacity as agent, director, and president of Diamond
International.” (R.35-2, Tayui Decl. ¶¶ 7-8).
Sebastia and Drexler deny this, each averring, “I do
not know who or what Diamond International is. Yellow Parts
did not conduct any negotiations with, or receive any
correspondence from, Diamond International during the
negotiations of the deal to supply heavy machinery to
Africa.” (R.31-1, Sebastia Decl. ¶ 21; R.31-2,
Drexler Decl. ¶ 35; R.38-1, Supp. Drexler. ¶¶
the September 2012 meeting attendees decided to structure the
deal between Locam, MJL, and Yellow Parts as an equity
partnership. (R.35-1, Ibeagha Decl. ¶ 10). Pursuant to
that understanding, Drexler agreed to send “a list of
machines and prices” that Yellow Parts would “be
able to source for the first phase of Locam Global.”
(R.35-1, Ibeagha Decl. Ex. 1E, Sept. 19, 2012 E-mail from
Drexler to Ibeagha, Tayui, Mbajon, and Biney).
Meeting In Ghana (January 2013)
January 2013, the parties again met-this time in Ghana-to
discuss forming a new company called “Locam Yellow
Parts.” (R.35-1, Ibeagha Decl. ¶ 12). Ibeagha,
Sebastia, Drexler, Chilet, and Biney attended this meeting.
(Id.; R.31-3, Chilet Decl. ¶ 10). According to
the meeting minutes, the attendees discussed business
opportunities, timelines, funding, equipment, and capital
structure for the contemplated JVCo. (R.6-6, Jan. 22, 2013
Meeting Minutes). The parties deferred, however, any
questions related to “ownership (costs and profit
sharing included)” or “final structure” to
Tayui. (Id.; R.35-1, Ibeagha Decl. ¶ 13).
According to Tayui, she was “predominantly responsible
for answering, discussing, and negotiating issues related to
the financing of the new JVCo., and for the structure of the
JVCo.” (R.35-2, Tayui Decl. ¶ 9).
February 2013, Locam prepared and circulated a draft
Memorandum of Agreement for a Joint Venture Company
(“JV Agreement”). (R.31-2, Drexler Decl. ¶
27; R.35-1, Ibeagha Decl. ¶ 14). Drexler subsequently
provided “feedback and suggestions to the draft
agreement from Locam.” (R.31-2, Drexler Decl. ¶
27; R.35-1, Ibeagha Decl. ¶¶ 15-16). In the course
of these dealings, Locam changed the total proposed capital
investment from $3 million to $2 million, with Locam
contributing $1 million and MJL and Yellow Parts each
contributing $500, 000. (R.31-2, Drexler Decl. ¶ 28 and
Ex. B thereto).
17, 2013, Ibeagha e-mailed the parties a final version of the
JV Agreement, informing them of the plan “to sign these
at the HQ of Locam in Chicago [the first] week of July - July
1st to 5th inclusive.” (R.35-1, Ibeagha Decl. Ex. 1I,
May 17, 2013 E-mail). On May 30, Drexler sent Ibeagha an
e-mail advising that he was “ready to go with the
Project . . . All we need is funding” and inquiring,
“What do we need to do to get the money so we can close
the deals we have and get these machines on a ship? I would
love to be sitting with all of you in Chicago on July 5th
drinking mojitos knowing that the ship is on its way to
[Cameroon] with $2, 000, 000 worth of machines.”
(R.6-8, May 30, 2013 E-mail).
5, 2013, Ibeagha asked Biney to “please arrange to
transfer the [available] funds to Mark and Yellow [P]arts to
the address below. [Advise] what [is] transferred and Madam
[Tayui] will make the rest transfer from Chicago.”
(R.6-9, June 5, 2013 E-mail). Biney subsequently advised
Drexler that “the funds are lodged in an off shore
account.” (R.31-2, Drexler Decl. Ex. C). On June 17,
Biney sent Drexler a transfer message indicating that he had
wired $700, 000 from his account at Ecobank, the Pan African
Bank. (Id. Ex. D).
to Tayui, however, the $700, 000 did not originate from
Locam. (R.35-2, Tayui Decl. ¶ 13). Rather, she
transferred the funding-which “came predominantly from
a USTDA grant and from Diamond International”-in order
“to fund the JVCo.” (Id. ¶¶
13-14). Diamond, therefore, was “ultimately the company
that suffered the loss of the $700, 000.” (Id.
¶ 15). The Complaint allegations, too, reflect that the
$700, 000 originated from Diamond and passed through Locam,
ultimately reaching Defendants. (R.6, Compl. ¶¶
46-47, 52, 53, 56, 60).
receipt of the $700, 000 wire from Ecobank via Biney, Yellow
Parts “contributed capital of its own in excess of its
$500, 000 commitment and began acquiring and preparing the
machinery that Locam had requested.” (R.31-2, Drexler
Decl. ¶ 32).
Meeting In Illinois (July 2013)
to Sebastia and Drexler, the “first time” they
heard the name “Diamond International” in the
course of business dealings was in June 2013 - when
“Locam told [them] that the Chicago meeting would be
held at Diamond International Headquarters on July 3,
2013.” (R.31-1, Sebastia Decl. ¶¶ 20-23;
R.31-2, Drexler Decl. ¶¶ 33-35). Drexler and
Sebastia nonetheless traveled to Chicago to attend the July
3, 2013 meeting. (Id.). During the course of that
meeting, Ibeagha, Mbajon, Tayui, Biney, Sebastia, and Drexler
discussed business opportunities, shipment and port details,
and JVCo. details, including establishing a board of
directors and formulating a mission statement. (R.35-1,
Ibeagha Decl. ¶¶ 20-24). They also “reviewed,
amended, and signed” the JV Agreement. (Id.).
The JV Agreement was “intended to set up a framework
for article of association / shareholders agreement and to be
valid to commence operations until articles of operations are
reflective of [the] new JVCo. and finalization of the
shareholders agreement.” (R.38-1, Supp. Drexler Decl.
Ex. B, Final JV Agreement at Art. VII). Only YP Europe,
Locam, and MJL are parties to the JV Agreement.
(Id.). The JV Agreement makes no mention of Diamond
International. (Id.). Despite the intention of the
JV Agreement, the signatories neither created the JVCo. nor
signed any articles of association or shareholders agreement.
(R.35-1, Ibeagha Decl. ¶ 27). According to Ibeagha,
Yellow Parts has failed to deliver any machinery to Africa,
and has failed to return the $700, 000. (Id. at
¶¶ 28-29). Yellow Parts, meanwhile, has $1.2
million worth of equipment sitting in its yard. (R.31-1,
Sebastia Decl. ¶ 19).