Lundstrom, Jr. v. Homolka, P.A. et. al.

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
NORTHERN DIVISION
JUL 2 I 2020
LOWELL LUNDSTROM,JR., I:19-CV-01006-CBK
Plaintiff,
vs.
DANIEL M. HOMOLKA,P.A., DANIEL
M. HOMOLKA, WATTS GUERRA LLP,
MIKAL C. WATTS,
MEMORANDUM OPINION AND
ORDER
Defendants.
This matter is before the Court on defendants Daniel M. Homolka and Daniel M.
Homoka P.A.'s motion to dismiss for lack of personal jurisdiction under Federal Rule of
Civil Procedure 12(b)(2) and for improper venue under Federal Rule of Civil Procedure
12(b)(3), Doc. 10.'
BACKGROUND
This case concerns allegations of breach of contract, fraud, and civil conspiracy
brought by plaintiff Lowell Lundstrom Jr. against defendants Daniel M. Homolka, Daniel
M. Homoka P.A., Mikal C. Watts, and Watts Guerra LLP.
Plaintiff is a farmer from Sisseton, South Dakota who had a background in
marketing. In late 2014, plaintiffs then lawyer, Daniel Rasmus,recommended plaintiffs
marketing services to defendants, whom he was working with on a number of lawsuits
against Syngenta AG,a global agrochemical and seed producer based in Switzerland.
The email was sent to Homolka on December 11,2014. The first sentence of the
introduction email stated,"Dan, we had a client in the office yesterday who is a young
' Defendants Mikal C. Watts and Watts Guerra LLP did notjoin in this motion,, and at the evidentiary hearing,
their attorneys advised the Court that they did not question personal Jurisdiciton.
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farmer from Sisseton, SD." Defense Exhibit B. The email explains that plaintiff has a
marketing background as well and said "[h]e will help us with our collective advertising
strategy and, of course, understands the best publications though which to reach farmers."
Id.
Shortly after the December meeting, plaintiff began working with defendants to
market the Syngenta litigation to farmers in South Dakota, then throughout the
midwestem United States. Plaintiff marketed the lawsuit via a variety of different means
and mediums. Plaintiff made all ad-buys, purchasing time slots on radio and television
(including many targeting South Dakota) as well as space in various publications aimed
at farmers. Plaintiff and Homolka corresponded regularly via email, telephone, and text
message. At times, Homolka urged plaintiff and others to target South Dakota farmers.
Defendant admits that he "managed and helped with the acquisition of clients and giving
support to our team." Doc 71 at 86. In response to the question "So you actually did
direct [plaintiff and others to do work in South Dakota, correct?" Homolka said,
"[y]es." Id-
An important facet ofthe overall marketing strategy in the Syngenta litigation was
plaintiffs website, which the defendants leased from him. The website,
"LostComIncome.com," was an interactive website, via which farmers could retain both
defendant law firms directly. Plaintiff estimates that most of defendants' South Dakota
plaintiffs chose to sign up via this method. Doc. 71 at 26. The website was registered to
plaintiff at his Sisseton, South Dakota, address. Plaintiffs Ex. W. Plaintiff was also the
contact for any issues with the site. Id. The website was hosted by Wild West Domains,
a company based in Scottsdale, Arizona. The IP address for the website was in Houston,
Texas. If a farmer did not wish to sign an online retainer agreement via the website, that
farmer could instead print out a retainer agreement from the website and send it via
regular mail. The print retainer agreement was mailed to plaintiffs address in Sisseton,
South Dakota. "Hundreds" ofsuch retainer agreements were received by plaintiff at his
Sisseton, South Dakota farm,some "20-30" of them from South Dakota farmers. Id. at
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25-6. These agreements were, in all respects other than the listing ofthe Sisseton, South
Dakota, mailing address, the same as the online retainer agreements.
Plaintiff and defendants also held a number of town hall style meetings, at which
defendants Homolka, Watts, or, at times, other local attorneys would speak to area
farmers about the litigation and inform them of possible claims they might have against
Syngenta. Homolka travelled to South Dakota for such meetings on at least four
occasions. The town hall meetings were all organized and planned by defendants with
input from plaintiff. Plaintiff would often attend the meetings. Relatedly, Homolka
travelled to South Dakota for another plaintiff recruitment meeting with the owners of
certain grain elevators who this Court understands would have had large claims against
Syngenta.^ On January 9, 2015, Homolka and plaintiff met with lawyers in Brookings,
South Dakota, and Yankton, South Dakota, to enlist them as local counsel for some ofthe
town hall meetings. Doc. 71 at 79.
Lastly, plaintiff created an infomercial to market the lawsuit that was run on
various television platforms. The infomercial was shot in the vicinity of Minneapolis,
Minnesota.
LEGAL STANDARDS
When deciding an issue of personal jurisdiction,"the court can consider the
pleadings, affidavits, exhibits, or other evidence when deciding whether a prima facie
showing has been made." Dever v. Hentzen Coatings. Inc.. 380 F.3d 1070, 1072(8th
Cir. 2004).
To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must
plead "sufficient facts to support a reasonable inference that the defendant[] can be
subjected to jurisdiction within the state." K-V Pharm. Co. v. J. Uriach & CIA. S.A.. 648
F.3d 588, 591-92(8th Cir.2011)(alteration in original)(internal quotation marks
omitted). But in cases such as this where the court holds an evidentiary hearing on the
^ Plaintiff estimates that defendant Homolka travelled to South Dakota to personally attend town halls "six times"
throughout the process of marketing the Syngenta lawsuits, and that he travelled to South Dakota a separate time to
meet another individual concerning the Syngenta lawsuits. Doc. 71 at 32-3. Defendant Homolka asserts that he
travelled to South Dakota for a Syngenta lawsuit marketing related reason "five or six times." Id- 77.
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subject and parties "bolster their positions on the motion," with affidavits and other
evidence outside the pleadings,"and the district court relies on the evidence, the motion
is in substance one for summary judgment." Creative Calling Sols.. Inc. v. LF Beautv
Ltd., 799 F.3d 975,979(8th Cir. 2015), citing Radaszewski ex rel. Radaszewski v.
Telecom Corp.. 981 F.2d 305,309-10(8th Cir.1992). Thus, the plaintiff in this case
must prove that personal jurisdiction over the defendant exists by a preponderance of the
evidence. Id.
In a diversity case, the court"may assume jurisdiction over nonresident defendants
only to the extent permitted by the long-arm statute ofthe forum state and by the Due
Process Clause." Romak USA.Inc. v. Rich. 384 F.3d 979, 987(8th Cir. 2004). The
South Dakota Supreme Court has phrased the inquiry as follows:
South Dakota courts must consider two questions to determine whether
they possess "personal jurisdiction over a nonresident defendant." Kustom
Cycles^ 2014 S.D. 87,K 9, 857 N.W.2d at 406."The first inquiry is whether
the legislature granted the courtjurisdiction pursuant to South Dakota's
Long Arm Statute ...." Id. (quoting Daktronics, 2007 S.D. 80, T| 4, 737
N.W.2d at 416); see also SDCL 15-7-2(South Dakota's long-arm statute).
"Second, the assertion ofjurisdiction must 'comport with federal due
process requirements.'" Id.(quoting Daktronics, 2007 S.D. 80, K 4,737
N.W.2d at 416).
Zhi Gang Zhang v. Rasmus. 2019 S.D. 46, H 18,932 N.W.2d 153, 160,reh'g
denied (Sept. 4, 2019), cert, denied. 140 S. Ct. 1111 (2020).
The Eighth Circuit has held that in South Dakota the dual inquiry can be
condensed into the due process analysis. See Bell Paper Box. Inc. v. Trans Western
Polvmers, Inc.. 53 F.3d 920,921 (8th Cir. 1995)("South Dakota applies its long-arm
statute to the fullest extent permissible under due process"). That said, the applicable
portion of South Dakota's long arm statute states:
Any person is subject to the jurisdiction ofthe courts ofthis state as to any
cause of action arising fi-om the doing personally, through any employee,
through an agent or through a subsidiary, of any ofthe following acts:...
(5)Entering into a contract for services to be rendered or for materials to be
furnished in this state by such person;...
S.D.C.L. 15-7-2.
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"Due process allows a Court to exercise personal jurisdiction over a non-resident
defendant only if doing so is consistent with traditional notions offair play and
substantial justice and if the defendant has sufficient "minimum contacts" with the forum
state." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,291
(19^0); International Shoe Co. v. Washington, 326U.S. 310,316(1945). Minimum
contacts exist if the defendant "should reasonably anticipate being haled into court
there." World-Wide Volkswagen Corp.. 444 U.S. at 297. Whether considered as a part
ofthe minimum contacts inquiry or as a separate part of the overall due process inquiry,
it is critical that a court determine whether a defendant performed "'some act by which
the defendant purposefully avail[ed][himself] of the privilege of conducting activities
within the forum state, thus invoking the benefits and protections of its laws."' Burger
King Corp. v. Rudzewicz. 471 U.S. 462,472(1985)(quoting Hanson v. Denckla, 357
U.S. 235, 253 (1958))(cleaned up).
For claims arising out of contract such as this, a court may properly exercise
personal jurisdiction over a defendant when the defendant can be said to have "reach[ed]
out beyond one state and create[ed] continuing relationships and obligations with citizens
of another state." Burger King Corp.. 471 U.S. at 473 (internal quotation marks omitted).
However, having entered into a contract with a citizen of another state standing alone is
insufficient to establish personal jurisdiction in that forum. Id. at 478.
In the Eighth Circuit, a five-factor test is used to determine whether a defendant has the
minimum contacts necessary for personal jurisdiction: "(1)the nature and quality ofthe
contacts,(2)the quantity ofthe contacts,(3)the relationship ofthe cause of action to the
contacts,(4)the interest ofthe forum state in providing a forum for its residents, and(5)
the convenience or inconvenience ofthe parties." Fastpath, Inc. v. Arbela Techs. Corp.,
760 F.3d 816, 821 (8th Cir. 2014). "In contract disputes, we first consider the role ofthe
contract in the personal jurisdiction analysis before addressing the five factors."
Henrv Law Firm v. Cuker Interactive. LLC.950 F.3d 528,532(8th Cir. 2020). To
evaluate the role of the contract in the personal jurisdiction analysis the Court must assess
'prior negotiations and contemplated future consequences, along with the terms ofthe
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contract and the parties' actual course of dealing." Creative Calling Sols.. Inc. v. LF
Beauty Ltd.. 799 F.3d 975,980(8th Cir. 2015)(quoting Burger King Corp., 471 U.S. at
479).
Finally, even when minimum contacts with a forum exist,jurisdiction can still be
unreasonable if the exercise of personal jurisdiction occurs "under circumstances
that would offend 'traditional notions offair play and substantial justice. Asahi Metal
Indus. Co. V. Superior Court.480 U.S. 102,113 (1987)(citing Infl Shoe Co. v.
Washington. 326 U.S. 310,316 (1945)). To assess this final question, the court must
consider the burden on the defendants of having to answer suit in this forum, the interest
of the plaintiff of having his grievances redressed in his forum of choice, and the interests
of the forum state in providing redress for plaintiffs grievances. Id. at 113-15.
As for the issue of venue,the "question—whether venue is 'wrong' or
'improper'—is generally governed by 28 U.S.C. § 1391." Atl. Marine Const. Co. v. U.S.
Dist. Court for W.Dist. of Texas. 571 U.S. 49, 55(2013)(cleaned up). That provision
states that "[ejxcept as otherwise provided by law ... this section shall govern
the venue of all civil actions brought in district courts ofthe United States." 28 U.S.C. §
1391(a)(1). Section 1391(b) provides that "[a] civil action may be brought in—(1)a
judicial district in which any defendant resides, if all defendants are residents ofthe State
in which the district is located;(2) a judicial district in which a substantial part of the
events or omissions giving rise to the claim occurred, or a substantial part of property that
is the subject ofthe action is situated; or(3)if there is no district in which an action may
otherwise be brought as provided in this section, any judicial district in which any
defendant is subject to the court's personal jurisdiction with respect to such action." 28
U.S.C. § 1391(b).
DISCUSSION
Defendant Homolka and his law firm's contacts in South Dakota relating to this
litigation are such that he should have reasonably anticipated being haled into court in
this state. Homolka and his law firm negotiated a contract that clearly called for the
establishment of a long-term professional relationship between himself and plaintiff.
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While the actual terms ofthe contract are in dispute in this litigation, the course of
dealing between the parties clearly shows a long-term and close working relationship.
The nature ofthe business between them also speaks to the creation of a close working
relationship. Plaintiff was the primary creative talent in the Syngenta lawsuits marketing
campaign and Homolka "managed" marketing efforts. Doc 71 at 86(Homolka:"I
managed and helped with the acquisition of clients.. Finally, while Homolka claimed
in an affidavit that at the time of negotiating the contract with plaintiff he believed
plaintiff to be a resident of Lakeville, Minnesota, that assertion must be false. See
defendant Homolka's affidavits: Doc. 12 at 2; Doc. 59. In the email that first brought
plaintiff to Homolka's attention, it clearly stated that plaintiff was a "a young farmer
from Sisseton, SD." Defendant's Ex. B. Homolka later stated that he did not recall that
the fact of plaintiffs residency when he made the statement in the affidavit because of
the extremely high volume of emails he received throughout the marketing ofthe
Syngenta lawsuits, but remembered once the email was brought to his attention more
recently. Doc. 71 at 87.
Homolka claims that he did not believe he was contracting to create a long-term
working relationship with a South Dakota resident who would do much ofthat work in
South Dakota. This Court does not find that claim credible. Homolka was also informed
in the email introducing him to plaintiff that plaintiff was a South Dakota farmer.
Defendant's Ex. B. Homolka repeatedly instructed those marketing the Syngenta lawsuit,
including plaintiff, to target South Dakotans. Homolka was also intimately involved in
the planning ofthe South Dakota town hall meetings. S^ Doc. 71 at 84-5. Homolka
travelled to South Dakota "five to six times" for the purpose of marketing the lawsuit—at
least four ofthose visits were for town halls. Doc. 71 at 32-3. These town hall meetings
had no purpose other than marketing the lawsuit, which was also the purpose ofthe
contract between plaintiff and defendants. Finally, Homolka was specifically asked at the
evidentiary hearing on this motion whether he had directed others' activities in South
Dakota, and he said: "Yes." Doc. 71 at 86. Homolka's physical presence in South
Dakota to work in conjunction with plaintiff to carry out the purpose oftheir contract to
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market the Syngenta litigation is a weighty contact in the specific personal jurisdiction
calculation.
Another of Homolka's significant contacts is his receipt of client retainer
agreements via plaintiffs farm in Sisseton, South Dakota. While it was not the primary
means by which Homolka retained clients in the Syngenta litigation, it was the method
used for clients who did not want to sign up in-person at a town hall meeting or online via
the website. Homolka acquired tens of clients via retainer agreements posted to
plaintiffs farm in South Dakota. Thus,the purpose ofthe parties' contract was partially
fulfilled via this mechanism.
By the same token, Homolka acquired hundreds of clients via plaintiffs website,
"LostCornIncome.com," which was registered to plaintiff at his Sisseton, South Dakota,
farmhouse. Many of Homolka's clients were South Dakota residents. S^ Plaintiffs Ex.
22. While this is not a particularly significant contact in light of Homolka's other, more
substantial contacts in South Dakota, it is another point of interaction with the state
related to carrying out the purpose ofthe contract at issue in this case.
When all of the circumstances are viewed in the aggregate,[Homolka] had
fair warning that he could be subject to jurisdiction in [South
Dakota]. Burger King,471 U.S. at 472-73,105 S.Ct. 2174 (holding that a
defendant has "fair warning" if he purposefully directs his activities at
residents ofthe forum and if the litigation results fi^om alleged injuries
arising out of or relating to those activities.).
Henry Law Firm v. Cuker Interactive. LLC.950 F.3d 528, 533 (8th Cir. 2020).
Homolka's above contacts with South Dakota "were numerous and significant and
extended over a substantial time." Northrup King Co. v. Compania Productora Semillas
Algodoneras Selectas. S.A.. 51 F.3d 1383, 1388 (8th Cir. 1995). He directed that work
be done in South Dakota, directed the targeting of South Dakota residents, physically
visited South Dakota multiple times to market the lawsuit to local farmers, and retained
clients via mailings to plaintiffs residence in South Dakota. All ofthese actions were
taken in furtherance ofthe purpose of Homolka's contract with plaintiff to market the
Syngenta lawsuits. In short, a significant portion of the contract between the parties was
performed in South Dakota and Homolka always knew that it would be. In fact,
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Homolka directed and managed much ofthat performance. For these reasons, the first
three factors of the Fastpath test support the exercise of personal jurisdiction over
Homolka and his law firm in this case. Cf. Delonev v. Chase,755 F. App'x 592, 597
(8th Cir. 2018)(The Eighth Circuit affirmed the dismissal of a legal malpractice suit for
lack of personal jurisdiction because the defendant had never visited the forum,
advertised in the forum, employed anyone in the forum, nor personally conducted any
activities whatsoever in the forum.).
The final two Fastpath factors are less important but also weigh in favor of
jurisdiction. The fourth factor accounts for the interests ofthe forum state in maintaining
the case. "[South Dakota] has an obvious interest in providing a local forum in which its
residents may litigate claims against non-residents." Northrup King Co., 51 F.3d at 1389.
The fifth factor: convenience ofthe parties, also weighs very slightly in favor of
jurisdiction. The plaintiff is traditionally the master ofthe action and is entitled to choose
among permissible forums. In this case, plaintiff chose his home forum of South Dakota.
Defendants Homolka and Daniel M. Homolka,P.A. are at home in Minnesota,
defendants Watts and Watts Guerra LLP are at home in Texas. Evidence and witnesses
in the case seem to be spread primarily between the three aforementioned states. Thus,
because no state would be convenient to all the parties and witnesses there is nothing to
move the Court to overrule plaintiffs choice offorum.
In short, the nature and extent of Homolka and his law firm's contacts make clear
that they have purposefully availed themselves ofthe laws of South Dakota. In carrying
out the contract to market and have plaintiff market the Syngenta lawsuits, he travelled to
South Dakota, directed marketing activities in South Dakota and, in conjunction with
plaintiff, recruited South Dakota clients. Homolka clearly reached out from his home
state to recruit South Dakota clients and used plaintiff as a means of doing so. This suit
arises from defendants' marketing activities; plaintiffs essential claim is that defendants
have not paid him what he is owed for his work marketing the Syngenta lawsuits for
them. Burger King Corp.. 471 U.S. at 473 ("[Wjith respect to interstate contractual
obligations, we have emphasized that parties who 'reach out beyond one state and create
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continuing relationships and obligations with citizens of another state' are subject to
regulation and sanctions in the other State for the consequences oftheir activities.").
As to the question of venue, 28 U.S.C. § 1391(b)(2) provides that venue lies in "a
judicial district in which a substantial part ofthe events or omissions giving rise to the
claim occurred." 28 U.S.C. § 1391(b)(2). As discussed above, a substantial portion of
the performance ofthe contract at issue in this case occurred at plaintiffs farm in
Sisseton, South Dakota, which lies within the boundaries of the Northern Division of the
District of South Dakota. That includes performance by plaintiff as well as the receipt of
retainer agreements on behalf of Daniel M. Homolka,P.A. and Watts Guerra LLP and the
registration of the website via which many more retainers were received. Additionally,
some ofthe South Dakota town halls were held within the boundaries of the Northern
Division. Indeed, much ofthe work that Homolka directed in South Dakota was
performed within the Northern Division. Thus, venue in this Court is proper.
IT IS HEREBY ORDERED that defendants Daniel M. Homolka and Daniel M.
HomokaP.A.'s motion to dismiss for lack of personal jurisdiction and improper venue,
Doc. 10, is DENIED.
DATED this^^/^^y ofJuly, 2020.
BY THE COURT:
CHARLES B. KORNMANN
United States District Judge
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