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Defendant's ''Technological Presence'' in the State Held Sufficient to Exercise Personal Jurisdiction

Thursday, October 20, 2011
Yamuna Bhaskaran | Bloomberg Law MVP Lanes, LLC v. RI Hispanic Bancgroup, LLC, No. 11-cv-02402, 2011 BL 259306 (D. Md. Oct. 7, 2011) As part of a plan to build a bowling and entertainment complex in Maryland, MVP Lanes, LLC, a Maryland limited liability corporation with its primary place of business in Maryland, entered into a financing deal with RI Hispanic Bancgroup, LLC (RIH), a Rhode Island limited liability company with its principal office in Rhode Island and a home office in Massachusetts. RIH's sole owner and alter ego, Martien Eerhart, represented to MVP that RIH had a direct banking relationship with Bank of Nova Scotia (Scotia Bank) and offered to have the bank issue $65 million in credit to MVP. Pursuant to a written agreement, MVP deposited $90,000 into what it believed was an Interest Only Lawyer's Trust Account (IOLTA) selected by RIH and was subsequently told by RIH that Scotia Bank issued the credit. Despite repeated inquiries, RIH failed to provide proof that the credit had been issued. In fact, the account in which MVP had deposited the $90,000 was not an IOLTA, Eerhart had no relationship whatsoever with Scotia Bank, and both the funds and the purported escrow agent were gone. MVP subsequently sued RIH in the U.S. District Court for the District of Maryland, and RIH moved to dismiss for lack of personal jurisdiction, arguing that it "maintains no offices in Maryland, no employees or agents in Maryland, owns no property in Maryland and made no in-person contact with any Maryland resident to solicit a business relationship." According to the Court, however, RIH "used electronic messaging, telephone calls, letters, and text messages" to reach Maryland and MVP to discuss and enter into a contract with MVP. Noting that "a defendant's physical presence is unnecessary" to establish personal jurisdiction, the Court observed that "[a]s technology has evolved, so have the standards." Because RIH "reached into Maryland and took $90,000 from a Maryland corporation without subsequent performance of the . . . agreement," the Court held that it "purposefully directed its activities toward Maryland," justifying the exercise of personal jurisdiction under Maryland's long-arm jurisdiction statute, Md. Code, Cts. & Jud. Proc. § 6-103(b)(1).   DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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