Damian v. Click Intelligence Ltd.

Background

Melanie Damian sued as receiver for Today’s Growth Consultant, Inc. (TGC), seeking to recover funds that she alleged TGC had fraudulently transferred to Click Intelligence Ltd. The complaint asserted claims under sections 5(a)(1) and 5(a)(2) of the Illinois Uniform Fraudulent Transfer Act and for unjust enrichment.

According to the complaint, TGC raised $75 million between 2017 and 2019 through a scheme that represented it would build and maintain eCommerce websites for investors and provide them with a share of website revenue and a guaranteed annual return. TGC allegedly generated little revenue from the websites and instead used money from later investors and loans to make most payments to earlier investors.

TGC made about nine payments totaling $869,174 to Click, which the complaint described as payments for link-building services. The receiver alleged that Click did not provide reasonably equivalent value and that the payments were primarily intended to defraud TGC’s investors and creditors. The Securities and Exchange Commission later brought an enforcement action against TGC, and Damian was appointed receiver.

Click’s Motion

Click moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, under Rule 12(b)(6) for failure to state a claim, and on forum non conveniens grounds, which concerns whether another forum is more appropriate. The court addressed only personal jurisdiction.

Personal Jurisdiction

The receiver relied on New York’s long-arm statute, specifically New York Civil Practice Law and Rules section 302(a)(3)(ii). That provision can allow jurisdiction over a person who commits a tort outside New York that causes injury in New York, if the person expected or reasonably should have expected consequences in New York and receives substantial revenue from interstate or international commerce.

The court held that the receiver had not plausibly alleged that Click caused an injury in New York or should reasonably have expected to do so. The complaint alleged only that part of TGC’s scheme occurred in New York. It did not show that an injury actually occurred there, much less that Click caused it. The court also explained that the presence of injured investors in New York, and their economic losses there, was not enough by itself to establish jurisdiction.

The receiver also relied on Click’s website listing a New York office. The court found that the complaint did not explain how that office made it foreseeable that New York investors would be injured. It did not allege that investors were injured after meeting Click at that office or that the injury occurred through Click’s website.

The court separately held that exercising jurisdiction would not satisfy due process. Due process requires a defendant to have sufficient connections with the forum state and requires the plaintiff’s claims to arise from or relate to those connections. The receiver’s claims arose from payments made from a bank account in Illinois to a company in the United Kingdom. The complaint did not allege that Click’s New York office was involved in those payments or that Click itself engaged in conduct in New York giving rise to the claims.

Leave to Amend

The receiver asked for permission to file an amended complaint if the case were dismissed. The court denied that request. It found that the complaint contained a serious jurisdictional defect that amendment could not cure. The receiver had already been given an opportunity to amend, had been warned that it likely would be the final opportunity, did not submit proposed amendments, and did not explain how amendment would establish personal jurisdiction.

Disposition

The court granted Click’s October 29 motion to dismiss. It denied leave to amend, directed the Clerk of Court to enter judgment for Click, and ordered the case closed. The court did not reach Click’s arguments under Rule 12(b)(6) or forum non conveniens.