United States District Court, W.D. Kentucky, Paducah Division
B. Russell, Senior Judge United States District Court.
matter is before the Court on Defendants Alternative IRA
Services, LLC, DitigalIRA.com LLC, Camilo Concha and Chris
Kline's (“Defendants”) Motion to Dismiss for
Failure to State a Claim Upon Which Relief May Be Granted,
and Alternatively, Motion For More Definite Statement, [DN
5], and Defendants' Motion to Dismiss For Lack of
Personal Jurisdiction or Alternatively, Motion to Transfer,
[DN 6]. Plaintiffs responded to both motions, [DN 21], and
Defendants replied, [DN 22]. This matter is ripe for
adjudication. For the reasons stated herein: Defendants'
Motion to Dismiss For Lack of Personal Jurisdiction is
GRANTED and Defendants' Motion to Dismiss for Failure to
State a Claim Upon Which Relief May Be Granted and
Alternatively, Motion For More Definite Statement is DENIED
factual allegations, as set forth in the Complaint and
presumed to be true at the motion to dismiss stage of
litigation, are as follows. Plaintiff My Retirement Account
Services, LLC d/b/a Kingdom Services is a Kentucky limited
liability company with its principle place of business in
Murray, Kentucky. [DN 1 at 3]. Kingdom Services wholly owns
and provides administrative services to Kingdom Trust, a
South Dakota corporation with its principle place of business
in Kentucky. Id. Kingdom Trust is a trust custodian
holding various types of assets in individual retirement
accounts (“IRA”) on behalf of its clients.
Id. at 7. A portion of the assets held by Kingdom
Trust are digital assets including cryptocurrencies.
Alternative IRA Services, LLC is a Delaware limited liability
company with its principle place of business in Sherman Oaks,
California. Id. at 3. Alternative IRA Services does
business under several different names, including Digital
IRA, Bitcoin IRA, Bitcoinira.com, and Digitalgold.com.
Id. at 4. Defendant BitGo, Inc. is a Delaware
corporation and its affiliate, BitGo Trust, is a South Dakota
corporation. Id. Defendant Camilo Concha is the
Chief Executive Officer of Bitcoin IRA and DigitalIRA.com and
is a resident of California. Id. at 4. Defendant
Chris Kline is the Chief Operating Officer of Bitcoin IRA and
DigitalIRA.com and is a resident of California. Id.
in early 2018, Kingdom Trust entered into an agreement with
Bitcoin IRA pursuant to which Bitcoin IRA provided a
technology platform allowing Kingdom Trust clients to buy and
sell digital assets held in their IRAs. Id. at 8.
Around this time, BitGo, Inc. and Kingdom Trust entered into
a Merger Agreement and a Confidentiality Agreement.
Id. at 9-10. However, in May 2018, BitGo,
Inc. terminated the merger and the relationship between the
companies dissolved. Id. at 10. In September 2018,
Kingdom Trust and Bitcoin IRA entered into a Referral
Agreement whereby Kingdom Trust paid a fee to Bitcoin IRA for
each client referred to and accepted by Kingdom Trust from
Bitcoin IRA. Id. Throughout the course of this
relationship, the companies shared trade secrets, client
lists, and other proprietary information with each another.
Id. at 8-10.
7, 2019, DigitalIRA.com and its parent company, Digital Asset
Group, LLC entered into a Third Party Administrator
Engagement Agreement with BitGo Trust Company and BitGo
Holdings, Inc. Id. at 13. Pursuant to this
agreement, DigitalIRA.com would act as a third-party
administrator to market and retail self-directed IRAs holding
cryptocurrencies and other alternative assets held by BitGo
Trust. Id. at 14. Plaintiffs claim that
DigitalIRA.com, Bitcoin IRA, BitGo Inc., and BitGo Trust then
“developed a plan to contact all Kingdom Trust clients
with cryptocurrency assets in their IRAs and convert them to
BitGo Trust clients.” Id.
in June 2019, BitCoin IRA began sending letters, emails, and
posting links on Bitcoin IRA's technology platform
directing Kingdom Trust clients to upgrade their account.
Id. at 18. However, Plaintiffs claim these efforts
actually directed clients to an asset transfer form which
clients could use to transfer their assets from Kingdom Trust
to BitGo Trust. Id. As a result of Defendants'
actions, Kingdom Trust claims it received approximately 665
transfer requests between June and August 2019. Id.
transferring its clients' assets, Kingdom Trust claims it
was required by federal and state law to perform due
diligence on BitGo Trust and its relationships with service
providers. Id. at 17. In response to Kingdom
Trust's delay in executing the transfers, Defendant
Concha sent Kingdom Trust a cease and desist letter demanding
Kingdom Trust execute the transfers immediately. Id.
at 19. Kingdom Trust also claims that BitGo Trust encouraged
clients to contact South Dakota banking regulators and
complain about the delay. Id. at 20. According to
the Complaint, Defendants continued to contact Kingdom Trust
clients and encourage them to transfer their assets to BitGo
Trust until the current action was filed in August 2019.
STANDARD AND ANALYSIS
Waiver of Personal Jurisdiction Defense
the Court will address Defendants' Motion to Dismiss for
Lack of Personal Jurisdiction. Plaintiffs claim that
Defendants have waived their right to assert a personal
jurisdiction defense pursuant to Federal Rule of Civil
Procedure 12(h) because they previously filed a motion to
dismiss for failure to state a claim. [DN 21 at 502]. In
response, Defendants claim they have not waived their
personal jurisdiction defense because the concurrently filed
motion to dismiss for failure to state a claim incorporates
their motion to dismiss for lack of personal jurisdiction.
[DN 22 at 582]. Moreover, Defendants claim a waiver in this
instance would be contrary to the purpose of Rule 12.
Rule of Civil Procedure 12(b)(1) allows a defendant to
challenge the court's personal jurisdiction. However,
“[t]he ability to challenge personal jurisdiction is
not indefinite and can be waived if not pled at the correct
time.” Nat'l Feeds, Inc. v. United Pet Foods,
Inc., 118 F.Supp.3d 972, 973 (N.D. Ohio 2015) (citing
Gerber v. Riordan, 649 F.3d 514, 518 (6th Cir.
2011)). Rule 12(h) provides that “[a] party waives any
defense listed in Rule 12(b)(2)-(5) by” omitting it
from an earlier Rule 12 Motion. Fed.R.Civ.P. 12(h). Rule
12(b) includes motions to dismiss for lack of personal
jurisdiction. Fed.R.Civ.P. 12(b). Accordingly, if Defendants
filed a Rule 12 motion to dismiss for failure to state a
claim upon which relief may be granted and omitted their
personal jurisdiction defense, that defense would be waived
by operation of Rule 12(h). See Means v. U.S. Conference
of Catholic Bishops, 836 F.3d 643, 648-49 (6th Cir.
the Sixth Circuit has noted that a party does not waive a
defense under Rule 12(h) by failing to plead that defense
with sufficient specificity. King v. Taylor, 694
F.3d 650, 657 (6th Cir. 2012) (collecting cases)
(“See Mattel, Inc. v. Barbie-Club.com, 310
F.3d 293, 307 (2d Cir. 2002) (‘[T]o preserve the
defense of lack of personal jurisdiction, a defendant need
only state the defense in its first responsive filing and
need not articulate the defense with any rigorous degree of
specificity.'); compare United States v. Ziegler Bolt
& Parts Co.,111 F.3d 878, 880, 882 (Fed. Cir. 1997)
(defendant's assertion in his answer that the complaint
was ‘barred because of insufficient service of
process' was adequate to preserve the defense at the
outset); and Holzsager v. Valley Hosp., 646 F.2d
792, 795-96 (2d Cir. 1981) (answer's assertion that the
district court ‘lacked jurisdiction over the person of
the defendant' was ...