Texas Co. Fights To Keep Failed Mask Deal Suit Intact

By Emily Sides
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Law360 (October 30, 2020, 7:08 PM EDT) -- A Texas company that attempted to buy more than $1.8 million worth of K95 masks urged a Louisiana federal judge not to trim its suit accusing a California attorney of breaching his contract, arguing that the court has jurisdiction.

Share Holders LLC and Charlie Holder, which does business as Advantage Testing, argued the court has personal jurisdiction over BAFF Consultants Inc. and its president Farhan Mirza because the company was properly notified of the lawsuit and voluntarily appeared at a hearing in August via phone call in the Louisiana federal court.

"Mirza did not make a limited entry of appearance for purposes of contesting this Court's jurisdiction nor did he raise the issue at the conference," Advantage Testing said in its memo.

BAFF is one alleged player in a failed deal full of twists and turns.

Advantage Testing, which sells drug, alcohol and industrial hygiene tests, tasked California lawyer Thomas Gruenbeck with ordering 500,000 KN95 masks that were promised to arrive within two business days, but alleged that Gruenbeck instead used $1.25 million of Advantage Testing's funds for the masks without permission. BAFF Consultants had agreed to sell the masks to Advantage Testing, according to the suit.

Gruenbeck allegedly sent the money to King Consulting Group LLC, another defendant in the case. Advantage Testing sued Gruenbeck and the others in July after the company did not receive the masks.

In September, BAFF Consultants asked the court to permanently dismiss it from the dispute, arguing that Advantage Testing did not establish personal or specific jurisdiction over BAFF Consultants.

Aimee Gill, lawyer for BAFF Consultants, said in an email to Law360 that BAFF Consultants did not consent to personal jurisdiction in Louisiana federal court. Gill said the company cannot waive its right to argue against personal jurisdiction because a business can't appear in court without a lawyer.

Gill also said her client didn't request the court's judgment by phoning in, especially considering BAFF wasn't served with a summons or a complaint related to the dispute.

"The law is clear that you cannot trick someone into waiving personal jurisdiction and that it has to be done through an affirmative action by the party that recognizes the court's jurisdiction over them," Gill said.

In their bid to exit the case, BAFF Consultants, which is based in Michigan and California, said Advantage Testing does not allege any facts that would connect BAFF Consultants to the Louisiana federal district.

BAFF Consultants also said the Louisiana court doesn't have specific jurisdiction over the company because Advantage Testing does not allege that BAFF Consultants took any action in Louisiana regarding this dispute.

"The Complaint does not mention any conduct on the part of BAFF or Mirza arising in connection to any activity in Louisiana," BAFF Consultants said. "The only specific conduct alleged in Louisiana was the transfer of money to a company in Louisiana which was done by another [Gruenbeck] — not BAFF or Mirza."

BAFF Consultants also argued that the sale agreement for the KN95 masks said any legal action could only be started in federal or state courts in Orange County, California.

Advantage Testing did not immediately return requests for comment.

Advantage Testing is represented by Mary Lee Holmes of Holmes McLelland & Ferraez PLLC and by Carmen M. Rodriguez and Gary J. Russo of Jones Walker LLP.

Gruenbeck is representing himself.

Baff Consultants and Mirza are represented by Aimee Gill of Law Offices of Aimee Gill.

The case is Holder et al v. Gruenbeck et al, case number 6:2020cv00875, in the U.S. District Court for the Western District of Louisiana.

--Additional reporting by Kevin Penton. Editing by Amy Rowe.

For a reprint of this article, please contact reprints@law360.com.

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Case Information

Case Title

Holder et al v. Gruenbeck et al


Case Number

6:20-cv-00875

Court

Louisiana Western

Nature of Suit

Contract: Other

Judge

Michael J Juneau

Date Filed

July 13, 2020

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