Listen to this articleHighlights:
- Judge found sufficient contacts to establish Rhode Island jurisdiction
- Illinois executive signed personal guaranty with RI company
- Dispute involves $145,000 in unpaid invoices to Contempo Card Co.
- Court cites state interest in adjudicating disputes involving RI firms
An Illinois man who signed certain business agreements with a Rhode Island company on behalf of his out-of-state employer had sufficient contacts to be sued in Rhode Island for his company’s alleged breach of the agreements, a federal judge has determined.
Defendant Timothy Madigan, an Illinois resident and executive with defendant Myndset Alchemy, based in Nevada, signed a “new customer application” with Rhode Island-based plaintiff Contempo Card Co., to secure packaging and shipping services for Myndset’s products.
In connection with the agreement, Madigan executed a personal guarantee that Myndset would pay for Contempo’s services in full. His communications with Contempo apparently occurred from his Illinois home and Myndset’s Michigan office.
After Myndset allegedly failed to pay its invoices, Contempo sued Myndset and Madigan in U.S. District Court in Rhode Island.
Madigan argued in a motion to dismiss that he was not subject to personal jurisdiction in Rhode Island because his involvement with Contempo never “touched” Rhode Island.
Judge Melissa R. DuBose disagreed.
“It is clear that Madigan’s starring role in the New Customer Application, especially given his name and signature on the ‘Personal Guaranty of Account’ section and email communications with Contempo over orders and payments, indicates that he, personally, reached into Rhode Island to form the contract and engage in the business relationship with Myndset,” DuBose wrote. “While the Court acknowledges the inconvenience to Madigan, Rhode Island has a strong interest in adjudicating a dispute which affects a business homed within its borders, and there is an undeniable efficiency in Contempo litigating its claims against both defendants in the same forum as filed.”
The 16-page decision is Contempo Card Company, Inc. v. Myndset Alchemy, Lawyers Weekly No. 52-097-25. The full text of the ruling can be found here.
New York attorneys Brett A. Berman and Erik Detloff and West Warwick lawyers Harmony Conti Bodurtha and Catherine A. Shaghalian represented the plaintiff. None of the attorneys responded to requests for comment.
Madigan’s attorney, Lisa M. Kresge of Providence, also did not respond.
Cross-border dispute
Until at least 2022, Madigan was the managing partner, CFO and primary contact for Myndset, a cannabis company incorporated in Delaware, headquartered in Nevada, and with an office in Michigan.
Contempo is a Providence-based company that provides packaging and shipping services to other businesses.
Madigan’s initial contact with Contempo was in October 2021 at a trade show in Las Vegas, where he met with Contempo representatives at their exhibition booth and received marketing materials.
A year later, he apparently completed, on Myndset’s behalf, the “New Customer Application” that Contempo reportedly imposes on anyone seeking to place an order for its products or services.
The application included shipping, billing and payment details. It also included a standalone page with the subheading “Personal Guarantee of Account,” which Madigan apparently signed as Myndset’s “partner.”
Contempo Card Company, Inc. v. Myndset Alchemy
THE ISSUE
Did an Illinois resident who signed certain business agreements with a Rhode Island company on behalf of his out-of-state employer have sufficient contacts to be sued in Rhode Island for his company’s alleged breach of the agreements?
DECISION
Yes (U.S. District Court)
LAWYERS
Brett A. Berman and Erik Detloff, of Fox Rothschild, New York; Harmony Conti Bodurtha and Catherine A. Shaghalian, of Orson & Brusini, West Warwick (plaintiff)
Lisa M. Kresge of Brennan, Scungio & Kresge, Providence; Christopher S. Griesmeyer of Greiman, Rome & Griesmeyer, Chicago (defense)
The guarantee stated: “I hereby agree to pay in full all charges as specified on my invoices per the stated terms.”
Business transactions followed, as did conflict between the two companies.
In December 2024, Contempo sued Myndset and Madigan in U.S. District Court in Rhode Island asserting breach of contract stemming from an alleged $145,000 in unpaid invoices.
In the alternative, Contempo asserted claims of unjust enrichment and “account stated.”
Madigan subsequently moved to dismiss for lack of personal jurisdiction and failure to state a claim.
Sufficient contacts
In support of his jurisdictional challenge, Madigan argued that Contempo could not satisfy the requirement that Contempo prove that its claim arose from or related to his contacts with Rhode Island.
Specifically, he asserted that any part he played in forming a contract between Contempo and Myndset occurred outside Rhode Island, as he met with Contempo reps in Nevada and his follow-up email, phone and videoconference communication with Contempo occurred from either his Illinois home or Myndset’s Michigan office.
Contempo argued in response that his contacts with Rhode Island directly related to the litigation based on the fact that the new customer application listed him as primary contact, that he signed the guarantee of account page, and that Contempo’s alleged economic harm from the unpaid balance occurred in Rhode Island.
DuBose agreed with Contempo.
“Contempo … alleges a breach of contract resulting from unpaid invoices, a claim that arises out of a contract which includes Madigan’s signature as a personal guarantor of the account and Madigan’s name as both a Managing Partner and direct contact for Myndset,” the judge wrote. “With all of these details in mind, Court concludes that this cause of action indeed arises from and directly relates to the contact — however narrow — Madigan had with Contempo, a Rhode Island company, on behalf of Myndset.”
The judge determined that Rhode Island’s interest in adjudicating a dispute that affected a Rhode Island company, paired with the efficiency of the plaintiff litigating its claims against both defendants in the same forum, outweighed whatever inconvenience Rhode Island jurisdiction might create for one of the defendants.
DuBose also found that Contempo showed Madigan purposefully availed himself of the privilege of conducting activities in Rhode Island, referencing his “starring role” in completing the new customer application, signing the personal guaranty of account, and the email communications with Contempo that he subsequently engaged in — all of which showed that he “reached into” Rhode Island to engage in a business relationship on Myndset’s behalf.
“Moreover, these documents (especially the emails) show the intended ongoing business relationship with Contempo while Madigan was employed by Myndset,” the judge said. “This Court therefore concludes that the voluntary and reasonable foreseeability factors of the purposeful availment test are met.”
Finally, DuBose found that Contempo made the requisite showing that personal jurisdiction over Madigan was reasonable.
In doing so, the judge weighed the burden it would place on Madigan to force him to appear in a Rhode Island court, against Rhode Island’s clear interest in adjudicating the dispute.
Noting that co-defendant Myndset did not challenge Rhode Island jurisdiction, DuBose determined that Rhode Island’s interest in adjudicating a dispute that affected a Rhode Island company, paired with the efficiency of Contempo litigating its claims against both defendants in the same forum, outweighed whatever inconvenience Rhode Island jurisdiction might create for Madigan.
“The Court therefore concludes that the reasonableness factor is met,” DuBose said.
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