Opinion
A3-01-114
October 18, 2002
MEMORANDUM AND ORDER
I. Introduction
The Court has previously denied a motion by MobleSource Industries, Inc. (MSI) to dismiss for lack of personal jurisdiction. (Doc. # 34.) Since that time, MSI has brought a counterclaim against the City of Roseville, California and the city's utility, Roseville Electric (collectively Roseville). Now Roseville moves to dismiss for lack of personal jurisdiction, or, alternatively, to sever the counter-claims and transfer venue to the Eastern District of California. (Doc. # 59.) For the reasons explained below, the motion to dismiss is GRANTED. (Doc. # 59-1.)
II. Background
Many of the background facts of this case were fully disclosed in the Memorandum and Order denying MSI's motion to dismiss, and thus the Court finds no reason to engage in a full-blown recitation of the facts. See Memorandum and Order, Feb. 4, 2002. (Doc. # 34.) There are, however, several facts that are relevant to this motion that bear repeating.
Plaintiff Border States Industries (BSI) (also called Border States Electric, or BSE) is a North Dakota corporation with its headquarters in Fargo, North Dakota; it is a large electrical and communications distributor. MSI, a Canadian company, designs and manufactures electrical substations and stationary power transformer units. MSI cultivated a relationship with BSE in which BSE would enter into direct contracts with buyers; BSE would then subcontract MSI to perform the contracts. Under this arrangement, BSE entered into five contracts with five cities in four different states. One of these cities is Roseville.
MSI did not complete the performance of the Roseville contract. BSE and MSI blame each other for this nonperformance, and, consequently, the relationship between BSE and MSI fell apart. As a result, BSE sued MSI in this Court, and, on the same day, MSI sued BSE in the Eastern District of California.
The Court denied MSI's motion to dismiss for lack of personal jurisdiction, holding that MSI's cultivation of a relationship with plaintiff and its routing of business through North Dakota constituted the minimum contacts required for personal jurisdiction. The litigation between MSI and BSE in the Eastern District of California was then transferred to this Court, and, more than three months later, MSI counterclaimed against Roseville.
In its brief in opposition to Roseville's motion to dismiss, MSI relies on the Court's assertion of personal jurisdiction over it to support its claim that personal jurisdiction over Roseville is proper. As explained below, however, the relationship between this forum and MSI is quite different than the relationship between this forum and Roseville.
III. Discussion A. Personal Jurisdiction Standards
As the party requesting that the Court assume jurisdiction over Roseville, a nonresident defendant, MSI bears the burden of establishing that this Court's jurisdiction over Roseville comports with North Dakota law and the Due Process Clause of the Fourteenth Amendment. First Nat'l Bank of Lewisville, Ark. v. First Nat'l Bank of Clinton, Ky., 258 F.3d 727, 729 (8th Cir. 2001). North Dakota's long-arm statute has been interpreted to permit the exercise of personal jurisdiction to the fullest extent permitted by due process; thus, this Court is constrained only by the dictates of due process. Id.
Due process requires sufficient minimum contacts between [Roseville] and [North Dakota] so that maintenance of the suit does not offend traditional notions of fair play and substantial justice. Id. (citation omitted). In order for this standard to be met, "there [must] be some act by which the defendant purposefully avails itself of the privilege of conducting activities with the forum State, thus invoking the benefits and protections of its laws." Id. (citation omitted). Such contacts must not be random, fortuitous, attenuated, or the result of a third party's unilateral activity. Guinness Import Co. v. Mark VII Distributors, Inc., 153 F.3d 607, 614 (8th Cir. 1998) (citation omitted). Finally, these contacts must create a substantial connection between Roseville and the State of North Dakota. Porter v. Berall, 293 F.3d 1073, 1075 (8th Cir. 2002).
B. Analysis
Roseville argues that jurisdiction is improper since it has essentially no connection with North Dakota. The following facts, as presented by Roseville, are not disputed by MSI. Roseville is a municipal corporation located in California. Roseville does not do business in North Dakota; it has no employees in North Dakota; and its employees have not traveled to North Dakota in connection with the present dispute. In 1999, Roseville solicited bids to provide and install transformers. However, there is no indication that Roseville exclusively sought bids from North Dakota residents. While Roseville acknowledges that it eventually accepted a bid and entered into a contract with BSE, a North Dakota resident, the contract was not formalized in North Dakota.
After a review of the file, the Court agrees with Roseville's assessment that Roseville's only connection to North Dakota is its contract with BSE, a North Dakota resident. As the Eighth Circuit has explained, "[m]erely entering into a contract with a forum resident does not provide the requisite contacts between a [nonresident] defendant and the forum state." Bell Paper Box, Inc. v. Trans Western Polymers, Inc., 53 F.3d 920, 922 (8th Cir. 1995) (citation omitted).
MSI urges the Court, however, to consider that Roseville's contract with BSE caused BSE to perform other activities in North Dakota on Roseville's behalf. For example, MSI points out that the contract required a performance bond, and, consequently, BSE entered into a contract with a North Dakota bonding company. MSI supports its argument for jurisdiction with Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816 (8th Cir. 1996).
In this case, a South Dakota corporation sued a Michigan corporation for breach of contract. Id. at 817. Aside from its business with the South Dakota corporation, the Michigan defendant had never conducted any business in South Dakota, and none of its employees had traveled to South Dakota in connection with the contract. Id. at 818. Nevertheless, the Eighth Circuit held that the defendant was subject to jurisdiction in South Dakota. In doing so, the Circuit noted that the controlling distinction is that the subject matter of this dispute occurred entirely within the forum state since the contract was performed entirely within South Dakota and a representative of defendant visited South Dakota in connection with the contract. Id. at 89. This controlling distinction is missing from the fact pattern in this case; the crucial part of the contract at issue — the installation of the transformers — was to be performed in California, and no Roseville representative has traveled to North Dakota in connection with the contract.
The Court finds that the facts of the present case are more akin to those in Jarvis Sons, Inc. v. Freeport Shipbuilding Marine Repair, Inc., 966 F.2d 1247 (8th Cir. 1992). In Jarvis, the plaintiff was a Minnesota vessel owner and defendant was a Florida shipbuilder. Id. at 1248. The plaintiff entered into a contract with defendant to make modifications of the vessel. Id. In affirming the district court's denial of jurisdiction, the Eighth Circuit noted defendant's lack of contacts with Minnesota:
[D]efendant has no office or agent or representative or employees in Minnesota; none of defendant's employees has ever visited Minnesota in connection with the contract; the contract was negotiated, executed and performed in Florida; all the modification work was performed, or, as alleged by plaintiff, not performed in breach of the contract, in Florida.
Id. at 1250. These facts mirror the facts in the present case.
More importantly, though, the Jarvis Court held that plaintiff failed to demonstrate that defendant purposefully availed itself of the protections and laws of Minnesota: There is no evidence that defendant designed the modification of the vessel in anticipation of contracts for similar work in Minnesota or that it has attempted to solicit business or market its shipbuilding services in Minnesota. Id. Similarly, MSI has not satisfied its burden of establishing that Roseville has purposefully availed itself of conducting business within North Dakota. This is what distinguishes the relationship between MSI and Roseville from the relationship between BSE and MSI. Whereas MSI entered into a contract with BSE in which it used North Dakota as a medium through which it transacted all of its American business, Roseville, through mere fortuity, contracted with a North Dakota resident. The Court therefore concludes that there are insufficient contacts between Roseville and North Dakota to support an exercise of jurisdiction, and the motion to dismiss is GRANTED. See Guinness, 153 F.3d at 614 (finding that personal jurisdiction may not be satisfied by random, fortuitous, or attenuated contacts with the forum state).
As an alternative to its motion to dismiss, Roseville seeks to sever the counterclaims and transfer venue to the Eastern District of California. Since the Court has granted the motion to dismiss, this request is DENIED AS MOOT. (Docs. # 59-2, # 59-3.) In its response to Roseville's motion, MSI also alternatively seeks transfer to the Eastern District of California. MSI seeks to transfer the entire action, including the action between it and BSE, the action in which this Court previously denied dismissal and transfer. To entertain such a request would essentially allow any defendant with an unsuccessful transfer motion to circumvent a Court's denial of transfer by merely adding a nonresident third-party defendant. The Court will not set such a precedent, and this request is denied.
IV. Conclusion
For the above reasons, the motion to dismiss is GRANTED. (Doc. # 59-1.) The alternative motions to sever the counterclaims and transfer venue to the Eastern District of California are DENIED AS MOOT. (Docs. # 59-2, # 59-3.)
IT IS SO ORDERED.