Opinion
Case No. 1:01-CV-106
May 31, 2001
OPINION
This matter is before the Court on Defendant Outback Sports, L.L.C.'s Motion to Dismiss. On review of this matter, the Court determines that the Motion can be decided without oral argument. The Court also determines, for the reasons which follow, that the Motion will be granted.
FACTS
Plaintiff Mid-Michigan Great Dane, Inc. originally filed this suit in the Circuit Court for Kent County, Michigan on January 8, 2001. The Summons and Complaint were served on the Defendant on or about January 16, 2001. Defendant then removed the suit by Notice of Removal filed with this Court on February 13, 2001. The Notice of Removal is premised on diversity jurisdiction under 28 U.S.C. § 1332. The Complaint itself states claims for breach of contract and claim and delivery under state law. The Complaint seeks damages in excess of $75,000 and is allegedly between citizens residing in separate states.
Defendant filed the instant Motion on May 8, 2001. Plaintiff has responded to the Motion and Defendant has replied to the response. A review of the documentary evidence and affidavits filed by the parties reveals essential agreement about the facts pertinent to this Court's exercise of personal jurisdiction over the Defendant.
Defendant contends and the Plaintiff does not dispute that the Defendant was not a party to the contract at issue, that the contracting party is a necessary party to the suit, and that the contracting party is "OS Suites, Ltd." These assertions are based on the affidavit of James Tucker (the official of OS Suites, Ltd. who signed the contract in question) and are not disputed by the Plaintiff.
In light of this situation, Plaintiff has requested to amend its Complaint to substitute OS Suites, Ltd. instead of Outback Sports, L.L.C., citing to Federal Rule of Civil Procedure 17(a), which states the preference of the Federal Rules for the substitution of a real party in interest. In light of Rule 17 and the liberal standard for amendment of pleadings under Rule 15, see Foman v. Davis, 371 U.S. 178, 182 (1962), this request would normally be granted. However, before doing so, the Court must consider whether it has personal jurisdiction over OS Suites. Ltd. because an amendment of the pleadings to assert a claim against a party over whom the Court lacks jurisdiction would be futile. See Foman, 371 U.S. at 182.
As to OS Suites, Ltd. ("OS"), it is a Florida limited liability corporation with its principal place of business in Tampa, Florida. (Tucker Affidavit at ¶ 6.) OS does not own real property or personal property in the State of Michigan and has no Michigan employees. (Tucker Affidavit at ¶ 8-9; Lance McNeill Affidavit at ¶ 8-9.) OS is not licensed to do business in the State of Michigan. (Tucker Affidavit at ¶ 7; McNeill Affidavit at p 7.)
Nevertheless, OS did contract for the purchase of 90 custom built trailers and 45 over-the-road dollies with Plaintiff at a total cost in excess of 1.6 million dollars. (Tucker Affidavit at ¶ 17 and Exhibit A.) The subject of the contract were dollies and trailers manufactured by Holden Industries, Inc. in Missouri, which were to be sold by Plaintiff to OS and delivered F.O.B. in Missouri. (Tucker Affidavit at ¶ 11.) The contract in question was negotiated between Michigan (Plaintiff's place of business) and Florida (OS' place of business) by telephone, fax and mail. (McNeill Suppl. Affidavit at ¶ 9a.) Plaintiff now seeks in this lawsuit in excess of $300,000 of the contract price, which is allegedly unpaid.
In addition to the contract in question, OS has had some additional contacts with the State of Michigan between November 1997 and March 2000. These contacts include: (1) on two occasions, the President of OS, Lance McNeill, traveled to Michigan to negotiate the purchase of SGA (a consulting company which provided information to OS about custom trailers), which purchase did not occur; (2) OS rented two hospitality suites at the Michigan International Speedway for use on three race week-ends in 1999 (June 11-13, 1999; July 23-25, 1999; and August 20-22, 1999); (3) OS rented a hospitality suite at the Buick Open Golf Tournament between Aug. 8-13, 2000; (4) OS has negotiated for use of hospitality suites in the year 2001; (5) OS engaged David Reed of SGA as an engineering consultant to assist in its decision to purchase trailers from Plaintiff; (6) OS communicated with David Reed by telephone, e-mail, mail and fax about the purchases of the trailers and the possible purchase of SGA; and (7) OS, by its attorney, communicated with Plaintiff by telephone, fax and mail about the repair of two of the contracted trailers, which were located at the Michigan International Speedway since May 30, 2000. (Tucker Suppl. Affidavit at ¶¶ 7-8; McNeill Suppl. Affidavit at ¶¶ 7-9; September 20, 2000 letter of David C. Crowell, OS corporate counsel, to Bruce Hoppe.) Complaints about the trailer performance by OS have also been asserted by OS as a basis for challenging Plaintiff's claims for non-payment. (November 3, 2000 letter of David C. Crowell to Richard Marvin.)
Plaintiff has also provided affidavits and other papers as evidence, including the affidavit of Bruce Hoppe and Richard Marvin. These affidavits, for the most part, only confirm the information contained in Defendant's affidavits. To the extent that Plaintiff's affidavits seek to contradict Defendant's affidavits, though, the information asserted is not properly considered because it is based on hearsay or is otherwise outside the personal knowledge of the affiants.
LEGAL ANALYSIS
Federal Rule of Civil Procedure 12(b)(2) mandates the dismissal of an action when personal jurisdiction over the defendant is lacking. When challenged, a plaintiff bears the burden of establishing personal jurisdiction over a defendant by sufficient prima facie proof (affidavits and document evidence) of jurisdiction. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991); Market/Media Research v. Union-Tribune Publishing Co., 951 F.2d 102,104 (6th Cir. 1991); Serras v. First Tennessee Bank, 875 F.2d 1212, 1214 (6th Cir. 1989); Evans Tempcon, Inc. v. Index Industries, Inc., 778 F. Supp. 371, 373 (W.D.Mich. 1990). The Court has considerable discretion in assessing the evidence filed as to whether to require an evidentiary hearing. Id. If the motion is decided on written submissions, the evidence adduced must be interpreted in a light most favorable to the plaintiff. Theunissen, 935 F.2d at 1459. The question of whether personal jurisdiction exists over a particular defendant depends on an analysis of both the pertinent state long-arm statute and the federal due process limitations on the exercise of personal jurisdiction. Genetic Implant Systems, Inc. v. Core-Vent Corp., 123 F.3d 1455, 1458 (Fed. Cir. 1997).
In 1945, the United States Supreme Court announced that the Due Process Clause of the United States Constitution requires that a defendant have sufficient minimum contacts with the forum state "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Over the years, this requirement has been tailored by many decisions of the Supreme Court and the Sixth Circuit Court of Appeals. A 1996 decision of the Sixth Circuit Court of Appeals summarizes the basic due process requirements as follows:
"First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum to make the exercise of jurisdiction over the defendant reasonable."Compuserve, Inc v. Patterson, 89 F.3d 1257, 1263 (6th Cir. 1996) (quoting earlier case law). Furthermore, a review of the Michigan and Sixth Circuit case law interpreting the long-ann statute reveal that it has been interpreted as co-extensive with the due process inquiry. See Michigan Coalition of Radioactive Material Users, Inc. v. Griepentrog, 954 F.2d 1174, 1176 (6th Cir. 1992); Chandler v. Barclays Bank PLC, 898 F.2d 1148, 1150-51 (6th Cir. 1990), Sifers v. Horen, 188 N.W.2d 623, 623-24 (Mich. 1971); see also Nationwide Mutual Ins. Co. v. Tryg International Ins. Co., 91 F.3d 790, 793 (6th Cir. 1996) (holding that where that statute extends to the constitutional limits the two inquiries are merged).
Of course, the subject of personal jurisdiction has been well-plowed and the furrows left by past decisions must guide this Court. Two cases cited by Defendant — Kerry Steel, Inc. v. Paragon Industries, Inc., 106 F.3d 147 (6th Cir. 1997) and LAK, Inc. v. Deer Creek Enterprises, Inc., 885 F.2d 1293 (6th Cir. 1989) — illustrate the constitutional limitations on the exercise of personal jurisdiction. In Kerry Steel, a Michigan steel servicing center negotiated a single contract to sell steel coils to an Oklahoma pipe fabricator. The contract was negotiated by telephone and facsimile machine and the steel coils were delivered at the site of an Illinois warehouse. The fabricator then made partial payment to the Michigan company-some payments made in Illinois and some in Michigan. The fabricator did not do business in Michigan other than the transaction described. The Sixth Circuit held that the defendant fabricator could not be sued in Michigan because its contacts were mainly "a single transaction." The location of Plaintiff's injury in the forum state did not justify personal jurisdiction over the defendant nor did "fortuitous contacts" such as telephone and fax contract negotiations. The Kerry Steel decision followed the Sixth Circuit's prior decision in LAK, Inc., which determined that a single contract for a sale of Florida land between a Michigan corporate seller and an Indiana corporate buyer did not subject the Indiana corporation to personal jurisdiction in Michigan in the absence of other contacts with the forum state.
The Kerry Steel decision notably distinguished two important cases finding personal jurisdiction arising out of contracts — Burger King Corporation v. Rudzewicz, 471 U.S. 462, 475 (1985) and Lanier v. American Bd. of Endodontics, 843 F.2d 901 (6th Cir. 1988). In the Burger King case, the Supreme Court held that an out-of-state franchisee had purposely availed himself to the benefits of the forum state by entering into a long-term franchising agreement which creating continuing obligations in the forum state. In Lanier, the Sixth Circuit held that a contract with a Michigan company subjected the defendant to Michigan jurisdiction because the contract clearly intended to create ongoing consequences in the Michigan dental market.
This case is similar in some respects to all of the cases cited. Nevertheless, it is more similar to Kerry Steel and LAK, Inc. than it is to Burger King and Lanier. In the instant case, the Defendant's alleged breach of the contract, non-payment, occurred in Missouri (where payment was due) or in Florida (where payment was demanded), but not in Michigan. The location of Plaintiff's purse in Michigan is not pertinent to this due process analysis. Kerry Steel, 106 F.3d at 151-52; LAK, Inc., 885 F.2d at 1302-1303. The contract itself was negotiated between the states of Michigan, Missouri and Florida-although those contacts by telephone, tele-fax and mail are, as in Kerry Steel and LAK, Inc., largely fortuitous as are the isolated instances in which OS had contacts with its independent contractor SGA and wrote letters concerning a possible breach of warranty. Also, it does not appear that OS regularly conducted business in the State of Michigan and had sufficient contracts with the State of Michigan to subject it to the general jurisdiction of the Michigan courts in that it did not do "continuous and systematic" business within the State. See Kerry Steel, 106 F.3d at 152-153. Accordingly, the Court determines that the Plaintiff's Motion to Dismiss should be granted since the Court lacks personal jurisdiction over the
Defendant corporation and also OS Suites, Ltd. as to the instant suit.
CONCLUSION
Therefore, Defendant's Motion to Dismiss shall be granted and judgment shall enter dismissing this suit without prejudice pursuant to Federal Rule of Civil Procedure 12(b)(2).
JUDGMENT
In accordance with the Opinion of this date;
IT IS HEREBY ORDERED that Defendant Outback Sports, L.L.C.'s Motion to Dismiss (Dkt. No. 3) is GRANTED and this action is DISMISSED WITHOUT PREJUDICE pursuant to Federal Rule of Civil Procedure 12(b)(2) .