1st Source Bank v. Vill. of Stevensville

• Decision Date: 25 October 2012
• Docket Number: Cause No. 3:11–CV–205–TLS.
• Citation: 905 F.Supp.2d 898
• Parties: 1ST SOURCE BANK, Plaintiff, v. VILLAGE OF STEVENSVILLE, et al., Defendants.
• Court: U.S. District Court — Northern District of Indiana

905 F.Supp.2d 898

1ST SOURCE BANK, Plaintiff,

v.VILLAGE OF STEVENSVILLE, et al., Defendants.

Cause No. 3:11–CV–205–TLS.

United States District Court,

N.D. Indiana.

Oct. 25, 2012.

John David Ladue, Paul E. Harold, Robert John Kuehn, III, Ladue Curran & Kuehn LLC, South Bend, IN, for Plaintiff.

Robert A. Callahan, Plunkett Cooney PC, Kalamazoo, MI, James F. Groves, David E. Ballard, Lee Groves and Zalas, South Bend, IN, Judith A. Moskus, Garan Lucow Miller PC, Ann Arbor, MI, for Defendants.

OPINION AND ORDER

THERESA L. SPRINGMANN, District Judge.

This matter is before the Court on a Motion to Dismiss for Lack of Personal Jurisdiction [ECF No. 40] and Brief in Support [ECF No. 41] filed by Defendants Steve Hinrichs, Kim Peters, Donald Schlipp, Don Meyer, Pat Arter, Ken Hansen, Steve Slavicek, Shirley Kerlikowske, and Lori Gibson on October 31, 2011. The Plaintiff, 1st Source Bank, filed a Response in Opposition to the Defendants' Motion [ECF No. 45] on November 17, 2011. On December 1, 2011, the Defendants filed a Motion for Leave to File Supplemental Brief and Reply Brief [ECF No. 51], which included their Supplemental Brief [ECF No. 51–1] and Reply Brief in Support of Defendants' Motion to Dismiss for Lack of Personal Jurisdiction [ECF No. 51–3]. The Plaintiff did not oppose the Defendants' Motion for Leave to File Supplemental Brief and Reply Brief. On December 6, 2011, Defendant Dawn Rush filed a Joinder to Co–Defendants' Motion to Dismiss for Lack of Personal Jurisdiction [ECF No. 53]. On December 23, 2011, the Plaintiff filed a Response in Opposition to Defendant Rush's Motion [ECF No. 54].¹

BACKGROUND

This diversity action arises out of a series of loans made by the Plaintiff to the Village of Stevensville, Michigan (the Village) and the Village of Stevensville Downtown Development Authority (DDA) (collectively Stevensville). In 2010, the Village and the DDA defaulted on those loans. The Plaintiff, a bank organized and existing under the laws of Indiana and located in Indiana, then brought the present suit to enforce its rights under the loan agreements.

Defendants Steve Hinrichs, Kim Peters, Donald Schlipp, Don Meyer, Pat Arter, Ken Hansen, Steve Slavicek, and Lori Gibson are all former or current members of the Stevensville Village Council (collectively Council members). Shirley Kerlikowske is a former member of the DDA. Dawn Rush is the former Treasurer for the Village. In its Amended Complaint [ECF No. 14], the Plaintiff raises claims of intentional or negligent misrepresentation against the aforementioned Defendants in their individual capacities. The Defendants now move for dismissal of the Plaintiff's Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(2), arguing that this Court lacks personal jurisdiction over the individual Defendants.

LEGAL STANDARD

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) seeks dismissal of a claim where personal jurisdiction is lacking. Once the defendant moves to dismiss under Rule 12(b)(2), “the plaintiff bears the burden of demonstrating the existence of jurisdiction.” Purdue Research Found. v. Sanofi–Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir.2003). The difficulty of meeting this burden depends on the method by which a court resolves the issue of personal jurisdiction. Id. “When the ... court holds an evidentiary hearing to determine [personal] jurisdiction, the plaintiff must establish [personal] jurisdiction by a preponderance of the evidence.” Id. But where, as here, the court determines personal jurisdiction based only on reference to submissions of written materials, the plaintiff simply needs to make a prima facie case of personal jurisdiction. GCIU—Employer Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1023 (7th Cir.2009). In determining whether the plaintiff has met the prima facie standard, a plaintiff is entitled to a favorable resolution of all disputed relevant facts. uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 423–24 (7th Cir.2010). However, if a defendant submits evidence in opposition to a finding of personal jurisdiction, “the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction.” Purdue, 338 F.3d at 782–83. This evidence submitted by a defendant may include affidavits unless the affidavits merely contain conclusory assertions that the court lacks personal jurisdiction over the defendant. Id. at 783 n. 13 (citing Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir.2002)).

ANALYSIS

A. Applicable Law

“A district court sitting in diversity has personal jurisdiction over a nonresident defendant only if a court of the state in which it sits would have jurisdiction.” Purdue, 338 F.3d at 779. A district court must undertake and satisfy a two-step analysis in order to determine whether a state court would have personal jurisdiction over a non-resident defendant. First, the exercise of personal jurisdiction must comport with the state's long-arm statute; second, the exercise must comport with the Due Process Clause of the Fourteenth Amendment. Id. Because Indiana's long-arm statute, Indiana Trial Rule 4.4(A), “reduce[s] analysis of personal jurisdiction to the issue of whether the exercise of personal jurisdiction is consistent with the [f]ederal Due Process Clause,” LinkAmerica Corp. v. Albert, 857 N.E.2d 961, 967 (Ind.2006), the Court only needs to consider the second step of the analysis.

Due process requires that a defendant have “ ‘certain minimum contacts' with the forum [state] such that ‘the maintenance of the suit does not offend traditional notions of fair play and substantial justice.’ ” Abelesz v. OTP Bank, 692 F.3d 638, 654 (7th Cir.2012) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). These minimum contacts “must have a basis in ‘some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum [s]tate, thus invoking the benefits and protections of its laws.’ ” Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 109, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)). Such purposeful availment is required to ensure that defendants may reasonably anticipate what conduct will subject them to the jurisdiction of a foreign sovereign. Burger King, 471 U.S. at 472, 105 S.Ct. 2174.

Personal jurisdiction may be either specific or general, Goodyear Dunlop Tires Operations, S.A. v. Brown, ––– U.S. ––––, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011), but only specific jurisdiction needs to be considered here.² “Specific jurisdiction is jurisdiction over a specific claim based on the defendant's contacts with the forum that gave rise to or are closely connected to the claim itself.” Abelesz, 692 F.3d at 654 (citing Goodyear, 131 S.Ct. at 2851). The Seventh Circuit instructs that specific jurisdiction is appropriate where: (1) the defendant has purposefully directed his activities at the forum state or purposefully availed himself of the privilege of conducting business in that state; (2) the alleged injury arises out of the defendant's forum-related activities; and (3) the exercise of specific jurisdiction comports with traditional notions of fair play and substantial justice. See Felland v. Clifton, 682 F.3d 665, 673 (7th Cir.2012).

1. Purposeful Direction/Purposeful Availment

An analysis of the purposeful direction or purposeful availment factor is dependent on the type of claim at issue. Id. at 674. In the present case, the Plaintiff alleges that the individual Defendants engaged in intentional or negligent misrepresentation because of their representations to the Plaintiff that the Village Council was authorized to approve the loan from the Plaintiff to the Village. “Where a plaintiff's claim is for an intentional tort, ‘the inquiry focuses on whether the conduct underlying the claim[ ] was purposely directed at the forum state.’ ” Id. (quoting Tamburo v. Dworkin, 601 F.3d 693, 702 (7th Cir.2010)). The Supreme Court's decision in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), provides a framework for a purposeful direction analysis in cases involving intentional torts. The Seventh Circuit in Felland and Tamburo has identified three factors necessary to establish that tortious conduct was “purposefully directed” at the forum state: “ ‘(1) intentional conduct (or intentional and allegedly tortious conduct); (2) expressly aimed at the forum state; (3) with the defendant's knowledge that the effects would be felt—that is, the plaintiff would be injured—in the forum state.’ ” Felland, 682 F.3d at 674–75 (quoting Tamburo, 601 F.3d at 703) (internal quotation marks omitted). There is significant overlap in the analysis of the second and third requirements. Tamburo, 601 F.3d at 704.

2. Injury Arises Out of the Defendant's Forum-related Activities

If a defendant's conduct is purposefully directed to a forum state, the plaintiff must also demonstrate that its injury “arises out of” or “relates to” the actions of the defendant. Felland, 682 F.3d at 676 (quoting Tamburo, 601 F.3d at 708). As the Felland court noted, “the Supreme Court has not elaborated on the details of this requirement.” 682 F.3d at 676. Circuit courts have split on how close the causal connection between a defendant's actions and a plaintiff's injury must be. Id. The Seventh Circuit has expressed that a “but for” causal relationship is insufficient to satisfy this requirement, but has not definitively resolved the issue. Id. at 676–77.

3. Traditional Notions of Fair Play and Substantial Justice

Finally, courts are required to consider whether the exercise of personal jurisdiction over a non-resident defendant would offend traditional notions of fair play and substantial justice. Id. at 677 (citing Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154). This inquiry...