Everett v. Dreis & Krump Mfg. Co.

• Decision Date: 07 June 1988
• Docket Number: No. 88-446-CIV-T-17B.,88-446-CIV-T-17B.
• Citation: 685 F. Supp. 1224
• Parties: Buford R. EVERETT, et al., Plaintiffs, v. DREIS & KRUMP MANUFACTURING COMPANY, et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

685 F. Supp. 1224

Buford R. EVERETT, et al., Plaintiffs, v. DREIS & KRUMP MANUFACTURING COMPANY, et al., Defendants.

No. 88-446-CIV-T-17B.

United States District Court, M.D. Florida, Tampa Division.

June 7, 1988.

S. David Anton, Harvey Schonbrun, P.A., Tampa, Fla., for plaintiffs.

W. Donald Cox, Fowler, White, Gillen, Boggs, Villareal and Banker, P.A., Tampa, Fla., for defendants.

ORDER ON MOTIONS TO DISMISS

KOVACHEVICH, District Judge.

This cause is before the Court on motions to dismiss filed by Defendants Dreis & Krump Manufacturing Company and Frontenac Capital Corporation (hereinafter Dreis & Krump and Frontenac Corp.) and Defendant Martin J. Koldyke, filed May 6, and May 17, 1988, respectively, and responses thereto filed June 2, 1988.

A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that Plaintiff can prove no set of facts that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). A trial court, in ruling on a motion to dismiss, is required to view the complaint in the light most favorable to the Plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1947).

This cause of action was removed to this Court on April 1, 1988. The following facts are alleged by Plaintiffs:

1. Dreis & Krump is an Illinois corporation whose prime business is the manufacturing of machine tools, with the primary place of business being Cook County, Illinois.

2. Defendant Frontenac Corp. is a Delaware corporation which, under the guidance of Koldyke, participates in arranging the lending of money.

3. Defendant Koldyke is a professional investment banker as well as an officer of Frontenac Corp. and Dreis & Krump.

4. In or about May, 1976, all of the stock of Dries & Krump was solely owned by Plaintiffs and other persons or entities related to the Dreis & Krump families. Plaintiffs owned approximately ten percent (10%) of the stock. At that time all of the stockholders of Dreis & Krump, except for Plaintiffs, desired to sell their shares of stock. At that time also, Plaintiff Buford Everett was a member of the Board of Directors and President of Dreis & Krump.

5. On or about June 1, 1976, Buford Everett entered into an agreement with Koldyke to assist him in financing the acquisition of all the stock of Dreis & Krump. Frontenac Corp. was involved in the agreement between Everett and Koldyke. Koldyke acted in bad faith in assisting Plaintiff, in that there was a secret plan for Koldyke and Frontenac Corp. to take-over ownership of Dreis & Krump.

6. In order to close on the acquisition, Buford Everett was forced by Koldyke to accede to certain changes to the original agreement, including executing a consulting agreement with Frontenac Company, another defendant herein.

7. Following the acquisition, Koldyke and another member of the board of directors acted in concert to remove Buford Everett from the board and from control of Dreis & Krump. On April 5, 1978, Buford Everett was replaced as president and chief executive officer.

8. Koldyke purchased Plaintiffs' stock pursuant to a purchase agreement for cash and a consulting agreement to pay Buford Everett consulting fees totaling $440,000.00 between November 12, 1980 and October 31, 1987. That on May 13, 1983, Koldyke caused Dreis & Krump to discontinue payments under the consulting agreement to Plaintiff.

The consulting agreement in question has been filed with this Court as exhibit A to the complaint. The agreement is dated November 17, 1980, and purports to be an agreement between Buford Everett, an individual residing in Tampa, Florida and Dreis & Krump, an Illinois corporation. The agreement is signed by the president and chief executive officer of Dreis & Krump and Buford Everett.

The complaint contains the following counts: 1) breach of contract against Dries & Krump; 2) fraud and breach of a confidential relationship against Koldyke, Frontenac Corp., Frontenac Company, George Hendrick, Jr., Paul Leach, and Robert Furick; and 3) fraud against all Defendants.

MOTION TO DISMISS OF DEFENDANTS DREIS & KRUMP AND FRONTENAC CORP.

Defendants first allege as a basis for dismissal that they have committed no act sufficient to invoke long-arm jurisdiction. Section 48.193(1)(g), Florida Statutes, commonly known as the long-arm statute, subjects to Florida jurisdiction any person "Breaching a contract in this state by failing to perform acts required by the contract to be performed in this state." Section 48.193(1)(b), Florida Statutes, subjects any person who commits a tortious act within the state to the jurisdiction of Florida. The question is whether these Defendants, under the facts of this case, may be subjected to the jurisdiction of this Court by applying the long-arm statute to those facts.

In deciding whether jurisdiction is conferred on this Court over these non-resident Defendants, two questions must be posed and answered in the affirmative: First, the Court must find that Defendants are amenable to service under one or both of the sections of the long-arm statute relied on, 49.193(1)(b) or (g), and, additionally, does the assertion of jurisdiction comport with due process. Davis v. Pyrofax Gas Corp., 492 So.2d 1044 (Fla.1986). Even where there is facial jurisdiction under the Florida long-arm statute, the party over which jurisdiction is asserted must have had sufficient minimum contacts with Florida to satisfy due process requirements. Lakewood Pipe of Texas, Inc. v. Rubaii, 379 So.2d 475 (Fla. 2d D.C.A.1979), citing, Rebozo v Washington Post Co., 515 F.2d 1208 (5th Cir.1975) and Jack Picard Dodge, Inc. v. Yarbrough, 352 So.2d 130 (Fla. 1st D.C.A.1977).

Federal due process imposes certain restraints on a state's long-arm statute. Poston v. American President Lines, Ltd., 452 F.Supp. 568, at 572 (S.D.Fla.1978). The Supreme Court has reaffirmed constitutional due process dictates in regard to exercise of personal jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-474, 105 S.Ct. 2174, 2181-83, 85 L.Ed.2d 528 (1985).

The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful "contacts, ties, or relations." International Shoe Co. v Washington, 326 US 310, at 319, 90 L Ed 95, 66 S Ct 154 160, 161 ALR 1057. By requiring that individuals have "fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign," Shaffer v Heitner, 433 US 186, 218, 53 L Ed 2d 683, 97 S Ct 2569, 2587 (1977) (Stevens, J., concurring in judgment), the Due Process Clause "gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit," World-Wide Volkswagen Corp. v Woodson, 444 US 286, 297, 62 L Ed 2d 490, 100 S Ct 559, 567 (1980).

Where a forum seeks to assert specific jurisdiction over an out-of-defendant who has not consented to suit there, this "fair warning" requirement is satisfied if the defendant has "purposefully directed" his activities at residents of the forum, Keeton v Hustler Magazine, Inc., 465 US 770 774, 79 L Ed 2d 790, 104 S Ct 1473, 1478 (1984), and the litigation results from alleged injuries that "arise out or relate to" those activities, ... Notwithstanding these considerations, the constitutional touchstone remains whether the defendant purposefully established "minimum contacts" in the forum State. International Shoe Co. v Washington, supra, 326 U.S. at 316, 90 L Ed 95, 66 S Ct 154 158, 161 ALR 1057 ... "the foreseeability that is critical to due process analysis ... is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." (Cite omitted) (Footnotes omitted) (Emphasis added).

Plaintiffs assert as one basis for invoking jurisdiction over Defendants is that payments to Mr. Buford under the consulting agreement were to be made to him in Florida. Allegations that Defendant Dreis & Krump failed to make payments, per the contract, in Florida is sufficient to bring this action within the ambit...