G & H PARTNERS v. BOER GOATS INTERN.

• Court: U.S. District Court — Western District of Texas
• Writing for the Court: BIERY
• Citation: G & H PARTNERS v. BOER GOATS INTERN., 896 F. Supp. 660 (W.D. Tex. 1995)
• Decision Date: 07 August 1995
• Docket Number: Civ. A. No. SA-95-CA-444.
• Parties: G & H PARTNERS, LTD., Buster Kennedy, Jim Ruhmann, Allen Lynch, Mike Beck, and Sam Talkington, Plaintiffs, v. BOER GOATS INTERNATIONAL LIMITED, and Daniel Berry, Individually, Defendants.

896 F. Supp. 660

G & H PARTNERS, LTD., Buster Kennedy, Jim Ruhmann, Allen Lynch, Mike Beck, and Sam Talkington, Plaintiffs, v. BOER GOATS INTERNATIONAL LIMITED, and Daniel Berry, Individually, Defendants.

Civ. A. No. SA-95-CA-444.

United States District Court, W.D. Texas, San Antonio Division.

August 7, 1995.

COPYRIGHT MATERIAL OMITTED

James Samuel Wilkins, Jacobs, Willis, et al, San Antonio, TX, for plaintiffs.

Roger L. Merrill, Houston, TX, for defendants.

ORDER

BIERY, District Judge.

This in personam jurisdiction controversy involves the impregnation of Texas female goats with South African frozen goat embryos, the intimate rendezvous occurring in Canada and the funds for the romantic interlude being placed in a bank in Louisiana. Some of the seminal cases to be considered are: McDonald v. Mabee, 243 U.S. 90, 91-93, 37 S.Ct. 343, 343-44, 61 L.Ed. 608 (1917); International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945); Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2579, 53 L.Ed.2d 683 (1977); see also Beckett v. State ex rel. Rothert, 10 Ind.App. 408, 37 N.E. 30, 30-31 (Ind.App. 1894); Sherburne County Social Servs. v. Kennedy, 426 N.W.2d 866, 870 (Minn.1988); State v. Cummings, 2 Neb.App. 820, 515 N.W.2d 680, 683-84 (1994).

Presently before the Court is the defendants' Motion to Set Aside Default Judgment and Rule 12(B) Motion for Insufficiency of Service of Process and Lack of Jurisdiction Over the Person, defendants' memorandum of law in support of their motion, and plaintiffs' response. For the reasons stated below, the entry of default and the default judgment are set aside, and this case is dismissed for lack of personal jurisdiction.

Plaintiffs are individuals residing in Texas and a partnership, having its principal place of business involving the raising of goats, in Texas. Defendant Boer Goats International Limited is a Canadian corporation not registered to do business in Texas. Defendant Daniel Berry is a resident of South Africa. The funds sought to be recovered by plaintiffs are in a bank in Louisiana. Plaintiffs allege defendant Berry, in late spring or early summer of 1994, came to San Antonio, Texas, for the purpose of attending a Boer Goat trade show. Plaintiffs further allege defendant Berry met with plaintiff Ruhmann at the trade show and gave him a brochure advertising the defendants' frozen goat embryos. The defendants, however, deny traveling to San Antonio and further contend the plaintiffs, through Ruhmann, contacted them for the brochure.

In any event, the parties agree the defendants sent a brochure advertising the embryos to Dr. Ruhmann at some point before April 19, 1994. On April 19, 1994, plaintiffs entered into a contract with defendants. Under the terms of the contract, defendants were to ship frozen goat embryos from South Africa to Canada to be implanted into the plaintiffs' female goats. The contract also contained a "choice of law" clause which provided:

The parties agree that the Laws of Ontario, Canada in effect on the date on signature hereof will govern any legal proceedings or arbitration arising out of this agreement.

Notwithstanding the dates and places of the respective parties signing and performing this agreement, the contract shall be deemed to be entered into and performed at the Seller's address in Canada.

Plaintiffs filed their original complaint alleging defendants breached Texas state contract law by providing frozen embryos of a much lesser quality and grade than the "grade one blastocyst" classification provided for in the agreement and that defendants were liable for fraud damages because they knowingly made false representations regarding the quality of the embryos. Plaintiffs moved for, and were granted, a temporary restraining order ("TRO") prohibiting the defendants from removing funds located in defendants' account in the Sunburst Bank in Louisiana. The plaintiffs sought to freeze this account because it contained a $120,000 payment made to defendants for the embryos.

Plaintiffs sent the summons and complaint via facsimile transmittal on May 17, 1995, to Daniel Berry in South Africa and to Boer Goats International Limited in Canada. Plaintiffs also forwarded the summons, along with a copy of the complaint and the TRO, to Canada and South Africa by registered mail on May 18, 1995.

Subsequently, the Court extended the TRO and, following a hearing on May 26, 1995, a preliminary injunction was entered. On June 14, 1995, no answer having been filed, the plaintiffs requested the Clerk of the Court to make an entry of default. The Court was also requested to enter a judgment of default. The clerk filed a Certificate of Entry of Default on June 16, 1995. Thereafter, plaintiffs submitted, by affidavit, evidence of $120,000 in contract damages and proof of their attorney's fees. On June 27, 1995, the Court entered a judgment of default.

Defendants were not present at the hearing on the preliminary injunction, nor did they make an appearance in this matter until their Motion to Set Aside Default Judgment and Rule 12(b) Motion for Insufficiency of Service of Process and Lack of Jurisdiction Over the Person, filed on July 3, 1995. In their motion, defendants contend the entry of default and default judgment should be set aside because plaintiffs failed to serve properly the summons and complaint. Defendants also contend the Court lacks personal jurisdiction over the defendants.

Rule 4(f) provides that service of process upon individuals and corporations in a foreign country may be obtained by "any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the party to be served" or "by other means ... as may be directed by the court." FED.R.CIV.P. 4(f)(2)(C)(ii), 4(f)(3). Plaintiffs failed to meet the requirements of Rule 4(f). Although the summons and complaint were sent return receipt requested via mail, the documents were addressed and dispatched by the plaintiffs, not the clerk as required by Rule 4(f). Moreover, the facsimile transmittals fail to comport with Rule 4(f) because this method of service was not directed by the Court. Accordingly, the entry of default and default judgment are set aside for noncompliance with process provisions regarding service upon individuals and corporations in foreign countries.

Having set aside the clerk's entry of default and the default judgment, the Court next considers defendants' challenge to the Court's in personam jurisdiction. If a "nonresident defendant protests the exercise of personal jurisdiction, the burden falls on the plaintiff to make a prima facie showing that personal jurisdiction exists." Rittenhouse v. Mabry, 832 F.2d 1380, 1382 (5th Cir.1987). When the district court decides defendants' motion to dismiss without an evidentiary hearing, as does the Court here, the allegations contained in the complaint, except insofar as controverted by opposing affidavits, must be taken as true. Colwell Realty Invs. v. Triple T Inns, Inc., 785 F.2d 1330, 1333 (5th Cir.1986); Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir.1985).

In a diversity action, personal jurisdiction may be exercised over non-resident defendants if: (1) the nonresident defendants are amenable to service of process under the law of the forum state; and (2) the exercise of jurisdiction under state law comports with the due process clause of the fourteenth amendment. Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1166 (5th Cir.1985); D.J. Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg Inc., 754 F.2d 542, 545 (5th Cir.1985); Smith v. DeWalt Prods. Corp., 743 F.2d 277, 278 (5th Cir.1984). The first step of this dual inquiry is a matter of determining the reach of the forum state's long-arm statute. The second step — the due process inquiry — is governed by federal law and requires the satisfaction of two elements: (1) the nonresidents must have some minimum contact with the forum which results in an affirmative act on their part; and (2) it must be fair and reasonable to require the nonresident to defend the lawsuit in the forum state. D.J. Invs., Inc., 754 F.2d at 545; Pedelahore v. Astropark, Inc., 745 F.2d 346, 347 (5th Cir.), reh'g denied, 751 F.2d 1258 (1984). Because the Texas long arm statute has been interpreted to extend to the limits of due process, the Court's inquiry in this case focuses solely on whether the assertion of jurisdiction over the defendants by a district court sitting in Texas would be constitutionally permissible under the due process clause. Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 777 (5th Cir.1986), cert. denied, 481 U.S. 1015, 107 S.Ct. 1892, 95 L.Ed.2d 499 (1987).

For the exercise of jurisdiction to be consistent with due process, nonresident defendants must have some "minimum contact" with the forum state which results from an affirmative act on the part of the nonresidents. International Shoe Co., 326 U.S. at 316, 66 S.Ct. at 158.

In evaluating a nonresident's contacts with the forum, we must determine whether the nonresident has purposefully availed himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws. The defendant's conduct and connection with the forum state must be such that he should reasonably anticipate being haled into court in the forum state.

Holt Oil & Gas Corp., 801 F.2d at 777 (citing Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958)). In making this determination, the trial court is obligated to disregard plaintiffs' actions, for "the unilateral activities of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum state." Patterson v. Dietze, Inc., 764 F.2d 1145, 1146 (5th Cir. 1985) (citing Hanson, 357 U.S. at 253, 78 S.Ct. at 1239-40). Moreover, it is well established a nonresident may permissibly structure his...