Ameristone Tile, LLC v. Ceramic Consulting Corp.

• Decision Date: 19 August 2013
• Docket Number: Case No. 2:13–cv–00670–PMD.
• Citation: 966 F.Supp.2d 604
• Parties: AMERISTONE TILE, LLC, Plaintiff, v. CERAMIC CONSULTING CORPORATION, INC.; Mario Klappholz; Scott Alpert; Floors 2000, Inc.; and Jason Jones, Defendants.
• Court: U.S. District Court — District of South Carolina

966 F.Supp.2d 604

AMERISTONE TILE, LLC, Plaintiff,

v.CERAMIC CONSULTING CORPORATION, INC.; Mario Klappholz; Scott Alpert; Floors 2000, Inc.; and Jason Jones, Defendants.

Case No. 2:13–cv–00670–PMD.

United States District Court,

D. South Carolina,

Charleston Division.

Aug. 19, 2013.

David Breault Lail, William E. Applegate IV, Yarborough Applegate, Lydia Blessing Applegate, Haynsworth Sinkler Boyd, Charleston, SC, for Plaintiff.

James Walker Coleman, IV, Joshua Wallace Dixon, K&L Gates, Lydia Blessing Applegate, Haynsworth Sinkler Boyd, J.W. Nelson Chandler, Corrigan and Chandler, Charleston, SC, for Defendants.

ORDER

PATRICK MICHAEL DUFFY, District Judge.

This matter is before the Court upon two motions to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), for improper venue pursuant to Rule 12(b)(3), and for failure to state a claim pursuant to Rule 12(b)(6). The first motion was brought by Defendants Ceramic Consulting Corporation, Inc. (“Ceramic”), Mario Klappholz (“Klappholz”), and Scott Alpert (“Alpert”), (collectively, “Ceramic Defendants”), and the second motion was brought by Defendants Floors 2000, Inc. (“Floors 2000”) and Jason Jones (“Jones”), (collectively, “Floors Defendants”). For the reasons that follow, the Court grants in part and denies in part the Ceramic Defendants' motion and grants the Floors Defendants' motion.

BACKGROUND¹

Ameristone is a South Carolina limited liability company headquartered in Mt. Pleasant, South Carolina. Ameristone is in the business of developing and selling porcelain and ceramic tile products. Ameristone develops tile products with its manufacturing partners, incurring product development costs in doing so, and then sells those products to retailers. In May 2010, Ameristone entered into an Agent Contract Agreement (“Agent Agreement”) with Ceramic, in which Ceramic agreed to act as Ameristone's exclusive sales agent for a very large territory, including fifteen states and twenty-five islands and nations in the Caribbean (the “Territory”). Notably, South Carolina is not part of the Territory. Under the Agent Agreement, Ameristone relied exclusively on Ceramic to sell its products within the defined Territory, and Ameristone was precluded from selling its own products by any other means in that Territory.

In September 2011, Ceramic's sales agent Scott Alpert informed Ameristone about a “large volume” sales opportunity at Lowe's Home Improvement Warehouse (“Lowe's”). This new opportunity was a “stocking program,” under which Lowe's would select various tiles to be stocked in 250 Lowe's stores initially, with potential for expansion to 1,750 Lowe's stores nationwide. Alpert requested samples of Ameristone's products for submission to Lowe's for this program. In response, Ameristone's President, Mark Campbell, began the work necessary to develop tiles for the Lowe's submission. Ameristone incurred approximately $14,000 in hard costs, traveling to visit two of its manufacturers in Spain—Gayafores and Tau Ceramica—to develop and produce tile samples for the Lowe's submission. Once the samples were completed and approved by Ameristone, the manufacturer stamped its insignia on the back of the tile, signifying its origin in accordance with industry practice.

Defendant Floors 2000, a tile distributor, was working with Ceramic and Ameristone at the time of the Lowe's submission, and it was Floors 2000's employee, Defendant Jason Jones, who received Ameristone's tile samples and presented them to Lowe's for the stocking program. In all, Ameristone provided eighteen (18) tile samples to Floors 2000 for the Lowe's submission. In early January 2012, Ameristone's exclusive agent, Defendant Alpert, informed Ameristone that eight (8) of the Ameristone samples had made the second cut in the Lowe's selection process, including Ameristone's Daino sample from the Gayafores plant in Spain and Ameristone's Breccia sample from the Tau Ceramica plant in Spain. In late February 2012, however, Alpert called Ameristone's Mark Campbell at his office located in South Carolina and told him that none of the Ameristone tiles had been selected for the Lowe's submission.

To the contrary, however, two of Ameristone's tile samples were selected by Lowe's—the Breccia and Daino—but, unbeknownst to Ameristone and without Ameristone's permission or consent, Ameristone's exclusive agents Defendants Alpert and Klappholz contacted the Atlanta, Georgia office of Ege Ceramics (“Ege”) and arranged to have Ege replicate and produce the two Ameristone tile samples to fill the Lowe's order. Defendants Alpert and Jones traveled to the Ege factory in Turkey to approve the samples for production. By April 2012, Ege had shipped approximately two million square feet of the copied Ameristone product for placement in Lowe's, equaling $1,900,000 of the $2,489,000 opening order. In June 2012, Defendant Alpert again told Ameristone's Mark Campbell via a telephone call to him in South Carolina that it was too bad that Lowe's did not select any Ameristone products, and he mentioned that Lowe's had selected two other products Floors 2000 had submitted, which products were being manufactured in Turkey.

Ameristone's Mark Campbell reviewed a document, given to Ege by Ceramic, that listed the stores to which Lowe's planned to distribute the copied tiles. This list included several South Carolina stores, including store # 1004 in Myrtle Beach. In August 2012, Ameristone's Mark Campbell purchased the copied Daino and Breccia tiles—renamed Galini and Lisano—from Lowe's store # 1004 in Myrtle Beach, South Carolina.

ANALYSIS

I. Motions to Dismiss for Lack of Personal Jurisdiction under Rule 12(b)(2)

Defendants Klappholz, Alpert, Jones, and Floors 2000 have moved to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2). Defendant Ceramic has not made such a motion.²

A. Legal Standard under Rule 12(b)(2)

When personal jurisdiction is challenged by the defendant, the plaintiff has the burden of showing that jurisdiction exists. See In re Celotex Corp., 124 F.3d 619, 628 (4th Cir.1997). When the court addresses the issue of jurisdiction on the basis of motion papers and supporting legal memoranda without an evidentiary hearing, “the burden on the plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis in order to survive the jurisdictional challenge.” Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989). “[T]he court must take all disputed facts and reasonable inferences in favor of the plaintiff.” Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir.2003). In deciding the jurisdictional issue, the court may consider pleadings, affidavits, and other evidentiary materials. Magic Toyota, Inc. v. Se. Toyota Distribs., Inc., 784 F.Supp. 306, 310 (D.S.C.1992).

“[T]o validly assert personal jurisdiction over a non-resident defendant, two conditions must be satisfied.” Christian Sci. Bd. of Dirs. of the First Church of Christ v. Nolan, 259 F.3d 209, 215 (4th Cir.2001). First, the exercise of jurisdiction must be authorized by the long-arm statute of the forum state, and second, the exercise of personal jurisdiction must not “overstep the bounds” of Fourteenth Amendment due process. Anita's New Mexico Style Mexican Food, Inc. v. Anita's Mexican Foods Corp., 201 F.3d 314, 317 (4th Cir.2000). South Carolina's long-arm statute has been construed to extend to the outer limits allowed by the Due Process Clause. Foster v. Arletty 3 Sarl, 278 F.3d 409, 414 (4th Cir.2002). Thus, the scope of the court's inquiry is whether defendants have “certain minimum contacts” with the forum, such that “maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (citations omitted).

A defendant has minimum contacts with a jurisdiction if “the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Under this standard, “it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). In determining the existence of minimum contacts, the court is mindful that it must draw all reasonable inferences from both parties' pleadings, even if they conflict, in the Plaintiff's favor. See, e.g., Precept Med. Prods., Inc. v. Klus, 282 F.Supp.2d 381, 385 (W.D.N.C.2003) (explaining that “for the purposes of a Rule 12(b)(2) motion, the Court will accept the Plaintiff's version of disputed facts”).

The analytical framework for determining whether minimum contacts exist differs according to which species of personal jurisdiction—general or specific—is alleged. See generally ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 623–24 (4th Cir.1997). When a cause of action arises out of a defendant's contacts with the forum, a court may seek to exercise specific jurisdiction over a defendant that purposefullydirects activities toward the forum state and the litigation results from alleged injuries that arise out of or relate to those activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472–73, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). However, when the cause of action does not arise out of the defendant's contacts with the forum, general jurisdiction may be exercised upon a showing that the defendant's contacts are of a “continuous and systematic” nature. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).

B. Application of the legal standard to the Defendants

Plaintiff all but...