Ashburn Family Props., L.L.C. v. Ebr Huntsville, L.L.C.

Decision Date14 January 2016
Docket NumberCivil Action No. 5:15-CV-650-CLS
PartiesASHBURN FAMILY PROPERTIES, L.L.C., Plaintiff, v. EBR HUNTSVILLE, L.L.C.; EBL&S PROPERTY MANAGEMENT, INC.; AT HOME GROUP, INC.; and AT HOME STORES, L.L.C., Defendants.
CourtU.S. District Court — Northern District of Alabama
MEMORANDUM OPINION AND ORDER

On December 11, 1969, James C. Ashburn and Margaret Ashburn leased approximately 9.5 acres of real property to Wiggins Alabama Properties, Inc. ("Wiggins").1 Under that lease, Wiggins was to develop the property for retail use and then sublease it to retail tenants.2 Wiggins "was required to use its best efforts to obtain subleases that provided for the payment of both minimum guaranteed rents and overage rents."3 MLP Associates, L.P., the entity that succeeded Wiggins asdeveloper for the subject property, assigned the lease, and all duties thereunder, to EBR Huntsville, L.L.C. ("EBR").4 EBL&S Property Management ("EBL&S") serves as EBR's property manager and leasing agent.5

In or about November 2014, EBR, "through its leasing agent [EBL&S], entered into a sublease agreement ('the Sublease') with the At Home Defendants [At Home Group, Inc., and At Home Stores, L.L.C.]."6 Plaintiff Ashburn Family Properties, L.L.C. ("Ashburn")7 claims that EBR failed to employ its best efforts in negotiating the sublease, as demonstrated by its failure to include a provision for the payment of overage rents, by the At Home Defendants, to Ashburn.8 In other words, the sublease only provides for the payment of minimum guaranteed rents to Ashburn.9 Ashburn accordingly brought this action requesting a judgment declaring that both the lease to EBR and the sublease to the At Home Defendants are void.10 Ashburn also seeksdamages for breach of contract against EBR, for its failure to use its best efforts in negotiating the sublease with the At Home Defendants.11 The complaint, filed in the Circuit Court of Madison County, Alabama, named the following entities as defendants: EBR Huntsville, L.L.C.; EBL&S Property Management, Inc.; At Home Group, Inc.; and At Home Stores, L.L.C.12

Defendants At Home Group, Inc. ("At Home Group") and At Home Stores, L.L.C. ("At Home Stores") filed a notice of removal on April 17, 2015, asserting jurisdiction on the basis of the parties' complete diversity of citizenship.13 See 28 U.S.C. §§ 1332(a), 1441(a)-(b). EBR and EBL&S joined in the removal.14 Ashburn subsequently filed a motion to remand, arguing that the "Defendants . . . failed to prove complete diversity of citizenship . . . and . . . failed to comply with the procedural requirements for removal."15 In their initial notice of removal, defendants identified the citizenship of the limited liability company parties using the rules of citizenship for corporations, rather than those for limited liability companies. Plaintiff also sought remand on the basis that defendants had not included the entirestate-court file with their notice of removal.

This court denied the motion to remand, finding that defendants had corrected the deficiencies in their initial notice of removal by properly establishing complete diversity of citizenship, and including the entire state-court file in their amended notice of removal.16

This action presently is before the court on the motion to dismiss filed by defendant At Home Group.17 At Home Group seeks dismissal of Ashburn's claims against it pursuant to Federal Rule of Civil Procedure 12(b)(2), for lack of personal jurisdiction.18 Upon consideration of the pleadings and briefs, this court concludes that the motion is due to be denied.

I. STANDARDS GOVERNING MOTIONS TO DISMISSUNDER RULE 12(b)(2)

The determination of personal jurisdiction over a nonresident defendant is a two-step analytical process. First, a federal district court sitting in diversity must address the reach of the forum State's long-arm statute. In that regard, the State of Alabama "permits its courts to exercise jurisdiction over nonresidents to the fullest extent allowed under the Due Process Clause of the Fourteenth Amendment to theConstitution." Ruiz de Molina v. Merritt & Furman Insurance Agency, Inc., 207 F.3d 1351, 1355-56 (11th Cir. 2000) (citing Ala. R. Civ. P. 4.2).19 Second,

[i]f there is a basis for the assertion of personal jurisdiction under the state statute, [the district court must] next determine whether sufficient minimum contacts exist to satisfy the Due Process Clause of the Fourteenth Amendment so that "maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Only if both prongs of the analysis are satisfied may a federal or state court exercise personal jurisdiction over a non-resident defendant.

Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 256 (11th Cir. 1996) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)) (alterations supplied, citations omitted).

The Eleventh Circuit discussed the two prongs of this inquiry in the following portions of its opinion in Robinson, supra:

1. Minimum contacts
Where a forum seeks to assert specific personal jurisdiction over a nonresident defendant, due process requires the defendant have "fair warning" that a particular activity may subject him to the jurisdiction of a foreign sovereign. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 2182, 85 L. Ed. 2d 528 (1985); Shaffer v. Heitner, 433 U.S. 186, 218, 97 S. Ct. 2569, 2587, 53 L. Ed. 2d 683 (1977) (Stevens, J. concurring in judgment). This fair warning requirement is satisfied if the defendant has "purposefully directed" his activities at theforum, Keeton [v. Hustler Magazine, Inc.], 465 U.S. [770], 774, 104 S. Ct. [1473], 1473 [79 L. Ed. 2d 790 (1984)], and the litigation results from alleged injuries that "arise out of or relate to" those activities. Burger King, 471 U.S. at 472, 105 S. Ct. at 2182 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S. Ct. 1868, 1872, 80 L. Ed. 2d 404 (1984)).
Additionally, the defendant's conduct and connection with the forum must be of a character that he should reasonably anticipate being haled into court there. Burger King, 471 U.S. at 474, 105 S. Ct. at 2183; World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490 (1980). However,
the unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State . . . 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, 1239-40, 2 L. Ed. 2d 1283, reh'g denied, 358 U.S. 858, 79 S. Ct. 10, 3 L. Ed. 2d 92 (1958). This requirement assures that a defendant will not be haled into a jurisdiction as a result of random, fortuitous, or attenuated contacts, Burger King, 471 U.S. at 475, 105 S. Ct. at 2183, Keeton, 465 U.S. at 774, 104 S. Ct. at 1478, or because of the unilateral activity of a third person. Burger King, 471 U.S. at 475, 105 S. Ct. at 2183; Helicopteros, 466 U.S. at 417, 104 S. Ct. at 1873. Jurisdiction is proper where the defendant's contacts with the forum proximately result from actions by the defendant himself that create a "substantial connection" with the forum state. Burger King, 471 U.S. at 475, 105 S. Ct. at 2183 (quoting McGee v. International Life Ins. Co., 355 U.S. 220, 223, 78 S. Ct. 199, 201, 2 L. Ed. 2d 223 (1957)). Although the concept of foreseeability is not irrelevant to this analysis, the kind of foreseeability critical to the proper exercise of personal jurisdiction is not the ability to see that the acts of third persons may affect the forum, but rather that thedefendant's own purposeful acts will have some effect in the forum. See Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 112, 107 S. Ct. 1026, 1032-33, 94 L. Ed. 2d 92 (1987).
2. Fair Play and Substantial Justice
Once it has been determined that the nonresident defendant has purposefully established minimum contacts with the forum such that he should reasonably anticipate being haled into court there, these contacts are considered in light of other factors to decide whether the assertion of personal jurisdiction would comport with "fair play and substantial justice." Burger King, 471 U.S. at 476, 105 S. Ct. at 2184 (quoting International Shoe Co., 326 U.S. at 320, 66 S. Ct. at 160). These other factors are the burden on the defendant in defending the lawsuit, the forum state's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies and the shared interest of the states in furthering fundamental substantive social policies. Burger King, 471 U.S. at 477, 105 S. Ct. at 2184; World-Wide Volkswagen, 444 U.S. at 292, 100 S. Ct. at 564. Minimum requirements of "fair play and substantial justice" may defeat the reasonableness of asserting personal jurisdiction even if the defendant has purposefully engaged in forum activities. Burger King, 471 U.S. at 477-78, 105 S. Ct. at 2185. Conversely, these considerations may serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required. Id. at 477, 105 S. Ct. at 2184.

Robinson, 74 F.3d at 258-59 (quoting Madara v. Hall, 916 F.2d 1510, 1516-17 (11th Cir. 1990) (footnote omitted)) (alterations supplied).

In considering a defendant's motion to dismiss for lack of personal jurisdiction, a district court

must accept as true all the allegations of the plaintiff's complaint, exceptto the extent that the defendant presents evidence to contradict those allegations. If that occurs, then the burden shifts back to plaintiffs to "produce evidence supporting personal
...

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