Bay Tobacco, LLC v. Bell Quality Tobacco Products
| Decision Date | 24 April 2003 |
| Docket Number | No. CIV.3:03 CV 130.,CIV.3:03 CV 130. |
| Citation | 261 F.Supp.2d 483 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | BAY TOBACCO, LLC, Plaintiff, v. BELL QUALITY TOBACCO PRODUCTS, LLC, et. al., Defendants. |
Steven Scott Biss, Richmond, VA, for Plaintiff.
Charles Michael Sims, LeClair Ryan, Richmond, VA, for Defendant.
This case is before the Court on Plaintiffs Motion to Remand and on Defendants' Federal Rules of Civil Procedure (hereinafter "Rule(s)") 12(b)(2) and 12(b)(6) motions to dismiss.
In or about January of 2003, Plaintiffs Bay Tobacco Company, LLC ("Bay" or "Bay Tobacco") and Kingston Tobacco, Inc. ("Kingston") filed, in the Circuit Court for the City of Richmond, the Motion for Judgment that is the subject of the instant action. On February 5, 2003, Defendants Bell Quality Tobacco Products, LLC ("Bell" or "Bell Quality") and Continental Distribution, LLC ("Continental") filed a Joint Notice of Removal in this Court alleging, as their basis for removal, that this suit involves diverse parties where the amount in controversy exceeds $75,000 and that Plaintiff Kingston was fraudulently joined in order to defeat diversity jurisdiction.
On February 10, 2003, Defendants filed several dispositive motions including Rule 12(b) motions to dismiss for lack of in personam jurisdiction and for failure to state a claim upon which relief may be granted. In support of their motions challenging this Court's exercise of personal jurisdiction, Defendants attached two affidavits: Bell Quality tendered the affidavit of James C. Heflin (hereinafter "Heflin Aff."), and Continental tendered the affidavit of Carl B. White (hereinafter "White Aff."). Thereafter, this Court ordered Plaintiff Bay Tobacco to file any affidavits it might have in support of personal jurisdiction in this case. In the same March 6, 2003 order, the Court advised counsel that "If Plaintiff files no affidavits ... [as to personal jurisdiction,] Defendants' affidavits will be deemed unrebutted and controlling." Bay chose not to file any such affidavits.1
On March 6, 2003, the Court sua sponte found that any cause of action Plaintiff Kingston might have against the defendants is completely separate and distinct from those currently alleged by Plaintiff Bay Tobacco. Consequently and pursuant to Rule 21, the Court dismissed Kingston as a misjoined party.2 This created complete diversity between the parties and gave this Court subject matter jurisdiction over this action in its entirety. Moreover, dismissal of Kingston necessarily made Plaintiffs (formerly Plaintiffs') Motion to Remand moot. As a result, that motion will be denied.
On April 11, 2003, the remaining parties appeared before this Court to present oral argument in support of and in opposition to the pending motions to dismiss. Taking the defendants' motions to dismiss for lack of personal jurisdiction first, the Court invited each party to present additional evidence in support of its position. The parties declined, and the Court proceeded to hear oral argument. Thereafter, the Court took Defendant Bell Quality's Rule 12(b)(2) motion to dismiss under advisement, denied Continental's Rule 12(b)(2) motion to dismiss, and heard argument with respect to the Rule 12(b)(6) motions to dismiss. Not having decided the jurisdictional issue with respect to Bell Quality, the Court again took Bell's motion under advisement. As to Continental, the Court granted the motion to dismiss Counts I and II of the Motion for Judgment for failure to state a claim upon which relief may be granted and denied the motion with respect to the defamation claim alleged in Count VI.3
After performing an exhaustive review of the pleadings, memoranda, and affidavits in support thereof and considering the arguments and case law offered by counsel, the Court will grant Defendant Bell Quality's motion to dismiss for lack of personal jurisdiction. The relevant factual background and the Court's reasoning and rationale underlying this and the aforementioned rulings are detailed below.
On March 7, 2003, Bay Tobacco and Kingston filed a joint motion to remand to state court for alleged lack of diversity between the parties. Whether to remand a case to state court following removal is governed by 28 U.S.C. § 1447(c) and (d). Subsection (c) provides, in pertinent part, that "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." Moreover, "[i]f federal jurisdiction is doubtful, a remand is necessary." Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir.1994) (citations omitted).
As this case was originally filed, with the inclusion of Kingston as a plaintiff, federal subject matter jurisdiction was doubtful. However, because this Court found that, as pled in the Motion for Judgment, Kingston's alleged contract and dealings with Defendants did not arise out of the same transaction or occurrence as those between Plaintiff Bay Tobacco and Defendants, the Court found that Kingston was improvidently joined and dismissed Kingston as a misjoined party under Rule 21. See also Fed.R.Civ.P. 20(a). As a direct result, complete diversity exists between the parties. Because the amount in controversy exceeds $75,000, this Court may properly exercise subject matter jurisdiction over the action. The Plaintiffs Motion to Remand will be denied.
Plaintiff Bay Tobacco is a Virginia corporation with its principal place of business in Richmond, Virginia. MFJ ¶ 1. Defendant Bell Quality, a cigarette manufacturer, is a North Carolina limited liability company. Id. ¶¶ 3, 4. Defendant Continental, a cigarette distributor and competitor of the plaintiff, is a Florida limited liability company. Id. ¶¶ 5, 6.
Bay is owned by Sandra W. Brent ("Brent") and Stan Beasley ("Beasley") and was officially formed on January 22, 2002. Id ITU 1, 10. Bay owns the "Chesapeake" brand of cigarette, a cigarette that was at one time manufactured by CIGTEC Tobacco, LLC in Charles City, Virginia. Id. ¶¶ 1, 13. In January of 2002, Plaintiff Bay contacted Defendant Bell to inquire about a manufacturing agreement. Id. ¶¶ 14. Subsequently, Bay and Bell entered into such an agreement (the "Agreement"). Id. ¶¶ 14, 16.
In the Agreement, Bay promised to manufacture the Chesapeake brand cigarette for Bay. Id. ¶ 14. The Agreement also required Bay to pre-pay fifty percent (50%) of each total invoice before Bell would commence manufacturing. Id ¶ 17. Bay contends that Bell "ship[ped] Bay Tobacco's product to Virginia upon completion of production."4 Id. Bell agreed to produce 5,099 master cases of cigarettes for Bay per twenty(20) day month at a total manufacturing cost of $5.85 per carton. Id. at ¶ 19.
On or about February 6, 2002, Bay placed its first order with Bell for 192 cases of Chesapeake "100s" and 96 cases of Chesapeake "Kings." Id. ¶ 23. Bay shipped the print materials to Bell to use in the manufacturing process. Id. ¶ 24. Bay alleges that Bell "filled the order and shipped [the] product to Virginia." Id ¶ 26. These particular cigarettes sold at a profit, and from April through June 2002, Bay continued to place increased orders for the manufacture of additional Chesapeake cigarettes. Id. ¶¶ 27-34.
From July to September of 2002, Bay alleges that Bell lagged behind in production, consistently failing to produce the agreed-upon number of cases. Id. ¶¶ 35-43. As a result, Bay missed out on potential sales and profits. Id. ¶ 43. Thereafter, from October to December of 2002, Bell failed to fill cigarette orders for Bay, giving such excuses as "the machines are down" and "we're really busy." Id. ¶ 44-49. As a result of the delays that occurred during those months, Bay's customers found new distributors. Id, ¶ 50.
In November of 2002, one of Bay's Virginia distributors, Cooper Booth ("Booth"), told Bay he heard Bay was going out of business. Id. ¶ 51. Bay then "discovered that Bell had secretly entered into an agreement with [sic ] a Continental, and never had any intention of manufacturing any cigarettes for Bay Tobacco after September/October 2002." Id. ¶ 52. Bay alleges that as a part of this secret agreement Bell's owner, Jim Heflin, instructed Bell to manufacture only for Defendant Continental and not for Bay. Id. ¶ 53. Consequently, Plaintiff avers that Bell forced Bay out of business. Id. ¶ 54. Bay alleges that, since then, its packaging materials and other items of its personal property that are in the possession of Bell Quality have not been returned. Id. ¶¶ 24, 56.
Plaintiff asserts claims against Defendant Continental for civil and statutory conspiracy in violation of Va.Code §§ 18.2-499, -500 (Count I); tortious interference with business (Count II); and defamation (Count VI). In addition to Counts I, II and VI, Bay asserts claims against Defendant Bell including actual and constructive common law fraud (Count III); conversion (Count IV); violation of confidentiality (Count V); and breach of contract (Count VII).
On February 10, 2003, each defendant filed a motion to dismiss for lack of personal jurisdiction and a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). This Court must resolve the jurisdictional issues before proceeding to the issue of whether the plaintiff has stated any valid causes of action. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 93-102, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).
As the Fourth Circuit has recognized, an analysis of personal jurisdiction is normally a two-step inquiry consisting of both statutory and constitutional components. Peanut Corp. of Am. v. Hollywood...
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