Browning Enterprise v. Rex Iron & Machine

• Decision Date: 13 August 2007
• Docket Number: No. 4:07-CV-1113-RDP.,4:07-CV-1113-RDP.
• Court: U.S. District Court — Northern District of Alabama
• Parties: BROWNING ENTERPRISE, INC., Plaintiff, v. REX IRON & MACHINE PRODUCTS COMPANY, INC., Defendant.

Page 1217

504 F.Supp.2d 1217

BROWNING ENTERPRISE, INC., Plaintiff, v. REX IRON & MACHINE PRODUCTS COMPANY, INC., Defendant.

No. 4:07-CV-1113-RDP.

United States District Court, N.D. Alabama, Middle Division.

August 13, 2007.

David C. Livingston, Gadsden, AL, for Plaintiff.

Andrew B. Johnson, John M. Goodman, Bradley Arant Rose & White LLP, Birmingham, AL, for Defendant.

MEMORANDUM OPINION

R. DAVID PROCTOR, District Judge.

I. INTRODUCTION

Pending before the court is Defendant Rex Iron and Machine Products Company Inc.'s ("Rex Iron" or "Defendant") Motion to Dismiss for Lack of Personal Jurisdiction, Or, in the Alternative, to Dismiss or Transfer for Improper Venue (Doc. # 3) filed on June 18, 2007. Plaintiff Browning Enterprise, Inc. ("Browning" or "Plaintiff") responded to the motion on June 25, 2007 and Defendant filed its reply on June 28, 2007. For the reasons stated below, the court finds Defendant's motion is due to be granted since the court concludes its lacks personal jurisdiction over Defendant.

II. STATEMENT OF FACTS

Defendant Rex Iron is a Colorado corporation with its principal place of business in Colorado. (Doc. # 3 Ex. A at ¶ 3). It does not maintain an office in Alabama, have employees in Alabama, own property in Alabama, or have an agent in Alabama. (Id. at ¶ 4). Rex Iron is not licensed to do business in Alabama, nor does it regularly transact business in Alabama. (Id.). Rex Iron insists, and Defendant does not dispute, that its only known contact with Alabama is its purchase of certain custom steel parts from Browning, an Alabama corporation, in a series of either three or four transactions. (Id. at ¶¶ 4, 8; Doc. # 6 at pp. 1-2). It is undisputed that Rex Iron representatives and employees were never physically present in Alabama during the negotiation of the purchase of these goods or anytime thereafter. (Doc. # 3 Ex. A at ¶ 4).

Plaintiff Browning is a corporation located and organized under the laws of Alabama, which manufactures various steel products at its Atalla, Alabama plant. (Doc. # 1; Doc. # 7 at p. 1). Plaintiff instituted this action by filing a complaint in the Circuit Court of Etowah County on May 11, 2007. (Doc. # 1). Rex Iron's agent was served with a copy of this complaint on May 18, 2007. (Id.). On June 13, 2007, Rex Iron timely filed a Notice of Removal of the action to this court, basing federal jurisdiction solely on diversity of citizenship. (Id.). In its Complaint, Plaintiff claims that Defendant has failed to pay for all of the goods that it shipped to Defendant, and has asserted claims of open account, account stated, breach of contract, and work and labor performed. (Id.). Defendant maintains that Plaintiff manufactured and shipped custom steel parts in excess of what it ordered. (Id.; Doc. # 3 Ex. A at ¶ 9). Defendant disputes that it is obligated to purchase these excess goods, and it is this dispute that forms the basis of the current lawsuit. (Doc. # 3 Ex. A at ¶ 9).

Rex Iron initially purchased steel taper brackets for use in a solar energy plant project (the goods that are the subject of the contract in question) from an Oklahoma company named Oilfield Pipe and Supply ("Oilfield"), through a Colorado company named Integrity Burning Services. (Id. at ¶ 5). As Browning admits, during negotiations to purchase additional goods directly from Oilfield, Oilfield elected to not move forward with the transaction, but referred the transaction to Browning. (Id. at ¶ 6; Doc. # 6 at p. 3). Browning initiated contact with Rex Iron through a telephone call from Dan Browning, Browning's President, to Aaron Haywood ("Haywood"), an employee of Rex Iron. (Doc. # 3 Ex. A at ¶ 7). As a result of Browning's solicitation, Rex Iron agreed to purchase, and Browning agreed to manufacture, 700 custom steel parts in the first order on July 10, 2006, and an additional 10,000 parts in the second order on July 18, 2006. (Id. at ¶ 8; Doc. # 6 Exs. A, B & C). These parts were to be made to specifications outlined in a fax composed by Browning and sent to Rex Iron, and later referenced in the purchase transactions. (Doc. # 6 Ex. A). Browning asserts that Rex Iron further provided it with a "detailed drawing, designating how the pieces were to be fabricated," but Rex Iron insists that this drawing was solicited by Browning and that it did not direct how Browning was to complete its work. (Doc. # 6 at p. 1; Doc. # 7 at p. 7, Ex. A ¶ 6). There was no specification in either the faxed, undated letter (consummating the second order/contract) or the faxed "proposal" (consummating the first order/contract) as to where the goods were to be manufactured, but the final goods were manufactured in Alabama. (Doc. # 3 at ¶ 8; Doc. # 6, Browning Decl. at ¶ 4, Exs. A, B & C; Doc. # 7 Ex. A ¶ 6). Nevertheless, Rex Iron insists that: there was no requirement that the goods be manufactured in Alabama using Alabama labor. (Id.). The parties agree that, although not specified on the proposal or letter cited above, the goods were to be shipped from Alabama to Colorado in bi-weekly shipments beginning mid-August 2006, and that the risk of loss did not pass from Browning to Rex Iron until the arrival of the goods. (Doc. # 3 at p. 7; Doc. # 6 Browning Decl. at ¶ 2; Doc. # 7 at p. 9). From July 10, 2006 to July 18, 2006, there were several telephone conversations about the above-referenced transactions between Haywood and Dan Browning, and these phone calls were initiated by both parties. (Doc. # 6 Browning Decl. ¶ 2).

On July 19, 2006, Haywood phoned Dan Browning, and advised him that Rex Iron needed 1,750 pieces as soon as possible,¹ since its solar energy plant project was "shut down" pending receipt of additional steel taper brackets. (Doc. # 6 at p. 2). Dan Browning advised Haywood that he could obtain steel plate from local sources and could begin fabrication immediately,. but that the cost of the finished brackets would increase because of having to obtain the steel plate locally. (Id.). Haywood agreed to pay the increased amount, and Dan Browning prepared a proposal on a fax cover sheet and sent the proposal to Haywood. (Id.; Doc. # 6 Ex. D). Haywood approved the proposal by signing it and faxing it back to Dan Browning in Alabama. (Doc. # 6 at p. 2 & Ex. D). Over the course of the next several months, Browning manufactured the steel taper brackets in Alabama and made multiple shipments to Rex Iron, and Rex Iron made several payments to Browning by mailing checks to Alabama. (Doc. # 6 at p. 2 & Ex. E).

In September 2006, Plaintiff claims that Haywood called Dan Browning and ordered an additional 1,400 brackets. (Doc. # 6 Browning Decl. at ¶ 4; Doc. # 7 Ex. A ¶ 7). However, Defendant maintains that Dan Browning called Haywood to solicit an additional order and that Haywood told Dan Browning that he would have to check Rex Iron's current supply. (Id.). Defendant also claims that Haywood received a fax on September 19, 2006, again soliciting an additional order of brackets, but that he never agreed, orally or in writing, to purchase an additional 1,400 pieces from Browning.² (Doc. # 6 Ex. F; Doc. # 7 Ex. A at ¶ 8). Defendant supports its contention with the fact that the documentation submitted by Plaintiff — the sales order form — is unsigned by Haywood, or any other Rex Iron representative. (Doc. # 6 Ex. F). Plaintiff alleges that Haywood confirmed an order for the additional 1,400 pieces on September 22, 2006 by telephone with Dan Browning, and that on September 25, 2006, he called Browning and placed this fourth order on hold after Browning had already commenced production. (Doc. # 6 Browning Decl. at ¶ 4). In October or November 2006, Plaintiff states that Haywood advised Dan Browning that they no longer needed as many steel taper brackets as they originally thought and told Plaintiff to stop shipping more pieces. (Id.).

In total, Plaintiff alleges: (1) that it produced 12,333 pieces and had already shipped 11,725 pieces to Rex Iron in Colorado, before it was notified to cease further shipments; (2) that Rex Iron has only paid for 10,841 of the pieces shipped; (3) that it is undisputed that Rex Iron used 11,158 pieces during production; and (4) that Rex Iron has never returned any of the shipped, but unused pieces, to Browning. (Doc. # 6 at p. 2 & Browning Decl. at ¶ 5). In contrast, Defendant contends: (1) that it did not order an additional 1,750 brackets in July 2006, but only sought to modify the previous contract so as to expedite the shipment of these pieces; (2) that it did not place the final order for 1,400 brackets; and (3) that Plaintiff manufactured and shipped more brackets than Defendant ordered, and now expected Defendant to pay for these additional brackets. (Doc. # 3 Ex. A at ¶¶ 8-9; Doc. # 7 Ex. A at ¶¶ 7-9). However, it is not this underlying dispute that concerns the court today, but whether this court can constitutionally exercise jurisdiction over the Defendant.

III. DISCUSSION

Defendant has challenged the sufficiency of Plaintiffs claims under Federal Rule of Civil Procedure 12(b)(2) (contesting the court's jurisdiction over the Defendant's person) and Rule 12(b)(3) (contending that venue is improper). fED. R. Civ. P. 12(b)(2) & (3). Because the court finds the inquiry into its personal jurisdiction over Defendant to be dispositive, it does not reach the issue of venue.

Plaintiff has the burden of establishing that personal jurisdiction over Defendant exists. See Lasalle Bank N.A. v. Mobile Hotel Prop., LLC, 274 F.Supp.2d 1293, 1296 (S.D.Ala.2003). Because Alabama's long-arm provision "authorizes the assertion of personal jurisdiction to the limits of the United States Constitution," Plaintiff may carry its burden "by demonstrating that personal jurisdiction over the Defendant meets the requirements of federal due process. Due process requires that the Defendant have `certain minimum contacts' with the forum state and, second that the exercise of jurisdiction over...