Cromeans v. Morgan Keegan & Co.
| Decision Date | 08 April 2014 |
| Docket Number | No. 2:12-CV-04269-NKL,2:12-CV-04269-NKL |
| Court | U.S. District Court — Western District of Missouri |
| Parties | JOHN W. CROMEANS., JR., et al., Plaintiffs, v. MORGAN KEEGAN & CO., INC., et al., Defendants/Third-Party Plaintiff, v. PERKINS COIE, LLP, et al., Third-Party Defendants. |
Third-Party Defendant Perkins Coie, LLP ("Perkins Coie") moves to dismiss the Third-Party Complaint of Morgan Keegan & Co., Inc. ("Morgan Keegan") for lack of personal jurisdiction. [Doc. # 209]. For the reasons set forth below, Perkins Coie's motion is GRANTED.
On July 15, 2010, the City of Moberly, Missouri ("the City") approved the issuance of $39 million in municipal bonds by the Industrial Development Authority of the City of Moberly ("the IDA"). Cunningham, Vogel and Rost ("CVR") served as counsel to both the City and the IDA in connection with the bond issue. The bonds wereissued by the IDA to finance a project that included acquiring and improving a 33 acre parcel of land as well as constructing and equipping a sucralose manufacturing and processing facility. This facility was to be operated by Mamtek U.S., Inc. ("Mamtek") a Delaware corporation registered to transact business in Missouri. During the process leading up to the sale of the bonds, the City selected Morgan Keegan & Company, Inc. ("Morgan Keegan") to serve as the underwriter for the bonds. Approximately 140 persons or entities purchased the bonds. Mamtek failed, however, and the bonds are now alleged to be worthless.
This putative class action was filed on behalf of the bond purchasers (collectively, the "Bondholders") against Morgan Keegan and others. The Bondholders' claims are based, in substantial part, on alleged material misrepresentations and omissions contained in the Official Offering Statement that was published in connection with the sale of the bonds. The Bondholders allege that Morgan Keegan, as underwriter, had a duty to conduct a due diligence investigation as to the accuracy of the representations in the Official Statement. Morgan Keegan subsequently filed a Third-Party Complaint for contribution and indemnity against Perkins Coie, Mamtek's intellectual property counsel during the relevant period.
Perkins Coie argues that Morgan Keegan's Third-Party Complaint must be dismissed because the Court lacks personal jurisdiction over Perkins Coie, a partnership organized under the laws of the State of Washington with its principal place of businessin Seattle, Washington. In opposing Perkins Coie's motion, Morgan Keegan has the burden of proving facts sufficient to make a prima facie showing of personal jurisdiction. See Miller v. Nippon Carbon Co., Ltd., 528 F.3d 1087, 1090 (8th Cir. 2008). Although Morgan Keegan must ultimately prove the existence of personal jurisdiction by a preponderance of the evidence, this need not occur "until trial or until the court holds an evidentiary hearing." Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991). Nonetheless, the requisite "prima facie showing must be tested, not by the pleadings alone, but by the affidavits and exhibits presented with the motions and opposition thereto." Miller, 528 F.3d at 1090 (quotations omitted). In reviewing these materials, the Court must view the facts in the light most favorable to Morgan Keegan and resolve all factual conflicts in favor of Morgan Keegan. See Dakota Indus., Inc., 946 F.2d at 1387.
Morgan Keegan maintains that Perkins Coie is subject to both specific and general personal jurisdiction. Specific personal jurisdiction, which "refers to jurisdiction over causes of action arising from or related to a defendant's actions within the forum state," exists only to the extent permitted by Missouri's long-arm statute and the Due Process Clause of the Fourteenth Amendment. Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG, 646 F.3d 589, 593 (8th Cir. 2011) (quotation omitted). The requirements of Missouri's long-arm statute and the Due Process Clause present two, independent inquiries that must be addressed separately, and failure to satisfy either precludes the exercise of specific personal jurisdiction. Myers v. Casino Queen, Inc., 689 F.3d 904, 909-10 (8th Cir. 2012); accord Viasystems, Inc., 646 F.3d at 593 n.2. Ifspecific jurisdiction does not exist, the Court must consider whether Perkins Coie is subject to general jurisdiction, meaning the authority of a state court to hear claims against a defendant regardless of where the cause of action arose, who is suing, or the subject matter of the litigation. Miller, 528 F.3d at 1091.
Morgan Keegan argues that specific jurisdiction over Perkins Coie is authorized under the provisions of the Missouri long-arm statute that confer jurisdiction over a nonresident defendant for causes of action arising from the transaction of business or the commission of a tort in Missouri. See Mo. Rev. Stat. § 506.500. "These individual categories are construed broadly, such that if a defendant commits one of the acts specified in the long-arm statute, the statute will be interpreted 'to provide for jurisdiction, within the specific categories enumerated in the statute[ ], to the full extent permitted by the [D]ue [P]rocess [C]lause.' " Viasystems, Inc., 646 F.3d at 593 (alterations in original) (quoting State ex rel. Metal Serv. Ctr. of Ga., Inc. v. Gaertner, 677 S.W.2d 325, 327 (Mo. 1984)). Though construed broadly, the nonresident's commission of one of the statute's enumerated acts is an absolute prerequisite to jurisdiction, "and the cause of action must arise from the nonresident defendant's activities in Missouri." Moog World Trade Corp. v. Bancomer, S.A., 90 F.3d 1382, 1384 (8th Cir. 1996).
With respect to specific jurisdiction, Perkins Coie submitted the following list of its contacts with Missouri that relate to the bond issue:
[Doc. # 213 at 1-2]. In addition to these contacts, Morgan Keegan claims that Perkins Coie had the following contacts with Missouri related to the bond issue:
(1) items in its possession are referenced in the bond transcript; (2) its attorneys (not limited to Mr. Wise) prepared agreements and schedules for inclusion in the transcript of proceedings on the bond; (3) its attorneys corresponded with Third-Party Defendant Pellegrino & Associates, the valuation firm engaged to value Mamtek's intangible assets for the purpose of the Moberly bonds; (4) Perkins Coie was paid directly from the proceeds of the bonds; (5) Perkins Coie's representation of Mamtek US, which only ever had operations in Missouri, continued well into 2011 and included Missouri-specific issues; and (6) Mr. Wise gave testimony to the Missouri House Committee that investigated the Moberly Bonds, on which the Plaintiff intends to rely to prove his claims.
Morgan Keegan claims that Perkins Coie transacted business in Missouri by virtue of its ongoing representation of Mamtek, "a Delaware corporation that proposed to build a manufacturing facility in Moberly, Missouri with financial aid from a municipal bond offering." [Doc. # 235 at 14]. The relevant provision of Missouri's long-arm statute is intended " 'to confer jurisdiction over nonresidents who enter into various kinds of transactions with residents of Missouri.' " Capitol Indem. Corp. v. Citizens Nat. Bank of Fort Scott, N.A., 8 S.W.3d 893, 904 (Mo. Ct. App. 2000) ). While broadly construed, this provision nonetheless requires a showing of some activity "on the part of the nonresident defendant within the state," and that the cause of action arises from this activity. Sales Serv. Inc. v. Daewoo Int'l (Am.) Corp., 719 F.2d 971, 972-73 (8th Cir. 1983).
In this case, there is no evidence that Perkins Coie entered into any kind of business transaction in Missouri or with any resident of Missouri. Perkins Coie began providing legal services for Mamtek, generally with respect to intellectual property matters, in 2006, well prior to any of Mamtek's dealings in Missouri. [Doc. # 213 at 6]. Perkins Coie's attenuated involvement in those dealings arose purely as incident of this preexisting relationship. In particular, the evidence shows that, sometime in 2009, Perkins Coie, in its role as intellectual property counsel to Mamtek, came to possess various intellectual properties and other assets belonging to Mamtek. See, e.g., [Doc. #213 at 14-15]. On July 1, 2010, Mamtek pledged these materials as security for its obligations in connection with the bond issue and agreed to place them in escrow. See [Docs. ## 235-1, 235-2]. Perkins Coie was not a party to and assumed no rights or obligations under these agreements, although the specific materials pledged by Mamtek as described in Schedule 1 to the Escrow Agreement included "all documentation of" the...
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