Dental Dynamics, LLC v. Jolly Dental Grp., LLC

• Decision Date: 09 January 2020
• Docket Number: No. 18-6107,18-6107
• Citation: 946 F.3d 1223
• Parties: DENTAL DYNAMICS, LLC, an Oklahoma limited liability company, Plaintiff - Appellant, v. JOLLY DENTAL GROUP, LLC, an Arkansas limited liability company, doing business as Jolly Family Dentistry ; Scott D. Jolly, DDS, an individual, Defendants - Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

946 F.3d 1223

DENTAL DYNAMICS, LLC, an Oklahoma limited liability company, Plaintiff - Appellant,

v.JOLLY DENTAL GROUP, LLC, an Arkansas limited liability company, doing business as Jolly Family Dentistry ; Scott D. Jolly, DDS, an individual, Defendants - Appellees.

No. 18-6107

United States Court of Appeals, Tenth Circuit.

FILED January 9, 2020

Anthony W. Billings (Kevin R. Donelson and Socorro A. Dooley on the brief), Fellers, Snider, Blankenship, Bailey & Tippens, P.C., Oklahoma City, Oklahoma, for Appellant.

George S. Freedman, Spencer Fane LLP (Sarah R. Clutts, Spencer Fane LLP, and Lance B. Phillips, Phillips Law Office, with him on the brief), Oklahoma City, Oklahoma, for Appellee.

Before TYMKOVICH, Chief Judge, PHILLIPS and McHUGH, Circuit Judges.

TYMKOVICH, Chief Judge.

This case presents a question of personal jurisdiction. Namely, whether a federal court sitting in Oklahoma has specific personal jurisdiction over Dr. Scott Jolly—a dentist and Arkansas resident—and the limited liability company through which he runs his dentistry practice, Jolly Dental Group, LLC. The plaintiff below, Dental Dynamics, LLC, argues that three isolated business interactions and an allegedly fraudulent contract suffice to establish federal court jurisdiction over its breach of contract and fraud claims.

We disagree. With respect to Dental Dynamics’s breach of contract claim, Jolly Dental’s contacts with Oklahoma are too random, fortuitous, and attenuated to establish personal jurisdiction there. With respect to Dental Dynamics’s fraud claim, we conclude that Dental Dynamics fails to show Dr. Jolly’s allegedly tortious conduct sufficiently targeted Oklahoma to establish personal jurisdiction there. Accordingly, we AFFIRM the district court’s dismissal of Dental Dynamics’s claims for lack of personal jurisdiction.

I. Background

Dental Dynamics is an Oklahoma entity with its principal place of business in Oklahoma. Kellie Haller is Dental Dynamics’s sole member and manager. Dental Dynamics specializes in brokering transactions involving pre-owned dental equipment between dentists across the United States. For any particular sale, "Dental Dynamics purchases the dental equipment directly from the seller dentist and resells the equipment to the buyer dentist." App. at 37.

Dr. Jolly is a dentist residing in Arkansas and is the owner, manager, or member of Jolly Dental—an Arkansas entity with its principal place of business in North Little Rock, Arkansas. Dr. Jolly operates his dentistry practice through Jolly Dental.

Since 2008, Dr. Jolly has inquired into prospective business transactions with Dental Dynamics on three occasions. First, in 2008, Dr. Jolly contacted Dental Dynamics regarding the potential sale of a pre-owned piece of equipment he owned. Haller informed Dr. Jolly that she could not sell the machine. Next, in May 2017, Dr. Jolly engaged Dental Dynamics to broker the sale of a 2014 Planmex Promax MID X-Ray Unit (X-Ray unit) that is the subject of the present lawsuit. Third, in June 2017, Dr. Jolly contacted Dental Dynamics regarding the purchase of a separate X-Ray unit. Jolly Dental paid Dental Dynamics the purchase price for this unit. But after a defect was discovered with the machine, Dental Dynamics returned the purchase price to Jolly Dental.¹ The parties prepared and executed these transactions through telephonic, email, and text communications.

Dental Dynamics’s present claims arise out of the second transaction. On or around May 20, 2017, Dental Dynamics secured the sale of the X-Ray unit from Jolly Dental to Dr. Joiner, a dentist practicing in California. On May 26, 2017, Jolly Dental, through Dr. Jolly, executed a bill of sale selling the X-Ray unit to Dental Dynamics. The bill of sale represents that the X-Ray unit is in "perfect working condition" and that the sale includes the X-Ray unit’s hardware, software, manuals, and "all accessories and any other items pertaining" to the X-Ray unit. Id. at 14–15. The negotiations pertaining to the bill of sale were conducted through text messages and email. To pay for the X-Ray unit and associated items, "Dr. Joiner tendered the sales price to Dental Dynamics in Oklahoma, and Dental Dynamics subsequently mailed a check ... to Dr. Jolly." Id. at 36.

The bill of sale notes that "disassembly, packaging, and shipment" would be handled by an independent support company. Id. at 14. Dental Dynamics does not dispute that the X-Ray unit was shipped directly from Dr. Jolly’s offices in Arkansas to Dr. Joiner’s offices in California without ever entering Oklahoma. After receipt of the X-Ray unit, Dr. Joiner discovered that it was not in perfect working condition as represented. Due to certain defects and missing hardware and software, the X-Ray unit Dr. Joiner received was "worthless" in that it would "cost more to repair than to purchase a brand new [unit]." Id. at 9–10. Dr. Joiner notified Dental Dynamics of the X-Ray unit’s unsatisfactory condition.

In turn, Dental Dynamics brought the present action in federal court in Oklahoma, alleging breach of contract against Jolly Dental and fraud against Dr. Jolly. Dental Dynamics alleges Jolly Dental breached its contractual obligations outlined in the bill of sale by "failing to properly disassemble and crate the X-Ray Unit; failing to provide the software and computer hardware required ... and materially misrepresenting the condition of the X-Ray Unit." Id. at 10. With respect to its fraud allegations, Dental Dynamics alleges Dr. Jolly knowingly made false representations regarding the X-Ray unit’s condition and his intention to satisfactorily disassemble and crate the X-Ray unit to induce Dental Dynamics to secure the sale of the unit.

In response, Dr. Jolly and Jolly Dental (together Jolly Dental) moved to dismiss the action for lack of specific personal jurisdiction. Jolly Dental argues it lacks the requisite minimum contacts with Oklahoma to establish jurisdiction and that, even if the minimum contacts test is satisfied, exercising jurisdiction would be unreasonable.

The district court granted Jolly Dental’s motion, holding Dental Dynamics failed to establish specific personal jurisdiction over either its breach of contract or fraud claim. Dental Dynamics appealed, contending both that the district court erred in concluding it lacked personal jurisdiction over Jolly Dental and, in the alternative, that the district court should have at least granted limited discovery on the jurisdictional issues prior to dismissal.

II. Analysis

Before discussing the merits, we explain the standard of review on appeal and the applicable legal framework.

A. Standard of Review

We review dismissals for lack of personal jurisdiction de novo. See Old Republic Ins. Co. v. Cont’l Motors, Inc. , 877 F.3d 895, 903 (10th Cir. 2017). Dental Dynamics, as the plaintiff below, bears the burden of establishing personal jurisdiction. See id. Where, as here, a complaint is dismissed at the preliminary motion to dismiss stage based only upon the complaint and accompanying affidavits, Dental Dynamics need only make a prima facie showing of personal jurisdiction. See Dudnikov v. Chalk & Vermilion Fine Arts, Inc. , 514 F.3d 1063, 1069 (10th Cir. 2008). Dental Dynamics must make this showing with respect to each of the claims alleged. See 4A Charles A. Wright, Arthur R. Miller & Adam N. Steinman, Federal Practice and Procedure § 1069.7 (4th ed. 2015) ("[I]t is important to remember that a plaintiff also must secure personal jurisdiction over a defendant with respect to each claim she asserts."). Dental Dynamics may make this showing through affidavits or other written materials. See AST Sports Sci., Inc. v. CLF Distrib. Ltd. , 514 F.3d 1054, 1057 (10th Cir. 2008). At this stage, all factual disputes are resolved in Dental Dynamics’s favor. See Old Republic , 877 F.3d at 903. Conclusory allegations, however, need not be credited by this court and "will not suffice to defeat a Fed. R. Civ. P. 12(b) motion." Dudnikov , 514 F.3d at 1073.

B. Legal Framework

1. Personal Jurisdiction

To show personal jurisdiction over a nonresident in a diversity action, Dental Dynamics must demonstrate that jurisdiction is proper under the laws of the forum state—in this case Oklahoma—and that the exercise of jurisdiction complies with the Due Process Clause of the Fourteenth Amendment. Walden v. Fiore , 571 U.S. 277, 282, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) ; Fed. R. Civ. P. 4(k)(1)(A).² This requires us to focus on state law, and particularly, the relevant state’s long-arm statute. That statute establishes the extent to which the state intends its courts to exercise jurisdiction over nonresidents. Oklahoma’s long-arm statute authorizes courts to "exercise jurisdiction on any basis consistent with the Constitution of this state and the Constitution of the United States." Okla. Stat. Ann., tit. 12, § 2004(F). Neither party raises any objection based on the Oklahoma constitution. Accordingly, the analysis collapses into a single due process inquiry. See Old Republic , 877 F.3d at 903 ; Newsome v. Gallacher , 722 F.3d 1257, 1264 (10th Cir. 2013).

The Due Process Clause authorizes personal jurisdiction if two elements are met. First, a defendant must have "purposefully established minimum contacts within the forum state." Int’l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Second, the assertion of personal jurisdiction must comport with traditional notions of fair play and substantial justice. See Burger King Corp. v. Rudzewicz , 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).

a. Minimum Contacts

The minimum contacts test for specific personal jurisdiction has two requirements: (1) a defendant must have "purposefully directed its activities at residents of the forum state,"³ and (2) the plaintiff’s injuries must arise out of the defendant’s forum-related activities. Old Republic , 877 F.3d at 904. With respect to the first requirement, purposeful...