Devt. Corp. of Palm Beach v. Wbc Const.

• Decision Date: 26 April 2006
• Docket Number: No. 4D05-293.,4D05-293.
• Citation: 925 So.2d 1156
• Parties: DEVELOPMENT CORP. OF PALM BEACH, Appellant, v. WBC CONSTRUCTION, L.L.C., Willard Brothers Construction, Inc. and Building Materials Holding Corporation, Inc., Appellees.
• Court: Florida District Court of Appeals

925 So.2d 1156

DEVELOPMENT CORP. OF PALM BEACH, Appellant, v. WBC CONSTRUCTION, L.L.C., Willard Brothers Construction, Inc. and Building Materials Holding Corporation, Inc., Appellees.

No. 4D05-293.

District Court of Appeal of Florida, Fourth District.

April 26, 2006.

COPYRIGHT MATERIAL OMITTED

Spencer M. Sax of Sachs Sax Klein, Boca Raton, and Robert Rivas of Sachs Sax Klein, Tallahassee, for appellant.

Rodolfo Sorondo, Jr. and Ilene L. Pabian of Holland & Knight LLP, Miami, for appellee Building Materials Holding Corporation, Inc.

WARNER, J.

Development Corp. of Palm Beach ("Development") appeals an order of the trial court dismissing its complaint filed against Building Materials Holding Corporation ("BMHC") for lack of personal jurisdiction over BMHC. We affirm because BMHC was not subject to jurisdiction under section 48.193, Florida Statutes.

Development brought suit against Willard Brothers Construction, Inc. ("Willard Brothers"), WBC Construction, LLC ("WBC"), and BMHC for damages for breach of contract entered into by Willard Brothers in 2000 and modified in 2003 to construct shells of residential homes for Development. Although its agreements were with Willard Brothers, which later became WBC, Development also sued BMHC alleging that BMHC was the parent company of WBC and the cause of action arose from the activities of a joint venture between WBC, Willard Brothers, and BMHC.

BMHC moved to dismiss the complaint for lack of personal jurisdiction. It attached affidavits from its chief administrative officer, stating that it conducted no business activities in Florida, that it was not a member or manager of WBC, and that it was not a party to a joint venture with WBC. It denied that it had a contractual relationship with Development or that it was involved with any of the activities that gave rise to the alleged tortious conduct in the complaint.

Development filed counter-affidavits of one of its officers, stating his understanding that BMHC was engaged in a joint venture with WBC and Willard Brothers. He further stated that BMHC controls and is responsible for WBC and Willard Brothers. Attached to the affidavit were press releases from BMHC which included language describing the relationship between Willard Brothers and BMHC as a joint venture. It also filed an affidavit of Danny Willard, who testified in a deposition that Willard Brothers "merged with a partner, which is BMHC." BMHC then filed an affidavit of Bruce Willard which refuted his brother's statement, attesting that WBC was not a merger or joint venture with BMHC.

After a review of the motion and affidavits, the trial court concluded that the affidavits could not be reconciled and conducted a limited evidentiary hearing pursuant to Venetian Salami Company v. Parthenais, 554 So.2d 499 (Fla.1989), to determine whether BMHC had the requisite minimum contacts with Florida to be subjected to its jurisdiction.

At the hearing, the following facts revealed the connection between BMHC and WBC. BMHC is a publicly-traded holding company that invests in the residential construction industry through its operating subsidiaries. It is headquartered in California and incorporated under the laws of Delaware. BMHC has two wholly owned subsidiaries that conduct its business operations, one of which is BMC Construction, Inc. ("BMC").

Willard Brothers is a Florida corporation, owned by Bruce and Danny Willard, and formed in 1990. It is in the business of shell construction, which refers to the business of building the structural portions of new homes. In 2002, BMHC, through BMC, sought to purchase the assets of Willard Brothers. In order to accomplish the sale, Bruce and Danny formed a company called WBC Construction, a limited liability company incorporated in Delaware. The assets of Willard Brothers were then transferred to WBC. Willard Brothers retained a 98% share of WBC, with the brothers owning the remaining 2%.

In January 2003, Willard Brothers, WBC, Bruce, Danny, BMHC, and BMC entered into a securities purchase agreement. Pursuant to the agreement, BMC purchased sixty percent of WBC, leaving Willard Brothers with 38% and the brothers owning 2%. BMHC has no direct ownership interest in WBC. BMHC is referred to in the securities purchase agreement because it issued shares of its stock to Willard Brothers as part of the purchase price for BMC's 60% interest.

Concurrent with the sale, an operating agreement was entered which provided that the ordinary and usual decisions concerning WBC would be made by its managing member, Willard Brothers, through Bruce Willard. Among other powers, the managing member has the authority to hire and fire employees and consultants, to execute leases and contracts in the ordinary course of business, to maintain bank accounts, and to bring and defend actions and proceedings before any court. The managing member also participates in a management committee which oversees the company. The members of the management committee are Bruce and Danny Willard; Mike Mahre, the CEO of BMC, who is also a senior vice-president at BMHC; and Randy Shipp, who is the Chief Operating Officer of BMC.

However, there are some limitations on the authority of Willard Brothers as the managing member. Certain expenditures must have the approval of BMC as well as BMHC. BMHC must approve any purchase or sale of an asset in excess of $25,000. Further WBC must receive BMHC's permission to buy or sell automobiles or real estate.

BMHC audits WBC on an annual basis, and WBC's profits and losses are reported in a consolidated financial statement of all BMHC-held entities. BMHC processes WBC's payroll through a national payroll service in Idaho. Bruce Willard acknowledged that he reports each month on significant accounts to BMC. He reports to Mike Mahre, who is not only CEO of BMC, but also a senior vice-president of BMHC.

BMHC presented its relationship with WBC as a joint venture in press releases and on its website. The website repeatedly referred to a joint venture with Willard Brothers through WBC. Furthermore, in BMHC's Form 10-K filing with the SEC, it stated that WBC was managed by BMHC and referred at one place to WBC as being integrated into BMHC and in another as being consolidated with BMHC. Additionally, under the headline "BMHC Launches Florida Operations Through New Construction Services Joint Venture," BMHC's website included an article describing a joint venture with WBC through its subsidiary BMC.

The corporate attorney of BMHC who testified at the hearing stated that the press releases and website material were written by its investor relations firm and were meant to be responsive to the SEC requirement that firms use "plain English" for investors. It was not meant to characterize their legal relationship, which is defined in the securities purchase agreement and operating agreement.

After hearing the evidence, the court granted the motion to dismiss finding that BMHC did not have minimum contacts with the State of Florida. Development appeals this order.

Generally, a trial court's ruling on a motion to dismiss for lack of personal jurisdiction is reviewed de novo. Wendt v. Horowitz, 822 So.2d 1252, 1256-57 (Fla. 2002). However, where "the trial court's decision is based on live testimony, the appellate court defers to the trial court's determination as to the credibility of witnesses." Evans v. Thornton, 898 So.2d 151, 152 (Fla. 4th DCA 2005). Thus, with respect to the determination of facts, we defer to the trial court. With respect to the application of those facts to the law, we review de novo.

Section 48.193, Florida Statutes, is the long-arm statute of this state and provides, in relevant part:

(1) Any person, whether or not a citizen or resident of this state, who personally or through an agent does any of the acts enumerated in this subsection thereby submits himself or herself and, if he or she is a natural person, his or her personal representative to the jurisdiction of the courts of this state for any cause of action arising from the doing of any of the following acts:

(a) Operating, conducting, engaging in, or carrying on a business or business venture in this state or having an office or agency in this state.

....

(2) A defendant who is engaged in substantial and not isolated activity within this state, whether such activity is wholly interstate, intrastate, or otherwise, is subject to the jurisdiction of the courts of this state, whether or not the claim arises from that activity.

In Venetian Salami Co. v. Parthenais, 554 So.2d 499, 502 (Fla.1989), the court explained the procedure to determine whether personal jurisdiction exists. Initially, the plaintiff must allege facts in its complaint showing the basis of the court's jurisdiction. When a defendant challenges jurisdiction, the defendant files a motion to dismiss. If the motion alone is filed, then the defendant merely raises the legal sufficiency of the pleadings. When, however, the defendant files affidavits contesting the factual assertions of jurisdiction or the existence of minimum contacts, the burden then shifts to the plaintiff to file counter-affidavits supporting its position. If those affidavits conflict, then it is incumbent on the trial court to hold a hearing to resolve the conflicts in the evidence and determine the jurisdictional issue. Id. Thus, an evidentiary hearing under Venetian Salami resolves the factual disputes necessary to determine jurisdiction pursuant to section 48.193 as well as whether minimum contacts exist to satisfy due process concerns.

Here, the complaint alleged sufficient facts to show personal jurisdiction under either section 48.193(1)(a) or (2). It alleged that the defendant conducted business in the state through a joint venture relationship with WBC, and those same allegations would also sustain jurisdiction pursuant to section 48.193(2) as they would show that the defendant conducted substantial...