Evergreen Media Holdings, LLC v. Safran Co.

Decision Date18 December 2014
Docket NumberCiv. A. No. H–14–1634.
PartiesEVERGREEN MEDIA HOLDINGS, LLC and Tony DeRosa–Grund, Plaintiffs, v. The SAFRAN COMPANY and Peter Safran, Defendants.
CourtU.S. District Court — Southern District of Texas

Sanford L. Dow, Stephanie Anne Hamm, Dow Golub Remels Beverly LLP, Houston, TX, Charles W. Grimes, Michael R. Patrick, Grimes LLC, Norwalk, CT, for Plaintiffs.

David J. Beck, Alex Benjamin Roberts, Beck Redden LLP, Houston, TX, for Defendants.

OPINION AND ORDER OF TRANSFER

MELINDA HARMON, District Judge.

The above referenced cause, removed from Texas state court on diversity jurisdiction1 and alleging breach of contract and breach of covenant of good faith and fair dealing,2 and seeking damages and declaratory relief, is a dispute between movie producers over payment rights to a Hollywood horror movie, “The Conjuring,” which was filmed in North Carolina. Pending before the Court is Defendants The Safran Company and Peter Safran's motion to dismiss for lack of personal jurisdiction under Fed. Rule of Civ. P. 12(b)(2) and, alternatively, motion to transfer to the Central District of California pursuant to 28 U.S.C. § 1404(a) (instrument # 5).

After a careful review of the record and the applicable law, for the reasons stated below, the Court finds that it lacks personal jurisdiction over Defendants and that a transfer to the Central District of California under § 1404 is appropriate.

Factual Allegations of the Original Petition (# 1–2)

Plaintiffs Evergreen Media Holdings, LLC (Evergreen) and Tony DeRosa–Grund (DeRosa–Grund), a motion picture producer, purchased the rights to case files of two paranormal investigators, Ed and Lorraine Warren, from which DeRosa–Grund wrote the story and developed the motion picture, “The Conjuring.” On or around March 2010, Plaintiffs entered into an Option Quitclaim Agreement with New Line Productions, Inc. (“New Line”), pursuant to which New Line obtained from Plaintiffs an option on the rights to produce “The Conjuring” and a theatrical sequel or remake of it or additional films based on the Warrens' case files. On or around March 31, 2010 Evergreen and New Line also entered into a Producer Loanout Agreement pursuant to which DeRosa–Grund would produce “The Conjuring.” Under both agreements Plaintiffs were to be compensated by New Line with a percentage of the adjusted gross receipts of “The Conjuring,” which turned out to be one of the most profitable movies of 2013.

While “The Conjuring” was being filmed, but before it was released, in or around February 13, 2012 DeRosa–Grund and Peter Safran (Safran), who is president and owner of The Safran Company, entered into an oral agreement in Montgomery County, Texas pursuant to which Defendants would provide customary producer services (e.g., securing writers, directors and other talent for and developing Plaintiffs' projects in the marketplace and obtaining financial sources, for ultimate sale and production) to Plaintiffs' motion picture products other than “The Conjuring,” for which DeRosa–Grund would pay Safran fifty percent of the contingent compensation paid to Plaintiffs by New Line on “The Conjuring.”

Nevertheless, claim Plaintiffs, not only did Safran not provide any producer services to Plaintiffs with respect to the other entertainment projects, but Defendants undermined Plaintiffs' efforts in the entertainment industry. Since Defendants did not provide consideration for the oral agreement, Plaintiffs insist that no valid and binding agreement exists between the parties. Even if it did, Plaintiffs contend that Safran breached the agreement and the implied covenant of good faith and fair dealing by failing to provide the producer services relating to the other entertainment projects and by his actions undermining Plaintiffs' efforts. Therefore Plaintiffs claim they have no obligation to pay Safran any portion of the contingent compensation connected to “The Conjuring.”

Furthermore New Line purportedly failed to pay the profit participation it promised to Plaintiffs.

Applicable Law

Whether the court has personal jurisdiction over a defendant is a question of law subject to de novo review. In re Chinese–Manufactured Drywall Products Liability Litig., 753 F.3d 521, 528–29 (5th Cir.2014). When a defendant files a motion to dismiss for lack of jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of demonstrating that the court has personal jurisdiction over the defendant. Luv N' Care, Ltd. v. Insta–Mix, Inc., 438 F.3d 465, 469 (5th Cir.) (citing Wyatt v. Kaplan, 686 F.2d 276, 280 (5th Cir.1982) ), cert. denied, 548 U.S. 904, 126 S.Ct. 2968, 165 L.Ed.2d 951 (2006).3 Personal jurisdiction must be determined on an individual basis for each defendant. Rush v. Savchuk, 444 U.S. 320, 332, 100 S.Ct. 571, 62 L.Ed.2d 516 (1980) ; Best Little Promohouse in Texas, LLC v. Yankee Pennysaver, Inc., No. 3:14–CV–1824–BN, 2014 WL 5431630, at *2 (N.D.Tex. Oct. 27, 2014). At the pretrial stage of litigation, if the district court does not conduct a hearing on personal jurisdiction, the plaintiff need only present a prima facie case of personal jurisdiction. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert. denied, 513 U.S. 930, 115 S.Ct. 322, 130 L.Ed.2d 282 (1994) ; Felch v. Transportes Lar–Mex S.A. DE CV, 92 F.3d 320, 325 (5th Cir.1996) ; Johnston v. Multidata Systems Intern. Corp., 523 F.3d 602, 609 (5th Cir.2008). Proof by preponderance of the evidence is not required. Johnston, 523 F.3d at 609.4

When a defendant disputes factual bases for personal jurisdiction, the district court may consider the record before it, including “affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery.” Quick Technologies, Inc. v. Sage Group PLC, 313 F.3d 338, 344 (5th Cir.2002) (quoting Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th Cir.1985) ), cert. denied, 540 U.S. 814, 124 S.Ct. 66, 157 L.Ed.2d 29 (2003) ; Kelly Law Firm, P.C. v. An Attorney for You, 679 F.Supp.2d 755, 762 (S.D.Tex.2009). The Court “must accept the plaintiff's uncontroverted allegations, and resolve in [his] favor all conflicts between the facts contained in the parties' affidavits and other documentation' ” for purposes of the prima facie case of personal jurisdiction. Monkton Ins. Services, Ltd. v. Ritter, 768 F.3d 429, 431 (5th Cir.2014), quoting Revell v. Lidov, 317 F.3d 467, 469 (5th Cir.2002). Nevertheless, the court is not required to credit conclusory allegations even if they are uncontroverted. Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 869 (5th Cir.2001).

The court had discretion whether to allow jurisdictional discovery. Monkton Ins., 768 F.3d at 429, citing Davila v. U.S., 713 F.3d 248, 263–64 (5th Cir.2013). As the party opposing dismissal and requesting jurisdictional discovery, the plaintiff bears the burden of showing that discovery is needed. Id. As recently opined by the district court in National Surety Corp. v. Ferguson Enterprises, Inc., No. 3:13–CV–2045–M, 2014 WL 5472436, at *1 (N.D.Tex. Oct. 29, 2014),

When seeking discovery on personal jurisdiction, a plaintiff must make a “preliminary showing of jurisdiction” before being entitled to such discovery. Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 429 (5th Cir.2005). The decision to allow jurisdictional discovery is within the district court's discretion. See id. at 419. [D]iscovery on matters of personal jurisdiction need not be permitted unless the motion to dismiss raises issues of fact. When the lack of personal jurisdiction is clear, discovery would serve no purpose and should not be permitted.” Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841, 855 (5th Cir.2000) (citation omitted). A plaintiff seeking discovery on matters of personal jurisdiction is expected to identify the discovery needed, the facts expected to be obtained thereby, and how such information would support personal jurisdiction. See Mello Hielo Ice, Ltd. v. Ice Cold Vending LLC, No. 4:11–cv–629–A, 2012 WL 104980, at *7 (N.D.Tex. Jan. 11, 1012) (citing Kelly, 213 F.3d at 855 ). A court is entitled to deny leave to conduct discovery where the movant fails to specify what facts it believes discovery would uncover and how those facts would support personal jurisdiction. See id.; see also King v. Hawgwild Air, LLC, No. 3:08–cv–153–L, 2008 WL 2620099, at *8 (N.D.Tex. June 17, 2008).

The court has discretion as to the type and amount of discovery it will allow, but unless there is a full and fair hearing, it should not act as a factfinder and must construe all disputed facts in favor of the plaintiff. Walk Haydel, 517 F.3d at 241. “When a district court makes factual determinations decisive of a motion to dismiss for lack of jurisdiction, it must give plaintiffs an opportunity for discovery and a hearing that is appropriate to the nature of the motion to dismiss.” McAllister v. FDIC, 87 F.3d 762, 766 (5th Cir.1996).

Under the federal rules, except where a federal statute provides for broader personal jurisdiction, the district court's personal jurisdiction is coterminous with that of a court of general jurisdiction of the state in which the district court sits. Submersible Sys., Inc. v. Perforadora Cent., S.A. de C.V., 249 F.3d 413, 418 (5th Cir.2001).A federal court sitting in diversity may exercise personal jurisdiction over a nonresident defendant if the forum state's long-arm statute confers personal jurisdiction over that nonresident defendant and if the exercise of personal jurisdiction satisfies due process under the United States Constitution. McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir.2009), citing Moncrief Oil Int'l, Inc. v. OAO Gazprom, 481 F.3d 309, 311 (5th Cir.2007). The Texas long-arm statute, Texas Civil Practice and Remedies Code §§ 17.042 –.045,5 extends jurisdiction to the limits of federal due process. Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex.1990) ; ...

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