International Adm'Rs, Inc. v. Pettigrew

• Decision Date: 12 May 2006
• Docket Number: No. 4:06-CV-00108.,4:06-CV-00108.
• Citation: 430 F.Supp.2d 890
• Parties: INTERNATIONAL ADMINISTRATORS, INC., Plaintiff, v. Greg PETTIGREW, Albert White III, and Triune Resources, Inc., Defendants.
• Court: U.S. District Court — Southern District of Iowa

430 F.Supp.2d 890

INTERNATIONAL ADMINISTRATORS, INC., Plaintiff, v. Greg PETTIGREW, Albert White III, and Triune Resources, Inc., Defendants.

No. 4:06-CV-00108.

United States District Court, S.D. Iowa, Central Division.

May 12, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Andrew C. Johnson, Todd A. Strother, Bradshaw Fowler Proctor Fairgrave PC, Des Moines, IA, for Plaintiff.

Michael S. Jones, Patterson Lorentzen Duffield Timmons, Des Moines, IA, for Defendants.

ORDER

ROBERT W. PRATT, Chief District Judge.

Before the Court is Defendants' Motion to Dismiss for Lack of Personal Jurisdiction and Motion to Transfer for Improper Venue (Clerk's No. 2). Plaintiff resisted the Motion (Clerk's No. 6) and a hearing was held on the matter on May 4, 2006. The matter is fully submitted.

I. FACTUAL BACKGROUND

Plaintiff International Administrators, Inc. ("IAC") is an Iowa corporation, with its principal place of business in Des Moines, Iowa, and is owned by Frank DeMarco ("DeMarco"). Defendant Triune Resources ("Triune") is a Texas corporation, with its principal place of business in Texas, and was owned by Greg Pettigrew ("Pettigrew") and Albert White III ("White"), both citizens of Texas. Pettigrew and White acted, respectively, as the Vice President and President of Triune. The amount in controversy exceeds $75,000, exclusive of costs and interest, making diversity, jurisdiction proper under 28 U.S.C. § 1332.

According to Plaintiff's Resistance Brief and Complaint, filed originally in Polk County, Iowa, but removed to federal court on March 16, 2006, Triune is a third-party administration business. In early 2005, DeMarco discovered, through a third-party broker, that Pettigrew and White were seeking to sell the primary assets of Triune. DeMarco expressed his interest in purchasing the assets of Triune to the third-party broker and, shortly thereafter, was contacted by Pettigrew to discuss the matter. DeMarco claims that both Pettigrew and White phoned him in Iowa several times to discuss the sale of Triune and to negotiate a sale. Ultimately, Pettigrew and White traveled to Iowa and met with DeMarco regarding the purchase. DeMarco characterizes this meeting as a "sales presentation, whereby Pettigrew and White undertook to induce DeMarco (on behalf of IAC) to purchase the assets." Resistance at 3. DeMarco claims that the parties reached a general oral agreement regarding IAC's purchase of Triune's assets, and on May 5, 2005, DeMarco traveled to Texas to sign a written agreement on the matter. DeMarco claims that he relied on representations made by Pettigrew and White throughout the negotiation process in reaching a decision to purchase Triune's assets. DeMarco, on behalf of IAC, now asserts that many of these representations by Pettigrew and White were false, and that the agreement between the parties has been breached. Thus, IAC seeks to hold Defendants liable for Breach of Contract (Written and Oral) and Fraudulent Inducement.

Defendants filed the present motion, pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3), claiming that this Court lacks personal jurisdiction over the Defendants. Should the Court find that personal jurisdiction exists, Defendants seek a ruling that Iowa is the improper venue for this action under 28 U.S.C. § 1391(a), or alternatively, that Texas is a sufficiently more convenient forum, such that the case should be transferred under 28 U.S.C. § 1404(a).

In support of their motion, Defendants assert that Triune is a Texas corporation, with its only offices, corporate or otherwise, in Texas. Triune is licensed only in Texas, and has never engaged in business in Iowa. The written contract memorializing the sale of Triune's assets was signed in Texas. All clients of Triune are located in Texas, all of the assets transferred under the written sales agreement are located in Texas, and all payments by IAC were received in Texas. Pettigrew is a licensed insurance agent in Texas. Neither he nor White have ever personally engaged in business in Iowa. Neither White nor Pettigrew own any real estate in Iowa, or have any other traditional contacts with the state. Their only contacts with Iowa stem from the negotiations for the sale of Triune, and arose "within the scope of [their] employment with Triune." Pettigrew Aff., Clerk's No. 2.3 at 2; White Aff., Clerk's No. 2.4 at 2.

II. LAW AND ANALYSIS

A. Personal Jurisdiction

"While it is true that the plaintiff bears the ultimate burden of proof on [the issue of personal jurisdiction], jurisdiction need not be proved by a preponderance of the evidence 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) (citing CutCo Indus. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986)). Prior to the hearing on May 4, 2006, IAC filed an objection to Defendants' request for evidentiary hearing and a motion for leave to conduct jurisdictional discovery. Clerk's No. 8. According to IAC, it was unaware of Defendants' intent to hold a full-blown evidentiary hearing until May 3, 2006, when Defendants' counsel informed Plaintiffs counsel that Pettigrew would be present to testify at the hearing. The Court proceeded with the hearing on May 4, heard oral objections from IAC, but permitted Pettigrew to testify. In light of the fact that IAC was unable to present any evidence in support of its claim of personal jurisdiction over the Defendants, the Court declines to find that the May 4 hearing was evidentiary. Thus, to survive the present motion to dismiss for lack of personal jurisdiction, IAC need only make a prima facie showing of personal jurisdiction over Defendants. See e.g., Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1387 (8th Cir.1995); Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th Cir.1994); Watlow Elec. Mfg. Co. v. Patch Rubber Co., 838 F.2d 999, 1000 (8th Cir.1988). In evaluating whether IAC has made such a showing, the Court must view the evidence in the light most favorable to IAC and resolve all factual conflicts in IAC's favor. See Dakota Indus., Inc., 946 F.2d at 1387 ("If the district court does not hold a hearing and instead relies on pleadings and affidavits, as it did here, the court must look at the facts in the light most favorable to the nonmoving party.").

To determine whether it has personal jurisdiction over a non-resident defendant, this Court is guided by two primary rules. First, the facts presented must satisfy the requirements of the state's long-arm statute. See Austad Co. v. Pennie & Edmonds, 823 F.2d 223, 225 (8th Cir.1987). If the activities of the non-resident defendant pass the first level of analysis, the Court must then consider whether the exercise of personal jurisdiction complies with the requirements of constitutional due process. See Northrup King, 51 F.3d at 1387; Dakota Indus., Inc., 946 F.2d at 1388. "Because personal jurisdiction in Iowa reaches to the fullest extent permitted by the Constitution," however, this Court "need only exist." Hicklin Eng., Inc. v. Aidco, Inc., 959 F.2d 738, 739 (8th Cir.1992) (per curiam) (citing Newton Mfg. Co. v. Biogenetics, Ltd., 461 N.W.2d 472, 474 (Iowa App.1990)); see also Republic Credit Corp. I v. Rance, 172 F.Supp.2d 1178 (S.D.Iowa 2001) ("[B]ecause personal jurisdiction in Iowa is coterminous with the constitutional reach of due process, the two level inquiry collapses into one.").

Due process mandates that personal jurisdiction exists only if a defendant has sufficient "minimum contacts" with the forum state, such that summoning the defendant to the forum state would not offend "`traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v., Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). To maintain personal jurisdiction, a defendant's contacts with the forum state must be more than "random," "fortuitous," or "attenuated." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Rather, sufficient contacts exist when "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). In evaluating a defendant's reasonable anticipation, there must be "`some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Burger King, 471 U.S. at 475, 105 S.Ct. 2174 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)). Jurisdiction is proper, therefore, where the contacts proximately result from actions by the defendant that create a "substantial connection" with the forum state. Id.; World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 559.

In addition to the basic principles of due process, the Court evaluates five factors in analyzing the constitutional requirements needed to sustain personal jurisdiction: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum; (3) the relation of the cause of action to these contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties. See Wessels, Arnold & Henderson v. Nat'l Med. Waste, Inc., 65 F.3d 1427, 1432 (8th Cir.1995); Aaron Ferer & Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir.1977). The first three factors are considered to be primary, with the third factor distinguishing whether jurisdiction is specific or general.¹ See Wessels, 65 F.3d at 1432 n. 4. The latter two factors are considered "secondary factors." Minn. Mining Mfg. Co. v. Nippon Carbide Indus. Co., 63...