Johansson Corp. v. Bowness Const. Co.

• Decision Date: 22 January 2004
• Docket Number: No. CIV. CCB-03-1750.,CIV. CCB-03-1750.
• Citation: 304 F.Supp.2d 701
• Parties: JOHANSSON CORPORATION, d/b/a Titan Custom Cabinet v. BOWNESS CONSTRUCTION CO.
• Court: U.S. District Court — District of Maryland

304 F.Supp.2d 701

JOHANSSON CORPORATION, d/b/a Titan Custom Cabinet v. BOWNESS CONSTRUCTION CO.

No. CIV. CCB-03-1750.

United States District Court, D. Maryland.

January 22, 2004.

Richard I. Chaifetz, Law Office of Richard Chaifetz, Columbia, MD, for Plaintiff.

Deborah L. Robinson, Robinson Woolson PA, Baltimore, MD, for Defendant.

MEMORANDUM

BLAKE, District Judge.

The defendant, Bowness Construction Company, has moved to dismiss the complaint filed by the plaintiff, Johansson Corporation, for lack of personal jurisdiction. The issues in this motion have been fully briefed and no hearing is necessary. See Local Rule 105.6. For the reasons stated below, the motion to dismiss will be denied, but the case will be transferred to the United States District Court for the Middle District of North Carolina.

BACKGROUND

Johansson Corporation ("Johansson") is a Maryland corporation, with its principal place of business in Baltimore, Maryland. Johansson manufactures and installs custom displays and cabinets for homes and businesses. Bowness Construction Company ("Bowness") is a North Carolina corporation, with its principal place of business in Pinehurst, North Carolina. Bowness builds custom homes in North Carolina. The dispute in this case arises from a subcontract entered into by the parties.

On January 23, 2001, Bowness was selected to serve as the general contractor to build a custom home for Charles and Sherri Grantham on property that the couple owned in Moore County, North Carolina. Stagaard & Chao, A.I.A., a North Carolina firm, was the architect for the project. Charles Grantham previously had contacted Anders Johansson, the general manager of Johansson Corporation, about supplying the cabinets and paneling for the home. (Pl.'s Opp. Mem. at Ex. 1, Johansson Aff., at ¶ 1-2.) The Granthams apparently had seen work by Johansson Corporation at a home show in North Carolina. (Id. at ¶ 3.) At Grantham's request, Anders Johansson traveled to North Carolina in late 2000 to meet with representatives from Stagaard & Chao to discuss the project. (Id.)

Although Bowness was aware that Stagaard & Chao already was considering several subcontractors for the cabinets and paneling work, Bowness also sought out various subcontractors for the job, not including Johansson. (Def.'s Mem. at Ex. 1, Bowness Aff., at ¶ 15-17.) Ultimately, the Granthams directed Bowness to negotiate a subcontract with Johansson to perform the cabinetry and paneling work. (Id. at ¶ 16; Pl.'s Opp. Mem. at Ex. 1, Johansson Aff., at ¶ 4.) Johansson and Bowness entered into a subcontracting agreement on June 22, 2001, under which Johansson agreed to supply all of the cabinets and paneling for the Grantham home for a total sum of $265,890. (Def.'s Mem. at Ex. 1, Bowness Aff., at Ex. A.)

Johansson filed this action for breach of contract on June 13, 2003. Johansson alleges that it completed all of the work required under the subcontract in February 2003, but that Bowness has refused to pay the remaining balance due to Johansson under the subcontract. (Compl. at ¶ 4, 9.) Bowness responds that the work performed by Johansson was inferior and untimely, leading to delays and additional costs. (Def.'s Mem. at Ex. 1, Bowness Aff., at ¶ 20.) Johansson disputes this characterization, arguing that any delays and additional costs were caused by Bowness. (Pl.'s Opp. Mem. at Ex. 1, Johansson Aff., at ¶ 9.) Johansson seeks $109,956.95 in damages, which it alleges is the balance due under the subcontract. (Compl. at ¶ 8-10.)

ANALYSIS

Bowness has moved to dismiss the complaint for lack of personal jurisdiction. When a defendant challenges a court's personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure, the burden rests ultimately with the plaintiff to prove, by a preponderance of the evidence, grounds for jurisdiction. See Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396-97 (4th Cir.2003). If the district court does not hold an evidentiary hearing, however, as in this case, then the plaintiff is required only to make a prima facie showing of personal jurisdiction. See id. at 396; Estate of Bank v. Swiss Valley Farms Co., 286 F.Supp.2d 514, 516 (D.Md.2003). The court must resolve all factual disputes and make all reasonable inferences in favor of the plaintiff. See Carefirst, 334 F.3d at 396.

The nature of the claim and the defendant's contacts with the forum state determine whether a court may assert specific or general personal jurisdiction. Specific jurisdiction may exist where the claim is related to or arises out of the defendant's contacts with the state. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Alternatively, a defendant may be subject to general jurisdiction in a suit entirely unrelated to the defendant's contacts with the forum state where the defendant maintains "continuous and systematic" contact with the state. Id. at 414-415, 104 S.Ct. 1868 (quoting Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 438, 72 S.Ct. 413, 96 L.Ed. 485 (1952)). In the instant case, Johansson does not contend that Bowness's activities in Maryland are extensive enough to subject the company to general personal jurisdiction. Rather, Johansson asserts that specific personal jurisdiction applies, because its claim of breach of contract arises out of Bowness's contacts with Maryland.

A federal court may exercise personal jurisdiction over a non-resident defendant if (1) jurisdiction is authorized under the long-arm statute of the forum state, and (2) the assertion of jurisdiction comports with Fourteenth Amendment due process requirements. See Christian Sci. Bd. of Dirs. of First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir.2001). The Maryland Court of Appeals has held that Maryland's long-arm statute is co-extensive with the scope of jurisdiction permitted by the Fourteenth Amendment due process clause, and the statutory and constitutional inquiries therefore merge in this case. See Carefirst, 334 F.3d at 396-97. The Maryland long-arm statute, however, limits specific jurisdiction to cases where the cause of action "aris[es] from any act enumerated" in the statute itself. Md.Code Ann., Cts. & Jud. Proc. § 6-103(b)(1). Thus, a plaintiff must "identify a specific Maryland statutory provision authorizing jurisdiction." Ottenheimer Publishers, Inc. v. Playmore, Inc., 158 F.Supp.2d 649, 652 (D.Md.2001); see also Joseph M. Coleman & Assoc., Ltd. v. Colonial Metals, 887 F.Supp. 116, 118-19, n. 2 (D.Md.1995). Johansson relies on a provision of Maryland's long-arm statute which confers personal jurisdiction over a corporation that "transacts any business" in the state. Md.Code Ann., Cts. & Jud. Proc. § 6-103(b)(1).¹

To determine whether the exercise of specific jurisdiction comports with due process, the court must consider "(1) the extent to which the defendant has purposefully availed itself of the privilege of conducting activities in the state; (2) whether the plaintiffs' claims arise out of those activities directed at the state; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable." Carefirst, 334 F.3d at 397 (internal quotation marks omitted). A defendant has purposely availed itself of the privilege of conducting activities in the forum state if the defendant has created a "substantial connection" to the forum. Ellicott Mach. Corp., Inc. v. John Holland Party Ltd., 995 F.2d 474, 477 (4th Cir.1993). Phrased another way, the exercise of specific jurisdiction is consistent with the requirements of due process if "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). The Fourth Circuit has taken a restrictive view of the due process analysis of state long-arm statutes and has emphasized that a defendant's contacts with the forum state must be tantamount to physical presence in the state to satisfy due process. See ESAB Group, Inc., v. Centricut, Inc., 126 F.3d 617, 623 (4th Cir.1997) ("The question, then, is whether a defendant's contacts with the forum state are so substantial that they amount to a surrogate for presence and thus render the exercise of sovereignty just, notwithstanding the lack of physical presence in the state."); Harry and Jeanette Weinberg Found., Inc. v. ANB Inv. Mgt. and Trust Co., 966 F.Supp. 389, 391-92 (D.Md.1997).

The Supreme Court has made clear that an out-of-state party's contract with a party based in the forum state cannot "automatically establish sufficient minimum contacts" in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Instead, the court must perform an individualized and pragmatic inquiry into the surrounding facts such as prior negotiations, the terms of the contract, the parties' actual course of dealing, and contemplated future consequences, in order to determine "whether the defendant purposefully established minimum contacts within the forum." Id. at 479, 105 S.Ct. 2174; see also Mun. Mortgage & Equity v. Southfork Apartments Ltd. P'ship, 93 F.Supp.2d 622, 626 (D.Md.2000). Among the specific facts that courts have weighed are "where the parties contemplated that the work would be performed, where negotiations were conducted, and where payment was made." Mun. Mortgage & Equity, 93 F.Supp.2d at 626 (internal quotation omitted). One of the most important factors is "whether the defendant initiated the business relationship in some way." See id. at 626-27 (quoting Nueva Eng'g, Inc. v. Accurate Elecs., Inc., 628 F.Supp. 953, 955 (D.Md.1986)). Ultimately, the question is whether the contract had a "substantial connection" to the forum state. Burger King, 471 U.S. at 479, 105 S.Ct. 2174; Diamond Healthcare of Ohio, Inc. v....