Johnsen, Fretty & Co., LLC v. Lands South, LLC

• Citation: 526 F.Supp.2d 307
• Decision Date: 06 December 2007
• Docket Number: No. 3:07CV00541(DJS).,3:07CV00541(DJS).
• Court: U.S. District Court — District of Connecticut
• Parties: JOHNSEN, FRETTY & CO., LLC, Plaintiff, v. LANDS SOUTH, LLC and H/S Southern Graphics Systems, Inc., Defendants.

526 F.Supp.2d 307

JOHNSEN, FRETTY & CO., LLC, Plaintiff, v. LANDS SOUTH, LLC and H/S Southern Graphics Systems, Inc., Defendants.

No. 3:07CV00541(DJS).

United States District Court, D. Connecticut.

December 6, 2007.

Alan S. Gruber, Joshua H. Epstein, Dreier LLP, New York, NY, Joseph M. Pastore, III, Drier LLP, Stamford, CT, for Plaintiff.

E. Adam Webb, Webb Law Group, LLC, Atlanta, GA, Jennifer Morgan Delmonico, Murtha Cullina LLP, New Haven, CT, for Defendants.

MEMORANDUM OF DECISION AND ORDER

DOMINIC J. SQUATRITO, District Judge.

The Plaintiff, Johnsen, Fretty & Co., LLC ("the Plaintiff"), brings this action against the Defendants, Lands South LLC ("Lands South") and H/S Southern Graphics Systems, Inc. ("Southern Graphics") (collectively, "the Defendants"), alleging breach of contract (Count I) and breach of the implied covenant of good faith and fair dealing (Count II). The Plaintiff also alleges that the Defendants owe it money pursuant to the equitable remedy of quantum meruit (Count III). Now pending before the court are the Defendants' motions to dismiss for lack of personal jurisdiction and improper venue, or, in the alternative, to transfer venue. (Dkt. # s 25 & 28). For the reasons set forth herein, the Defendants' motions (dkt. # s 25 & 28) are DENIED.

I. FACTS

The following facts are alleged in the Amended Complaint. The Plaintiff, a limited liability company organized under the laws of Connecticut whose principal place of business is located in Stamford, Connecticut, is an investment banking firm that assists clients in the sale or disposition of their businesses. The Plaintiff's sole members, James E. Johnsen and Steven D. Fretty, are citizens of Connecticut. Lands South is a limited liability company organized under the laws of Alabama whose principal place of business is located in Opelika, Alabama. Southern Graphics is a corporation organized under the laws of Alabama whose principal place of business is also located in Opelika, Alabama.

At the Defendants' request, the Plaintiff agreed to assist the Defendants in the sale of a certain portion of their business, which consisted of outdoor advertising operations (principally roadside billboards) located in Alabama. On October 23, 2003, the Plaintiff and Southern Graphics entered into an investment banking agreement, and in late October or early November 2003, the Plaintiff and Lands South also entered into an investment banking agreement (collectively, "the Agreements").

Pursuant to the Agreements, the Plaintiff agreed to: (1) assist the. Defendants with developing a strategy to sell their outdoor advertising assets; (2) assist the Defendants with initiating discussions with potential buyers to determine their level of interest in acquiring the Defendants' assets and operations; (3) aid the Defendants in responding to information requests from potential buyers; and (4) in cases where serious intentions to buy are expressed, assist the. Defendants in negotiating purchase agreements and other relevant documentation. In addition, the Defendants agreed to compensate the Plaintiff for its services, including a payment of a "Success Fee" in the event of "any transaction in which [among others, Lands South and SGS] or their assignees sell the stock, or all or part of [their] assets." (See dkt. # 16 ¶ 11 (emphasis in original).) The Success Fee is defined as 3.5% of the aggregate amount of the consideration paid or owed in connection with a successful transaction ("the Deal Value"), except to the extent that the Defendants' Auburn, Alabama outdoor advertising assets ("the Auburn Assets") are included in such a transaction, in which case the portion of the Success Fee pertaining to the Auburn Assets is 1.0% of the portion of the Deal Value attributable to the Auburn Assets. The Success Fee is due and payable to the Plaintiff upon the closing of any such transaction.

The Plaintiff maintains that, for its part, it performed the services required by the Agreements. The Plaintiff alleges that, on or about November 30, 2006, the Defendants sold certain assets or stock of theirs, including the Auburn Assets, to Lamar Advertising Company ("the Lamar Deal"). The Plaintiff further alleges that, upon the closing of the Lamar Deal, the Defendants became obligated to pay to the Plaintiff a Success Fee. According to the Plaintiff, it sent an invoice to the Defendants on or about December 14, 2006, requesting payment of $180,000.00 for the portion of the Success Fee due and payable in connection with the disposition of the Auburn Assets. The Plaintiff alleges that, to date, the Defendants have refused to pay the Plaintiff for its services rendered under the Agreements, and that the Defendants have refused to provide the Plaintiff with any information regarding to the Lamar Deal rendering it impossible for the Plaintiff to determine whether it is owed any additional amounts pursuant to the Agreements.

II. DISCUSSION

Pursuant to Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure ("Fed. R. Civ.P.") and 28 U.S.C. §§ 1404(a), 1406(a), the Defendants seek dismissal of the Plaintiff's claims for lack of personal jurisdiction and improper venue, or, alternatively, a transfer to a different venue, namely, the Middle District of Alabama. Specifically, the Defendants claim that: (1) Connecticut's long-arm statute does not reach them; (2) the exercise of personal jurisdiction over the Defendants in Connecticut violates due process; (3) it is unreasonable for this court to exercise personal jurisdiction over the Defendants. The Plaintiff argues that this court has personal jurisdiction over the Defendants, and that venue within the District of Connecticut is proper.

A. STANDARD

A Rule 12(b)(2) motion seeks dismissal for lack of jurisdiction over the person. Fed.R.Civ.P. 12(b)(2). "On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Metropo. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.1996). "Prior to discovery, a plaintiff may defeat a motion to dismiss based on legally sufficient allegations of jurisdiction." Id. "Where . . . a court relies on pleadings and affidavits, rather than conducting a `full-blown evidentiary hearing,' the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant." Distefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir.2001). The court must "construe the pleadings and affidavits in the light most favorable to [the plaintiff], resolving all doubts in his favor." Id. "In diversity cases arising in [the Second] Circuit, personal jurisdiction is determined by the law of the state in which the district court sits . . . ." Id.

A Rule 12(b)(3) motion seeks dismissal for improper venue. Fed.R.Civ.P. 12(b)(3). "On a Rule 12(b)(3) motion to dismiss based on improper venue, the burden of showing that venue in the forum is proper falls on the plaintiff." Indymac Mortgage Holdings, Inc. v. Reyad, 167 F.Supp.2d 222, 237 (D.Conn.2001). "The court must take all allegations in the complaint as true, unless contradicted by the defendants' affidavits, and [w]hen an allegation is so challenged [a] court may examine facts outside the complaint to determine whether venue is proper." Id. (alterations in original) (internal quotation marks omitted). "The court must draw all reasonable inferences and resolve all factual conflicts in favor of the plaintiff." Id. (internal quotation marks omitted). Furthermore, "[i]f the venue is improper, the Court may dismiss or transfer the case to any district in which it could have been brought." Id. (citing 28 U.S.C. § 1406(a); Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir.1993) ("Whether dismissal or transfer is appropriate lies within the sound discretion of the district court.")).

B. PERSONAL JURISDICTION

Because discovery has not been completed in this case, and because no "full-blown evidentiary hearing" has been held, the Plaintiff need only make a prima facie showing, via pleadings and affidavits, that the court possesses personal jurisdiction over the Defendants. This is determined by the law of the state in which the this court sits, Connecticut. In determining personal jurisdiction, Connecticut utilizes a familiar two-step process. "First, the court must determine if the state's long-arm statute reaches the foreign corporation. Second, if the statute does reach the corporation, then the court must decide whether that exercise of jurisdiction offends due process." Bensmiller v. E.I. Dupont de Nemours & Co., 47 F.3d 79, 81 (2d Cir.1995) (citing Greene v. Sha-NaNa, 637 F.Supp. 591, 595 (D.Conn.1986); Frazer v. McGowan, 198 Conn. 243, 246, 502 A.2d 905 (1986); Lombard Bros., Inc. v. Gen. Asset Mgmt. Co., 190 Conn. 245, 250, 460 A.2d 481 (1983)).

1. Connecticut's Long-Arm Statute

The first step of the court's analysis, then, is to review the applicable portion of Connecticut's long-arm statute, Conn. Gen.Stat. § 33-929(f),¹ which governs jurisdiction over foreign corporations. The relevant part of Conn. Gen.Stat. § 33-929(f) reads as follows:

Every foreign corporation shall be subject to suit in this state, by a resident of this state or by a person having a usual place of business in this state, whether or not such foreign corporation is transacting or has transacted business in this state and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising as follows: (1) Out of any contract made in this state or to be performed in this state;. . . .

Conn. Gen.Stat. § 33-929(f)(1).

With regard to Conn. Gen.Stat. § 33-929(f)(1), the Defendants argue that, because the Agreements were not "made" in Connecticut, the long-arm jurisdiction does not confer jurisdiction. The Defendants fail, however, to present any argument discussing whether the Agreements were ...