Larson Mfg. Co. of S.D., Inc. v. Conn. Greenstar, Inc.

• Decision Date: 06 March 2013
• Docket Number: Civ. No. 12–4011.
• Citation: 929 F.Supp.2d 924
• Parties: LARSON MANUFACTURING COMPANY OF SOUTH DAKOTA, INC., Larson Manufacturing of Iowa, Inc., and Larson Manufacturing Company, Inc., Plaintiffs, v. CONNECTICUT GREENSTAR, INC., Greenstar a/k/a Touch ‘n Hold, Connecticut Trade Company Inc., and Valentin Luca, Defendants.
• Court: U.S. District Court — District of South Dakota

929 F.Supp.2d 924

LARSON MANUFACTURING COMPANY OF SOUTH DAKOTA, INC., Larson Manufacturing of Iowa, Inc., and Larson Manufacturing Company, Inc., Plaintiffs,

v.CONNECTICUT GREENSTAR, INC., Greenstar a/k/a Touch ‘n Hold, Connecticut Trade Company Inc., and Valentin Luca, Defendants.

Civ. No. 12–4011.

United States District Court,

D. South Dakota,

Southern Division.

March 6, 2013.

James Ellis Moore, Woods, Fuller, Shultz & Smith, PC, Sioux Falls, SD, Jeffrey W. Post, Timothy Michael O'Shea, Fredrikson & Byron, P.A., Minneapolis, MN, for Plaintiffs.

Jeffrey M. Sklarz, Convicer, Percy & Green, LLP, Glastonbury, CT, Pamela R. Bollweg, Johnson, Heidepriem & Abdallah, LLP, Sioux Falls, SD, for Defendants.

MEMORANDUM OPINION AND ORDER RE: MOTION TO DISMISS

LAWRENCE L. PIERSOL, District Judge.

In their Amended Complaint Plaintiffs Larson Manufacturing Company of South Dakota, Inc., Larson Manufacturing of Iowa, Inc., and Larson Manufacturing Company, Inc. (“Larson”) allege breach of a purchase agreement, breach of express warranty, breach of implied warranty of merchantability, breach of implied warranty for fitness for a particular purpose, fraud, and fraudulent transfers with reference to door closers purchased by Larson. Defendant Valentin Luca has moved to dismiss under Fed.R.Civ.P. 12(b)(2), arguing that this Court lacks personal jurisdiction over him. All of the Defendants have moved to dismiss the Amended Complaint for failure to state a claim under Fed.R.Civ.P. Rule 12(b)(6), or in the alternative, to transfer the case to the District of Connecticut. For the reasons set forth in this memorandum opinion, Defendants' motions are denied.

I.WHETHER THIS COURT HAS PERSONAL JURISDICTION OVER DEFENDANT VALENTIN LUCA?

The amended complaint alleges that Defendant Val Luca is liable on the fraud and fraudulent transfer causes of action. Defendants maintain that the Court does not have personal jurisdiction over the claims against Defendant Luca, a Connecticut resident, whose only connection to South Dakota was in his corporate capacity. Defendants further contend that the fiduciary shield doctrine prohibits finding personal jurisdiction over Luca based solely on his corporate acts.

To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that personal jurisdiction exists. This is accomplished by pleading sufficient facts to support a reasonable inference that the defendant can be subjected to jurisdiction within the state. Although the evidentiary showing required at the prima facie stage is minimal, the showing must be tested, not by the pleadings alone, but by supporting and opposing affidavits and exhibits. K–V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591–592 (8th Cir.2011). The evidence is viewed in the light most favorable to the plaintiff and all factual conflicts are resolved in the plaintiff's favor in deciding whether the plaintiff has made the requisite showing. Digi–Tel Holdings, Inc. v. Proteq Telecomm. (PTE), Ltd., 89 F.3d 519, 522 (8th Cir.1996). The determination of whether a court has personal jurisdiction over a defendant is normally a two-step analysis. Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1387 (8th Cir.1995). First, the applicable state long-arm statute, S.D.C.L. § 15–7–2, must be satisfied, and second, the Court's exercise of jurisdiction must comport with due process. Id. South Dakota construes its long-arm statute to confer jurisdiction to the fullest extent permitted by the Due Process Clause. Dakota Indus. v. Ever Best Ltd., 28 F.3d 910, 915 (8th Cir.1994). As such, the analysis collapses into one step: the due process analysis.

Due process allows a Court to exercise personal jurisdiction over a non-resident defendant only if doing so is consistent with traditional notions of fair play and substantial justice, and if the defendant has sufficient “minimum contacts” with the forum state. World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In order to exercise personal jurisdiction over a non-resident defendant the nonresident defendant's conduct and connection with the forum state must be such that he “should reasonably anticipate being haled into court there,” World–Wide Volkswagen Corp., 444 U.S. at 297, 100 S.Ct. 559. “The question is whether a defendant has followed a course of conduct directed at the society or economy existing within the jurisdiction of a given sovereign, so that the sovereign has the power to subject the defendant to judgment concerning that conduct.” J. McIntyre Machinery, Ltd. v. Nicastro, ––– U.S. ––––, 131 S.Ct. 2780, 2789, 180 L.Ed.2d 765 (2011) (plurality opinion).

To evaluate personal jurisdiction under the due process clause, the Court must consider five factors: (1) the nature and quality of the defendants' contacts with South Dakota; (2) the quantity of their contacts with this state; (3) the relation of the cause of action to the contacts; (4) the interest of South Dakota in providing a forum for its residents; and (5) the convenience of the parties. Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir.1996), quoted in Pangaea, Inc. v. Flying Burrito LLC, 647 F.3d 741, 746 n. 4 (8th Cir.2011). The latter two issues are secondary and of less importance than the first three factors. Land–O–Nod Co. v. Bassett Furniture Indus., Inc., 708 F.2d 1338, 1340 (8th Cir.1983). Because the first three factors are closely interrelated, the Court may consider them together. Id. The Court should consider the defendants' contacts with the forum in the aggregate; the Court should look at the totality of the circumstances. Id. When judging minimum contacts, a court should focus on “the relationship among the defendant, the forum, and the litigation.” Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977)).

The relationship of the cause of action to the contacts involves a distinction as to whether the jurisdiction is specific or general.¹EFCO Corp. v. Aluma Sys., USA, Inc., 983 F.Supp. 816, 820 (S.D.Iowa 1997). “Specific jurisdiction ... may be justified when a defendant, through its contacts with the forum, purposefully avails itself of the privilege of conducting business in the forum, ‘in a suit arising out of or related to the defendant's contacts with the forum.’ ” Pangaea, Inc. v. Flying Burrito LLC, 647 F.3d at 746(quoting J. McIntyre, 131 S.Ct. at 2787–88). The case at hand involves specific jurisdiction. When the Court considers whether it has specific jurisdiction over nonresident defendants, due process is satisfied if the defendants purposefully directed their activities at residents of the forum and the litigation results from alleged injuries that arise out of or relate to those activities. Wessels, Arnold & Henderson v. National Med. Waste, Inc., 65 F.3d 1427, 1432 (8th Cir.1995).

A plaintiff need only make a prima facie showing of personal jurisdiction over a defendant to survive a motion to dismiss for lack of personal jurisdiction. This is accomplished by pleading sufficient facts to support a reasonable inference that the defendant can be subjected to jurisdiction in the state in issue. Although a minimal evidentiary showing is required at the prima facie stage, this minimal “showing must be tested, not by the pleadings alone, but by the affidavits and exhibits” supporting or opposing the motion to dismiss. K–V Pharmaceutical Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591–592 (8th Cir.2011) (quoting Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir.2004)). The Court must view the facts in the light most favorable to the non-moving party. Kooima v. Zacklift Int'l., Inc., CIV 01–4078, 2002 WL 34458064 at *3 (D.S.D. Aug. 22, 2002).

Plaintiffs are South Dakota corporations. The Declaration of Michael Kondratuk, the Director of Engineering for Larson, sets forth that Defendant Luca made sales calls and attended meetings at Larson's offices and testing facilities in Brookings, South Dakota on February 8, 2007, May 11, 2007, May 27, 2008 and July 14, 2008. Defendant Luca sent numerous Emails, made numerous telephone calls, and sent drafts of an agreement to Plaintiffs' representatives in South Dakota until Larson and CGI executed a supply agreement for patented proprietary door closers in April of 2008. Defendant Luca signed the agreement of behalf of Defendant CGI, as its president. In the course of performance of the agreement, and after Larson requested changes to the door closers, Defendant Luca made numerous telephone calls, sent hundreds of Email, and mailed invoices and other correspondence to Larson in South Dakota regarding the door closers. Between 2007 and 2011 Defendant Luca traveled to South Dakota on at least eight occasions to solicit Larson's business and to discuss the alleged defects with the closers. Doc. 36.

Defendants maintain that Defendant Luca is a corporate officer sued in his individual capacity and that the fiduciary shield doctrine ² prohibits this Court from finding personal jurisdiction over Defendant Luca based solely on his performance of corporate acts. In support of this position Defendants rely primarily on Arkansas Rice Growers Co-op. Ass'n v. Alchemy Indus., Inc., 797 F.2d 565, 574 (8th Cir.1986), and Kooima v. Zacklift Intern., Inc., 2002 WL 34458064 (D.S.D. Aug. 22, 2002).

In Arkansas Rice Growers Co-op. Ass'n, an appeal in a breach of contract and negligent design action, the Eighth Circuit stated, “The law is clear that a corporate officer or agent who has contact with the forum state only with regard to the performance of corporate duties does not thereby become subject to jurisdiction in his or her...