Marrik Dish Co. v. Wilkinson CGR Cahaba Lakes, LLC

• Decision Date: 13 December 2011
• Docket Number: Case No. 3:11cv2305.
• Parties: MARRIK DISH COMPANY, LLC, Plaintiff v. WILKINSON CGR CAHABA LAKES, LLC, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

835 F.Supp.2d 449

MARRIK DISH COMPANY, LLC, Plaintiff

v.WILKINSON CGR CAHABA LAKES, LLC, et al., Defendants.

Case No. 3:11cv2305.

United States District Court,

N.D. Ohio,

Western Division.

Dec. 13, 2011.

David P. Strup, Sarah K. Skow, Cooper & Walinski, Toledo, OH, for Plaintiff.

Stephen A. Rothschild, Gregory H. Wagoner, Shumaker, Loop & Kendrick, Toledo, OH, for Defendants.

ORDER

JAMES G. CARR, Senior District Judge.

This is a case in which Marrik Dish Company, LLC contracted to exclusively provide internet and cable services to Cahaba Lakes, an apartment community in Alabama then owned by JRC Hunters Pointe LLC. The apartment community's current owner, Wilkinson CGR Cahaba Lakes, LLC, now contests the exclusive nature of the contract and its applicability to Wilkinson Group, as a different owner.

This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332.

Plaintiff contends that personal jurisdiction exists as to both defendants based on their alleged business transactions in Ohio, their alleged tortious conduct, and the forum and choice of law provisions in the Agreement. Defendants contest all of the bases for jurisdiction, primarily stemming from their stance that the Agreement is inapplicable to them. They correctly note that but for this Agreement, defendants have no other contact with SST and the state of Ohio.

Pending is defendants' motion to dismiss for lack of personal jurisdiction, or, in the alternative, to transfer. [Doc. 10]. For the following reasons, I grant the motion to transfer.

BACKGROUND

Plaintiff Marrik Dish Company, d/b/a SuiteSolutions Technologies (SST) is an Ohio company with its principal place of business in Toledo. Defendant Wilkinson CGR Cahaba Lakes (Wilkinson Group) is a Georgia company; defendant BroadBand Consulting Group (BBCG) is a Florida company with its principal place of business in Florida. Wilkinson is the owner of the property located at 1000 Hunt Cliff Road, Birmingham, AL 35242, also known as Cahaba Lakes Apartments (Cahaba Lakes).

SST installs, operates, and maintains satellite and antenna systems that deliver video and internet services to multiple-dwelling unit properties. Cahaba Lakes is such a property, with 801 residential units.

On June 22, 2007, SST entered into a Installation and Service Agreement with Cahaba Lakes' prior owner, JRC Hunters Pointe LLC (JRC), an Illinois company. Under the Agreement, JRC granted SST the exclusive right to install, operate, and maintain equipment on the property to deliver video service and internet service to property residents using owner writing infrastructure. [Doc. 1–Exh. 1, p. 2–3]. Pursuant to the implementation of the Agreement, SST installed certain video equipment and internet equipment, necessary to provide the requisite services. The Agreement granted SST the exclusive use, access, and control of all equipment and wiring.

The Agreement also states that the rights and obligations under the Agreement, including the exclusivity provisions, “constitute covenants and restrictions running with the land” and bind “all future owners of the property or of any interest in the property.” [Doc. 1–Exh. 1, p. 3]. JRC was obligated to disclose the Agreement “to any successor-in-interest in the property.” Id.

The initial term of the Agreement was for ten years, and was to renew automatically for successive two-year terms if not terminated.

On March 31, 2010, JRC granted a statutory warranty deed in lieu of foreclosure to Wilkinson Group. On August 29, 2011, JRC's President, Michael Pompizzi, gave Wilkinson Group a copy of the Agreement.

On September 29, 2011, Wilkinson Group closed on the property, and the Deed in Lieu was recorded with the Shelby County, Alabama Probate Court on September 30.

In early October, 2011, Wilkinson Group hired BBCG to negotiate with SST. BBCG's President, John Russo, informed SST that he believed Alabama law extinguished the restrictive covenant and SST's rights under the Agreement through the Deed in Lieu.

On October 21, 2011, Wilkinson Group's CEO, Phillip Deguire, wrote SST and asked that SST remove all its equipment from Cahaba Lakes by December 15, 2011.

On October 27, 2011, SST filed this action alleging three counts against Wilkinson Group and BBCG: 1) breach of covenant/breach of contract; 2) tortious interference with a contract; and 3) tortious interference with business relations. At the same time, SST filed a motion for a temporary restraining order and a separate motion for a preliminary injunction to stop Wilkinson Group and BBCG from “allowing, permitting, promoting, or distributing the internet and/or video services” of any of SST's competitors. [Doc. 3, 4]. I granted the TRO on October 27, 2011, for a period of ten days. [Doc. 8].

On November 8, 2011, defendants filed a motion to dismiss for lack or personal jurisdiction, or to transfer to the Northern District of Alabama. [Doc. 10].

DISCUSSION

The Supreme Court has held that “a federal court has leeway to choose among threshold grounds for denying audience to a case on the merits.” Sinochem Int'l Co. v. Malay. Int'l Shipping Corp., 549 U.S. 422, 431, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) (internal quotation marks omitted); cited with approval in Medical Mut. of Ohio v. K. Amalia Enterprises Inc., 548 F.3d 383, 390 n. 4 (6th Cir.2008). The Court in Sinochem held that “[a] district court ... may dispose of an action by a forum non conveniens dismissal, bypassing questions of subject-matter and personal jurisdiction, when considerations of convenience, fairness, and judicial economy so warrant.” Sinochem, supra, 549 U.S. at 432, 127 S.Ct. 1184.

Although this court may have jurisdiction over the defendants, discussed infra, it is a close question, and I believe that transferring the case to the Northern District of Alabama is a better resolution than either keeping a case with questionable jurisdiction or dismissing it altogether.

1. Personal Jurisdiction

Since this court's subject matter jurisdiction is based on diversity of citizenship, the substantive law of Ohio governs the issue of personal jurisdiction. Welsh v. Gibbs, 631 F.2d 436, 440 (6th Cir.1980).

In Ohio, personal jurisdiction is proper if: 1) the state long arm statute authorizes jurisdiction; and 2) the exercise of jurisdiction is consistent with the due process requirements of the United States Constitution. CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir.1996).

On a motion to dismiss, the plaintiff bears the burden of establishing a prima facie case with respect to both elements. Nationwide Mut. Ins. Co. v. Tryg Int'l Co., Ltd., 91 F.3d 790, 793 (6th Cir.1996). When this court rules on a motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) without conducting an evidentiary hearing, “the court must consider the pleadings and affidavits in a light most favorable to the plaintiff[.]” CompuServe, supra, 89 F.3d at 1262.

A. Ohio's Long Arm Statute

Ohio's law governing personal jurisdiction states that:

(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:

(1) Transacting any business in this state;

...

(6) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in this state.

O.R.C. § 2307.382.

Ohio courts have stated that the “bare wording of the statute” does not provide strong guidelines and the court must instead engage in “a case-by-case determination.” Ricker v. Fraza/Forklifts of Detroit, 160 Ohio App.3d 634, 828 N.E.2d 205, 209 (2005) (quoting U.S. Sprint Commc'ns Co., Ltd. P'ship v. Mr. K's Foods, Inc., 68 Ohio St.3d 181, 185, 624 N.E.2d 1048 (Ohio 1994)).

SST first argues that defendants have transacted business in Ohio due to their email communications regarding the Agreement. SST cites to a number of cases for the proposition that “any business”—even, as in this case, a few emails denying a contractual obligation and tentatively proposing a new arrangement—is sufficient to grant jurisdiction under the statute.

The importance of the case-by-case determination is evident from the cases in which courts interpret Ohio's long arm statute. While the language in the cases SST cites to is quite broad, see, e.g., Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc., 53 Ohio St.3d 73, 75, 559 N.E.2d 477 (Ohio 1990) (finding that the term “transact” should be interpreted expansively and “is a broader term than the word ‘contract’ and may involve business negotiations which have been either wholly or partly brought to a conclusion”), the actual circumstances in these cases show a far lengthier and involved course of dealing than the one in this case. See id. (holding that jurisdiction over a Georgia company was proper where defendant held telephone negotiations and signed a lease agreement with plaintiff, an Ohio company); see also Reynolds v. Int'l Amateur Athletic Federation, 841 F.Supp. 1444, 1451 (S.D.Ohio 1992) (holding that jurisdiction over an international athletic organization was proper where defendant had previously made eligibility determinations and provided funding to Ohio athletes, including plaintiff, for several years before the events leading to the litigation); Ricker, supra, 828 N.E.2d at 209–10 (holding that jurisdiction over a Michigan company was proper where the defendant had initiated contact and solicited business from plaintiff, an Ohio company, and sent a year's worth of fees to plaintiff's Ohio office); The Union Central Life Ins. Co. v. Andraos Capital Mgmt & Ins. Servs. Inc., 2010 WL 5093409, *1 (S.D.Ohio) (holding that jurisdiction over a California company was proper where the defendant had entered into a contract with an Ohio company, performed its obligations under the contract for over two years, and...