Mcallister Towing & Transp. v. Thorn's Diesel

• Decision Date: 25 September 2001
• Docket Number: No. Civ.A. 00-A-1618-N.,Civ.A. 00-A-1618-N.
• Citation: 163 F.Supp.2d 1329
• Parties: MCALLISTER TOWING & TRANSPORTATION COMPANY, INC., Plaintiff, v. THORN'S DIESEL SERVICE, INC., and Rex Thorn, Defendants. Thorn's Diesel Service, Inc., Third Party Plaintiff, v. NREC Power Systems, Inc.; Michael Lester; and Overnite Transportation Company, Third Party Defendants.
• Court: U.S. District Court — Middle District of Alabama

163 F.Supp.2d 1329 MCALLISTER TOWING & TRANSPORTATION COMPANY, INC., Plaintiff,
v.
THORN'S DIESEL SERVICE, INC., and Rex Thorn, Defendants.
Thorn's Diesel Service, Inc., Third Party Plaintiff,
v.
NREC Power Systems, Inc.; Michael Lester; and Overnite Transportation Company, Third Party Defendants. No. Civ.A. 00-A-1618-N. United States District Court, M.D. Alabama, Northern Division. September 25, 2001.

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J. Stephen Simms, Stephen S. McCloskey, Greber & Simms, Baltimore, MD, for Plaintiff.

Richard A. Lawrence, Montgomery, AL, for Defendant.

Allen E. Graham, Lyons, Pipes & Cook, Mobile, AL, Alexander M. Creighton III, PC, Houma, LA, for NREC Power Systems, Inc.

Brett A. Ross, Carr, Allison, Pugh, Howard, Oliver & Sisson, PC, Birmingham, AL, for Overnite Transp. Co.

MEMORANDUM OPINION AND ORDER

ALBRITTON, Chief Judge.

I. INTRODUCTION

This matter comes before the court on a Motion to Dismiss filed by Third Party Defendant NREC Power Systems, Inc., ("NREC") on June 11, 2001, and a Motion to Dismiss filed by Third Party Defendant Michael Lester ("Lester") on August 17, 2001. Third Party Plaintiff Thorn's Diesel Service, Inc., ("Thorn's Diesel") filed its third party Complaint on April 6, 2001, alleging a state law claim for misrepresentation against NREC and Michael Lester, an employee of NREC, and a state law claim for breach of contract against Overnite Transportation Co. In the Motions to Dismiss, NREC and Lester argue that the court lacks subject matter jurisdiction over the claims asserted against NREC and Lester and that the court lacks personal jurisdiction over NREC and Lester.¹ For the reasons to be stated, the Motions to Dismiss are due to be GRANTED.

II. MOTION TO DISMISS STANDARDS

A Rule 12(b)(1) motion challenges the district court's subject matter jurisdiction and takes one of two forms: a

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"facial attack" or a "factual attack." A "facial attack" on the complaint requires the court to assess whether the plaintiff has alleged a sufficient basis for subject matter jurisdiction. Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir.1990); Hayden v. Blue Cross & Blue Shield of Alabama, 855 F.Supp. 344, 347 (M.D.Ala. 1994). A "factual attack," on the other hand, challenges the existence of subject matter jurisdiction based on matters outside the pleadings. Lawrence, 919 F.2d at 1529. On a facial attack, a plaintiff is afforded safeguards similar to those provided in opposing a Rule 12(b)(6) motion — the court must consider the allegations of the complaint to be true. Id. Under a factual attack, the court may hear conflicting evidence and decide the factual issues that determine jurisdiction. Colonial Pipeline Co. v. Collins, 921 F.2d 1237, 1243 (11th Cir.1991). The burden of proof on a Rule 12(b)(1) motion is on the party averring jurisdiction. Thomson v. Gaskill, 315 U.S. 442, 446, 62 S.Ct. 673, 86 L.Ed. 951 (1942).

In the context of a motion to dismiss for lack of personal jurisdiction in which no evidentiary hearing is held, the plaintiff bears the burden of establishing a prima facie case of jurisdiction over the movant, non-resident defendant. Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988) (citations omitted); Delong Equip. Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir.1988); Bracewell v. Nicholson Air Servs., Inc., 748 F.2d 1499, 1504 (11th Cir.1984). A prima facie case is established if the plaintiff presents sufficient evidence to defeat a motion for a directed verdict. Morris, 843 F.2d at 492. The court must construe the allegations in the complaint as true, to the extent they are uncontroverted by defendant's affidavits or deposition testimony. Id. (citations omitted); Delong, 840 F.2d at 845; Bracewell, 748 F.2d at 1504. Moreover, where the evidence presented by the parties' affidavits and deposition testimony conflicts, the court must construe all reasonable inferences in favor of the non-movant plaintiff. Delong, 840 F.2d at 845.

III. BACKGROUND

The Third Party Plaintiff alleges the following facts:

Thorn's Diesel is an Alabama corporation with its principal place of business located in Alabama. Thorn's Diesel primarily rebuilds large diesel engines and marine transmissions for use with large diesel engines. NREC is a Louisiana corporation with its principal place of business in Houma, Louisiana. NREC is in the business of buying and selling heavy equipment and machinery. NREC has no employees who work or reside in Alabama, has no agents or brokers in Alabama, is not licensed to do business in Alabama, and asserts that other than its transaction with Thorn's Diesel, it has conducted no business in Alabama for over five years.

In June, 2000, Rex Thorn ("Thorn"), president of Thorn's Diesel, contacted and spoke to Michael Lester ("Lester"), an employee of NREC, concerning Thorn's Diesel's interest in purchasing a used Caterpillar marine transmission gear. Thorn informed Lester that Thorn's Diesel had a buyer for the transmission for use on an ocean vessel and that Thorn's Diesel intended to resell the transmission without rebuilding it. Lester allegedly represented to Thorn that NREC had a transmission which was in the condition of a "running take out" and could be sold for use without rebuilding. "Running take out" means that the transmission was in good running condition when removed from service, was complete, and did not have any known failures or problems of any type. To ensure that the transmission was in good condition and could be resold for use without rebuilding, Thorn's Diesel paid NREC to inspect the transmission. After

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having the transmission inspected, Lester informed Thorn that the transmission was in excellent condition. Thorn's Diesel decided to purchase the transmission and paid NREC for the transmission.

Thorn's Diesel, however, stopped payment on the check because its customer, McAllister Towing & Transportation Company, Inc. ("McAllister"), decided that it did not want the transmission. McAllister, however, changed its mind again and decided that it did want the transmission. Thorn contacted Lester and inquired if NREC still had the transmission which it did. Lester allegedly once again reassured Thorn that the transmission was a "running take out" and stated that "You can put that baby in and go right to work." Thorn's Diesel in turn purchased the transmission and another company picked up the transmission from NREC in Louisiana and delivered it to Marine Speciality which was also located in Louisiana. Marine Speciality was to clean, service, test, paint, detail the transmission, and send it to Thorn's Diesel upon completion. After Marine Speciality received the transmission, it notified Thorn's Diesel that the transmission would require complete disassembly and overhaul, and that the transmission lacked major components. As a result, Thorn's Diesel was unable to deliver the transmission to McAllister in the time desired by McAllister and now faces potential damages from the underlying suit McAllister has brought against Thorn's Diesel.

IV. DISCUSSION

NREC and Lester argue that the court lacks subject matter jurisdiction over the fraud claims asserted by Thorn's Diesel. In particular, NREC and Lester contend that the fraud claims do not fall within the court's admiralty or supplemental jurisdiction. If the court finds that it has subject matter jurisdiction over the fraud claims, NREC and Lester argue that the court does not have personal jurisdiction over NREC or Lester.²

A. Admiralty Jurisdiction

Article III, Section 2, of the United States Constitution extends the judicial

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power of the United States to "all Cases of admiralty and maritime Jurisdiction." Congress has embodied that power in a statute giving federal district courts "original jurisdiction ... of ... [a]ny civil case of admiralty or maritime jurisdiction." 28 U.S.C. § 1331.

Thorn's Diesel asserts that the court has admirability jurisdiction based on the court's prior decision in this case regarding whether the court has admiralty jurisdiction over the claim between McAllister and Thorn's Diesel. The court found that the contract between McAllister and Thorn's Diesel for the purchase of a maritime transmission to be used in one of McAllister's ships was a maritime contract, and accordingly, that McAllister's breach of contract claim fell within the court's admiralty jurisdiction. McAllister Towing & Transp. Co., Inc. v. Thorn's Diesel Serv., Inc., 131 F.Supp.2d 1296, 1299-1300 (M.D.Ala.2001). Thorn's Diesel's reliance on the court's earlier ruling is misplaced because Thorn's Diesel does not allege a breach of contract claim, but alleges a claim for misrepresentation, a tort claim.

Admiralty tort jurisdiction is determined quite differently from admiralty contract jurisdiction. In determining whether a contract falls within admiralty jurisdiction, a court examines "the nature of the contract, as to whether it has reference to maritime service or maritime transactions." Id. at 1299 (quoting Nehring v. Steamship M/V Point Vail, 901 F.2d 1044, 1048 (11th Cir.1990)). Tort jurisdiction, however, requires the satisfaction of two tests: location and connection with maritime activity. "[F]or a tort claim to be cognizable under admiralty jurisdiction, the activity from which the claim arises must satisfy a location test and it must have sufficient connection with maritime activity." Alderman v. Pacific N. Victor, Inc., 95 F.3d 1061, 1064 (11th Cir.1996) (citing Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534, 115 S.Ct. 1043, 130 L.Ed.2d 1024 (1995)). To satisfy the location test, the tort must have occurred on navigable water or the injury suffered on land must have been caused by a vessel on navigable water. Jerome B. Grubart, Inc., 513 U.S. at 534, 115 S.Ct. 1043. "Under the locality test, the tort occurs where the alleged negligence took effect." Executive...