Mercantile Capital, Lp v. Federal Transtel, Inc.

• Decision Date: 25 March 2002
• Docket Number: No. CV 01-BU-2785-S.,CV 01-BU-2785-S.
• Citation: 193 F.Supp.2d 1243
• Court: U.S. District Court — Northern District of Alabama
• Parties: MERCANTILE CAPITAL, LP, Plaintiff/Counterclaim Defendant v. FEDERAL TRANSTEL, INC., Defendant/Counterclaim Plaintiff/Third-Party Plaintiff, v. Gointernet.Net, Inc.; Integretel, Inc.; Neal Saferstein; Jay M. Starr; Dimitri L. Karapelou; and Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, Third-Party Defendants

Page 1243

193 F.Supp.2d 1243

MERCANTILE CAPITAL, LP, Plaintiff/Counterclaim Defendant v. FEDERAL TRANSTEL, INC., Defendant/Counterclaim Plaintiff/Third-Party Plaintiff, v. Gointernet.Net, Inc.; Integretel, Inc.; Neal Saferstein; Jay M. Starr; Dimitri L. Karapelou; and Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, Third-Party Defendants

No. CV 01-BU-2785-S.

United States District Court, N.D. Alabama, Southern Division.

March 25, 2002.

Harlan I. Prater, IV, Esq., Robin H. Graves, Esq., William H. Morrow, Esq., Lightfoot, Franklin & White, LLC, Birmingham, for Plaintiff.

Jeffrey E. Rowell, Esq., Campbell & Rowell, LLP, Birmingham, Lee R. Benton, Esq., C. Steven Ball, Benton & Centeno, LLP, Birmingham, for Defendant.

Memorandum Opinion

BUTTRAM, District Judge.

Now before the Court in the above-styled action is a Fed.R.Civ.P. 12(b)(2) motion filed on December 21, 2001 by Third-Party Defendant Integretel, Inc. ("Integretel"), seeking an order dismissing for lack of personal jurisdiction the third-party claims asserted against it by Defendant/Counterclaim Plaintiff/Third-Party Plaintiff Federal TransTel, Inc. ("FTT"). (Doc. 16). With the jurisdictional discovery authorized by the Court complete, the parties have filed evidence and briefs in support of their respective positions on the motion, which is now ripe for decision. Upon consideration of the record and the arguments of counsel, the Court concludes that Integretel's motion to dismiss FTT's third-party claims against it is due to be GRANTED.

I. BACKGROUND

Integretel's President, Ken Dawson, describes Integretel in his declaration as an "end-to-end billing services bureau." Declaration of Ken Dawson, Exhibit A to Memorandum in Support of Defendant Integretel, Inc.'s Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 17) (hereinafter "Dawson Decl.") ¶ 4. Dawson explained at his deposition in somewhat plainer terms that Integretel acts as a "billing intermediary" between its "clients," who are providers of telecommunications products and services, and "end users," the business and residential consumers who have purchased the clients' products or services. See Dawson Deposition (hereinafter "Dawson Depo."), Exhibit A to "Supplement to Federal TransTel, Inc.'s Response to Third Party Defendant Integretel, Inc.'s Motion to Dismiss" (Doc. 32) (hereinafter "FTT's Supplement"), at 14-16, 54. The record indicates that the process essentially works like this: Each client with whom Integretel has contracted sends data to Integretel at its California place of business, specifying, among other things, what charges the client claims it is owed by end users for services rendered. Integretel processes this data and forwards it to each individual end user's local exchange telephone carrier ("LEC"), which prints a charge for the client's service or product on the end user's telephone bill. Once the end user pays such bill, the LEC remits the appropriate amount to Integretel, which, in turn, deducts the fees and charges to which it is entitled for its services, paying the balance to the client. See Dawson Depo. at 18.

In this litigation, FTT is pursuing claims under a number of legal theories against various parties, asserting that this Court possesses diversity subject matter jurisdiction under 28 U.S.C. § 1332(a)(1). See FTT's Answer, Counterclaim, and Third-Party Complaint (hereinafter "Third-Party Complaint") ¶ 58. However, the only substantive cause of action asserted against Integretel is for the tort of conversion, as set forth in Count Two of FTT's Third-Party Complaint.¹ The salient facts underlying that claim are as follows: FTT is a Georgia corporation "with business activities in Georgia, California and Alabama." Third-Party Complaint ¶ 53. Like Integretel, FTT furnishes billing and collection services for telecommunications provider-clients through end users' LECs. FTT claims that, in March 1999, it entered into a billing services contract with Third-Party Defendant Gointernet.Net, Inc., f/k/a Mercury Marketing Technologies of Delaware, Inc. ("Gointernet"). See Third-Party Complaint, at ¶ 61. Gointernet is a Delaware corporation, with its principal place of business in Pennsylvania, that creates and maintains Internet web sites. See id. & Exhibit A attached thereto; Complaint for Temporary Restraining Order, Preliminary and Permanent Injunction, Accounting and Other Relief of Mercantile Capital, LP (hereinafter "Mercantile Complaint"), at ¶ 4. FTT asserts that Gointernet breached their agreement (hereinafter the "Billing Services Contract") by entering into a separate contract with Integretel and transferring to it billing and collections business associated with telecommunications service contracts between Gointernet and its end users ("end user contracts") that previously had been the source of transactions processed by FTT under the Billing Services Contract. FTT further claims that it is the "owner and/or assignee" of the end user contracts that gave rise to transactions it had processed under the Billing Services Contract and that it, FTT, has the "immediate right to the billing processing data, revenue, and related rights and obligations" associated with those end user contracts. Third-Party Complaint ¶ 73. Therefore, FTT claims, Integretel has converted such assets through its processing of transactions arising out of Gointernet end user contracts that previously had been handled by FTT, although FTT acknowledges that it believes Integretel did so without knowledge of FTT's rights. Id. ¶ 74-75. As a result, FTT demands judgment "for all profits derived by Integretel with respect to such end user contracts" and for "such net profits as would otherwise have been obtained by FTT from such transactions ...." Id. ¶ 75. FTT also asks that the Court impose a constructive trust upon both "such sums as have been paid by, received by or held by Integretel with respect to such end user contracts" and "all electronic data" submitted in connection with such end user contracts processed by Integretel that previously had been the subject of billing by FTT. Id.

Regarding personal jurisdiction, FTT alleges simply that Integretel, as well as the other party defendants, "either transact business in Alabama on a regular basis, or have caused and continue to cause damages in Alabama through the tortious conduct described [in the pleading.]" Third-Party Complaint ¶ 57. Integretel, however, disputes that allegation as to itself. Integretel asserts, rather, that it does not itself do any business within Alabama and that it has only the most limited of contacts with the forum, which are insufficient, Integretel argues, to allow this Court to exercise personal jurisdiction over it.

The record shows that Integretel is incorporated under the laws of California and maintains its principal place of business in San Jose, California. Dawson Declaration ¶ 4. Integretel does not have, and has never applied for, a license to do business in Alabama, nor does it maintain a registered agent in the state to receive service of process. Id. ¶ 6. Nor does Integretel have any physical presence within Alabama; it has no place of business, employees, mailing address, telephone number, real estate, bank accounts, or any other interest in property located in the state. Id. Integretel has not entered into a contract in Alabama nor has it contracted with any client entity that is either domiciled or has offices in Alabama; nor has Integretel ever filed suit in an Alabama court. Id. ¶¶ 6, 9, 11.

Further, Integretel does not intentionally direct advertisements to any person or entity located within Alabama. Integretel's Discovery Responses, at 8, ¶ 12. Integretel admits that it maintains a website that may be accessed via the Internet by persons in Alabama, but that website is passive and is thus for informational purposes only. Id. Dawson also acknowledges that Integretel places advertisements from time to time in a number of trade publications, some of which, Dawson believes, may be national in their circulation. Dawson Depo. at 35-37.

Although Integretel has no contracts with any clients or end users who are Alabama residents, Integretel does provide billing and collection services for its clients relating to telecommunications products and services purchased by end users in Alabama. See Defendant, Integretel, Inc.'s Responses to Federal TransTel's Discovery Regarding Jurisdiction (hereinafter "Integretel's Discovery Responses"), Exhibit B to FTT's Supplement, at 2-3, ¶¶ 1 & 3. Thus, Integretel has direct or indirect contractual relationships with LECs providing local telephone service to such Alabama end users, see Dawson Depo. at 16, 44-46, and Integretel receives payments from, and exchanges data concerning Alabama end users with, these LECs. In particular, Integretel has entered into a contract with BellSouth Corporation ("BellSouth"), an LEC that is headquartered in Georgia but which supplies local telephone service in several states, including Alabama. See Dawson Decl. ¶ 7. BellSouth also has offices in Alabama with which Integretel has had "sporadic contact via telephone." Id. However, Integretel's contract with BellSouth was executed in Georgia and California with BellSouth's Georgia office as signatory, and the contract contains Georgia choice-of-law provisions. Id. Integretel also has contracts with two "billing aggregators," Independent NECA Services, and Illuminet, who, in turn, have contracts with smaller Alabama LECs with whom Integretel has no direct contact. Id. ¶ 8.

Pursuant to its contractual right to collect fees and charges owed by its clients, Integretel retains some portion of the revenues it receives from LECs resulting from billed transactions, including those wherein the end user is located in Alabama. See Dawson Depo. at 16, 19, 24. Also as part of its contracts with clients, Integretel typically incurs obligations to respond to questions and disputes...