Moore Video Distributors v. Quest Entertainment

• Decision Date: 07 April 1993
• Docket Number: Civ. A. No. J90-0367(W).
• Citation: 823 F. Supp. 1332
• Court: U.S. District Court — Southern District of Mississippi
• Parties: MOORE VIDEO DISTRIBUTORS, INC.; C & B Video Incorporated; Michael Jean; Desert Sun Entertainment; and Betty Dowdell d/b/a Laughing Pines Entertainment, Plaintiffs, v. QUEST ENTERTAINMENT, INC.; Fire Mountain Pictures, Inc.; W. Hugh Parks, Jr.; Jim Parks; Jack Fowler; and John Does 1-10; and Roe Corporations 1-10, Defendants.

823 F. Supp. 1332

MOORE VIDEO DISTRIBUTORS, INC.; C & B Video Incorporated; Michael Jean; Desert Sun Entertainment; and Betty Dowdell d/b/a Laughing Pines Entertainment, Plaintiffs, v. QUEST ENTERTAINMENT, INC.; Fire Mountain Pictures, Inc.; W. Hugh Parks, Jr.; Jim Parks; Jack Fowler; and John Does 1-10; and Roe Corporations 1-10, Defendants.

Civ. A. No. J90-0367(W).

United States District Court, S.D. Mississippi, Jackson Division.

April 7, 1993.

John M. Roach, Jackson, MS, for plaintiffs.

Luther M. Dove, Jr., Jackson, MS, for defendants.

MEMORANDUM OPINION AND ORDER

WINGATE, District Judge.

I. STATEMENT OF THE CASE

This cause is currently before this court pursuant to the three following motions: (1) defendant Quest Entertainment, Inc.,'s motion to dismiss for lack of in personam jurisdiction, improper venue, and/or improper joinder of parties or, alternatively, to transfer pursuant to Rules 12(b)(2),¹ 12(b)(3),² 20(a),³ Federal Rules of Civil Procedure, and 28 U.S.C. § 1404(a),⁴ respectively; (2) plaintiff's motion for class certification pursuant to Rule 23, Federal Rules of Civil Procedure;⁵ and (3) the motion of defendants Fire Mountain Pictures, W. Hugh Parks, Jr., Jimmy W. Parks, and Jack Fowler to dismiss for lack of personal jurisdiction or, alternatively, to transfer brought pursuant to Rule 12(b)(2),⁶ Federal Rules of Civil Procedure, and 28 U.S.C. § 1404(a).⁷ Before this court pursuant to its diversity jurisdiction as codified in Title 28 U.S.C. § 1332(a)(1),⁸ plaintiffs' lawsuit charges defendant Quest Entertainment, Inc., its officers and its alleged successor corporation with a breach of plaintiffs' respective contracts under which plaintiffs allegedly were granted video distributor rights in specified geographical areas.

Plaintiff Moore Video Distributing, Inc., (hereinafter "Moore") is a corporation organized and existing under the laws of the State of Mississippi. Moore's principal place of business is in Jackson, Mississippi. Plaintiff C & B Video Incorporated (hereinafter "C & B") is a corporation organized and existing under the laws of the State of Louisiana. C & B's principal place of business is in Metairie, Louisiana. Plaintiff Michael Jean (hereinafter "Jean") is an adult resident citizen of the State of New Hampshire who resides in Nashua, New Hampshire. Plaintiff Desert Sun Entertainment (hereinafter "Desert Sun") is a corporation organized and existing under the laws of the State of New Mexico. Desert Sun's principal place of business is in Hobbs, New Mexico. Plaintiff Betty Dowdell (hereinafter "Dowdell") is an adult resident citizen of the State of Texas, d/b/a Laughing Pines Enterprises, which was located in Tyler, Texas. Dowdell herself resides in Marshall, Texas.

Defendant Quest Entertainment, Inc., (hereinafter "Quest"), is a Florida corporation organized and existing under the laws of the State of Florida. Quest's principal place of business is in Orlando, Florida. Quest has never been, nor is it now, qualified to do business in the State of Mississippi. Quest filed a Chapter 11 bankruptcy petition on January 30, 1991, in the United States Bankruptcy Court for the Middle District of Florida, Orlando Division. In re Quest Entertainment, Inc., No. 91-00445 (Bankr.M.D.Fla. filed January 30, 1991).⁹

The following individual defendants were all officers of Quest. Defendant W. Hugh Parks, who owned 50% of Quest's stock, is an adult resident citizen of Florida and was the president of Quest. Defendant Jimmy W. Parks is an adult resident citizen of Florida and the brother of W. Hugh Parks. Jimmy W. Parks, the vice president and sales manager of Quest, owned the remaining 50% of Quest stock. Defendant Jack Fowler (hereinafter "Fowler") is an adult resident citizen of Florida. Fowler was employed as a salesman by Quest. Fire Mountain Pictures, Inc., (hereinafter "Fire Mountain"), is a corporation organized and existing under the laws of the State of Florida. Apparently, Fire Mountain was formed during the course of Quest's bankruptcy. Plaintiffs contend that Fire Mountain is the successor corporation of Quest.

II. FACTS

Quest is a movie production company which produces its own movies for distribution and also purchases the distribution rights for movies produced by other persons. Beginning in the summer of 1989, Quest entered into approximately one hundred distributorship relationships with video distributors throughout the United States. Each distributor agreed to distribute Quest videotapes within a particular geographic region, and Quest agreed to supply each distributor with a certain quantity of videos of a specified quality. These agreements between the distributors and Quest were reduced to written distributorship contracts which set out the respective rights and obligations of Quest and the distributors. Through this distribution network, videos owned by Quest and videos to which Quest held distribution rights were marketed in every state of the United States.

The five plaintiffs here all entered into contracts with Quest which granted them distributorship rights in specified geographic regions. Each distributorship contract was individual and separately negotiated and consummated pursuant to contacts occurring exclusively between Florida (Quest's home state) and each plaintiff's state of residence. Each of the five plaintiffs contacted Quest in Florida after learning either through solicitation in local newspapers or through "word of mouth," that a Quest distributorship was available. After telephone conversations, the plaintiffs traveled separately and independently to Florida in order to familiarize themselves with Quest's operation and to conduct additional discussions with Quest's management regarding the proposed distributorship agreement.

After returning to their respective states of residence, all five plaintiffs independently made known to Quest their desire to enter into distributorships with Quest. Thereupon, Quest mailed the plaintiffs the distributorship contracts which were executed by the plaintiffs in their respective states of residence. The plaintiffs then returned the contracts to Quest's offices in Florida where they were executed by Quest. The individual distribution agreements were later effectuated by the plaintiffs' purchase of inventories and/or by Quest's periodic shipment of videotapes to plaintiffs in response to orders placed by the plaintiffs from their respective states of residence.

According to plaintiffs, under the individual distributorship agreements, the plaintiffs agreed to pay Quest certain sums of money and Quest agreed to: (1) furnish an initial inventory of video tapes; (2) furnish plaintiffs with the exclusive right to distribute within their respective territories videos developed or acquired by Quest; and (3) provide eighteen (18) different video movies ("titles") per twelve (12) month period of business.

Moore, the Mississippi plaintiff, distributed the tapes which it received from Quest within a region in central Mississippi. No employee, agent or other representative of Quest has ever traveled to Mississippi in connection with the distribution agreement between Moore and Quest.

Before proceeding to the plaintiffs' claims, this court must note that the plaintiff's pleadings are somewhat vague. The only specific facts presented seem to be drawn exclusively from the experiences of the Mississippi plaintiff, Moore Video.

Plaintiffs allege that Quest and its officers breached their respective contracts. According to the plaintiffs, Quest failed to live up to its obligations under the initial distributorship agreement and then coerced the plaintiffs into a second, disadvantageous distributorship agreement. Specifically, in regards to their allegations of their respective breaches, the plaintiffs assert that the defendants did not supply the requisite number of titles and that even the titles supplied were not of the promised quality. Plaintiffs also assert that the defendants interfered with their businesses by preventing the purchase, sale and/or exchange of franchise territory and product inventory between and among distributors. Plaintiffs assert that any purchase, sale and/or exchange is not restricted by any of the distributorship contracts. Lastly, the plaintiffs aver that the defendants breached their initial contracts and then attempted to coerce the plaintiffs into signing new, one-sided distribution contracts which would reduce plaintiffs to the status of employees of Quest. The coercion occurred, according to plaintiffs, when the defendants indicated that the signing of the new contract was a condition precedent to the maintenance of any business relationship with Quest whatsoever. The plaintiffs say they were advised that if they did not sign the new contract, however unprofitable or disadvantageous, they would lose their initial investment of $25,000.00.

III. ISSUES

A. DEFENDANT QUEST'S MOTION TO DISMISS FOR LACK OF IN PERSONAM JURISDICTION, IMPROPER VENUE AND/OR IMPROPER JOINDER OF PARTIES OR, ALTERNATIVELY, TO TRANSFER.

Quest argues that, pursuant to Rules 12(b)(2), 12(b)(3), and 20(a), Federal Rules of Civil Procedure, this court lacks in personam jurisdiction over the claims of the four non-Mississippi plaintiffs, that this is not the proper venue for such claims, and that these four non-Mississippi plaintiffs were improperly joined. Alternatively, Quest argues that, pursuant to 28 U.S.C. § 1404(a),¹⁰ this court should transfer this action to the Middle District of Florida, where the defendants reside.

This court holds that it has personal jurisdiction over the in-state plaintiff's claims, but does not have personal jurisdiction over the claims of the four non-Mississippi plaintiffs. By now it is hornbook law that "in a federal diversity action ..., the reach of federal jurisdiction over nonresident defendants is measured by a two-step inquiry. First, the law of the forum state must...