Noval Int'l Res., LLC v. Andec, Inc.

• Decision Date: 21 June 2012
• Docket Number: No. 12–2183–STA–tmp.,12–2183–STA–tmp.
• Citation: 875 F.Supp.2d 804
• Parties: NOVAL INTERNATIONAL RESOURCES, LLC and Lavon Worley Coleman, Plaintiffs, v. ANDEC, INC. and Ryan Edward Hensley, Defendants.
• Court: U.S. District Court — Western District of Tennessee

875 F.Supp.2d 804

NOVAL INTERNATIONAL RESOURCES, LLC and Lavon Worley Coleman, Plaintiffs,

v.ANDEC, INC. and Ryan Edward Hensley, Defendants.

No. 12–2183–STA–tmp.

United States District Court,

W.D. Tennessee,

Western Division.

June 21, 2012.

Anthony Charles Pietrangelo, Blake H. Gibson, IV, Timothy R. Johnson, Pietrangelo Cook, Memphis, TN, for Plaintiffs.

Lori Hackleman Patterson, Mark Daniel Griffin, Baker Donelson Bearman Caldwell & Berkowitz, Memphis, TN, for Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

S. THOMASANDERSON, District Judge.

Before the Court is DefendantAndec, Inc. and Ryan Edward Hensley's Motion to Dismiss(D.E. # 9) filed on March 23, 2012.PlaintiffsNoval International Resources, LLC(“Noval”) and Lavon Worley Coleman have filed a response in opposition (D.E. # 16), to which Defendants have replied (D.E. # 22).For the reasons set forth below, Defendants' Motion to Dismiss is GRANTED.

BACKGROUND

Plaintiffs' Complaint alleges that the parties entered into an asset purchase agreement on December 16, 2010.(Compl. ¶ 10.)Pursuant to their agreement, DefendantAndec, Inc. was to sell Plaintiff Noval telecommunications equipment for the sum of $12.5 million, a price which was later reduced to $9.5 million.( Id.¶¶ 11, 16.)According to the Complaint, Defendant never delivered to Plaintiff many of the assets covered by the agreement.( Id.¶¶ 17, 18.)As for the assets Defendant did deliver, Plaintiffs allege that the goods were not of the same quality, value, or quantity promised in the agreement.( Id.¶ 20.)Based on these allegations, Plaintiffs have asserted claims for breach of contract, fraud and/or intentional misrepresentation, conversion, and a declaratory judgment that Plaintiffs are no longer obligated to Defendants for any additional payments under the agreement.

In their Motion to Dismiss, Defendants argue that Plaintiffs' Complaint is subject to dismissal.Defendants contend that Plaintiffs failed to affect proper service on each Defendant.As a result, the Court should dismiss the suit pursuant to Rule 12(b)(5) of the Federal Rules of Civil Procedure.Defendants next argue that this Court lacks personal jurisdiction over Andec, Inc. or Defendant Hensley, and so the Court should dismiss this matter under Rule 12(b)(2).Defendants emphasize that Andec is an Iowa corporation with its principal place of business in Davenport, Iowa, and that Hensley is an Iowa resident.Defendants contend that none of the jurisdictional facts support either general or specific personal jurisdiction over the Defendants in this matter.Therefore, the Court should grant the Motion to Dismiss.

Plaintiffs have responded in opposition.Plaintiffs argue that counsel for Defendants have agreed to receive service of process on behalf of Defendants, rendering that issue moot.As for the Court's exercise of personal jurisdiction over Defendants, Plaintiffs contend that Defendants have had continuous and systematic contacts with the state of Tennessee since 2003 such that this Court has general personal jurisdiction.Plaintiffs claim that Defendants maintain a warehouse in Shelby County, Tennessee.Plaintiffs also cite evidence that Hensley made several comments to Coleman about business he had conducted in Tennessee in the past.Plaintiffs have also produced an email Hensley sent Coleman on January 27, 2012, where Hensley stated he might be traveling to Memphis on business in February 2012.Plaintiffs go on to argue that their claims also arise out of or relate to Defendants' contacts with the state of Tennessee.Plaintiffs assert that the asset purchase agreement was signed in the state of Tennessee, that some of the goods were stored in Tennessee before being delivered to Plaintiffs, and that Defendant Hensley came to Memphis for the purpose of negotiating the agreement with Plaintiff Coleman.Plaintiffs argue that the parties' contractual dealings evidence a continuous business relationship between them and suggest that Defendants purposefully availed themselves of the privilege of conducting business in the state of Tennessee.In the alternative, Plaintiffs argue that Defendants have committed tortious acts in the forum state and therefore specific jurisdiction exists pursuant to the Tennessee Long–Arm Statute.

In their reply brief, Defendants concede that their argument about improper service of process is now moot.Defendants highlight that Plaintiff Noval has its principal place of business in Mississippi and that Noval took delivery of the contract goods in Mississippi.The only connection to the forum state Plaintiffs can show is that Plaintiff Coleman is a Tennessee resident.Defendants maintain that the only contacts Andec, Inc. has had with the state of Tennessee are the telephone calls made between the parties during the negotiation of their agreement.Defendant Hensley denies that he has had any minimum contacts whatsoever with the state of Tennessee in his individual capacity.Defendants further dispute some of the factual contentions made in Plaintiffs' response brief.

STANDARD OF REVIEW

When a party challenges personal jurisdiction pursuant to Rule 12(b)(2), a plaintiff bears the burden of establishing the existence of jurisdiction.¹A plaintiff may not stand on his pleadings but must, by affidavit or otherwise, set forth specific facts showing that the Court has jurisdiction.²In considering a properly-supported Rule 12(b)(2) motion, the Court may proceed in three ways: “it may decide the motion upon the affidavits alone; it may permit discovery in aid of deciding the motion; or it may conduct an evidentiary hearing to resolve any apparent factual questions.”³Here both parties have filed affidavits containing facts that go to the jurisdictional issue.The affidavits appear to include controverted jurisdictional facts.Neither party has requested an evidentiary hearing or an opportunity to conduct limited discovery on the jurisdictional issue.⁴

In the event the district court reaches the jurisdictional issue on the basis of affidavits alone, the burden on the plaintiff is “relatively slight.”⁵“[T]he plaintiff must make only a prima facie showing that personal jurisdiction exists in order to defeat dismissal.”⁶This means that the plaintiff must set forth specific facts to support a finding of jurisdiction by a preponderance of the evidence.⁷The pleadings and affidavits submitted must be viewed in a light most favorable to the plaintiff, and the district court should not “consider facts proffered by the defendant that conflict with those offered by the plaintiff.”⁸“Dismissal is proper only if [the plaintiff's] alleged facts collectively fail to state a prima facie case for jurisdiction.”⁹

ANALYSIS

Personal jurisdiction over a nonresident defendant arises from “certain minimum contacts with [the forum] such that maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ”¹⁰In a diversity case, the plaintiff must satisfy two showings that personal jurisdiction exists as to a nonresident defendant: (1)the defendant is amenable to suit under the forum state's long-arm statute; and (2) due process requirements of the Constitution are met.¹¹Therefore, the Court may only exercise personal jurisdiction over a non-resident defendant if jurisdiction meets the state's long-arm statute and constitutional due process requirements.¹²

First, the law of the forum state determines “whether personal jurisdiction exists,subject to constitutional limitations.”¹³In this case, the Tennessee long-arm statute sets forth the circumstances where an action or claim for relief might arise from a nonresident defendant's conduct within the state.Such conduct is defined as “the transaction of any business within the state; any tortious act or omission within this state; the ownership or possession of any interest in property located within this state; or entering into a contract for services to be rendered or for materials to be furnished in this state.”¹⁴Tennessee's long-arm statute is interpreted to be “coterminous with the limits on personal jurisdiction imposed” by the Due Process Clause of the United States Constitution.¹⁵Consequently, “the jurisdictional limits of Tennessee law and of federal constitutional law of due process are identical.”¹⁶

The Court holds that its exercise of personal jurisdiction over Defendants would be inconsistent with the due process requirements of the Constitution.“Depending on the type of minimum contacts in a case, personal jurisdiction can either be specific or general.”¹⁷The parties disagree over whether specific or general personal jurisdiction exists in this case as to both named Defendants.Furthermore, Defendants argue that Hensley acted at all relevant times in his official capacity as president of Andec and did not purposefully avail himself of the privilege of acting in this forum in his individual capacity.¹⁸The Sixth Circuit has held that “jurisdiction over the individual officers of a corporation cannot be predicated merely upon jurisdiction over the corporation.”¹⁹Instead, the Court must make an independent determination about whether it can exercise specific personal jurisdiction over an officer or agent named as a party.²⁰The fact that the officer or agent acts in an official capacity, and not a purely personal capacity, is not dispositive of the jurisdictional issue.²¹Therefore, the Court must separately analyze the Southern Machine factors to consider whether it has specific personal jurisdiction over Andec and Hensley.²²

Defendants contend that Tennessee's fiduciary shield doctrine applies here and precludes personal jurisdiction over Hensley.In its essence, the doctrine “provides that, when an individual defendant is an officer of a corporation, a court may not exercise personal jurisdiction over the defendant based on actions taken in his or her corporate capacity.”...