Patriot Coal Sales LLC v. Bridgehouse Commodities Trading Ltd.
| Decision Date | 08 February 2013 |
| Docket Number | CIVIL ACTION NO. 2:12-cv-03653 |
| Parties | PATRIOT COAL SALES LLC, Plaintiff, v. BRIDGEHOUSE COMMODITIES TRADING LIMITED, et al. Defendant. |
| Court | U.S. District Court — Southern District of West Virginia |
Pending before the Court is the defendant Bridgehouse Capital Limited's Motion to Dismiss [Docket 8] for lack of personal jurisdiction and the defendant Sentrum Holdings Limited's Motion to Dismiss [Docket 31] for lack of personal jurisdiction. The Court FINDS that it does have personal jurisdiction over both defendants and DENIES the Motions.
This Motion arises from breach of contract, fraud, and estoppel claims brought by the supplier of coal against the purchaser and two corporations affiliated with the purchaser that supplied a comfort letter1 to the supplier.
In April of 2011, representatives of Bridgehouse Commodities Trading Limited ("Bridgehouse Commodities") and Bridgehouse Capital Limited ("Bridgehouse Capital") approached Patriot Coal Sales LLC ("Patriot") about purchasing coal from the West Virginia mines of a Patriot affiliate. (Decl. of B. Reynolds [Docket 21, Exhibit 1], at ¶ 3). The purchasingentity was to be Bridgehouse Commodities. (Id.) Patriot is, and at all relevant times was, a limited liability corporation organized and existing under the laws of the State of Delaware with its principal place of business in St. Louis, Missouri and with offices in Charleston, West Virginia. Bridgehouse Commodities is, and at all relevant times was, a corporation organized and existing under the laws of the Isle of Man, with offices in London, England and Doha, Qatar. Bridgehouse Capital is, and at all relevant times was, a corporation organized and existing under the laws of England and Wales with a principal place of business in London, England.
Between April 2011 and September 2011, negotiations took place between Bridgehouse representatives and Beverly Reynolds, a Vice President of Patriot. (Id. at ¶¶ 2-4). Beverly Reynolds works at Patriot's Charleston, West Virginia offices. (Id.) One of the main negotiators for Bridgehouse Commodities and Bridgehouse Capital was Donald Jordan. [Docket 21, Exhibit 1, Exhibit A]. Donald Jordan's documented emails identify him as being associated with Bridgehouse Capital. (Id.) By early September 2011, the business points of the coal purchase agreement had largely been settled and memorialized in a contract referred to as a confirmation agreement (the "Confirmation"). (Decl. of B. Reynolds [Docket 21, Exhibit 1], at ¶ 7). The Confirmation detailed the various terms and conditions of the sale to Bridgehouse Commodities. (Id.) During the negotiation process, Donald Jordan emailed revisions of the draft Confirmation to Beverly Reynolds. (Id.)
In the Confirmation, Bridgehouse Commodities agreed to purchase hundreds of thousands of tons of coal a year from Patriot over a multiyear period. [Docket 60, Exhibit 1, Confirmation, at 1]. The contract value of the coal was between $50 million and $100 million dollars. (Id.) The Confirmation specified that coal would be from a West Virginia mine and would be loaded onto barges on the Kanawha River in West Virginia. (Id. at 1-2). BridgehouseCommodities agreed to take title to the coal when it was loaded on the barges in West Virginia. (Id. at 5).
Donald Jordan signed the Confirmation on Bridgehouse Commodities' behalf on September 16, 2011, in his capacity as "Managing Director" of Bridgehouse Commodities. (Id. at 4). Patriot, however, would not execute the Confirmation until it received credit information from Bridgehouse Commodities. [Docket 21, Exhibit 1, at ¶ 8]. Addressing Patriot's concern about Bridgehouse Commodities ability to pay, Bridgehouse Capital offered that it and Sentrum Holdings Limited ("Sentrum"), an affiliated entity organized under the laws of the British Virgin Islands, would support Bridgehouse Commodities with a comfort letter (the "Comfort Letter"). (Id. at ¶ 11). The Comfort Letter, along with nonpublic financial information from Sentrum, was emailed to Carol Damba in Patriot's St. Louis, Missouri office and Beverly Reynolds in Patriot's Charleston, West Virginia office. (Id. at ¶ 9). Robert Bennett, President of Patriot, executed the Confirmation on the same date Patriot received the Comfort Letter, October 27, 2011, in his Charleston, West Virginia office. [Docket 21, Exhibit 2, at ¶ 8; Docket 60, Complaint, at ¶ 14].
In January 2012, Patriot contends, persons representing the Bridgehouse entities (it is unclear which entity specifically) traveled to West Virginia to view the barge operations where the coal Bridgehouse Commodities was to purchase was to be loaded. [Docket 21, Exhibit 1, at ¶ 12]. Bridgehouse Commodities never took any coal as required under the Confirmation. (Id. at ¶ 13). Beverly Reynolds had multiple email and telephone communications with Donald Jordan regarding Bridgehouse Commodities' failure to take coal. (Id.) Patriot also contends that Donald Jordan traveled to Charleston, West Virginia on February 16, 2012 to discuss Bridgehouse Commodities' failure to abide by the Confirmation with Robert Bennett. (Id. at ¶ 14);[Docket 21, Exhibit 2, at ¶ 10].
The Comfort Letter provides that "[s]o long as any indebtedness of [Bridgehouse Commodities] to Patriot [] under the Agreement or otherwise remains outstanding and unpaid, [Sentrum and Bridgehouse Capital] represent and warrant to Patriot [] that: [Sentrum and Bridgehouse Capital] are affiliated with [Bridgehouse Commodities] and will maintain affiliation and effective control of [Bridgehouse Commodities]. . . ." [Docket 60, Ex. 2, at 1]. The Comfort Letter also provides covenants from Sentrum and Bridgehouse Capital to Patriot, namely that:
(Id. at 2). The comfort letter is signed by Andrew J. Ruhan, who according to this letter is the "Chairman & CEO" of Sentrum and Bridgehouse Capital. (Id.)
When a court's personal jurisdiction over a defendant is challenged under Federal Rule of Civil Procedure 12(b)(2), the plaintiff has the burden to prove grounds for jurisdiction by apreponderance of the evidence. Carefirst of Maryland, Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003) (citing Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir. 1993)). When a pretrial personal jurisdiction motion is decided without conducting an evidentiary hearing, "the plaintiff need only make a prima facie showing of personal jurisdiction." Id. (citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). In deciding whether the prima facie showing has been met, "the court must take all disputed facts and reasonable inferences in favor of the plaintiff." Id. (citing Mylan Labs., 2 F.3d at 60).
Among other limited scenarios, a federal court may exercise personal jurisdiction over a defendant who has been served a summons or filed a waiver of service and "who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located." Fed. R. Civ. P. 4(k)(1)(A). To determine whether a defendant is subject to the jurisdiction of a state court of general jurisdiction, two conditions must be met. First, the exercise of jurisdiction must be authorized under the state's long-arm statute. Carefirst, 334 F.3d at 397 (citing Christian Sci. Bd. of Dirs. of the First Church of Christ v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001)). Second, the exercise of jurisdiction must comport with the due process requirements of the Fourteenth Amendment. Id. Because West Virginia's long-arm statute, W. Va. Code § 56-3-33, has been interpreted to be coextensive in scope with the full reach of due process, the statutory inquiry merges with the due process inquiry. In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997).
The due process inquiry requires a court to determine whether the defendant has purposely established "minimum contacts" with the forum state such that it would not "offend traditional notions of fair play and substantial justice" to maintain the suit. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). The Fourth Circuit has provided a framework for assessing whether a federal court'sassertion of personal jurisdiction satisfies due process. The framework requires a district court to consider three factors: "(1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the State; (2) whether the plaintiff['s] claims arise out of those activities directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable." Consulting Engineers Corp. v. Geometric Ltd., 561 F.3d 273, 278 (2009) (quoting ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002)).
In Count II of its Complaint, Patriot alleges that Sentrum and Bridgehouse Capital are liable to it for breach of contract for failing to cause Bridgehouse Commodities to "meet its payment and other financial obligations to Patriot," "perform and observe all of...
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