Perez v. Metan Marine, Inc.

• Decision Date: 04 April 2018
• Docket Number: CIVIL 17-2170CCC
• Parties: RENE COLON PEREZ, his wife PRISCILLA BACO BAGUE and the conjugal partnership between them Plaintiffs/Counter-Defendants v. METAN MARINE, INC.; MICHAEL J. BORRELLI Defendants/Counter-Claimants
• Court: U.S. District Court — District of Puerto Rico

RENE COLON PEREZ, his wife PRISCILLA BACO BAGUEand the conjugal partnership between them Plaintiffs/Counter-Defendants v. METAN MARINE, INC.; MICHAEL J. BORRELLI Defendants/Counter-Claimants

CIVIL 17-2170CCC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

April 4, 2018

OPINION AND ORDER

Before the Court are defendants Metan Marine Restoration, Inc. ("Metan Marine") and Michael J. Borrelli's (together the "defendants") Motion to Dismiss the Amended Complaint for Lack of Personal Jurisdiction or for Venue Transfer (d.e. 7) filed on November 7, 2017 and plaintiffs' René Colón Pérez ("Colón"), his wife Priscila Bacó Bagué ("Bacó") and the conjugal partnership between them's (together the "plaintiffs") Opposition to Motion to Dismiss (d.e. 11). For the reasons set forth below, defendants' Motion to Dismiss or for Venue Transfer is DENIED, in part, and GRANTED, in part.

FACTUAL AND PROCEDURAL BACKGROUND

This action involves the restoration of a classic Bertram boat (the "vessel"). Plaintiffs hired Metan Marine to restore the vessel largely because of their familial relationship with Borrelli, director of Metan Marine and domestic partner of the mother of Colón and Bacó's son's fiancée. The parties met in February 2016, prompting Borrelli to visit Puerto Rico to inspect the vessel later that month. During this visit, Borrelli and Colón negotiated the Statement of Work (the "contract") and agreed to Metan Marine restoring the vessel. During the following months, Borrelli and Colón coordinated the transportation of the vessel to Jacksonville, Florida, where Borrelli picked it up and took it to Metan Marine's facilities in Massachusetts. Metan Marine determined that the vessel's hull needed to be replaced, which required additional work and expenses. Colón consented to this change, but Borrelli allegedly increased the price of other components in the process without consulting the vessel owners and the project also took longer than Borrelli represented.

On September 1, 2017, Colón and Bacó sued Metan Marine and Borrelli. Their complaint was amended on October 30, 2017, after Colón wired Borrelli a portion of the project's cost and Borrelli allegedly failed to provide sufficient evidence of the progress achieved to validate the delay. They brought claims sounding in breach of contract under Puerto Rico law against defendants for unilaterally changing the price of the vessel's restoration, destroying it in the process, and negligently or willfully misrepresenting Metan Marine's ability to restore it. d.e. 6, ¶¶ 31-51). They also brought a breach of contract claim under admiralty law. (d.e. 6, ¶¶ 52-55).

On November 11, 2017, Borrelli and Metan Marine moved to dismiss for lack of personal jurisdiction and due to insufficient contacts, in the alternative, to change venue to the District of Massachusetts. They also claim that Massachusetts is convenient for the parties, witnesses, and in the interest of justice because that is where the Metan Marine employees who worked on Colón's vessel are, the vessel itself is still in Metan Marine's facilities in Massachusetts, and the consultants who recommended replacing its hull are in Rhode Island and New Jersey.

Plaintiffs' opposition of December 1, 2017 argues that this Court has personal jurisdiction over defendants. Plaintiffs contend that Borrelli's trip to Puerto Rico to inspect the vessel and his emails to Colón show he purposefully availed himself of the laws of Puerto Rico by conducting business here and are sufficiently related to their underlying claims. As to venue change, they contend that litigating in Massachusetts is not convenient enough to warrant altering their choice of forum.

DISCUSSION

I. Personal Jurisdiction

A. Legal Standard

"To hear a case, a court must have personal jurisdiction over the parties, 'that is, the power to require the parties to obey its decrees.'" Astro-Med, Inc. v. Nihon Kohden America, Inc. 591 F.3d 1, 8 (1st Cir. 2009) (quoting United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 35 (1st Cir. 1999)). Personal jurisdiction comes in "two varieties, general and specific. General personal jurisdiction ... is broad in its ambit: it is the power of a forum-based court ... over a defendant 'which may be asserted in connection with suits not directly founded on [that defendant's] forum-based conduct . . .')." Pritzker v. Yari, 42 F.3d 53 (1st Cir. 1994) (citing Donatelli v. National Hockey League, 893 F.2d 459, 462-63 (1st Cir. 1990)). "General jurisdiction exists when the litigation is not directly founded on the defendant's forum-based contacts, but the defendant has nevertheless engaged in continuous and systematic activity, unrelated to the suit, in the forum state." United Elec. Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1088 (1st Cir. 1992).

"Specific personal jurisdiction, by contrast, is narrower in scope and may only be relied upon 'where the cause of action arises directly out of, or relates to, the defendant's forum-based contacts.'" Pritzker v. Yari, 42 F.3d at 60 (quoting United Elec. Workers, 960 F.2d at 1088-89). When determining whether a federal court may assert specific jurisdiction over foreign parties, "[t]he Supreme Court has held that the Due Process Clause of the Fourteenth Amendment limits the power of a court to render a valid personal judgment against a nonresident defendant." Eon Corp. v. AT&T Mobility, LLC, 879 F. Supp. 2d 194, 201 (D.P.R. 2012) (referring to Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 131 S. Ct. 2846, 2853, 180 L. Ed. 2d 796 (2011); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980)). Consequently, "[t]he proper exercise of specific [personal] jurisdiction hinges on satisfaction of two requirements: [1], that the forum in which the federal district court sits has a long-arm statute that purports to grant jurisdiction over [] defendant; and [2], that the exercise of jurisdiction pursuant to that statute comports with the strictures of the Constitution." Pritzker, 42 F.3d at 60 (referring to Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 204 (1st Cir. 1994); United Elec., Radio and Mach. Workers of America v. 163 Pleasant Street Corp., 960 F.2d 1080, 1086 (1st Cir. 1992); Hahn v. Vermont Law Sch., 698 F.2d 48, 51 (1st Cir. 1983).

This diversity suit also involves a federal question given plaintiffs' assertion of admiralty claims (d.e. 6, ¶¶ 52-55). For admiralty claims, "[t]he limits on the court's personal jurisdiction are based in the Due Process clause of the Fifth Amendment, not in the Fourteenth Amendment as is true for diversity cases." Zeus Projects Ltd. v. Perez y Cia. de Puerto Rico, Inc. 187 F.R.D. 23, 28-30 (D.P.R. 1999) (referring to 163 Pleasant Street, 960 F.2d at 1085; Lorelei Corp. v. County of Guadalupe, 940 F.2d 717, 719 (1st Cir. 1991); Toledo v. Ayerst-Wyeth Pharmaceutical, Inc., 852 F. Supp. 91, 102 (D.P.R. 1993); Colon v. Gulf Trading Co., 609 F. Supp. 1469, 1472 (D.P.R. 1985)). Nonetheless, "ultimately there is no practical difference in the way in which the Court proceeds towards its determination" of whether there is specific jurisdiction because "the defendant[s] must be served pursuant to a federal statute or Civil Rule." Zeus Projects Ltd, 187 F.R.D. at 28-30; see also Bohnenberger v. MCBC Hydra Boats, LLC, 2017 WL 397656, *4 (D. Mass. 2017). Given there is no federal statute providing for service on defendants, courts "return[] to the familiar realm of minimum contacts, the long-arm statute, and the Fourteenth Amendment." Zeus Projects Ltd, 187 F.R.D. 23 at 29.

The First Circuit has repeatedly held that Puerto Rico's long-arm statute is "coextensive with the reach of the Due Process Clause." Carreras v. PMG Collins, LLC., 660 F.3d 549, 552 (1st Cir. 2011); see also Pritker, 42 F.3d at 60. Whether asserting specific jurisdiction over Borrelli and Metan Marine comports with Due Process thus depends on the nature of their contacts with Puerto Rico and whether these were sufficient to give them "fair warning" that they could be sued there. See Burger King Corp. v. Rudzecwicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 2182, 85 L. Ed. 2d 528 (1985).

To make this determination, courts conduct a tripartite analysis. See Massachusetts Sch. of Law at Andover, Inc. v. American Bar Ass'n, 142 F.3d 26, 35 (1st Cir. 1998); Ticketmaster, 26 F.3d at 206:

First, an inquiring court must ask whether the claim that undergirds the litigation directly relates to or arises out of the defendant's contacts with the forum. Second, the court must ask whether those contacts constitute purposeful availment of the benefits and protections afforded by the forum's laws. Third, if the proponent's case clears the first two hurdles, the court then must analyze the overall reasonableness of an exercise of jurisdiction in light of a variety of pertinent factors that touch upon the fundamental fairness of an exercise of jurisdiction. An affirmative finding on each of the three elements of the test is required to support a finding of specific jurisdiction.

Afunday Charters, Inc. v. Spencer Yachts, Inc., 261 F. Supp. 3d 257 (D.P.R. 2017) (citing Phillips Exeter Acad. v. Howard Phillips Fund, 196 F.3d 284, 288 (1st Cir. 1999)).

Since defendants moved to dismiss for lack of personal jurisdiction under Rule 12(b)(2), "the plaintiff[s] ultimately bear[] the burden of persuading the court that jurisdiction exists." Astro-Med, Inc. v. Nihon Kohden America, Inc., 591 F.3d 1, 8 (1st Cir. 2009). An evidentiary hearing was not held, so the "plaintiff need only make a prima facie showing that defendants are subject to personal jurisdiction." Eon Corp., 879 F. Supp. 2d at 201. The Court "accept[s] the plaintiff's (properly documented) evidentiary proffers as true for the purpose of determining the adequacy of the prima facie jurisdictional showing." Astro-Med, Inc., 591 F.3d at 8 (quoting Adelson v. Hananel, 510 F.3d 43, 49 (1st Cir. 2007)). It...