Rapid Capital Inc. v. Black Rock Capital LLC.
| Decision Date | 18 September 2008 |
| Docket Number | No. 27-CV-08-17700.,27-CV-08-17700. |
| Parties | Rapid Capital Inc., Plaintiff, v. Black Rock Capital LLC., Defendant. |
| Court | Minnesota District Court |
Gary Larson, Judge of District Court.
The above-entitled matter came before the Honorable Gary Larson, Judge of Hennepin County District Court, on September 18, 2008, on Defendant's Motion to Dismiss.
William Henney, Esq., appeared for Plaintiff, Rapid Capital, and Michael Obermueller, Esq., appeared for Defendant, Black Rock Capital.
Based upon the files and proceedings herein, the Court makes the following:
1. Defendant's Motion to Dismiss is GRANTED.
2. The attached memorandum is incorporated herein.
Rapid Capital, ("Plaintiff") is a Minnesota corporation, located in Excelsior, Minnesota, acting as a broker for equipment lease financing. Black Rock Capital, ("Defendant") is a corporation based in Bridgeport, Connecticut conducting business primarily in equipment lease financing.
Plaintiff states that Wildwood Industries, Inc., an Illinois corporation, has leased equipment through Plaintiff numerous times over the past four years. In October 2006, Plaintiff originated an equipment lease with Wildwood, which it funded in late November 2006 through Defendant. Plaintiff further states that on November 20, 2006, George Booth, Defendant's CEO, personally delivered the commission check in the amount of $16,500 to Plaintiff's office. Plaintiff alleges that, while there, Booth spent an hour directly soliciting Plaintiff's business.
Plaintiff claims that, sometime later, Booth called Plaintiff after visiting Wildwood's offices in Chicago and stated that Defendant wanted to do more business with Plaintiff and Wildwood. On or about December 8, 2006, a second transaction took place between Defendant and Wildwood. Plaintiff alleges that Booth promised to pay Plaintiff a 2% commission, like in the previous transaction, for a total fee of $16,500.
Plaintiff states that it has fully satisfied all of its obligations owed to Defendant but, despite due demand, Defendant failed to pay Plaintiff the agreed upon commission. Plaintiff alleges that Defendant owes it $15,600.00, plus interest. Plaintiff sent an invoice to Defendant which constituted a stated account for the principal sum of $15,600, plus interest, which remains unpaid.
Defendant, on the other hand, asserts that, in or about September 2006, Defendant negotiated an equipment financing project for Wildwood. Defendant claims that its immediate business relationship was with a broker named George Barnhart, doing business out of North Carolina, who engaged Plaintiff as a sub-broker. After completion of the first transaction for Wildwood, Defendant paid a broker's commission to Plaintiff, at the direction of Barnhart, for services rendered by Barnhart's business as well as Plaintiff's.
Defendant also states that, in or about December 2006, Wildwood contacted Defendant to obtain a separate piece of financing. Understanding that Wildwood was brought to Defendant through Barnhart and Plaintiff (who represented that it had an exclusive arrangement with Wildwood), Defendant reached out to both entities to get a better sense of the transaction. After several months, Defendant came to the conclusion that Plaintiff had misrepresented its relationship with Wildwood and that this particular transaction was initiated by Wildwood, not through Barnhart or Plaintiff.
Defendant states that it does not actively solicit business in other states; rather, it's customers, either in person or through a broker, approach it for financing in Connecticut. Defendant further states that its direct contact with Minnesota consists entirely of one transaction with one single customer, which resulted from financing provided to a customer who reached out to Black Rock, in Connecticut, for financing.
Plaintiff brought suit alleging: (1) breach of contract, (2) account stated, (3) unjust enrichment, and (4) attorney fees. Defendant filed a Motion to Dismiss based on lack of personal jurisdiction. Plaintiff opposes Defendant's motion.
Whether personal jurisdiction exists is a question of law. V.H. v. Estate of Birnbaum, 543 N.W.2d 649, 653 (Minn. 1996). Once jurisdiction has been challenged by the defendant, the burden is on the plaintiff to prove that sufficient contacts exist with the forum state. Dent-Air, Inc. v. Beech Mountain Air Service, Inc., 332 N.W.2d 904, 907 n. 1 (Minn. 1983). At the pretrial stage, however, the plaintiff's allegations and supporting evidence are to be taken as true. Id. (citing Hardrives, Inc. v. City of LaCrosse, 240 N.W.2d 814, 816 (1976)).
Minnesota's long-arm statute, Minn. Stat. § 543.19 (2008), permits Minnesota courts to assert personal jurisdiction over defendants to the full extent of federal due process. Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410 (Minn. 1992); Leoni v. Wells, 264 N.W.2d 646, 647 (Minn. 1978). Due process requires that the defendant have "certain minimum contacts" with the forum state and that the exercise of jurisdiction over the defendant does not offend "traditional notions of fair play and substantial justice." Burnham v. Superior Court of Cal., 495 U.S. 604, 618 (1990) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)); Ulmer v. O'Malley, 307 N.W.2d 775, 777 (Minn. 1981); Minn. Stat § 543.19. In order to establish minimum contacts, a defendant must have purposely availed itself of the privilege of conducting activities within the jurisdiction. Hanson v. Denckla, 357 U.S. 253 (1958).
Minnesota courts use a five-factor test to determine whether an exercise of personal jurisdiction over a non-resident defendant is consistent with these requirements, evaluating (1) the quantity of the defendant's contacts with the forum state; (2) the nature and quality of those contacts; (3) the connection between the plaintiff's cause of action and those contacts; (4) Minnesota's interest in providing a forum; and (5) the convenience of the parties. Vikse v. Flaby, 316 N.W.2d 276, 282 (Minn. 1982). Of these factors, the first three are the most important because they determine whether the defendant has established minimum contacts with Minnesota, which is the "constitutional touchstone" of the due-process analysis. See Asahi Metal Indus., v. California, 480 U.S. 102, 108-09 (1987); Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565, 570 (Minn. 2004). The last two factors determine "whether the exercise of jurisdiction is reasonable according to traditional notions of fair play and substantial justice." Juelich, 682 N.W.2d at 570.
A non-resident's contacts with the forum state, not with residents of the forum state, determine whether minimal contacts exist. West Am. Ins. Co. v. Westin, Inc., 337 N.W.2d 676, 679 (Minn. 1983). To sustain jurisdiction, the quantity of Defendant's contacts with the forum state must have been "numerous and fairly frequent or regular in occurrence." Hardrives, 240 N.W.2d at 817. Here, Defendant's CEO was present in Minnesota, at Plaintiff's office on one occasion. Defendant is not licensed to do business in Minnesota, nor does it have an office or bank account in the state. Under the first factor, the quantity of contacts between the defendant and the state of Minnesota, Defendant's contacts with the state are insufficient to sustain personal jurisdiction.
Phone and mail contacts alone have been held to be insufficient to afford personal jurisdiction under the Minnesota long-arm statute. See, e.g., Dent-Air, 332 N.W.2d at 908 (); Leoni, 264 N.W.2d 646 (); see also S.B. Schmidt Paper Co. v. A to Z Paper Co., Inc., 452 N.W.2d 485, 488 (Minn. Ct. App. 1990).
In Walker Management, Inc. v. FHC Enterprises, Inc., the court held that a year and a half commercial relationship between the parties, primarily through the mail, by telephone, and by forwarding of funds, and by FHC's employees one-time presence in Minnesota did not constitute a sufficient quantity of contact with Minnesota to warrant granting jurisdiction. 446 N.W.2d 913, 915 (Minn. Ct. App. 1989), pet. for rev. denied, (Minn. Dec. 15, 1989). See Jenson v. R.L.K. & Co., 534 N.W.2d 719, 720 (Minn. Ct. App. 1995), rev. denied, (Minn. Sept. 20, 1995) ( that a non-resident defendant did not have "systematic and continuous" contacts with Minnesota giving rise to the exercise of personal jurisdiction where the defendant advertised in national publications, solicited business from the public at large, and responded to Minnesota residents' requests for information). In this case, besides Defendant's CEO's one single visit to Plaintiff in Minnesota, Defendant's contacts with Plaintiff included approximately 10 emails, Defendant's maintenance of a website, and business transaction with third parties. Further, unlike Walker Management, the communication lasted considerably less than a year and a half.
"It is a defendant's contacts with the forum state that are of interest in determining if in personam jurisdiction exists, not its contacts with a resident." Mountaire Feeds, 677 F.2d at 655 (citations omitted); Iowa Electric Light & Power Co. v. Atlas Corp., 603 F.2d 1301 (8th Cir. 1979), cert. denied, 445 U.S. 911, (1980); N. Am. Fin. Corp. v. Amgrar Gesellschaft Fur Farmlagen, 702 F.Supp. 1435, 1439 (D. Minn. 1989); Walker Mgmt., 446 N.W.2d at 915. The commercial contacts in the present case tie Defendant to Plaintiff, but not to the forum state.
A plaintiff cannot establish a defendant's minimum contacts merely by pointing to...
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