United Statest-Mamiya, Inc. v. True Sports, Inc.
| Decision Date | 25 February 2020 |
| Docket Number | CIVIL ACTION NO. 3:19-CV-2745-B |
| Parties | UST-MAMIYA, INC., Plaintiff, v. TRUE SPORTS, INC., and Premium Golf Management Co., Ltd., d/b/a PGMC, Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Melissa R. Kingston, Friedman & Feiger LLP, Dallas, TX, for Plaintiff.
Matthew W. Ray, Loewinsohn Flegle Deary Simon LLP, Dallas, TX, John S. Golwen, Pro Hac Vice, Jonathan E. Nelson, Pro Hac Vice, Bass, Berry & Sims PLC, Memphis, TN, for Defendants.
Before the Court is Defendants True Sports, Inc., and Premium Golf Management Company's (PGMC) Motion to Dismiss (Doc. 11). For the reasons that follow, the Court GRANTS the motion to dismiss (Doc. 11) and DISMISSES the complaint WITHOUT PREJUDICE .
Plaintiff UST-Mamiya (UST) designs and manufactures golf equipment, including the ACCRA-branded golf club shaft. Doc. 1, Notice of Removal, Ex. 2, Original Pet., ¶ 9. On January 1, 2008, UST and PGMC entered into an Asset Purchase Agreement ("the contract"), in which PGMC purchased certain rights related to the ACCRA brand. Id. The contract contained a right of first refusal on behalf of UST, which reads, in relevant part:
6.7 Transfer Restrictions: PGMC shall not sell, assign, license or otherwise transfer any interest in the ACCRA Marks until the date that the Notes are fully paid and satisfied. Thereater, if PGMC obtains a bona fide offer from a third party for the acquisition of the ACCRA Marks ("Purchase Offer"), PGMC shall forward to UST the identity of the offerer of the Purchase Offer and the terms and conditions thereof. UST shall then have thirty (30) days in which to notify PGMC of its election to re-acquire the ACCRA Marks under the same terms and conditions of the Purchase Offer.
Id. ¶ 10; see also Doc. 1, Notice of Removal, Ex. 2, Asset Purchase Agreement, 5.2
UST alleges that after the contract was signed, PGMC transferred its interest in the ACCRA marks to Defendant True Sports, without making UST aware of the transaction or "the Purchase Offer information as required under the terms of the Contract." Doc. 1, Notice of Removal, Ex. 2, Original Pet., ¶ 10. UST claims that it first learned of the transaction "after it was complete and True Sports began issuing press releases about it." Id.
Although UST does not attach Defendants' transaction to its complaint or mention the transaction by name, Defendants in their motion explain that the transaction was a stock sale agreement, referenced as the Share Purchase Agreement (SPA), between the two Defendants. See Doc. 12, Defs.' Br., 1. The SPA is attached to Defendants' motion. See Doc. 15, Ex. B, SPA.
After learning of the transaction, UST sent True Sports a letter, dated July 25, 2019, to request information about the transaction. Doc. 1, Notice of Removal, Ex. 2, Original Pet., ¶ 11. True Sports responded by saying "that PGMC and True Sport do not believe that the Contract is enforceable any longer" and "refusing [to] provide the requested information." Id.
Subsequently, UST brought two causes of action: (1) breach of contract based on the alleged breach of the right of first refusal and (2) declaratory judgment that the contract is enforceable and that Section 6.7 of the contract required PGMC to provide the requested information to UST before True Sports acquired the ACCRA marks. Id. ¶¶ 12–18.
Defendants then brought this Motion to Dismiss for Failure to State a Claim and Lack of Personal Jurisdiction under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). Doc. 11, Defs.' Mot. to Dismiss. All briefing has been submitted and the motion is ripe for review.
Under Federal Rule of Civil Procedure Rule 8(a)(2), a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief ...." FED. R. CIV. P. 8(a)(2). Rule 12(b)(6) authorizes the Court to dismiss a complaint for "failure to state a claim upon which relief can be granted ...." Id. 12(b)(6). To survive a 12(b)(6) motion, "enough facts to state a claim to relief that is plausible on its face" must be pled. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. At this stage, a court "must accept all well-pleaded facts alleged in the complaint as true and must construe the allegations in the light that is most favorable to the plaintiff." J & J Sports Prods., Inc. v. Live Oak Cnty. Post No. 6119 Veterans of Foreign Wars , 2009 WL 483157, at *3 (S.D. Tex. Feb. 24, 2009) (quoting Cent. Laborers' Pension Fund v. Integrated Elec. Servs. , 497 F.3d 546, 550 (5th Cir. 2007) ).
The Fifth Circuit has held that dismissal is appropriate "if the complaint lacks an allegation regarding a required element necessary to obtain relief." Blackburn v. City of Marshall , 42 F.3d 925, 931 (5th Cir. 1995) (citation omitted). Essentially, "the complaint must contain either direct allegations on every material point necessary to sustain a recovery ... or contain allegations from which an inference fairly may be drawn that evidence on these material points will be introduced at trial." Campbell v. City of San Antonio , 43 F.3d 973, 975 (5th Cir. 1995) (internal citation omitted).
Federal Rule of Civil Procedure 12(b)(2) allows for the dismissal of an action in which the court lacks personal jurisdiction over the defendant. A federal court may assert jurisdiction over a nonresident defendant in a diversity suit if the state's long-arm statute applies and due process is satisfied under the Fourteenth Amendment to the United States Constitution. Cycles, Ltd. v. W.J. Digby, Inc. , 889 F.2d 612, 616 (5th Cir. 1989). Texas courts have interpreted the Texas long-arm statute as "extending to the limits of due process." Bullion v. Gillespie , 895 F.2d 213, 215 (5th Cir. 1990). Accordingly, to determine whether it may assert jurisdiction under the Texas long-arm statute, a federal court must determine whether jurisdiction comports with federal constitutional guarantees of due process. Id. at 216.
"The due process clause of the Fourteenth Amendment, as interpreted by the Supreme Court, permits the exercise of personal jurisdiction over a nonresident defendant when (1) that defendant has established ‘minimum contacts’ with the forum state; and (2) the exercise of jurisdiction over that defendant does not offend ‘traditional notions of fair play and substantial justice.’ " Ruston Gas Turbines, Inc. v. Donaldson Co., Inc. , 9 F.3d 415, 418 (5th Cir. 1993) (quoting Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ). "Both prongs of the due process test must be met" for the Court to exercise personal jurisdiction over a defendant. See id.
A nonresident defendant's minimum contacts may either support an assertion of specific or general jurisdiction. WNS Inc. v. Farrow , 884 F.2d 200, 202 (5th Cir. 1989). A court may exercise specific jurisdiction when a cause of action arises out of a defendant's purposeful contacts with the forum. Dalton v. R & W Marine, Inc. , 897 F.2d 1359, 1361–62 (5th Cir. 1990). Alternatively, a court is said to have general jurisdiction when a defendant has engaged in continuous and systematic contacts with the forum. Id.
The party seeking to invoke federal jurisdiction bears the burden of establishing the requisite minimum contacts. WNS , 884 F.2d at 203. Further, "uncontroverted allegations in the plaintiff's complaint must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in the plaintiff's favor for purposes of determining whether a prima facie case for personal jurisdiction exists." D.J. Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc , 754 F.2d 542, 546 (5th Cir. 1985) (citations omitted).
Defendants believe that the complaint must be dismissed against both parties because UST's right of first refusal was never triggered when PGMC sold its stock to True Sports under the SPA. Doc. 12, Defs.' Br., 5–8. Alternatively, Defendants argue that True Sports should be dismissed from the case because (1) True Sports is not a party to the UST–PGMC contract, and (2) the Court lacks personal jurisdiction over True Sports. Id. at 9–13.
The Court concludes that UST's right of first refusal was never triggered by Defendants' SPA. However, because the Court concludes that UST's claims should be dismissed without prejudice, the Court also reaches True-Sports' specific arguments. As to those, the Court concludes that True Sports cannot be held liable under the contract and is not subject to the personal jurisdiction of this Court as currently pled.
To withstand a motion to dismiss on its breach of contract claim, UST must plead "(1) the existence of a valid contract between plaintiff and defendant; (2) the plaintiff's performance or tender of performance; (3) the defendant's breach of the contract; and (4) the plaintiff's damage as a result of the breach." In Re Staley , 320 S.W.3d 490, 499 (Tex. App.—Dallas 2010, no pet.).
The first issue is whether the Court can consider the SPA between Defendants PGMC and True Sports. See Doc. 15, Ex. B, SPA. The agreement is not attached to UST's complaint; rather, it is attached to and relied on in Defendants' motion to dismiss. See generally Doc. 12, Defs'....
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