Wells Fargo Financial Leasing Inc. v. Nch Healthcare System Inc.

• Decision Date: 08 December 2010
• Docket Number: No. 4:10–cv–00285–JEG.,4:10–cv–00285–JEG.
• Citation: 756 F.Supp.2d 1086
• Parties: WELLS FARGO FINANCIAL LEASING, INC., Plaintiff,v.NCH HEALTHCARE SYSTEM, INC., Defendant.
• Court: U.S. District Court — Southern District of Iowa

756 F.Supp.2d 1086

WELLS FARGO FINANCIAL LEASING, INC., Plaintiff,

v.NCH HEALTHCARE SYSTEM, INC., Defendant.

No. 4:10–cv–00285–JEG.

United States District Court, S.D. Iowa, Central Division.

Dec. 8, 2010.

Stacie M. Codr, R. Todd Gaffney, Finley Alt Smith Scharnberg Craig, Hilmes & Gaffney PC, Des Moines, IA, for Plaintiff.

Joseph R. Gunderson, Jason D. Walke, Gunderson Sharp & Walke PC, Des Moines, IA, for Defendants.

ORDER

JAMES E. GRITZNER, District Judge.

This matter comes before the Court on motion by Defendant NCH Healthcare System, Inc. (NCH) to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), or in the alternative, to transfer to the Middle District of Florida, Fort Myers Division pursuant to 28 U.S.C. § 1404(a). Plaintiff Wells Fargo Financial Leasing, Inc. (Wells Fargo) resists. The parties have not requested a hearing, and the Court finds no hearing is necessary in the resolution of this matter. The motion is fully submitted and ready for disposition.

I. FACTUAL BACKGROUND

Wells Fargo is an Iowa corporation with its principal place of business in Des Moines, Iowa. NCH operates non-profit community hospitals and related healthcare facilities and services primarily located in Collier County, Florida. Non-party AXSA Document Solutions, Inc. (AXSA) is a Florida corporation that provides “document, software and network solutions.” Reimer Aff. ¶ 9 n. 1. Although AXSA is not currently a party in this lawsuit, an agreement between AXSA and NCH is a central issue in this litigation.

On December 12, 2007, NCH and AXSA entered into a twelve-month Value Maintenance Agreement (2007 VMA). The front side of the 2007 VMA provided that for a 12–month term, AXSA would service and maintain various printers at NCH's facilities and that NCH would make twelve monthly payments of $24,459 to AXSA. The reverse side of the 2007 VMA contained standard, commercial agreement clauses, which included incorporation, assignment of rights, and forum selection clauses. While the front side of the 2007 VMA contained signature blocks, the reverse side contained no signature blocks. The parties also signed a “contract addendum” (2007 Addendum) outlining the parties' “accountability and responsibilities under the terms of the [2007 VMA] to fully support and provide print device services, support and management of all NCH laser printers covered by our partnership....” Def.'s App. Ex. A. NCH CFO Vicki Hale and AXSA Major Accounts Manager Thomas Heller ¹ signed the 2007 VMA and the 2007 Addendum. AXSA provided NCH with fully-executed copies of the 2007 VMA and the 2007 Addendum.

In or before January 2009, NCH and AXSA entered into negotiations for the renewal of the VMA. On February 2, 2009, Jack Silver (Silver), AXSA Vice President of Sales, sent an email to NCH with an attachment containing the proposed VMA (2009 VMA) and an Addendum to Value Maintenance Agreement (2009 Addendum). Silver's email indicated that the 2009 VMA was “the same maintenance agreement you had signed in December 2007.” Def.'s App. Ex. C. The terms on the front side of the 2009 VMA provided that for a term of 39 months, AXSA would service NCH's printers, and NCH would make thirty-nine monthly payments of $18,869.00. On February 2, 2009, NCH General Counsel Kevin Cooper (Cooper) signed the customer acceptance block on the 2009 VMA, and NCH CIO Susan Wolff signed the delivery acceptance block.

On February 4, 2009, Silver sent NCH a revised draft of the 2009 Addendum. The Addendum provided as follows:

This Addendum supplements and amends certain terms of the Value Agreement dated February 2, 2009 between NCH Healthcare System, Inc[.](NCH) its location(s) in Florida and AXSA Document Solutions Company (AXSA), Inc. Below are the items agreed to, and [if] these terms are contradictory of any terms in the agreement the terms of this Addendum will govern. All other terms of the Value Agreement will remain in full force and effect.

Def.'s App. Ex. C. Paragraphs 8 and 9 of the 2009 Addendum set out the procedure NCH would follow in the event of performance-related problems. Paragraph 9 stated,

If AXSA Document Solutions, Inc[.] fails to maintain the systems as outlined by this Addendum; with a 30–day written notice of cancellation NCH Healthcare Systems, Inc[.] will be held harmless for all remaining payments and fee's [sic] associated with the Value Agreement dated February 2, 2009. This addendum item will [g]overn and specifically dissolve the statement known on the Value Maintenance Agreement as “Noncancellable/Irrevocable” and “cannot be Canceled or Terminated[.]”

Id.

On February 16, 2009, Cooper signed the 2009 Addendum. NCH returned the documents to AXSA and requested that AXSA return to NCH fully-executed copies of the documents.

According to NCH, despite NCH's requests, AXSA never provided NCH with fully-executed copies of the 2009 VMA or the 2009 Addendum.² In spite of this omission, AXSA continued to provide services to NCH under the 2009 VMA, and NCH made several scheduled payments to AXSA.

On June 1, 2009, Wells Fargo and AXSA executed a Bill of Sale and Assignment (Bill of Sale) assigning the 2009 VMA to Wells Fargo for a purchase price of $662,301.90. The Bill of Sale provided inter alia that the assignment did not “include a transfer to, and shall not be deemed to constitute an assumption by, Wells Fargo of any obligations of [AXSA] with respect to any Contract.” Pl.'s Ex. B. Michele Boelling (Boelling) signed the Bill of Sale on behalf of AXSA. As of August 17, 2009, NCH knew that the 2009 VMA had been assigned to Wells Fargo. According to Wells Fargo, AXSA neither provided nor informed Wells Fargo of the 2009 Addendum, which modified terms of the 2009 VMA. After the assignment of the 2009 VMA to Wells Fargo, AXSA continued providing NCH with printer services.³

On September 28, 2009, Reimer sent AXSA a letter listing several items of concern regarding AXSA's performance of the 2009 VMA agreement and the 2009 Addendum. Reimer's September 28 letter lists AXSA's president, vice president of sales, and vice president of service, as well as NCH CIO Susan Wolff as copy recipients, but does not list Wells Fargo as a copy recipient.

On October 28, 2009, Wells Fargo sent NCH a re-notification letter reiterating that Wells Fargo held all rights, title, and interest in the 2009 VMA and in the equipment referenced therein, that all payments under the 2009 VMA should be remitted to Wells Fargo, and that NCH must secure Wells Fargo's written authorization before removing any of the equipment referenced in the 2009 VMA or before making any modifications to the 2009 VMA. As directed by Wells Fargo's October 28 letter, NCH sent three scheduled payments to Wells Fargo.⁴ However, NCH paid less than the amount billed, noting on the invoices that the “short pay” was because “toner [was] purchased outside the program because AXSA is not delivering.” Def.'s App. Ex. I.

On January 28, 2010, Wolff sent AXSA a letter informing AXSA that pursuant to “item # 9” of the 2009 Addendum and due to AXSA's unacceptable performance, NCH was “providing written notice that we are canceling this agreement and are to be held harmless of all remaining payments and fees associated with this agreement.” Pl.'s App. Ex. J. Wolff's letter listed AXSA's president, vice president of sales, and vice president of service as copy recipients but, as with Reimer's September 28 letter, did not list Wells Fargo as a copy recipient.

After sending AXSA the January 28 letter, NCH stopped making scheduled payments due under the 2009 VMA and refused to make payments upon demand. Wells Fargo, as the 2009 VMA assignee, filed a lawsuit against NCH in the Iowa District Court for Polk County alleging breach of contract. NCH timely removed the case and filed the present Motion to Dismiss, or in the Alternative, Motion to Transfer.

II. DISCUSSIONA. Lack of Personal Jurisdiction

NCH first argues the Court should dismiss this case pursuant to Rule 12(b)(2) for lack of personal jurisdiction, asserting that Iowa being Wells Fargo's principal place of business is not enough to satisfy due process.

“A federal court in a diversity action may assume jurisdiction over nonresident defendants only to the extent permitted by the long-arm statute of the forum state and by the Due Process Clause.” Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1073 (8th Cir.2004) (quoting Morris v. Barkbuster, Inc., 923 F.2d 1277, 1280 (8th Cir.1991)). Because Iowa's long-arm statute “provides for the broadest expanse of personal jurisdiction consistent with due process,” State ex rel. Miller v. Grodzinsky, 571 N.W.2d 1, 3 (Iowa 1997), the Court's analysis is limited to whether the exercise of personal jurisdiction comports with due process.

“The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful ‘contacts, ties, or relations.’ ” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471–472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). “To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving party need only make a prima facie showing of jurisdiction. The party seeking to establish the court's in personam jurisdiction carries the burden of proof, and the burden does not shift to the party challenging jurisdiction.” Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 647 (8th Cir.2003) (internal citations omitted). At this early stage in the litigation, “the court must look at the facts in the light most favorable to the nonmoving party, and resolve all factual conflicts in favor of that party.” Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991) (“While it is true that the plaintiff bears the ultimate burden of proof on this issue, jurisdiction need...