Willowbrook Foundation v. Visiting Nurse Ass'n, No. Civ A 1:99CV295-D-D.

• Decision Date: 10 February 2000
• Docket Number: No. Civ A 1:99CV295-D-D.
• Parties: The WILLOWBROOK FOUNDATION, INC., Plaintiff, v. VISITING NURSE ASSOCIATION, INC., Defendant.
• Court: U.S. District Court — Northern District of Mississippi

87 F.Supp.2d 629

The WILLOWBROOK FOUNDATION, INC., Plaintiff, v. VISITING NURSE ASSOCIATION, INC., Defendant.

No. Civ A 1:99CV295-D-D.

United States District Court, N.D. Mississippi, Eastern Division.

February 10, 2000.

S. Craig Panter, Kirkland & Barfield, Jackson, MS, for plaintiff.

David J. Cocke, The Bogatin Law Firm, PLC, Memphis, TN, for defendant.

OPINION

DAVIDSON, District Judge.

The following matters are before the court: 1) Defendant, Visiting Nurse Association, Inc.'s, motion to dismiss for lack of in personam jurisdiction, for improper venue, for insufficiency of service of process, or alternatively, to transfer venue, and 2) Defendant's appeal of the Magistrate Judge's order of January 6, 2000, denying Visiting Nurse Association's motion for a protective order. Upon due consideration, the court finds that the Defendant's motion to dismiss shall be denied, that this cause of action shall be transferred to the Western District of Tennessee, and that the decision of the Magistrate Judge shall be affirmed.

I. Factual Background

Plaintiff, The Willowbrook Foundation, Inc. (Willowbrook), a Mississippi non-profit corporation engaged in the business of providing home health services to patients who are eligible for Medicare benefits, filed a complaint against Visiting Nurse Association, Inc. (VNA), on August 27, 1999, in the Chancery Court of Lowndes County, Mississippi. In its complaint, Willowbrook asserted claims for specific performance and breach of contract arising out of an Asset Purchase Agreement entered into by the parties. On September 28, 1999, VNA removed the action from the chancery court to this court on the basis of diversity jurisdiction. On November 3, 1999, VNA filed the instant motion to dismiss contending that it is not subject to the personal jurisdiction of this court, that service of process was inadequate, that venue is improper, or alternatively, that the case should be transferred to the Western District of Tennessee.

On or about April 22, 1998, VNA, a Tennessee corporation, retained Health Care Concepts, Inc. (HCC), also a Tennessee corporation, to explore the possibility of selling substantially all of VNA's assets and to facilitate any such sale. In an effort to find a buyer, VNA, acting through HCC, sent out targeted mailings and placed telephone calls to organizations in eight states, including Mississippi, providing notice of VNA's willingness to enter into discussions regarding the potential sale of its assets.

In response to one of VNA's solicitation letters, Mark Alexander, Chairman of Dynahealth, Inc., a Mississippi corporation, placed a telephone call to HCC and expressed interest in having Dynahealth's subsidiary, The Willowbrook Foundation, Inc., purchase VNA's assets. On April 30, 1998, Mr. Alexander signed a confidentiality agreement allowing the parties to initiate discussions regarding the possible sale of VNA's assets, and on May 14, 1998, a letter of intent was sent to HCC formally indicating Dynahealth's intent that Willowbrook purchase VNA's assets. Over the ensuing months the parties negotiated the terms of the sale, a significant portion of which were carried out through telephone calls, mail, and facsimile transmissions between HCC and Dynahealth. See Affidavit of James Byrd. On September 22, 1998, representatives from Dynahealth and Willowbrook traveled to VNA's offices in Memphis, Tennessee to participate in a preliminary meeting with VNA representatives regarding the sale.

On September 28, 1998, Willowbrook and VNA consummated the negotiations and entered into an Asset Purchase Agreement which required Willowbrook to acquire all of VNA's interest in certain assets. Under the terms of the Agreement, Willowbrook was to pay an amount equal to the sum of $115,000 and the value of the "Net Assets" as defined in the Agreement. Pursuant to section 2.2 of the Agreement, the term "Net Assets" was defined as all of VNA's assets (excluding cash) less the current liabilities which Willowbrook was assuming. The parties recognized that, at the time of closing, there may remain disagreement as to the value of VNA's Net Assets. Thus, the Asset Purchase Agreement provided that if within 70 days after closing, the parties could not reach an agreement on the value of the Net Assets, VNA would provide Willowbrook a list of five independent accountants to resolve the dispute. Willowbrook would then choose one accountant from the list to determine the value of the assets and such calculation would be binding on both parties.

Ultimately, the parties could not agree on the value of the Net Assets. During the valuation discussions, VNA placed the sum of $80,000 in an escrow account for the purpose of paying Willowbrook if it was later determined that the value of the Net Assets was a large negative number, thereby requiring VNA to refund a portion of Willowbrook's payment. Willowbrook filed this action alleging that VNA failed and refused to comply with section 2.2 of the Asset Purchase Agreement, specifically seeking to compel VNA to submit a list of five accountants to make an independent calculation of VNA's Final Net Assets.

In addition to the Asset Purchase Agreement, VNA and Willowbrook entered into an Escrow Agreement containing a Tennessee choice of law provision. VNA contends that the parties are, in reality, disputing over the funds being held in the escrow account in Memphis, Tennessee. Conversely, Willowbrook argues that the dispute arises out of the Asset Purchase Agreement, which contains a Mississippi choice of law provision.

II. Discussion

A. Personal Jurisdiction

A nonresident defendant shall be subject to personal jurisdiction in a federal diversity suit to the extent permitted by the laws of the forum state and the considerations of constitutional due process. Bullion v. Gillespie, 895 F.2d 213, 215 (5th Cir.1990). The extent of federal jurisdiction over a nonresident defendant is determined by a two-step inquiry: 1) the defendant must be amenable to service of process under the forum state's jurisdictional long-arm statute, and 2) the exercise of jurisdiction under the state statute must comport with the dictates of the due process clause of the Fourteenth Amendment. See Omni Capital Int'l v. Rudolf Wolff & Co., 484 U.S. 97, 104-05, 108 S.Ct. 404, 409-10, 98 L.Ed.2d 415 (1987). Because proper service of process is not synonymous with amenability to an assertion of personal jurisdiction, the fact that service was effected does not resolve the jurisdictional issue. Applewhite v. Metro Aviation, Inc., 875 F.2d 491, 494 (5th Cir. 1989). Once personal jurisdiction has been challenged, plaintiffs bear the burden of establishing this court's jurisdiction over nonresident defendants. However, plaintiffs need not make a full showing on the merits that jurisdiction is proper but must make a prima facie showing of the facts upon which in personam jurisdiction is predicated to avoid dismissal for lack of jurisdiction. In this regard, "the allegations of the complaint, except as controverted by the defendant's affidavits, must be taken as true." Strong v. RG Indus., Inc., 691 F.Supp. 1017, 1018 (S.D.Miss. 1988) (internal citations omitted).

1. Mississippi Long-Arm Statute

Mississippi's long-arm statute provides in relevant part:

Any non-resident person, firm, general or limited partnership, or any foreign or other corporation not qualified under the constitution and laws of this state as to doing business herein, who shall make a contract with a resident of this state to be performed in whole or in part by any party in this state, or who shall commit a tort in whole or in part in this state against a resident or nonresident of this state, or who shall do any business or perform any character of work or service in this state, shall by such act or acts be deemed to be doing business in Mississippi and shall thereby be subjected to the jurisdiction of the courts of this state.

MISS.CODE ANN. § 13-3-57 (Supp.1993). The Mississippi Supreme Court has construed section 13-3-57 as applicable to three types of nonresident defendants: (1) nonresidents who make a contract with a Mississippi resident to be performed in whole or in part within the state; (2) nonresidents who commit a tort in whole or in part within the state against a resident or nonresident; and (3) nonresidents who are "doing business" within the state. Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1167-68 n. 5 (citing Smith v. Temco, Inc., 252 So.2d 212, 214-16 (Miss.1971)). The reach of Mississippi's long-arm statute is broad. It allows Mississippi courts to exercise jurisdiction over nonresident defendants whose conduct within the state has caused an alleged injury, and over nonresident defendants who have availed themselves to the protection of the laws of the State of Mississippi. The long-arm statute requires the satisfaction of at least one of its conditions before it may be utilized. Willowbrook claims that the Defendant falls under the contract prong of the Mississippi long-arm statute.

2. Contract Prong

The question before the court is whether Willowbrook and VNA entered into a contract "to be performed in whole or in part by any party in this state." VNA contends that the Asset Purchase Agreement was not a contract that was to be performed in whole or in part in Mississippi. To this end VNA argues that, although it did make a contract with Willowbrook, a Mississippi resident, the contract was consummated in Tennessee, was to be performed in accordance with the laws of the State of Tennessee, and that all meetings and negotiations between the parties took place in Memphis, Tennessee. Willowbrook, however, argues that it was VNA that initially reached out to the State of Mississippi to solicit potential buyers for its Tennessee operations, that a contract was executed containing a Mississippi choice of law provision, and that the specific provision of the contract in dispute...