Wlc, LLC v. Watkins

• Decision Date: 13 September 2006
• Docket Number: No. 1:06CV129.,1:06CV129.
• Court: U.S. District Court — Middle District of North Carolina
• Parties: WLC, LLC d/b/a The Learning Together Company, Plaintiff, v. W. David WATKINS, Watkins Strategy and Resource Group, LLC d/b/a Watkins Partners,, Watkins & Associates, PLLC, Watkins & Young, PLLC, Watkins & Young Properties, LLC, Watkins Properties, LLC, Equity Resorts LLC, and State Capital Services, LLC, Defendants.

Page 426

454 F.Supp.2d 426

WLC, LLC d/b/a The Learning Together Company, Plaintiff, v. W. David WATKINS, Watkins Strategy and Resource Group, LLC d/b/a Watkins Partners,, Watkins & Associates, PLLC, Watkins & Young, PLLC, Watkins & Young Properties, LLC, Watkins Properties, LLC, Equity Resorts LLC, and State Capital Services, LLC, Defendants.

No. 1:06CV129.

United States District Court, M.D. North Carolina.

September 13, 2006.

Frederick K. Sharpless, Sharpless & Stavola, P.A., Greensboro, NC, for Plaintiff.

Chad Dwight Hansen, Daniel R. Taylor, Jr., William Mark Conger, Kilpatrick Stockton, L.L.P., Winston-Salem, NC, Samuel L. Begley, Begley Law Firm, PLLC, Jackson, MS, for Defendants.

ORDER

OSTEEN, District Judge.

In this Standing Order 30 proceeding, the Magistrate Judge has recommended that Defendants' motion to dismiss for lack of personal jurisdiction be granted. The Magistrate Judge's recommendations render the following motions moot: Defendants' alternative motion to transfer venue pursuant to the first-to-file rule and Plaintiffs motion to remand. Plaintiff filed a timely objection to the recommendation and Defendants filed a response to Plaintiff's objection.

This court has conducted a review of the file and has determined that the recommendation of the Magistrate Judge is appropriate and should be adopted.

For the reasons set forth in the Magistrate Judge's recommendation of June 12, 2006,

IT IS ORDERED that Defendants' motion to dismiss (Doc. No. 6) is GRANTED and Defendants' alternative motion to transfer venue pursuant to the first-to-file rule is denied as moot.

IT IS FURTHER ORDERED that Plaintiffs motion to remand (Doc. No. 11) is denied as moot.

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

DIXON, United States Magistrate Judge.

This matter is before the court on Defendants' motion to dismiss for lack of personal jurisdiction or for improper venue under FED.R.CIV.P. 12(b)(2) and (3) [docket no. 6]. Alternatively, Defendants move to transfer venue to the Southern District of Mississippi under 28 U.S.C. § 1404(a) or for dismissal pursuant to the "first to file" rule. Also before the court is Plaintiffs motion to remand based on Plaintiffs argument that fewer than all Defendants consented to removal [docket no. 11]. Since there has been no consent, the court must deal with all dispositive motions by way of a recommended disposition. Both parties have responded to the respective motions. In this posture, the matter is ripe for disposition. For the reasons discussed herein, the court first finds that Plaintiffs motion to remand and Defendants' motion to dismiss under the first-to-file rule have been rendered moot. Furthermore, it will be recommended that the district court grant Defendants' motion to dismiss for lack of personal jurisdiction.

PROCEDURAL BACKGROUND

The essence of this lawsuit is that Plaintiff, a North Carolina limited liability company, entered into a verbal agreement with Defendants in August 2004 under which Defendants agreed to provide lobbying and consulting services to Plaintiff. In exchange, Plaintiff agreed to pay Defendants monthly consulting fees. Plaintiff eventually became dissatisfied with Defendants' services, and Plaintiffs attorney, on September 8, 2005, wrote a demand letter to Defendants, setting forth specific legal claims that Plaintiff intended to raise against Defendants. On December 8, 2005, Defendant Watkins Partners filed a declaratory judgment action against Plaintiff in Mississippi state court, seeking a declaration that it had not breached the parties' agreement. (Watkins Strategy & Resource Group, LLC v. WLC, LLC d/b/a/ The Learning Together Company, No. 251-05-1109, Circuit Court of the First Judicial District of Hinds County, Mississippi, located at Conger Aff. ¶ 2.)

On January 20, 2006, Plaintiff removed the Mississippi state court suit to the United States District Court for the Southern District of Mississippi, Jackson Division. (Conger Aff. ¶ 2.) On January 4, 2006, Plaintiff filed this action, naming as Defendants David Watkins; Watkins Strategy and Resource Group, LLC d/b/a Watkins Partners; Watkins & Associates; PLLC; Watkins & Young, PLLC; Watkins & Young Properties, LLC; Watkins Properties, LLC; Equity Resorts, LLC; and State Capital Services LLC in Guilford County Superior Court, alleging legal negligence, breach of fiduciary duty, actual and constructive fraud, and unfair and deceptive trade practices. Defendants removed the suit to this court on February 6, 2006, pursuant to 28 U.S.C. §§ 1132, 1441, and 1446. On May 23, 2006, the federal district court in Mississippi entered an order declining to hear the declaratory judgment action filed by Watkins Partners in that court.

FACTS

The following facts are taken in the light most favorable to Plaintiff on Defendants' motion to dismiss for lack of personal jurisdiction. Plaintiff WLC, LLC, doing business as "Learning Together" (hereinafter "Learning Together"), is a North Carolina limited liability company with its principal place of business in Guilford County. Learning Together designs and sells educational products. William Cassell is Learning Together's President and CEO. Defendant David Watkins is a lawyer and Mississippi resident and is a principal of Watkins & Young, PLLC, a Mississippi law firm. Watkins is the CEO of Watkins Strategy & Resource Group, LLC, doing business as Watkins Partners. Watkins Partners is described on a web site as being a network of affiliated companies, including the named Defendants Watkins & Associates, PLLC; Watkins & Young, PLLC; Watkins & Young Properties, LLC; Watkins Properties, LLC; Equity Resorts, LLC; and State Capital Services, LLC.¹ On the web site, Watkins Partners holds itself out to the public as a provider of legal services, accounting and financial advice, marketing and public relations services, technology consulting, and economic development and real estate investing opportunities.

Finally, Robin Williams is a former Georgia legislator who is now serving a ten-year, federal prison sentence in South Carolina after being convicted of health care fraud in 2005. (See Sharpless Aff., located at Ex. 5 to Pl.'s Br. Opp. Mot. Dismiss.) During the time in which consulting services were provided to Defendants, Williams was a business associate of Watkins. Williams is not a named Defendant in this lawsuit. The exact nature of the relationship between Williams and the other named Defendants is unknown, although it is clear that Watkins and Williams were working together in some capacity for some time as business associates. The court has gleaned from reviewing the record that Plaintiff paid some of its consulting fees directly to Williams, and Plaintiff is now attempting to recover those payments. In denying responsibility for returning any fees paid to Williams, Defendants maintain that Williams had no authority to act on behalf of Defendants and Defendants had no control over Williams.

Formation of the Relationship Between the Parties

In March 2004, North Carolina attorney Richard Schwartz was attending a convention in Florida, when he met with Mississippi attorney David Watkins, who he had known for several years. (Schwartz Aff. ¶ 2, located at Ex. 1 to Pl.'s Br. Opp. Mot. Dismiss.) According to Schwartz, during their conversations together while at the Florida convention, Watkins told Schwartz that he was forming a "network" of companies to carry on lobbying, legal services, and property investment businesses. (Schwartz Aff. ¶ 2.) Watkins told Schwartz that, among other things, his new business would include making use of his and others' political connections to secure appropriations for companies selling educational services and products. Watkins referred Schwartz to his web site, www.watkins partners.com. Schwartz was impressed with the web site, which contained references to numerous companies as well as an organizational chart showing the networking of the various companies. (Schwartz Aff. ¶ 2.) Schwartz believed that Watkins' new business venture might match up well with the business needs of Schwartz's business friend William Cassell. Schwartz, therefore, decided to put Watkins and Cassell in touch with each other and helped to arrange a meeting between the two men in North Carolina to discuss a potential business relationship. (Schwartz Aff. ¶ 2; see also Cassell Aff. ¶ 2, located at Ex. 3 to Pl.'s Br. Opp. Mot. Dismiss.)

The North Carolina Meeting Between William Cassell on Behalf of Learning Together and David Watkins on Behalf of Watkins Partners

On May 10, 2004, after an exchange of e-mails between William Cassell and David Watkins, David Watkins and Robin Williams traveled to the offices of Learning Together in Guilford County, North Carolina, where they met with William Cassell. (Cassell Aff. ¶ 3.) The parties dispute the purpose of the May 2004 meeting in North Carolina. Plaintiff argues that Defendants traveled to North Carolina for the specific purpose of soliciting Plaintiff's business for Defendants' consulting and lobbying services. Defendants argue, on the other hand, that they traveled to North Carolina to attempt to forge a relationship between one of Defendants' clients, the "I Can Learn" company, and Plaintiff. The parties do not dispute, however, that the meeting lasted approximately two hours and that the parties did not enter any agreement during the May 2004 meeting. Rather, over the next few months the parties negotiated the terms of a verbal agreement through e-mails and telephone calls, and in August 2004 Learning Together agreed to pay Watkins and Williams $10,000 per month initially, later increasing, for "governmental relations" and legal services. More specifically, Learning Together alleges that it agreed to pay Watkins $10,000 per month beginning in August 2004 for 9 months, a total of $90,000, and thereafter $20,000 per month, and then $30,000 per month, plus other expenses incurred...