Opinion
Civil Action No. 3:99-CV-1792-L.
November 30, 2000.
MEMORANDUM OPINION AND ORDER
Before the court is Defendant's Motion to Dismiss, filed September 9, 1999. After careful consideration of the motion, Plaintiff's response, Defendant's reply, the evidence submitted by the parties, and the applicable authority, the court grants Defendant's Motion to Dismiss.
I. Factual and Procedural Background
Plaintiff Lee Lee International, Inc. ("Plaintiff" or "LLI") is a closely held Texas corporation. Defendant Wayland Ma ("Defendant" or "Ma") is an individual and resident of California. Ma is the sole proprietor of Annielee, a California corporation engaged in the business of matching American product buyers with overseas manufacturers, primarily located in Asia.
In 1996, Cheng Yuan Liu and Chi-Wen Liu (the "Lius") entered into a contract with Annie Lee (Defendant's wife) and Jimmie Lee (Annie Lee's former spouse) to purchase Lee Lee Fine Linens, Inc. ("Fine Linens"), a business which manufactured, sold and imported exclusively designed miniature dolls, ornaments and decorative accessories. In purchasing the business, the Lius acquired, inter alia, the trade name "Lee Lee" along with the existing business, inventory, office and the company's warehouse. Plaintiff contends that the purchase agreement also included a covenant not to compete which prohibited the officers and shareholders of Fine Linens from selling identical products manufactured by Fine Linens for a period of two years. Plaintiff contends that prior to the sale of her business, Annie Lee and Defendant, on behalf of Fine Linens, sold seasonal merchandise such as the "Treetopper Santa." According to Plaintiff, less than one year after her sale of Fine Linens, Annie Lee and Defendant began selling seasonal merchandise identical or similar to the "Treetopper Santa" to Plaintiff's existing customers. Plaintiff brought suit against Defendant asserting claims for tortious interference with business relations, civil conspiracy, and interference with prospective contracts. Defendant moves to dismiss this action, contending that the court lacks subject matter jurisdiction in this case and also lacks personal jurisdiction over him.
Plaintiff's Original Complaint also included the individual plaintiff's Cheng Yuan Liu and Chi-Wen Liu. Plaintiff subsequently amended its original complaint to remove the individual plaintiffs. See Plaintiff's First Amended Original Complaint. Although Plaintiff filed its amended complaint without leave of court, Defendant has lodged no objection to the pleading. Therefore, the court will consider Plaintiff's amended pleading in determining Defendant's motion.
This merchandise is now sold by the Lius through the Plaintiff LLI.
II. Defendant's Motion to Dismiss
A. Subject Matter Jurisdiction
Defendant's motion to dismiss challenges the court's subject matter jurisdiction, contending that there exists a lack of complete diversity of citizenship between the parties. In its response, Plaintiff contends that this issue has been rendered moot by its subsequent filing of an amended complaint in which it removed the individual plaintiffs, Cheng Yuan Liu and Chi-Wen Liu, who are both California residents. Defendant, however, maintains that the parties nevertheless lack complete diversity of citizenship because Plaintiff's principal place of business is in Hayward, California. Defendant contends that because Plaintiff's true headquarters, that is, its principal place of business, is situated in California and Defendant Ma is also a California resident, there is no complete diversity of citizenship and the court lacks subject matter jurisdiction. The court agrees.
For purposes of diversity jurisdiction, "a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business. . . ." 28 U.S.C. § 1332(c)(1). A corporation may, therefore, be a citizen of both its state of incorporation and the state of its principal place of business. It is undisputed that Plaintiff is a citizen of Texas, the state of its incorporation. Under § 1332(c), Plaintiff is also a citizen of its principal place of business. Ordinarily the court applies the "total activity" test to determine principal place of business. See J.A. Olson Co. v. City of Winona, 818 F.2d 401, 404 (5th Cir. 1987). In this case, however, the court need not reach this issue because Defendant has presented substantial uncontroverted evidence that Plaintiff's principal place of business is in California. Moreover, in its response to Defendant's motion, Plaintiff concedes that there is substantial evidence that suggests that its principal place of business is in Northern California. See Pl.'s Resp. in Opposition to Def.'s Mot. to Dismiss, ¶ III(c). In this regard, Defendant has presented evidence that LLI's merchandise is currently warehoused in California, that sales orders are filled in California, that all billing, marketing, and sales contracts for the business are maintained in California, and that except for a warehouse in Dallas, no other aspect of the business remains in Texas. See Def's Reply to Pl.'s Resp. to Def.'s Mot. to Dismiss, Exhibit A (Oral Deposition of Chi-Wen Lucia Liu, August 26, 1998 at 246-247). Based on this evidence, the court concludes that LLI's principal place of business is in California. Since Defendant is a citizen of California and Plaintiff's principal place of business is also in California, complete diversity of citizenship does not exist between the parties. The court therefore finds that it lacks subject matter jurisdiction in this case pursuant to 28 U.S.C. § 1332. In any event, even if subject matter jurisdiction were proper in this case, the court would nevertheless grant Defendant's motion because it lacks personal jurisdiction over Defendant Ma.
B. Personal Jurisdiction
On a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the court's jurisdiction over a nonresident defendant. Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). The court may determine the jurisdictional issue by receiving affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery. Id. at 1192. 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 favor of the plaintiff Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990)
A determination of personal jurisdiction over a nonresident defendant consists of two elements. First, the court must determine whether the nonresident defendant is subject to jurisdiction under the law of the state in which it sits, and secondly, it must determine whether the exercise of jurisdiction over the defendant comports with the due process requirements of the United States Constitution. Stuart, 772 F.2d at 1189; CD Solutions, Inc. v. Tooker, 965 F. Supp. 17, 19 (ND. Tex. 1997). The Texas long-arm statute has been interpreted to extend as far as the limits of constitutional due process permit. See Gundle Lining Const. Corp. v. Adams County Asphalt, Inc., 85 F.3d 201, 204 (5th Cir. 1996) ( citing Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990)). Therefore, the court is only required to consider whether an exercise of jurisdiction over Defendant satisfies constitutional due process. Stuart, 772 F.2d at 1189; CD Solutions, 965 F. Supp. at 19.
The exercise of personal jurisdiction over a nonresident defendant will not violate due process principles if two requirements are satisfied. First, the nonresident defendant must have purposefully availed himself of the benefits and protections of the forum state by establishing "minimum contacts" with that state. Marathon Oil Co. v. Ruhrgas, 182 F.3d 291, 294-295 (5th Cir. 1999). Second, the exercise of jurisdiction over the nonresident defendant must not offend traditional notions of fair play and substantial justice. Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113 (1987)( citing International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)); Ruhrgas, 182 F.3d at 295.
The "minimum contacts" prong of the inquiry may be subdivided into contacts that give rise to "specific" personal jurisdiction and those that give rise to "general" personal jurisdiction. Ruhrgas, 182 F.3d at 295. Specific jurisdiction is appropriate when the nonresident defendant's contacts with the forum state arise from or are directly related to the cause of action. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8 (1984). Exercise of general jurisdiction is proper when the nonresident defendant's contacts with the forum state, even if unrelated to the cause of action, are continuous, systematic and substantial. Id. at 414 n. 9.
Once the plaintiff establishes that the nonresident defendant has sufficient related or unrelated minimum contacts with the forum state, the court must then determine whether the "fairness" prong of the jurisdictional inquiry has been met. See Asahi, 480 U.S. at 105. The defendant's conduct and connection with the forum state must be such that the person should reasonably anticipate being haled into court there. See Growden v. Ed Bowlin Assoc., Inc., 733 F.2d 1149, 1151 (5th Cir. 1984). The factors considered in the fairness inquiry are: 1) the burden upon the nonresident defendant; 2) the interests of the forum state; 3) the plaintiff's interest in securing relief; 4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and 5) the shared interest of the several States in furthering fundamental substantive social policies. Bullion, 895 F.2d at 216 n. 5 (quotations omitted).
Defendant contends that this case should be dismissed because he is not subject to personal jurisdiction in Texas. Defendant has presented uncontroverted testimony that he does not maintain a residence, bank account, office, agent, employees or any property in Texas. See Def.'s Mot. to Dismiss, Exhibit A (Affidavit of Wayland Ma at 3). Defendant also maintains that he does not conduct any business in Texas and does not solicit business from customers located in Texas. Id. Defendant therefore argues that he does not have the "minimum contacts" with this forum that are required for personal jurisdiction. Plaintiff contends that Defendant is subject to personal jurisdiction here because 1) Defendant tortiously interfered with Plaintiff's business and business relations; 2) Defendant's actions in this state were directed toward Plaintiff; 3) Plaintiff suffered damages as a result of Defendant's actions, and 4) Defendant should have reasonably anticipated being haled into Texas court for causing damage to a Texas corporation. In support of its position, Plaintiff relies on Calder v. Jones, 465 U.S. 783 (1984). Plaintiff's reliance on Calder, however, is misplaced.
Although Plaintiff asserts that Defendant (with the assistance of Annie Lee) solicited Plaintiff's customers and that Defendant diverted business opportunities from Plaintiff to which it paid valuable consideration, it presents no evidence to support these allegations.
In Calder, the plaintiff was a professional entertainer who lived and worked in California. One of the defendants was a reporter for a Florida publication and resident of Florida. The reporter wrote a story about the plaintiff and provided it to his employer, which had a substantial portion of its national circulation in California. The plaintiff brought a libel action against the reporter. The Court held that it was proper for the California court to exercise jurisdiction over the defendants (the reporter and his editor) in a libel action arising out of their intentional conduct in Florida because their actions were expressly aimed at California and they wrote and edited an article that they knew would have a potentially devastating impact upon the plaintiff in California. Calder, 465 U.S. at 789. In the instant case, although Plaintiff asserts in conclusory fashion that it was the focus of Defendant's activities out of which this lawsuit arises, it presents no evidence (and alleges no facts) that Defendant engaged in conduct in another state expressly aimed at Texas or intended to cause harm to Plaintiff in Texas. Calder is therefore inapposite and distinguishable from the facts in this case.
While Plaintiff asserts that Defendant's activities have given rise to this lawsuit, Plaintiff presents no evidence that Defendant committed any acts in Texas to support its allegations. Other than its evidence of the marital relationship between Defendant and Annie Lee and perhaps Defendant's knowledge of his wife's agreements made in connection with the sale of Fine Linens, Plaintiff presents no evidence showing affirmative acts by Defendant to suggest that he engaged in any conspiracy in Texas. Similarly, other than its bald assertions that Defendant tortiously interfered with its existing and prospective business relationships and prospective contracts, Plaintiff presents no evidence that he (Ma) sold merchandise in Texas, solicited business, contracts, or sales for products in Texas, or that he communicated with Plaintiff's clients or prospective clients in Texas. Plaintiff's mere assertion of a claim against Defendant will not support the court's exercise of jurisdiction absent minimum contacts. See Star Technology Inc. v. Tultex Corp., 844 F. Supp. 295, 299 (N.D. Tex. 1993) (Plaintiff's accusation of conspiracy alone will not support the court's exercise of jurisdiction absent minimum contacts). For these reasons, the court concludes that it may not exercise specific personal jurisdiction over Defendant.
Plaintiff also contends that the court may exercise general personal jurisdiction over Defendant based on his numerous unrelated contacts in Texas. In support of this contention, Plaintiff asserts that Defendant was employed by his wife's company, Lee Lee Fine Lines, Inc., from 1990 to 1996, that he resided in Texas in 1997, and that he traveled on a pleasure trip from Dallas to North Carolina during that year. Pl.'s Resp. in Opposition to Def's Mot. to Dismiss at 5. Plaintiff's evidence, however, is simply to too slender a reed to establish that Defendant's unrelated contacts with Texas are sufficient to subject him to suit in this state.
First, Plaintiff contends that Defendant resided in Texas in 1997, and directs the court to an excerpt (pages 161 and 162) from Ma's deposition. There, in response to a question posed by the examiner concerning the length of Ma's stay in Atlanta for a trade show, Ma stated that "[w]e [Ma and Annie Lee] were having a pleasure trip, driving from Dallas all the way up to Asheville — Asheville, North Carolina . . . ." Pl.'s Resp. in Opposition to Def.'s Mot. to Dismiss, Exhibit A (Oral Deposition of Wayland Ma at 162). Plaintiff argues that this statement indicates that Ma resided in Texas at some time during 1997. The court disagrees. Contrary to Plaintiff's assertion, that Defendant traveled from Dallas to North Carolina on a pleasure trip in no way establishes that he also resided in Texas at the same time, particularly in light of Ma's statement that he and his wife have maintained separate residences (his being in California) since their marriage in 1988. See Def's Mot. to Dismiss, Exhibit A (Affidavit of Wayland Ma at 2). Defendant's brief trip to Dallas for the purpose of picking up his wife to travel to North Carolina cannot be regarded as a contact of a systematic and continuous nature and thus cannot support an assertion of general personal jurisdiction over Defendant. See Wilson v. Belin, 20 F.3d 644, 650-651 (5th Cir.), cert. denied, 513 U.S. 930 (1994) (defendant's few trips to Texas during which he gave interviews concerning President Kennedy's assassination found to be sporadic and attenuated instead of continuous and systematic).
Plaintiff contends that Ma's affidavit does not establish that he has lived in California since his marriage to Annie Lee. Plaintiff argues that while Ma states that he is a resident of California, he fails to state over what period of time and fails to specifically state that he has lived in California since his marriage to Annie Lee. The court is unpersuaded by Plaintiff's argument. In paragraph 9 of Ma's affidavit, Ma states that "[s]ince our marriage, Ms. Lee and I have maintained separate finances and residences. My residence has been in California." When read in its proper context, it is apparent to the court that Ma intended to convey a single thought — that since his mamage to Annie Lee, he and his wife have maintained separate residences with his being in California.
Second, Plaintiff contends that Ma was employed by Fine Linens from 1990 through 1996. In this regard, Plaintiff presents evidence that Ma had a contract with Fine Linens to assist the company with trade shows, that Ma was compensated at $100 per day, and that his contractual relationship with Fine Linens dates back to 1990. See Pl.'s Resp. in Opposition to Def.'s Mot. to Dismiss, Exhibit A (Oral Deposition of Wayland Ma at 39). There is also evidence that Ma attended trade shows in Texas until 1994. Id.; see also Def's Reply to Pl.'s Resp. to Def.'s Mot. to Dismiss at 10 (Supplemental Declaration of Wai-Sai (Wayland) Ma). The record, however, is void of two important facts: 1) the number of trade shows Ma attended in Texas and 2) the location from which Ma performed a substantial part of his work for Fine Linens. This last fact is particularly important since Ma maintains that he has resided in California since his marriage to Annie Lee. Without these facts, the court is unable to conclude that Ma conducted regular business activities in Texas, or that his presence in Texas was continuous, systematic and substantial. Based on the evidence before it, the court concludes that Defendant's various unrelated contacts with Texas are insufficient to justify an assertion of general personal jurisdiction over him.
Ma, however, contends that he was an independent contractor rather than an employee of Fine Linens. See Def's Reply to Pl's Resp. to Def.'s Mot. to Dismiss at 10 (Supplemental Declaration of Wai-Sai (Wayland) Ma). Although Plaintiff presents no evidence to contradict this statement, the court will for the purpose of this analysis consider Ma as an employee of Fine Linens.
Because the court determines that Ma does not have sufficient related or unrelated minimum contacts with Texas, it need not address whether the exercise of personal jurisdiction in this case would be consistent with traditional notions of fair play and substantial justice. Belin, 20 F.3d at 650 n. 7.
III. Conclusion
For the reasons previously stated, because the parties lack complete diversity of citizenship the court lacks subject matter jurisdiction in this case. Moreover, even if the court did have subject matter jurisdiction, Plaintiff has failed to establish that Defendant has sufficient "minimum contacts" with Texas. Consequently, the assertion of personal jurisdiction over Defendant Ma would deprive him of his due process liberty interest not to be subjected to suit in a distant forum with which he has little connection. Accordingly, Defendant's Motion to Dismiss is hereby granted, and this action is hereby dismissed without prejudice. Judgment will be issued by separate document.
It is so ordered this 30th day of November, 2000.