Opinion
Case No. 1:17cv613
09-30-2018
Richard Goettle, Inc., Plaintiff, v. Joy Global Conveyors, Inc., Defendant.
OPINION & ORDER
This matter is before the Court upon Defendant Joy Global Conveyor Inc.'s Rule 12(b)(2) Motion to Dismiss or, in the Alternative, Transfer Venue to the Western District of Louisiana. (Doc. 9). Plaintiff Richard Goettle, Inc. has filed a Response in Opposition (Doc. 13); and Defendant filed a Reply (Doc. 25).
I. BACKGROUND
Plaintiff brings breach of contract and unjust enrichment claims against Defendant based on Defendant's refusal to pay Plaintiff's final invoice for work Plaintiff performed at a lignite mine in Louisiana. Plaintiff filed its Complaint in the Court of Common Pleas in Hamilton County, Ohio on September 5, 2017. On September 13, 2017, Defendant removed its case to this Court. (Doc. 1).
According to the Complaint, Plaintiff provides commercial engineering, earth retention, pile foundation systems and other related services. (Doc. 3, ¶ 3). Plaintiff is located in Ohio. (Id., ¶ 3). In October of 2016, Plaintiff was contacted by American Electric Power ("AEP") at Plaintiff's Cincinnati office about a project which required the design and installation of two retaining walls for a truck dump ramp at AEP's plant in Louisiana. (Id., ¶ 5). Defendant was the contractor retained by AEP for the project and would be subcontracting out the work on the project. (Id.) Defendant designs, develops, manufactures, installs and supplies conveyor systems and components. (Id., ¶ 4). Defendant is located in Winfield, Alabama. (Id., ¶ 2).
On October 20, 2016, Defendant sent the terms and conditions of the contract between AEP and Defendant to Plaintiff in Cincinnati. (Id., ¶ 7). Defendant also solicited a bid proposal from Plaintiff for the work on the AEP project. (Id.) On November 8, 2016, Plaintiff submitted its bid proposal for the work to Defendant. (Id., ¶ 8). Plaintiff explains that "considerable work" was performed at its Cincinnati office to "design the retaining walls and to prepare its Bid Proposal for the work." (Id., ¶ 9). Plaintiff received acceptance of its bid proposal and started work on November 18, 2016. (Id., ¶ 10). In doing this work, Plaintiff "performed substantial services in Hamilton County, Ohio designing the two retaining wall system, preparing construction drawings, and performing other services required for its performance of the work." (Id., ¶ 12).
Plaintiff claims the wall system failed because Defendant used fill material which did not meet the specifications required by its design; and the fill was improperly installed by another subcontractor. (Id., ¶¶ 14-15). However, Defendant claims that the wall failed because Plaintiff's design was defective, and refuses to pay Plaintiff for the work. (Id., ¶ 20).
On October 2, 2017, Defendant filed a Motion to Dismiss based on lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), or, in the Alternative, Transfer Venue to the Western District of Louisiana. (Doc. 9).
On October 17, 2017, Defendant also filed a claim against Plaintiff in the United States District Court for the Western District of Louisiana. Joy Global Conveyors, Inc. v. Richard Goettle, Inc., Case No. 5:17-cv-1121. The Louisiana Court has stayed the action pending this Court's decision on Plaintiff's Motion to Dismiss or, in the Alternative, Transfer Venue to the Western District of Louisiana. --------
II. ANALYSIS
A. Standard of review
Federal Rule of Civil Procedure 12(b)(2) provides that a defendant may seek dismissal if the court lacks personal jurisdiction over that defendant. "The party seeking to assert personal jurisdiction bears the burden of demonstrating that such jurisdiction exists." Schneider v. Hardesty, 669 F.3d 693, 697 (6th Cir. 2012) (quoting Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002)). In the face of a supported motion to dismiss, the plaintiff may not rest on his pleadings, but must, by affidavit or otherwise, set forth specific evidence supporting jurisdiction. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991) (citing Weller v. Cromwell Oil Co., 504 F.2d 927, 930 (6th Cir. 1974)). When a court considers a motion to dismiss pursuant to Rule 12(b)(2) without an evidentiary hearing, as this Court does here, the plaintiff "'need only make a prima facie showing of jurisdiction.'" Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002) (quoting Neogen, 282 F.3d at 887) (internal citation omitted).
B. Forum selection clause
In its Response in Opposition, Plaintiff explains that under the forum selection clause in the contract between AEP and Defendant, Defendant submitted to personal jurisdiction in Ohio and agreed that Ohio is a proper venue for any litigation arising out of the contract.
The Ohio Supreme Court has held that "absent evidence of fraud or overreaching, a forum selection clause contained in a commercial contract between business entities is valid and enforceable, unless it can be clearly shown that enforcement of the clause would be unreasonable and unjust." Kennecorp Mortg. Brokers, Inc. v. Country Club Convalescent Hosp., Inc., 66 Ohio St. 3d 173, 176, 610 N.E.2d 987, 989 (Ohio 1993).
Defendant does not challenge the validity or the enforceability of the forum selection clause, but points out that Plaintiff relies upon the Terms and Conditions in a contract between Joy Global Surface Mining Inc. ("Surface") and Dolet Hills Lignite Company, LLC ("Dolet Hills Agreement"). (Doc. 25-1, Craig Hull Aff., ¶ 12 & Exh. 4). Defendant—Joy Global Conveyors Inc.—explains that it is a different entity from Joy Global Surface Mining, and is therefore not bound by the forum selection clause in the Dolet Hills Agreement.
Defendant also explains that Plaintiff's bid proposal did not incorporate the Terms and Conditions of the Dolet Hills Agreement. Plaintiff's bid proposal does not reference any provisions related to personal jurisdiction or governing law. (Doc. 3, PageID # 47-50). Defendant explains that the three purchase orders issued by Defendant to Plaintiff state that either Louisiana or Alabama is the governing law for the purchase order; and include forum selection provisions naming either Louisiana or Alabama. (Doc. 25-1, Hull Aff, Exhs. 5-7).
The Court concludes that the forum selection clause in the Dolet Hills Agreement does not govern the dispute between Plaintiff and Defendant. Therefore, the Court will turn to the personal jurisdiction analysis.
C. Personal jurisdiction
"Under Ohio law, personal jurisdiction over non-resident defendants is available only if (1) the long-arm statute confers jurisdiction and (2) jurisdiction is proper under the Federal Due Process Clause." Conn v. Zakharov, 667 F.3d 705, 712 (6th Cir. 2012) (citing Kauffman Racing Equip., L.L.C. v. Roberts, 126 Ohio St.3d 81, 930 N.E.2d 784, 790 (2010); Goldstein v. Christiansen, 70 Ohio St.3d 232, 638 N.E.2d 541, 543 (1994)).
Under Ohio's long-arm statute, a court "may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's . . . (1) Transacting any business in this state." Ohio Rev. Code § 2307.382(A).
The Ohio Supreme Court has interpreted "transacting" broadly:
"Transact," as defined by Black's Law Dictionary (5 Ed.1979) 1341, " * * * means to prosecute negotiations; to carry on business; to have dealings * * *." The word embraces in its meaning the carrying on or prosecution of business negotiations but it is a broader term than the word 'contract' and may involve business negotiations which have been either wholly or partly brought to a conclusion * * *.Ky. Oaks Mall Co. v. Mitchell's Formal Wear, Inc., 53 Ohio St. 3d 73, 75, 559 N.E.2d 477 (1990) (emphasis and omissions in original). In determining what constitutes "transacting business," courts typically consider two factors: (1) whether the defendant initiated the "business dealing," and (2) whether the parties conducted their negotiations in Ohio or with terms affecting Ohio. Thomas v. Dykstra, 309 F. Supp. 3d 480, 484 (N.D. Ohio 2018) (citing Shaker Constr. Grp., LLC v. Schilling, 2008 WL 4346777, at *3 (S.D. Ohio 2008)). In addition, the plaintiff must demonstrate there is a "substantial connection" between the defendant and the forum state. Id.
The Court notes that it was AEP who reached out to Plaintiff on October 4, 2016 regarding the construction of a soldier pile retaining wall for the truck dump in Louisiana. (Doc. 25-2, Larry Atkinson Aff., ¶ 2). No employee from Defendant went to Ohio to negotiate the contractual agreement between Plaintiff and Defendant. (Doc. 9-1, Larry Atkinson Aff., ¶ 17). Instead, Plaintiff's employees travelled multiple times to Louisiana during contract negotiations. (Doc. 9-1, Atkinson Aff., ¶ 8, 17). Other discussions were held through conference calls and emails. (Doc. 9-1, Atkinson Aff. ¶ 8, 9). Defendant maintains that Plaintiff performed the design work in Ohio to get the contract, not as part of the work performed under the contract. Defendant explains that the contractual agreement between the parties was centered on the construction of the soldier pile retaining wall at the mine in Louisiana. That construction work was performed by Plaintiff at the site in Louisiana. (Doc. 9-2, Craig Hull Aff., ¶ 5).
The Court concludes that these acts by Defendant do not constitute "transacting business" under Ohio's long-arm statute. Moreover, this Court's exercise of personal jurisdiction over Defendant would not be consistent with due process.
The Sixth Circuit has a three-part test for determining whether due process permits the exercise of personal jurisdiction over a defendant:
First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.Miller v. AXA Winterthur Ins. Co., 694 F.3d 675, 680 (6th Cir. 2012) (quoting S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968)).
"Due process requires that a defendant be haled into court in a forum State based on his own affiliation with the State, not based on the 'random, fortuitous, or attenuated' contacts he makes by interacting with other persons affiliated with the State." Walden v. Fiore, 571 U.S. 277, 134 S.Ct. 1115, 1123, 188 L.Ed.2d 12 (2014) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)). Defendant's contacts with Ohio came from Plaintiff being located in Ohio, not because the defendants sought to invoke the benefits and protections of Ohio law. See Nationwide Mut. Ins. Co. v. Tryg Int'l Ins. Co., 91 F.3d 790, 795-97 (6th Cir. 1996) (finding no purposeful availment of Ohio law even though the defendant sent an agent to Ohio, solicited business from an Ohio company, and realized profits from business in Ohio).
To "arise from" contacts with the forum state, those contacts must be "related to the operative facts of the controversy." MAG IAS Holdings, Inc. v. Schmuckle, 854 F.3d 894, 903 (6th Cir. 2017) (quoting Bird v. Parsons, 289 F.3d 865, 875 (6th Cir. 2002)). Here, the operative facts of the controversy are related to the construction of the soldier pile retaining wall in Louisiana.
Finally, in determining reasonableness, this Court must examine three factors: (1) the burden on the defendant; (2) the forum state's interest; and (3) the plaintiff's interest in obtaining relief. Schmuckle, 854 F.3d at 904 (citing City of Monroe Emps. Ret. Sys. v. Bridgestone Corp., 399 F.3d 651, 666 (6th Cir. 2005)). Defendant has no offices in Ohio and is headquartered in Alabama. The site of the performance of the contract is Louisiana. The Court concludes these factors show that exercising jurisdiction over Defendant would not be reasonable.
Therefore, the Court concludes that it does not have personal jurisdiction over Defendant and upon Defendant's Rule 12(b)(2) Motion to Dismiss is GRANTED.
D. Venue
Because the Court has found that it lacks personal jurisdiction, it need not address the Defendant's alternative motion regarding the transfer of venue.
III. CONCLUSION
Based on the foregoing, Defendant Joy Global Conveyor Inc.'s Rule 12(b)(2) Motion to Dismiss (Doc. 9) is GRANTED. There being no more matters before this Court, this matter is CLOSED.
IT IS SO ORDERED.
/s/ Michael R . Barrett
JUDGE MICHAEL R. BARRETT