Opinion
Civil Action No. 00-2991 SECTION "K"(1)
February 8, 2001
ORDER AND REASONS
Before the Court is a Motion to Dismiss filed, by defendant Midland 2000, Inc. ("Midland") (Doc. 4). Midland seeks the dismissal of this suit based on the Court's lack of personal jurisdiction over it or. alternatively, pursuant to the doctrine of forum non conveniens. The suit is one brought byBrokerwoodproducts International (U.S.), Inc. ("Brokerwood"), a Louisiana corporation, against Midland, a Canadian corporation, in Civil District Court for the Parish of Orleans. Brokerwood contends that Midland has breached "an exclusive contract" by which Brokerwood was to be the exclusive sales agent for Midland's cabinetry products in the U.S. Brokerwood alleges that Midland has failed to produce and deliver cabinets in a timely manner such that Brokerwood has suffered losses in excess of $5,000,000.00. Having reviewed the memoranda, pleadings filed and the relevant law, the Court finds that it lacks personal jurisdiction over Midland rendering the issue of forum non conveniens moot.
Background
The underlying facts are essentially not in dispute. Brokerwood is one of a number of "interrelated companies" whose stock is privately held by the "Shiell family of Montreal and New Orleans." (Defendant's Exhibit 1). Apparently, the "International Head Office Street Address of all Companies" is "Maison Brokerwood, 3814 rue St.-Denis, Montreal, Quebec H2W 2M2." (Exhibit 1).
In the opposition to this motion, plaintiff opines "The Statement of Facts recounted in Midland 200, Inc.'s . . . memorandum, is in the particulars relating to this motion, largely unobjectionable." Brokerwood's sole "objection" is that Midland did not note that Brokerwood's alleged "principal place of business" is in Louisiana. For this proposition. Brokerwood offers the phone directory listing of Brokerwood in New Orleans. As will be discussed more fully above, this assertion is not supported by any competent evidence-no affidavit is presented, no deposition testimony is proffered to explain the basis of such an assertion. As such, the record is devoid of proof as to the actual "principal place of business" of Brokerwood.
In the fall of 1998, William Shiell ("Shiell") contacted Teamworkers International Placement Agency, a Canadian corporation owned by Elie Khoury, to provide labor to Cabi-Fab, Inc. ("Cabi-Fab"), a Shiell business and a Quebec corporation that manufactured kitchen cabinets. After a period of negotiation, Fadi Khoury, Elie Khoury's brother, entered into "Master Agency Distribution Agreement" personally with Brokerwood on February 3, 1999 (Defendant's Exhibit 2). Khoury apparently agreed to produce cabinets which would be sold by Brokerwood. In this contract, Brokerwood is identified as a "duly incorporated company doing business at 3814 St. Dents, Montreal, Quebec H2W 2M2." The "applicable law" as stated in the contract is that of Quebec. ((Exhibit 2, ¶ 19) However, this paragraph also states "in the event that [Brokerwood] chooses to enforce its rights of payment as previously mentioned then the laws of the state in which such rights are to be enforced shall apply." The contract was executed in Canada. Under the terms of the contract, Fadi Khoury as "Manufacturer" granted to Brokerwood the exclusive agency for the sale of "its" product in the United States of America. Khoury as manufacturer was to collect payment from those orders placed and Brokerwood would receive approximately a 13% commission.
Teamworkers International Placement Agency ("Teamworkers") is a Quebec corporation that places labor on short and long term assignments to other business concerns. Its sole director and shareholder is Fadi's brother, Elie Khoury ("Khoury").
An identical contract was subsequently executed on September 15, 1999; however, in that contract, Midland 2000, Inc. is denoted as the "manufacturer" as opposed to Fadi Khoury personally. Fadi Khoury is the sole shareholder of Midland. The terms of the contract are identical. Brokerwood is identified with a Canadian address; the contract was executed in Canada; and there is a choice of law provision citing Quebec law as applicable, with the same caveat concerning enforcement of payment by Brokerwood.
Midland contends that from September 1, 1999 until February, 2000 Shiell provided no requests for production ("RFPs"). From February to May 200, $70,000 RFP's were submitted. CabiFab declared bankruptcy in May of 2000; Shiell then submitted RFP's in the amount of $430,000.00 for the period from May to August, 2000.
Shiell allegedly ordered Midland to finish production orders not completed by Cabi-Fab and demanded that they be done before orders originally made to Midland were completed. Brokerwood contends that Midland then began to lag behind in production and delivery of (and eventually ceased the production and delivery of) the cabinets, which resulted in loss of revenue and customers for Brokerwood. as well as exposure to legal liability for breach of contract.
Midland argues that because the bulk of its orders were from Cabi-Fab, Brokerwood failed to adhere to the Master Work Agreement's terms. The contract required Midland to collect revenue from sales of cabinets directly from the end-user and then remit a commission to Brokerwood. Instead, Midland alleges, Shiell Businesses collected the accounts receivable and forwarded payments to Midland. Midland argues that Brokerwood was in debt to Midland in the amount $198.615 by August of 2000, refused to make good on payments at that time and eventually ceased placing orders with Midland.
As noted, the instant suit was filed by Brokerwood in Civil District Court for the Parish of Orleans on August 30, 2000. On September 6, 2000, Midland took the first procedural steps necessary in order to sue Brokerwood in Canada. On October 6, 2000, this suit was removed by Midland to United States District Court for the Eastern District of Louisiana. Then, Midland instituted its own suit in Superior District Court for Montreal, Quebec on November 10, 2000. The instant motion was then filed by Midland.
With this as background, the Court will now turn to the issue of-whether there exist sufficient contacts to exercise jurisdiction over Midland.
Burden of Proof with Respect to Jurisdiction
"'[T]he party who seeks to invoke the jurisdiction of the district court bears the burden of establishing contacts by the nonresident defendant sufficient to invoke the jurisdiction of the court.'" Felch v. Transportes Lar-Mex SA DE CV, 92 F.3d 320 (5th Cir. 1996) citing Bullion v. Gillespie, 895 F.2d 213] at 216-17. The appellate court noted that pertaining to this burden, it is well established that where the district court rules on a motion to dismiss for lack of jurisdiction without conducting an evidentiary hearing, the plaintiff may bear his burden by presenting a prima facie case of jurisdiction. Id. In doing so, the Court must "accept the allegations of the complaint as true except as controverted by the defendant's affidavits, and conflicts in the affidavits are resolved in plaintiffs favor." Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784, 785 (5th Cir. 1990).
Personal Jurisdiction
A federal district court sitting in diversity may exercise personal jurisdiction only to the extent permitted a state court under applicable state law. Allred v. Moore Peterson, 117 F.3d 278, 281 (5th Cir. 1997). The Louisiana long-arm statute extends personal jurisdiction to the maximum limus permitted by due process. Pedelahore v. Astropark, Inc., 745 F.2d 346, 348 (5th Cir.), reh. denied, en banc, 751 F.2d 1258 (5th Cir. 1984). Due process advances a two-pronged test in order for the Court to exercise jurisdiction: (1) the nonresident must have minimal contacts with the forum state and (2) subjecting the nonresident to jurisdiction must be consistent with traditional notions of fair play and substantial justice. Id.; International Shoe Co. v. Washington, 326 U.S. 310, 316, (1945).
Mimmum contacts with the forum state can arise incident to either "specific jurisdiction" or "general jurisdiction." Marathon Oil Co. v. A.G. Ruhrgas, 182 F.3d 291, 295 (5th Cir. 1999). As noted by the Fifth Circuit:
The "minimum contact" prong of the inquiry may be further subdivided into contacts that give rise to "specific" personal jurisdiction and those that give rise to "general" personal jurisdiction. Exercise of specific jurisdiction is only appropriate when the nonresident's contacts with the forum state arise from or are directly related t the cause of action. General personal jurisdiction is found when the nonresident defendant's contacts with the forum state, even if unrelated to the cause of action, are continuous, systematic, and substantial.Id. Furthermore, with respect to general personal jurisdiction, the minimum contacts review is more demanding and broader and requires a plaintiff to demonstrate substantial activities in the forum state.
Brokerwood has not presented any affidavit or deposition testimony to establish facts that would be sufficient to give rise to this Court exercising jurisdiction over Midland. The Court was presented with a xerox copy of the local telephone listing for Brokerwood as "proof' of New Orleans being its principal place of business; however, there is no indication that Midland was ever informed of this "fact" or that indeed any telephone calls were ever placed by Midland to that telephone number. The other "proof" offered with respect to the type of contact that Midland has with Louisiana is approximately 50 invoices to demonstrate that Brokerwood's "nerve center" is in the Parish of Orleans. This exhibit, without any supporting affidavit, is inconclusive. The invoices are from Midland 200 Corp. in Quebec; the materials were "Sold to" Brokerwood International, U.S., Inc. of those 50 invoices, the first notes a Metairie address for Brokerwood. The next two invoices have a post office box in New Orleans as the purchaser. The next notes "Continental Kitchen Inc." as the person to whom the cabinets were sold with a handwritten note that this "was our showroom and distributor in New Orleans." There is no indication as to who wrote the notes and what personal knowledge the writer had of these circumstances. The rest of the invoices note as "sold to" Brokerwood Products Intl(US) Inc. in Westborough, MA. Some of these have handwritten notes that this address is not Brokerwood's address; that the proper address is "in N.O."
Furthermore, with respect to all of the invoices, only two invoices show goods were actually shipped to Louisiana. The total invoiced amount of those goods is less than $4500. Most of the cabinets were shipped to Washington, D.C., Virginia. Maryland and Massachusetts.
These actions by Midland as alleged and supported by Brokerwood fail to demonstrate "continuous" and "systematic" contacts for purposes of general personal jurisdiction. Other than the few invoices noted, which are not competent evidence as presented to the Court, there is no indication that Midland has had anything but sporadic contact with Louisiana. There is no allegation or proof of any visit to Louisiana made by Khoury; there is no proof of any telephone contact by Khoury in Louisiana. All of the activity outlined in the confection of the contract apparently centered in and occurred in Canada. The cabinets in question are made in Canada. Indeed the law of the contract is Canadian.
As to specific jurisdiction, it is true that "a single act" by a defendant directed at the forum state can be enough to confer personal jurisdiction if that act gives rise t the claim being asserted, Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 417 (5th Cir. 1993). Considering that two shipment of cabinets apparently were delivered to Louisiana and that some invoices were sent to Louisiana, there is an argument to be made that there might be sufficient contacts with respect to specific jurisdiction; however, the Court does not find such an argument overly persuasive in light of the sporadic nature of the alleged contacts. This case does not present a situation where on 211 occasions over a fifteen year period the manufacturer shipped equipment directly to locations in Texas. and on several occasions employees of the manufacturer met with customers in Texas as was the case in Ruston. Id. at 420-421. And the facts of this case are not analogous to a situation where a Washington manufacturer introduced thousands of steel castings into the stream of commerce with "no attempt to limit the states in which its casting would be sold and used," Bean Dredging Corp. v. Dredge Technology Corp., 864 F.2d 383, 386 (5th Cir. 1989). However, the Court finds that pretermitting whether it could exercise specific jurisdiction over Midland, plaintiff has not demonstrated that the assertion of personal jurisdiction would comport with "fair play and substantial justice"-that is the second prong of the test. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985).
When determining the fundamental fairness issue the Court normally examines
(1) the defendant's burden; (2) the forum state's interests; (3) the plaintiffs interest in convenient and effective relief; (4) the judicial system's interest in efficient resolution of controversies; and (5) the shared interest of the several states in furthering substantive social policies.Gundle Lining Const. Corp. v. Adams County Asphalt, Inc., 85 F.3d 201 (5th Cir. 1996). The Court will address these factors in turn.
In terms of the burden on Midland in proceeding in this Court, while it may not be as great a burden for a Canadian corporation as a Japanese one to proceed in the United States as noted in Aristech Chemical Intl. Limited v. Acrylic Fabricators Ltd., 138 F.3d 624 (6th Cir. 1998) (holding that the burden on a Canadian corporation is less onerous than the burden on other foreign defendants), it appears that both parties, most of the proof and most of the witnesses are in Quebec, and not Louisiana. The burden on Midland who has absolutely no real presence in Louisiana would be overwhelming.
See generally Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987);
As to Louisiana's interest in this matter, it is difficult for the Court to find this factor weighs in favor of finding jurisdiction. The Shiell companies put themselves out as being owned by the "Shiell family of Montreal and New Orleans." Obviously then, Canada would also have an interest in the resolution of this matter. While Brokerwood is a Louisiana corporation, it apparently conducts a large part of its business in Canada. Thus, it seems that while the forum state does have an interest in the status of corporations established under it laws, it has almost no interest in a dispute between what are essentially two Quebec parties, over a contract executed in Quebec that includes a choice| of-law provision establishing Quebec law as that law governing the agreement.
The next factor is the judicial system's interest in convenient and effective relief. Certainly, for all of the reasons previously stated, Quebec would be the most efficient place to litigate this matter. This suit is essentially a controversy between two Quebec parties that have established their agreement under the laws of Quebec. Secondly, and perhaps most importantly, the several states have an interest in having local controversies resolved locally. In this case "local" appears to be Quebec, not Louisiana. Indeed, the exercise of jurisdiction over Midland would be unfair and unreasonable.
Conclusion
This suit centers on the failure of a Canadian corporation to adhere to the terms of a contract. While it is true that Brokerwood was to act as agent for Midland for the sale of cabinets "in the United States", and there is an indication that Midland knew of the Louisiana office of Brokerwood, the record does not indicate that Midland would have known that Brokerwood was indeed a Louisiana corporation.
In this breach of contract action, apparently all of the relevant events took place in Quebec, and no wrongful acts expressly aimed at Louisiana are alleged. The Master Agreement lists Brokerwood with a Quebec address. In addition, all other Shiell businesses with which Midland or Khoury interacted are Quebec corporations. As noted, in a document submitted to this Court and purportedly prepared by a Shiell, it is suggested that all Shiell businesses may be reached at an address and phone number in Quebec. (Defendant's Exhibit 1). The Master Agreement was negotiated and executed in Quebec. The choice of law provision in the Master Agreement requires that Quebec law apply with the caveat concerning "rights of payment." Shiell and Fadi are both domiciled in Quebec and are apparently Quebec citizens. Under these circumstances, the Court cannot exercise jurisdiction over Midland. Accordingly,
IT IS ORDERED that Midland's Motion to Dismiss is GRANTED and judgment dismissing this case without prejudice shall be entered forthwith.