Opinion
Civil Action No. 3:01-CV-1523-BF
March 12, 2002
ORDER
The parties in the above-captioned case have consent trial before a United States Magistrate Judge, and the case has been transferred to United States Magistrate Judge Paul D. Stickney. Now before the Court is Defendants Communication Cable Co., John Black Paul Black's Motion to Dismiss for Lack of Personal Jurisdiction, filed December 6, 2001.
Factual and Procedural Background
Plaintiff first brought suit against Defendants in a Texas state court in May of 2001, and Defendants subsequently removed the action to the U.S. District Court in August of 2001. This Court considered Plaintiff's Motion to Remand, and subsequently denied that Motion on the grounds that Defendants' "Notice of Removal" was indeed timely filed, contrary to Plaintiffs assertions. Defendants now seek dismissal of this case for lack of personal jurisdiction on the grounds that Defendants lack sufficient contacts with the state of Texas to allow such jurisdiction.
Defendants are citizens of and are incorporated in the state of Pennsylvania. Further, Defendants reside in and maintain their only place of business in Pennsylvania. Plaintiff is a business entity having its principal office and place of business in Dallas County, Texas.
Paul Black Aff. at 2.
Pl. Orig. Pet. at 1.
Defendants argue that this Court lacks personal jurisdiction because Defendants have not maintained sufficient minimum contacts with the state of Texas to warrant this Court's exercise of such jurisdiction. Plaintiff argues that Defendants waived their right to object to the jurisdiction of this Court by filing their "Notice of Removal," and that Defendants have maintained contacts in Texas sufficient to satisfy jurisdictional requirements by making two or three contacts with Verizon's Dallas office, making one sales call to Dallas related to the Verizon sales, purchasing a few spools of wire in separate transactions with Plaintiff through Plaintiffs Minnesota office with payment being made to Texas at Plaintiffs request, calling the Plaintiff in Texas after viewing Plaintiffs advertisement on the internet, and corresponding with Plaintiffs in Texas via e-mail.
Analysis
I. Waiver
It is well-settled that a defendant is amenable to the personal jurisdiction of a federal court in a diversity case to the extent permitted by a state court in the state where the federal court sits. Brown v. Flowers Industries, inc., 688 F.2d 328, 331 (5th Cir. 1982); Terry v. Raymond Int'l, Inc., 658 F.2d 398, 401 (5th Cir. 1981); Gold-Kist, Inc. v. Baskin-Robbins Ice Cream Co., 623 F.2d 375 (5th Cir. 1980). The Fifth Circuit has interpreted Rule 12(h)(1) of the Federal Rules of Civil Procedure as providing that the defense of lack of jurisdiction over the person is waived (1) if omitted from a motion under 12(g); or (2) if it is neither made by motion under Rule 12 nor included in a responsive pleading or an amendment. Cactus Pipe Supply v. M/V Montmartre, 756 F.2d 1103, 1108 (5th Cir. 1985).
In this case, Defendants filed a special appearance for the purpose of presenting a Motion Objecting to Jurisdiction in Texas state court on August 6, 2001. By that special appearance, Defendants presented their Motion Objecting to Jurisdiction, challenging the state court's jurisdiction over each of the defendants, stating that neither the defendants nor their property "are amenable to process issued by the courts of Texas." Plaintiff argues that Defendants submitted to the jurisdiction of the District Court by stating in the "Notice of Removal" that the District Court had original jurisdiction over the matter.
The full title of the document is "Defendants' Special Appearance to Present Motion Objecting to Jurisdiction, and Subject to that Special Appearance, Defendants' Original Answer." See Def. Exhib. D4.
Id.
Plaintiff's Resp. at 2.
However, as Defendant points out, removal does not, in itself constitute a waiver of the right to object to personal jurisdiction. Morris Co. v. Skandinavia Ins. Co., 279 U.S. 405, 409, 73 L.Ed. 762, 49 S.Ct. 360 (1928). Therefore, by asserting an objection to the jurisdiction of the Texas state court, with such objection being raised prior to or at the time of the answer, Defendants did not waive their right to raise the lack of personal jurisdiction defense.
The Court now turns to the "minimum contacts" issue.
II. Minimum Contacts
A federal court sitting in diversity may assert jurisdiction if (1) the state's long arm statute applies, as interpreted by the state's courts; and (2) if due process is satisfied under the Fourteenth Amendment to the United States Constitution. Cycles, Ltd v. WJ. Digby, Inc., 889 F.2d 612, 616 (5th Cir. 1989); accord WNS, Inc. v. Farrow, 884 F.2d 200, 202 (5th Cir. 1989). The Texas long-arm statute has been interpreted by Texas Courts as extending to the limits of due process. See Bullion v. Gillespie, 895 F.2d 213, 215 (5th Cir. 1990) (citing WNS, 884 F.2d at 202.). As such, a non-resident's amenability to personal jurisdiction turns upon whether jurisdiction over the defendant would be permissible under the Fourteenth Amendment. Id. at 216.
The Due Process Clause of the Fourteenth Amendment permits the exercise of personal jurisdiction over a nonresident defendant when (1) that defendant has purposefully availed himself of the benefits and protections of the forum state by establishing "minimum contacts" with the forum state; and (2) the exercise of jurisdiction over that defendant does not offend "traditional notions of fair play and substantial justice." Mink v. AAAA Dev. LLC, 190 F.3d 333, 336 (5th Cir. 1999) (quoting Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999) (in turn quoting International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945))).
Minimum contacts with a forum state may arise incident to a federal court's "general" or "specific" jurisdiction over a nonresident defendant. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).
A. General Jurisdiction
The principle of general jurisdiction requires that the defendant have "continuous and systematic general business contacts" within the forum state. Helicopteros, 466 U.S. at 415-416. Additionally, those continuous and systematic contacts must exist at the time the cause of action arose or at the time the action was brought. Id.
Plaintiffs Response to Defendants' Motion to Dismiss focuses largely on specific jurisdiction, with little or no argument relating to general jurisdiction. Moreover, the Court has no facts before it suggesting that general jurisdiction should be exercised over Defendants. To the contrary, Defendants admit that Communication Cable had "two or three contacts with Verizon's Dallas office," and that Communication Cable made one sales call to Dallas related to the Verizon sales. Defendants assert that the Verizon transaction is now complete and that Communication Cable has had no further contacts with Texas since its completion. Additionally, Defendants have stated that "Communication Cable also purchased a few spools of wire in separate transactions with Plaintiff through [Plaintiffs] Minnesota office, with payment being made to, at the unilateral request of Plaintiff, Texas." Defendants further admit that Paul Black personally called Plaintiff in Texas after viewing Plaintiffs advertisement on the internet. Plaintiff makes no objection to such statements in its Response to Defendants' Motion, and Plaintiff in fact adopts these statements as true, adding only that in addition to the admitted activity, Defendants also engaged in e-mail correspondence with Plaintiffs.
Paul Black Aff. at 1.
Defendant's Motion to Dismiss, p. 7 n. 1.
Id.
Id.
In Plaintiff's Response to Defendants' Motion to Dismiss, Plaintiff states the following: "Defendants' own Affidavits admit to . . . contacts with the state of Texas. These facts are not disputed. Plaintiff agrees that Defendants had not only the contacts with the State of Texas as admitted, but also through e-mail." Plaintiff's Resp. at 5.
Based on these facts, it appears that Defendants have not maintained the contacts necessary in determining that this Court should exercise general jurisdiction over the Defendants. Defendants' previous two or three contacts with a sales office in Texas, along with one phone call related to that sale hardly constitute continuous and systematic general business contacts, as required by Helicopteros, 466 U.S. at 415-416. Thus, the Court turns to consideration of whether the exercise of specific jurisdiction is proper in this instance.
B. Specific Jurisdiction
In contrast to the theory of general jurisdiction, specific jurisdiction requires that the defendant purposefully direct activity at, or consummate some transaction in the forum state, and the cause of action must arise from or be connected with that transaction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). However, the defendant will not be subjected to the jurisdiction of a foreign court based solely upon attenuated contacts or the unilateral activity of others. Id. Rather, contacts justifying the exercise of jurisdiction must result from the nonresident defendant's own purposeful conduct directed at the forum. Id. An exchange of communications between a resident and a non-resident of the forum state in developing a contract is insufficient of itself to be characterized as purposeful activity invoking the benefits and protection of the forum state's laws. Stuart v. Spademan, 772 F.2d 1185, 1193 (5th Cir. 1985) (citing Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700 F.2d 1026, 1028 (5th Cir. 1983). cert. denied, 466 U.S. 962, 104 S.Ct. 2180, 80 L.Ed.2d 851 (1984). The agreement to mail payment checks into the forum state does not weigh heavily in the calculus of contacts. See Patterson v. Dietze, Inc., 764 F.2d 1145, 1147 (5th Cir. 1985); CH Transportation Co. v. Jensen Reynolds Construction Co., 719 F.2d 1267, 1270 (5th Cir. 1983), cert. denied, 466 U.S. 945, 104 S.Ct. 1930 (1984); Hydrokinetics, 700 F.2d at 1029.
As previously stated, Defendants' activities in the state of Texas relating to this litigation include a payment made to Texas at Plaintiffs request, and a call made to Plaintiff in Texas after viewing Plaintiffs advertisement on the internet. All other significant communications and contacts appear to have been made with Plaintiffs Minnesota office, with the exception of Defendants' alleged e-mail correspondence with Plaintiff in Texas.
Plaintiff's Resp. at 5. Plaintiff has alleged that in addition to Defendants' admitted contacts with the state of Texas, Defendants also corresponded by e-mail with Plaintiffs in Texas. Plaintiff has not provided the Court with information relating to the number of e-mails or the frequency with which Defendant allegedly corresponded with Plaintiff via e-mail. Additionally, Defendant has not expressly admitted to such correspondence. For purposes of this Motion, however, the Court will resolve this question of fact in favor of the Plaintiff.
Defendants' contacts with Plaintiff in Texas do not rise to the level required by Fifth Circuit case law in order to exercise specific jurisdiction over Defendants. See Hydrokinetics, 700 F.2d at 1028 (holding that personal jurisdiction was lacking over Defendant although Defendant corporation had agreed to purchase specific goods to be manufactured in Texas, payment for these goods was to be made in Texas, extensive communications were exchanged between the parties who were originally located in Texas and Alaska, and officers of the Defendant Alaska corporation traveled to Texas to close the deal); see also Stuart, 772 F.2d at 1192 (holding that Defendant who had shipped products to Texas and exchanged letters and telephone calls relating to the subject of the litigation was not subject to the exercise of personal jurisdiction); CH Transportation Co. v. Jensen Reynolds Construction Co., 719 F.2d 1267 (5th Cir. 1983) cert. denied, 466 U.S. 945, 104 S.Ct. 1930, 80 L.Ed.2d 475 (1984) (holding that the trial court lacked personal jurisdiction where Defendant placed a telephone call to the forum, there was movement of goods through the forum, and payment was made to the forum). As such, even if Defendants did indeed communicate with Plaintiffs via e-mail, in addition to the single payment mailed to Plaintiffs office in Texas and the single telephone call made by Defendants in response to an internet advertisement, there do not exist sufficient minimum contacts to exercise personal jurisdiction over Defendants, and it cannot be said that the activities of the parties to this action were centered on Texas. See Patterson v. Dietze, 764 F.2d 1145 (5th Cir. 1985). Moreover, the communications exchanged in developing the contract at issue are insufficient to constitute purposeful activity invoking the benefits and protection of the forum state's laws. Stuart 772 F.2d at 1193; Hydrokinetics, 700 F.2d at 1028.
CONCLUSION
Defendants' contacts within the state of Texas are insufficient to effect the exercise of personal jurisdiction. Defendants have not maintained the continuous and systematic contacts necessary to warrant general jurisdiction, and neither Defendants' exchange of communications in negotiating a contract, nor the forwarding of payment to Plaintiffs in Texas is sufficient to warrant specific jurisdiction. For these reasons, Defendants' Motion to Dismiss for Lack of Personal Jurisdiction is GRANTED, and Plaintiffs claims against Defendants are DISMISSED.