Opinion
CIVIL ACTION 02-2564 SECTION "T" (4)
March 25, 2003
CIVIL ACTION
Before the Court is a Motion to Dismiss for Lack of Personal Jurisdiction under FRCP Rule 12(b)(2) filed on behalf of the Defendant, Baptist Health Systems, Inc. ("Baptist"). The Court, having entertained oral arguments, considered the arguments of counsel, the evidence presented, the law and applicable jurisprudence, is fully advised in the premises and ready to rule.
ORDER AND REASONS
I. BACKGROUND:
The Plaintiffs, Egan Nursing and Barry Eagan, filed their complaint with this Court on August 16, 2002. Jurisdiction is based on 18 U.S.C. § 1964, 28 U.S.C. § 1331, 1337, 1367(a) and the Court's Pendent Jurisdiction. The Plaintiff alleges claims based on 18 U.S.C. § 1961 (the "RICO" Act) as well as various theories of Louisiana law including but not limited to breach of contract, unjust enrichment, breach of fiduciary duty and negligence.
On or about November 4, 1999, the Southeast Medical Alliance, L.L.C. ("SMA") was acquired by the Venture Health Partnership Group, L.L.C. ("VHPG LLC"). The VHPG LLC is an HMO acquisition and management company comprised of the principals of the Sheur Management Group, Inc. ("SMG"). At the time of the acquisition, SMA was owned by East Jefferson General Hospital, West Jefferson Medical Center, Terrebonne General Medical Center, Slidell Memorial Hospital Medical Center, and the Tulane Educational Fund (hereinafter referred to collectively as the "Selling Entities"). The sale was finalized on December 31, 2000. The selling entities stated the reason for selling was to focus on health care provision rather than health care insurance. On April 24, 2000, VHPG LLC announced that the name of SMA had been changed to the "Oath of Louisiana."
Egan Nursing Services, Inc. provided an assortment of ancillary health care services including, but not limited too, home health care, infusion therapy, durable medical equipment, social works services, and various other therapies. Egan Nursing Services is solely owned by Peter Egan, Plaintiff, and his wife Pamela B. Egan. The Plaintiffs allege that Egan Nursing and, therefore, Peter Egan suffered economic loss due to the sale of SMA to the Defendant Barry Scheur and his entity, SMG.
The Louisiana Department of Insurance ("LDJ") placed The Oath for Louisiana in receivership in April, 2002. The Louisiana Insurance Code determines the process of liquidation. In accordance with liquidation procedure, the LDI filed a Petition for Liquidation and Injunctive Relief in April, 2002. The Nineteenth Judicial District Court of East Baton Rouge found that there were sufficient grounds for ordering liquidation and entered an Order of Liquidation on The Oath for Louisiana and Venture Health Partnership Group of Louisiana on May 29, 2002. The Plaintiffs allege that it contracted with The Oath of Louisiana and was owed approximately $853,000.00 when The Oath was placed in receivership.
II. ARGUMENTS ON BEHALF OF THE PARTIES:
A. ARGUMENTS OF BAPTIST IN SUPPORT OF MOTION TO DISMISS:
(1) Lack of Personal Jurisdiction pursuant to FRCP 12(b)(2):
The Defendant, Baptist, argues that the Court lacks personal jurisdiction over them. The Plaintiff has the burden of demonstrating that the forum court's jurisdiction over each named defendant. Personal jurisdiction may be either "general" or "specific." When the defendant's contacts with the form "arise from or are directly related to the cause of action," there is specific jurisdiction. See Lewis v. Fresne, 252 F.2d 352, 358 (5th Cir. 2001). "General jurisdiction exists when a defendant's contacts with the forum state are unrelated to the cause of action but are 'continuous and systematic.'" Mink v. AAA Dev., LLC, 190 F.3d 333, 336 (5th Cir. 1999) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). No specific jurisdiction exists because the Defendant was not a party to the contract between Egan and SMA/The Oath and had no knowledge of the contract or of the Plaintiffs prior to this action. No general jurisdiction exists over the Defendant because Egan has failed to prove that the non-resident Defendant had deliberately engaged in significant activities within, or has created continuing obligations between it and residents of Louisiana. The Defendant is a corporation registered, incorporated, and domiciled in the state of Alabama. The Defendant has never contracted or done business with either of the Plaintiffs and has none of the contacts that determine whether a defendant is present in a state. Egan, therefore, has not and cannot meet its burden.
B. ARGUMENTS OF EGAN IN OPPOSITION TO MOTION TO DISMISS:
The Plaintiffs argue that the Court has specific jurisdiction. Egan has never made any specific or general contact with Alabama but they were damaged in Louisiana by Baptist's actions. Baptist is as integral to the conspiracy as Scheur and SMG. Baptist has established minimum contacts with Louisiana through its conspiracy with Schuer and VHPG and should not be allowed to evade responsibility.
C. BAPTISTS' REPLY:
The Defendant argues that the Plaintiffs argument in their Opposition should be disregarded. Egan's Complaint and Opposition are devoid of any facts that would establish this Court's jurisdiction over Baptist. Egan has failed to meet its burden of proof.
III. LAW AND ANALYSIS:
Federal personal jurisdiction over a nonresident defendant may be asserted if: (1) the law of the forum state provides for the assertion of such jurisdiction; and (2) the exercise of jurisdiction under state law comports with the dictates of the Fourteenth Amendment Due Process Clause. Job v. ATR Marketing, Inc., 87 F.3d 751 (5th Cir. 1996). Under the Louisiana long arm statute, a court of this state may exercise personal jurisdiction over a nonresident on any basis consistent with the constitution of this state and the Constitution of the United States. La.R.S. 13:3201(B). Thus, the Louisiana long arm statute, in effect, merges the two part requirement for federal personal jurisdiction over a nonresident defendant and permits the exercise of that jurisdiction to the full extent allowed under the United States Constitution and the Due Process Clause of the Fourteenth Amendment. Id. See also Dalton v. RW Marine. Inc., 897 F.2d 1359 (5th Cir. 1990).
The Due Process Clause, "gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). The due process inquiry has two parts. First, for personal jurisdiction to exist the nonresident defendant purposefully must have established "minimum contacts" with the forum state such that it invoked the benefits and protections of the forum's law and thus reasonably could anticipate being haled into court there. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945); Holt Oil Gas Corp. v. Harvey, 801 F.2d 773, 777 (5th Cir. 1986). Second, one must determine that circumstances are such that the exercise of personal jurisdiction does not offend "traditional notions of fair play and substantial justice." Asahi Metal Industry Co. v. Superior Court of California, 480, U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); Gulf Consolidated Services v. Corinth Pipeworks. S.A., 898 F.2d 1071 (5th Cir. 1990).
"Minimum contacts" are established through either "specific" or "general" jurisdiction over the defendant. When a cause of action arises out of a defendant's purposeful contacts with the forum, mini mum contacts are found to exist and the court may exercise specific jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). On the other hand, a court may exercise general jurisdiction when a defendant's contacts with the forum state are "sufficiently systematic and continuous to support a reasonable exercise of jurisdiction," though the contacts with the state may be unrelated to the controversy. Stuart v. Spademan, 772 F.2d 1185, 1191 (5th Cir. 1985). Courts have held that minimum contacts must have a basis in "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefit and protection of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958); Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784 (5th Cir. 1990).
The determination of whether a district court may exercise its personal jurisdiction over a nonresident defendant is a question of law. All questions of jurisdictional facts must be resolved in favor of the party seeking to invoke the court's jurisdiction. Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 418 (5th Cir. 1993).
1. Specific Jurisdiction
When the court attempts to assert "specific jurisdiction" over a non-resident defendant, a "relationship among the defendant, the forum, and the litigation" is the essential foundation of specific jurisdiction. Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569 (U.S. 1977). There must be "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, (U.S. 1958). The "purposeful availment" element "ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts, . . . or the 'unilateral activity of another party or a third person.'" Burger King Corp. v. Rudzewics, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183 (U.S. 1985).
2. General Jurisdiction
Unlike the specific jurisdiction analysis, which focuses on the cause of action, the defendant and the forum, a general jurisdiction inquiry is dispute blind, the sole focus being on whether there are continuous and systematic contacts between the defendant and the forum. Helicopteros, 466 U.S. at 414, 104 S.Ct. at 1872. Due process requires that "continuous and systematic" contacts exist between the State and the foreign corporation to exercise general personal jurisdiction because the forum state does not have an interest in the cause of action. Id., 466 U.S. at 415-416, 104 S.Ct at 1872-73. The Supreme Court has only addressed the following two cases that have directly dealt with general jurisdiction:Perkins v. Benguet Consolidated Mining Company, 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952) and Helicopteros, supra.
In Perkins, the Court held that Benguet Mining's contacts with Ohio were continuous and systematic and were sufficient to hold them subject to personal jurisdiction in Ohio. Perkins, 342 U.S. at 448, 72 S.Ct. at 420. Due to the Japanese occupation of the Philippine Islands during World War II, Benguet Consolidated Mining Co. ("Benguet Mining") was forced to halt its mining operations. After being exiled from the Philippines, the companies' president, general manager, and principal stockholder returned to his home in Ohio where he conducted the company's business, which included drawing salary checks in which he used two Ohio banks to hold company funds, holding several directors' meetings, and reestablishing business in the Philippines after the occupation. The president of the Benguet Mining essentially "carried on in Ohio a continuous and systematic supervision of the necessarily limited wartime activities of the company." Perkins, 342 U.S. at 448, 72 S.Ct. at 419.
In Helicopteros, several American citizens where killed in a helicopter accident in Peru. The relatives of those citizens sued the foreign defendant, Helicopteros, in Texas state court. In dismissing the defendants for lack of general jurisdiction, the Court found that Helicopteros had never been authorized to do business in Texas, never had an agent for service of process in Texas, never solicited business in Texas, never signed a contract in Texas (although it did contract with residents of Texas several times), never had any employees based in Texas, never owned any real property in Texas, never maintained an office in Texas, did not maintain any records in Texas, and did not have any shareholders in Texas. Helicopteros, 466 U.S. at 411-12, 104 S.Ct at 1870-71. However, Helicopteros did have numerous contacts with Texas over a seven year period, which included purchasing helicopters, spare parts, and accessories from Bell Helicopters in Texas; sending prospective pilots to Texas for training; and visits to Bell by management and maintenance personnel of Helicopteros. Id., 466 U.S. at 4121, 104 S.Ct at 1870. Notwithstanding Helicopteros' contacts with Texas, the Court held that the contacts did not "constitute the kind of continuous and systematic general business contacts the Court found to exist in Perkins." Id., 466 U.S at 416, 104 S.Ct. at 1873. "Purchases and related trips, standing alone, are not a sufficient basis for a State's assertion of jurisdiction." Id., 466 U.S. at 417, 104 S.Ct. at 1874.
The Plaintiffs conceded, at oral argument, that no general jurisdiction exists over the Defendant, Baptist. The Court, therefore, must have specific jurisdiction over Baptist in order to deny the Defendant's Motion to Dismiss under FRCP 12(b)(2). The Plaintiffs, however, have failed to prove that the Defendant purposefully availed itself of this jurisdiction. The Defendant's Motion is hereby granted because the Court has neither general nor specific jurisdiction over the Defendant.
Accordingly,
IT IS ORDERED that the Defendant's, Baptist Health Systems, Inc., Motion to Dismiss for Lack of Personal Jurisdiction is hereby GRANTED.