Grene v. TD Digesters Inc.

Full title: Jeffrey Grene, Plaintiff, v. TD Digesters Inc., ORCA Digesters, Andrew…

Court: UNITED STATES DISTRICT COURT DISTRICT OF SOUTH CAROLINA BEAUFORT DIVISION

Date published: Mar 24, 2020

C/A 9:19-3263-BHH-BM (D.S.C. Mar. 24, 2020)

Opinion

C/A 9:19-3263-BHH-BM

03-24-2020

Jeffrey Grene, Plaintiff, v. TD Digesters Inc., ORCA Digesters, Andrew Lackmann and Louis Anagnostakos, Defendants.

Bristow Marchant United States Magistrate Judge

REPORT AND RECOMMENDATION

This action was originally filed by the Plaintiff, pro se, in the South Carolina Court of Common Pleas, Beaufort County. Plaintiff alleges causes of action against the Defendants for breach of contract, intentional interference with contractual relations, and negligent and intentional interference with prospective economic relations. The Defendants removed this case to Federal Court on November 19, 2019, asserting diversity jurisdiction in this Court. 28 U.S.C. § 1332.

Contemporaneous to their removal of this case to this Court, the Defendants filed a motion to dismiss the Complaint pursuant to Rules 12(b)(2), (4) and (5), Fed.R.Civ.P., on the grounds that this Court lacks personal jurisdiction over the Defendants and that the Plaintiff had failed to properly serve the Defendants. As the Plaintiff is proceeding pro se, a Roseboro order was entered by the Court on November 21, 2019, advising Plaintiff of the importance of a dispositive motion and of the need for him to file an adequate response. Plaintiff was specifically advised that if he failed to respond adequately, the Defendants' motion could be granted, thereby ending his case. Plaintiff thereafter filed a response in opposition to the Defendants' motion on November 26, 2019.

The Defendants' motion is now before the Court for disposition.¹

1 This case was automatically referred to the undersigned United States Magistrate Judge for all pretrial proceedings pursuant to the provisions of 28 U.S.C. § 636(b)(1)(A) and (B) and Local Rule 73.02(B)(2)(e), D.S.C. The Defendants have filed a motion to dismiss. As this is a dispositive motion, this Report and Recommendation is entered for review by the Court.

Allegations of the Complaint

According to the allegations of the Complaint, Plaintiff is a citizen and resident of South Carolina, the Defendant Lackmann is a citizen of New York, the Defendant Anagnostakos is a citizen of Canada, the Defendant TD Digesters Inc. is a corporation organized pursuant to Canadian law with its principal place of business in Ontario, Canada, and the Defendant ORCA Digesters is a corporation organized pursuant to the laws of Delaware, with its principal place of business in California. Plaintiff alleges that on July 17, 2017 he signed an agreement with TD Digesters Inc. (signed by Anagnostakos as "authorized signer"), which obligated the "Defendant" to pay a marketing fee of $7,500 per month for a period of five years, with the right of either party to terminate the agreement by giving ninety days notice. However, Plaintiff alleges that on August 1, 2019, the "Defendant" failed to pay the marketing fee, and denied Plaintiff access to the company's Outlook account and other marketing tools, without ever having giving him any notice of any kind.

Plaintiff alleges that the "Defendants" breached the contract, and that the Defendants Lackmann and Anagnostakos further "did send threats to Plaintiff if Plaintiff contacted any of its prospects". Plaintiff also alleges that § 5 of the agreement calls for the Defendants to pay a ten percent commission on all proceeds received by the company, and that Lackmann sent a schedule of commissions owed which totaled $24,812.60, but which the Defendants refused to pay. Plaintiff alleges that the Defendants acted with "malice, oppression and fraud when Defendants intentionally and in conscious disregard of Plaintiff's rights, deliberately interfered with Plaintiff's contacts and sought to deprive Plaintiff [ ] of [his] rightful proceeds from its economic relations with others". Plaintiff asserts claims for breach of contract and intentional tort, and seeks monetary damages.

Plaintiff has attached to his Complaint a copy of the "Independent Contractor Agreement" dated July 1, 2017, along with some other documents. The Complaint filed in State Court also has an attached Certificate of Service showing that Plaintiff served the Complaint by "mailing it to him/her, at his/her last known address, by depositing it in the U. S. Mail, in an envelope with sufficient postage affixed, addressed as follows: [addresses listed for each Defendant].

Rule 12(b)(2)

The Defendants initially move for dismissal pursuant to Rule 12(b)(2), Fed.R.Civ.P., for lack of personal jurisdiction. In deciding the Defendants' motion to dismiss under Rule 12(b)(2), the Court may rely on the parties' pleadings, affidavits, and other documents, and in doing so "the court must construe all relevant pleading allegations in the light most favorable to the Plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction". Combs v. Bakker, 886 F.2d 673, 676 (4^th Cir. 1989); see also Hawkins v. i-TV Digitalis Tavkozies ZRT, 935 F.3d 211 (4^th Cir. 2019) ["Unlike under Rule 12(b)(6), the court may also consider affidavits submitted by both parties, although it must resolve all factual disputes and draw all reasonable inference in favor of the party asserting jurisdiction."]; Sunny Days Entertainment, LLC v. Traxxas, L.P., 376 F.Supp. 3d 654, 658 (D.S.C. 2019) [Under 12(b)(2) motion, a court may consider pleadings, affidavits, and other evidentiary materials without converting motion to dismiss to a motion for summary judgment].

Defendants assert (and have provided affidavits to support), and Plaintiff does not appear to dispute, that none of the named Defendants are residents of South Carolina, and that at the time the parties entered into the contract at issue in this case, Plaintiff was a resident of Florida. Defendants further assert that they have no contacts in South Carolina so as to subject them to suit in this state, and are therefore entitled to dismissal of this case. The Defendants are correct that a federal courts exercise personal jurisdiction over a Defendant in the manner provided by state law; Rule 4(k)(1)(A), Fed.R.Civ.P.; ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 622 (4^th Cir. 1997); and that South Carolina's long-arm statute, S.C.Code Ann. § 36-2-803, requires that non-resident Defendants have sufficient minimum contacts with South Carolina so that maintenance of the action "does not offend traditional notions of fair play and substantial justice." Atlantic Soft Drink Co. of Columbia, Inc. v. South Carolina National Bank, 336 S.E.2d 876, 878 (S.C. 1985), quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); see also Gentry Tech. of S.C., Inc. v. Baptist Health, No. 11-1232, 2012 WL 847540 at ** 2-3 (D.S.C. May 21, 2014). The exercise of jurisdiction must not only be authorized under the state's long-arm statute, but must comport with the due process requirements of the Fourteenth Amendment. Carefirst of Maryland v. Carefirst Pregnancy Ctrs., 334 F.3d 390, 396 (4^th Cir. 2003). Factors to be considered in determining whether due process is satisfied include the interest of the State in exercising its jurisdiction over non-residents, as well as 1) the duration of the activity of the non-resident in South Carolina; 2) the character and circumstances of the commission of the non-resident's acts; and 3) the inconvenience resulting to the parties by conferring or refusing to confer jurisdiction over the non- resident. Atlantic Soft Drink Co., 336 S.E.2d at 878.

In support of the motion to dismiss, the Defendant Anagnostakos has submitted an affidavit in which he attests that he is the Chief Executive Officer of TD Digesters. Inc., and ORCA Digesters, Inc., that he is a citizen and resident of Toronto, Canada, and that he received the Complaint in this case, both personally and on behalf of Defendants TD Digesters. Inc., and ORCA Digesters, Inc., by regular mail on October 30, 2019. Anagnostakos attests that neither corporate Defendant owns any property, maintains any contracts within, does business within, or has availed themselves of the laws of the State of South Carolina at any time, and that he also personally does not own any property, maintain any contacts within, do business within, or availed himself of the laws of the State of South Carolina at any time. Anagnostakos further attests that at the time of the entry into the contract which is the subject of this Complaint, Plaintiff was a citizen and resident of the State of Florida, the contract anticipated that the Plaintiff would operate within the state of Florida, and that Plaintiff has not contracted on behalf of any Defendant with any customer in the state of South Carolina. Finally, Anagnostakos attests that neither he nor ORCA Digesters, Inc. have entered into any contractual relationship with the Plaintiff, and that neither he, TD Digesters, Inc. nor ORCA Digesters, Inc. have threatened to, or taken any action to, interfere with any contractual relations with any customer of the Plaintiff, whether in South Carolina or elsewhere. See generally, Anagnostakos Affidavit.

The Defendant Lackmann has also submitted an affidavit wherein he attests that he is the Sales Director for TD Digesters, Inc. and ORCA Digesters, Inc., and is a resident of New York City. Lackmann attests that he received the Complaint in this case by regular mail on either October 21 or October 22, 2019. Lackmanm attests that neither he nor TD Digesters, Inc. nor ORCA Digesters, Inc. owns any property, maintains any contracts within, does business within, or has availed themselves of the laws of the State of South Carolina at any time. Lackmann further attests that at the time of the entry into the contract which is the subject of this Complaint, Plaintiff was a citizen and resident of the State of Florida, the contract anticipated that the Plaintiff would operate within the State of Florida, and that Plaintiff has not contracted on behalf of any Defendant with any customer in the State of Florida. Further, Lackmann attests that he has not personally entered into any contractual relationship with Plaintiff, nor has he threatened to, or taken any action to, interfere with any contractual relations with any customer of the Plaintiff, whether in South Carolina or elsewhere. See generally, Lackmann Affidavit.

When personal jurisdiction is challenged pursuant to Rule 12(b)(2) (as is the case here) and the court considers the matter on the record, Plaintiff must only "make a prima facie showing of a sufficient jurisdictional basis in order to survive the jurisdictional challenge". Combs, 886 F.2d at 676. However, the undersigned does not find that Plaintiff has made such a showing in this case. As noted (and Plaintiff does not even dispute), none of the Defendants are residents of, or have any ties to, the State of South Carolina. Further, at the time Plaintiff entered into the contract with TG Digesters Canada Inc. (not with any of the other Defendants) Plaintiff was a resident of Florida, while the contract itself further specifically provides that the "provisions of this Agreement are made subject to all applicable laws, regulations, rules, requirements in accordance with the laws of State of Florida, United States of America", and that in the event of any dispute between the parties to the Agreement, the parties "may seek their rights and remedies subject to the courts of law in Florida, United States of America". See Exhibit [Independent Contractor Agreement], ¶ ¶ 30, 31. Pursuant to the Agreement, TG Digesters Canada Inc. contracted with the Plaintiff ("as an independent contractor") to broker sales of the ORCA System (a system to organically process food waste) within North America. There is nothing in this contract to show that any named Defendant transacted any business in this state, nor does Plaintiff even allege that any Defendant contracted to supply services or things in South Carolina, or otherwise availed itself of business in this state. Moreover, no Defendant owns property in South Carolina, or maintains any registered agent for service of process in South Carolina.

The only "minimum contacts" Plaintiff puts forth is that he continued to maintain contact with the Defendant Lackmann, Director of Sales, after he moved from Florida to South Carolina. See Plaintiff's Response, p. 1. While email, telephone, and mail contacts into a forum state can establish personal jurisdiction under some circumstances; cf. Heritage House Rests., Inc. v. Cont'l Funding Grp., Inc., 906 F.2d 276, 283-284 (7^th Cir. 1990) [Finding that personal jurisdiction existed where the defendants "reached out" to plaintiffs through telephone calls and mailings"]; such circumstances normally relate to more extensive types of contact, the forming of contracts between parties, or similar type processes. In this case, however, even if Plaintiff continued to have communications with Lackmann after he moved to South Carolina via emails or phone calls, or even mailings, such random and attenuated contacts are insufficient in and of themselves to warrant the exercise of personal jurisdiction over these Defendants in this case. See Asset Allocation and Management Co. v. Western Employers Ins. Co., 892 F.2d 566, 570 (7th Cir. 1989)[Holding that contacts with Illinois limited to "paying and complaining" are insufficient to establish personal jurisdiction over an out-of-state resident]; Barrett v. Catacombs Press, 44 F.Supp.2d 717, 729 (E.D.Pa. 1999)["Telephone communication or mail sent by a defendant [does] not trigger personal jurisdiction if they 'did not show purposeful availment'"], quoting Mellon Bank (east) Psfs, NA v. DiVeronica Bros., Inc., 982 F.2d 551, 556 (3rd Cir. 1993). In Barrett, the Court found that an exchange of emails between the Plaintiff and Defendant, without more, did not "amount to the level of purposeful targeting required under the minimum contacts analysis". Id., at 729. Such is the case here. Cf. Machulsky v. Hall, 210 F.Supp.2d 531, 542 (D.N.J. 2002)[Minimal email correspondence, "by itself or even in conjunction with a single purchase does not constitute sufficient minimum contacts"]; see also Diamond Health Care of Ohio, Inc. v. Humility of Mary Health Partners, 229 F.3d 448 (4th Cir. 2000); Reynolds v. Int'l Amateur Athletic Federation, 23 F.3d 1110, 1119 (6th Cir. 1994)["Use of interstate facilities such as the telephone and mail is a secondary or ancillary factor and cannot alone provide the minimum contacts required by due process"] (citations omitted); cf. Wells American Corp. V. Sunshine Elecs., 717 F.Supp. 1121 (D.S.C. 1989). Additionally, it would be manifestly unfair to require these Defendants, none of whom have any business contacts in South Carolina other than the Plaintiff (an independent contractor who sells ORCA systems for the Defendants nationwide) having moved here from Florida in 2018, to defend a lawsuit in this State. Mitan v. Pendarvis, No. 07-2762, 2008 WL 1930072, at * 3 (D.S.C. Apr. 30, 2008) ["The court's exercise of jurisdiction over a non-resident defendant comports with due process only if that defendant has sufficient minimum contacts with the forum state such that to require the defendant to defend its interest in that state does not offend traditional notions of fair play and substantial justice."]; see also Moore v. Novo Nordisk, Inc., No. 10-2182, 2011 WL 1085650, at * 1-2 (D.S.C. Feb. 10, 2011); ALS Scan, Inc. v. Digital Sevice Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002).

In sum, Plaintiff has failed to demonstrate that any named Defendant had sufficient minimum contacts with South Carolina such that the exercise of personal jurisdiction over them would comport with the requirements of due process, or that any named Defendant should have reasonably anticipated being hauled into court in South Carolina. Accordingly, the Defendants are not subject to personal jurisdiction in South Carolina, either as a matter of specific jurisdiction or general jurisdiction,² and their motion to dismiss for lack of personal jurisdiction should be granted.

2 Personal jurisdiction may arise through either specific jurisdiction or general jurisdiction. Under specific jurisdiction, a defendant may be sued in South Carolina if the litigation results from alleged injuries that arose out of, or related to, their conduct with South Carolina and those contacts were sufficient. Under general jurisdiction, a defendant's contacts or activities in the forum state are not the basis for the suit, but rather they may be sued where they purposely availed themselves of the privileged of conducting continuous and systematic business in South Carolina. CFA Inst. v. Inst. of Chartered Fin. Analyst of India, 551 F.3d 285, 292, n. 15 (4^th Cir. 2009); ALS Scan, Inc., 293 F.3d 711-712. Plaintiff has failed to make a prima facie showing of either jurisdictional basis sufficient to survive the motion to dismiss. Combs, 886 F.2d at 676 [Plaintiff must "make a prima facie showing of a sufficient jurisdictional basis in order to survive the jurisdictional challenge"].

Rule 12(b)(4) and (5)

Rules 12(b)(4) and (5) allow for dismissal of a party for insufficient process (4) and insufficient service of process (5). As this case was filed in the Court of Common Pleas for Beaufort County, sufficiency of service of process is determined by the applicable South Carolina service of process rule. See Redding v. Sun Printing Inc., No. 12-2113, 2013 WL 2149685 at * 2 (D.S.C. May 16, 2013). Rule 4(d)(8), S.C.R.Civ.P., provides that service of a summons and complaint may be made upon an individual or corporation by registered or certified mail, return receipt requested and delivery restricted to the address. The Defendants attest that they received service of process in this case by regular mail, and Plaintiff's own attached certificates of service indicate that service was accomplished on the Defendants by mailing the summons and Complaint to each Defendant at their last known address "in an envelope with sufficient postage affixed". Therefore, service requirements do not appear to have been met in this case.

Plaintiff states in his response to the Defendants' motion that he has "receipts for Certified Mail" (see response to motion, p. 2), but no such receipts have been either filed on the docket of this case or otherwise provided to the Court. While South Carolina service of process rules governing service on corporations (but not individuals) have been interpreted to include certified mail even in the absence of restricted delivery to the address, where the service was otherwise proper; see Colleton Preparatory Academy, Inc. v. Beazer East, Inc., 223 F.R.D. 401, 403 (D.S.C. 2004), aff'd ín part, rev'd in part sub norn., Colleton Preparatory Academy, Inc. v. Hoover Uníversal, Inc., 616 F.3d 413, 421 (4th Cir. 2010) [where registered agent received service of process, failure to employ "restricted delivery" certified mail does not defeat service]; even service on a corporation should be via certified mail, return receipt requested. Id., at 405.

Therefore, even if these Defendants were properly subject to suit in this District under the South Carolina long-arm statute, Plaintiff has failed to properly serve them with process in this case.

Conclusion

Based on the foregoing, it is recommended that the Defendants' motion to dismiss Plaintiff's Complaint be granted, and that this case be dismissed. However, this dismissal should be without prejudice. Cf. Myers v. Vanderbilt Mortgage and Finance, Inc., No. 19-351, 2019 WL 5855971 at * 2 (D.S.C. Aug. 28, 2019); Vitale v. Mimedx Group, Inc., et al., No. 19-529, 2020 WL 528021 (D.S.C. Feb. 3, 2020). This will preserve the pro se Plaintiff's ability to pursue his claims against the Defendants in a proper forum, assuming other legal requirements for any such litigation are met.

The parties are referred to the Notice Page attached hereto.

/s/_________

Bristow Marchant

United States Magistrate Judge March 24, 2020
Charleston, South Carolina

Notice of Right to File Objections to Report and Recommendation

The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. "[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'" Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4^th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note).

Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:

Robin L. Blume, Clerk

United States District Court

Post Office Box 835

Charleston, South Carolina 29402

Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).