Opinion
Civil Action No. 3:01-CV-0987-D
December 5, 2001
MEMORANDUM OPINION AND ORDER
In this declaratory judgment action brought by plaintiff U.S. Restaurant Properties Operating L.P. ("USRP") against defendant Aloha Petroleum, Ltd. ("Aloha"), Aloha moves to dismiss for lack of in personam jurisdiction. For the reasons set forth below, the court holds that it lacks personal jurisdiction over Aloha and dismisses the suit without prejudice.
Aloha moves in the alternative to dismiss for improper venue under Fed R. Civ. P. 12(b)(3) or to transfer the case pursuant to 28 U.S.C. § 1406(a) to the District of Hawaii. Because the court holds that it lacks personal jurisdiction, it need not address the alternative grounds of Aloha's motion.
I
USRP sued Aloha in state court seeking a declaration of USRP's rights under a Guaranty Agreement ("Guaranty") entered into between Aloha and USRP. Aloha removed the case to this court based on diversity of citizenship. USRP and Aloha entered into the Guaranty as part of a set of related transactions involving the acquisition by BC Oil Ventures LLC ("BC Oil") and various affiliates of USRP, Inc. of petroleum marketing assets located on the Hawaiian island of Oahu from Equilon Enterprises LLC. Under the Guaranty, Aloha guarantied BC Oil's obligation to pay rent to USRP under leases for 27 premises on the Island of Oahu. BC Oil later filed for bankruptcy in California. USRP, as landlord, is now attempting to find substitute tenants for the 27 Oahu properties. Aloha advised USRP that it has the right under the terms of the Guaranty to maintain the Aloha brand at the stations formerly leased by BC Oil and/or to serve as a substitute tenant. USRP seeks a declaration that Aloha has no such right.
II A
The determination whether a federal district court has in personam jurisdiction over a nonresident defendant is bipartite: the court first ascertains whether the law of the state in which it sits confers jurisdiction over the person of the defendant; if it does, the court then decides whether the exercise of jurisdiction would comport with the basic due process requirements of the United States Constitution. See InterFirst Bank Clifton v. Fernandez, 844 F.2d 279, 282 (5th Cir. 1988), modified on other grounds, 853 F.2d 292 (1988). Because the Texas long-arm statute extends to the limits of due process, see Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991), the court considers only whether exercising jurisdiction over Aloha satisfies the due process requirements imposed by the Constitution. See InterFirst Bank, 844 F.2d at 282.
The due process inquiry further divides into two parts: the first is whether the nonresident defendant purposefully established "minimum contacts" with Texas; if so, the second is whether the exercise of jurisdiction results in "fair play and substantial justice." Id. (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 105 (1987); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)).
A defendant's contacts with the forum may support either specific or general jurisdiction over the defendant. See id. at 283. A court has specific jurisdiction if the suit arises out of or is related to the defendant's contacts with the forum state. Id. A court may exercise general jurisdiction, even if the suit does not arise out of contacts with the forum state, if the defendant has maintained "continuous and systematic" contacts with the forum. Id.
The unilateral activity of a plaintiff cannot form the basis for the exercise of jurisdiction over a nonresident defendant. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298 (1980) (citing Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Rather, the nonresident must purposefully avail itself of the benefits and protections of the forum's laws. Id. at 297. The defendant's contacts with the forum state must be such that it should "reasonably anticipate being haled into court there." Id; Union Carbide Corp. v. UGI Corp., 731 F.2d 1186, 1190 (5th Cir. 1984).
Where, as here, the court considers the motion to dismiss without conducting an evidentiary hearing, USRP, as the party who seeks to invoke this court's jurisdiction, shoulders only the burden of proving a prima facie case for jurisdiction. See Bullion v. Gillespie, 895 F.2d 213, 216-17 (5th Cir. 1990); Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th Cir. 1993) ("Plaintiffs typically carry the burden of proof on personal jurisdiction by making a prima facie showing. The district court usually resolves the jurisdictional issue without conducting a hearing." (footnote omitted)). The uncontroverted allegations of plaintiff's complaint are to be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in plaintiffs favor for the purpose of determining whether a prima facie case for personal jurisdiction exists. See Brown v. Flowers Indus., Inc., 688 F.2d 328, 332 (5th Cir. 1982).
B
USRP contends that Aloha is subject to both specific and general in personam jurisdiction in Texas. See P. Am. Br. at 9-11, 11-12.1
USRP has failed to establish a prima facie case that Aloha has engaged in the type of continuous and systematic contacts with Texas that is necessary to support general jurisdiction. The record indicates that Aloha is a Hawaii corporation with its principal place of business in Honolulu, see Am. Not. of Rem. 3, that Aloha's principal activity is marketing retail gasoline in the state of Hawaii, and that Aloha has never distributed, sold, or marketed gasoline in Texas or had any other continuous or systematic contacts with the state of Texas, see D. App. 3-4, 11-12 (reproducing affidavits of two senior Aloha officers attesting to firm's limited degree of contact with state of Texas). Aloha is not subject to general jurisdiction in Texas.
2
Nor has USRP made a prima facie showing of specific jurisdiction. The transactions that led to the execution of the Guaranty and events that occurred subsequent to the BC Oil bankruptcy filing form the primary basis for USRP's contention that Aloha is subject to specific personal jurisdiction in Texas. Specifically, USRP contends the Guaranty and related agreements were "negotiated with U.S. Restaurant representatives in Dallas, Texas[.]" P. Am. Br. 3. The evidence offered in support of this factual assertion-an affidavit given by a senior USRP official who was in part responsible for negotiating the agreements in question-indicates that only the USRP officials were physically present in Dallas and that the negotiations took place exclusively by telephone, facsimile, Federal Express, and U.S. mail. See P. App. 4. Uncontradicted evidence indicates that USRP officials traveled to Honolulu, Hawaii in order to execute the documents. See D. App. 6, 14.
As further support for its argument that personal jurisdiction may be asserted over Aloha in Texas for the declaratory judgment claim, USRP points to a choice-of-law clause contained in the Guaranty that provides that the agreement "shall be governed by the laws of the state of Texas." USRP also argues that, because its principal place of business is in Texas, the agreement contemplates that Aloha's performance under the Guaranty would be rendered in Texas because payments would be sent here. Finally, USRP relies on a trip that senior Aloha executives made to USRP headquarters in Dallas to discuss the parties' relationship, particularly the Guaranty and the operations of the bulk loading gasoline terminal that is the subject of a related agreement, after BC Oil began experiencing financial difficulties.
The Guaranty does not, however, contain a clause selecting Texas as the forum in which disputes relating to the agreement are to be litigated.
Taken as a whole, these contacts by Aloha with the state of Texas are insufficient to support the exercise of specific jurisdiction in a manner that would be consistent with the constitutional standards governing personal jurisdiction. In Stuart v. Spademan, 772 F.2d 1185, 1193 (5th Cir. 1985), the Fifth Circuit stated that "an exchange of communications between a resident and a nonresident 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." The evidence regarding the parties' long-distance communications leading up to the formation of the contract is therefore insufficient to support the exercise of personal jurisdiction over Aloha in Texas. Similarly, the choice-of-law clause that provides that Texas law governs the Guaranty does not of itself support personal jurisdiction in an action based on the contract. See id at 1195 ("At best, the choice-of-law provision may be said to represent yet one more of several contacts, which taken in their totality are insufficient to support personal jurisdiction."). The meeting between Aloha and USRP executives in Dallas following the emergence of a dispute cannot weigh in favor of specific jurisdiction because USRP does not allege that its claim arises out of, or relates to, any of the actions taken here. The present declaratory judgment action would still fail to arise out of, or relate to, Aloha's conduct in Texas even if the record indicated that at the Dallas meeting Aloha first asserted the rights under the contract that are the basis of the dispute. See Thousand Trails, Inc. v. Foxwood Hill Prop. Owners Ass'n., Inc., 1999 WL 172322, at *3 (N.D. Tex. Mar. 22, 1999) (Fitzwater, J.) (holding that, for purposes of personal jurisdiction, plaintiff's declaratory judgment action did not arise out of defendant's threats to commence litigation that were made in Texas).
This leaves as the remaining ground USRP's contention that Aloha was to perform the Guaranty in Texas. Even if it is assumed-despite the absence of a specific provision stating so-that the Guaranty contemplates that Aloha was to perform its obligations in Texas, this basis for in personam jurisdiction is inadequate because USRP's suit does not arise out of or relate to this contact with the forum. The performance that Aloha must render under the Guaranty is the payment of money. USRP is not suing Aloha to recover unpaid guaranty payments or even to obtain a declaratory judgment that concerns an aspect of Aloha's obligation to make such payments. According to USRP's state court petition, which in this removed action is the operative pleading, Aloha notified USRP that it believes it has certain rights that pertain to the leased properties in Hawaii that would prohibit USRP from dealing directly with or reletting the 27 leased stores without Aloha's agreement. See Pet. at ¶ 5. USRP thus seeks a declaratory judgment that it can deal with substitute tenants and execute substitute agreements with tenants without Aloha's having any rights under the substitute lease agreements or modifications under the terms of the Guaranty except for payment credits. See id. at ¶ 6. It contends that Aloha does not have rights related to reletting or branding the premises. See id at ¶ 7. USRP requests that the court declare that it can and has the right to relet any of the premises to anyone, upon such terms as it deems appropriate, and that it is not required to negotiate any type of fuel agreement in connection with such reletting, that Aloha has no rights to be substitute tenant or to post its brand on the stores, and that Aloha does not have any rights or agreements in connection with the leased premises described in the Guaranty except the right to a credit on any liabilities it may have for rentals that are paid as a result of any reletting. See id. at ¶ 10. The requested relief does not arise out of or relate to Aloha's contact with Texas in the form of payments under the Guaranty.
Even if it is assumed arguendo that USRP's suit arises out of or relates to Aloha's obligation to make indemnity payments in Texas, the totality of the circumstances would still be insufficient to support the exercise of personal jurisdiction in Texas. See Stuart, 772 F.2d at 1193 (holding personal jurisdiction lacking where defendant mailed payments into forum state, engaged in communications surrounding execution and performance of contract, and contract provided that law of plaintiff's home state governed suits relating to contract).
* * *
Accordingly, for the reasons stated, the court grants Aloha's August 30, 2001 motion to dismiss and dismisses this action without prejudice by judgment filed today.