Willow Bend, L.L.C. v. Blue Dot Corporation, et al

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Willow Bend, L.L.C. v. Blue Dot Corporation, et al

Doc. 0

Case: 09-31135

Document: 00511175191

Page: 1

Date Filed: 07/15/2010

IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
N o . 09-31135 S u m m a r y Calendar July 15, 2010 Lyle W. Cayce Clerk

W I L L O W BEND, L.L.C., P la in t iff ­ Appellant v. D O W N T O W N ABQ PARTNERS, L.L.C.; VINCENT J. GARCIA, D e fe n d a n t s ­ Appellees

A p p e a l from the United States District Court fo r the Eastern District of Louisiana

B e fo r e HIGGINBOTHAM, DENNIS, and SOUTHWICK, Circuit Judges. P A T R I C K E. HIGGINBOTHAM: O u r plaintiff wants a federal court in Louisiana to assert specific personal ju r is d ic t io n over a New Mexico resident and a New Mexico partnership so that it may bring claims of breach of contract and breach of a fiduciary duty. As n e ith e r defendant remaining in this appeal was an actual party to that contract o r otherwise assumed a fiduciary duty to the plaintiff, we affirm the district c o u r t's dismissal for want of jurisdiction. I W illo w Bend, a Colorado limited liability company whose members reside in both Colorado and Louisiana, held an option to purchase a parcel of land in S t . John the Baptist Parish, in the Eastern District of Louisiana. In the fall of

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2 0 0 6 , it began negotiating with a New Mexico resident, Vincent J. Garcia, for a jo in t venture arrangement to assist in the property's financing. Garcia, the p r e s id e n t of Blue Dot--a New Mexico corporation--and managing partner of D o w n t o w n ABQ Partners--a New Mexico partnership--indicated that one of the t w o entities would assist in purchasing the property. A month's worth of negotiations later, Willow Bend and Blue Dot--but not D o w n t o w n ABQ or Garcia in his personal capacity--entered into a financing a g r e e m e n t. By the contract's terms, Blue Dot was to either profit from the s u b s e q u e n t resale of the property to a third-party purchaser or, failing a sale, b e c o m e a 65 percent owner in the property. Garcia, acting on Blue Dot's behalf, t w ic e visited the state to inspect the property. He and his representatives spoke w it h Louisianan attorneys, brokers, and real estate agents concerning the p r o p e r t y , Blue Dot's intent to finance the purchase of it, and financial and zoning d e t a ils related to the planned purchase. The contract Blue Dot signed chose L o u is ia n a law. A s it happened, the would-be third-party purchaser pulled out, and Blue D o t was unable to fund the purchase price to obtain its 65 percent ownership s t a k e . Willow Bend sued Garcia, Blue Dot, and Downtown ABQ for breach of c o n t r a c t and breach of fiduciary duty in the Eastern District of Louisiana. The d is t r ic t court found personal jurisdiction lacking as to Garcia and Downtown A B Q and dismissed them from the lawsuit. Satisfying itself of its jurisdiction o v e r Blue Dot, the court then entered a judgment for money damages in the a m o u n t of $2,425,000 against the New Mexico corporation and in Willow Bend's fa v o r . Unhappy with this result, Willow Bend timely appealed the district c o u r t's dismissal of Garcia and Downtown ABQ for want of jurisdiction. II A federal district court in Louisiana sitting in diversity may exercise p e r s o n a l jurisdiction over a non-resident defendant if (1) the defendant has p u r p o s e fu lly availed himself of the protections and benefits of Louisiana by 2

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e s t a b lis h in g "minimum contacts" in the state, and (2) the exercise of the ju r is d ic t io n complies with traditional notions of "fair play and substantial ju s tic e ."1 Though minimum contacts may give rise to either "general" or

" s p e c ific " jurisdiction, Willow Bend pushes only the latter, which exists when the " p la in tiff's cause of action"--in the present case, footed on theories of breach of c o n t r a c t and fiduciary duty--"arises out of or results from the defendant's forumr e la t e d contacts." 2 F a it h fu l to the adage that "[e]ach defendant's contacts with the forum S t a te must be assessed individually,"3 the district court examined the defendants o n e at a time. Blue Dot, the court concluded, was obliged to defend Willow B e n d 's lawsuit because, as we have mentioned, it had contracted to finance the p u r c h a s e of a plot of land in the state; Garcia--acting as the corporation's p r e s id e n t-- tw ic e visited Louisiana; and Garcia and other Blue Dot

r e p r e s e n t a t iv e s repeatedly contacted Louisianans about the property. And, a g a in , the contract--on which Willow Bend's claims are based--chose Louisiana la w . Downtown ABQ, conversely, was not a party to that contract: it is a legal e n tit y separate and apart from Blue Dot, and had only one contact with the state in its name--the ordering of an appraisal for the property from a Louisiana firm.

See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476­77 (1985) (quotation marks omitted). The Louisiana long-arm statute must confer personal jurisdiction over the defendant and the exercise of personal jurisdiction must comport with due process under the United States Constitution. See Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999). Because the Louisiana long-arm statute extends to the limits of due process, we collapse the two-step inquiry into a single question: Would the exercise of personal jurisdiction over the defendants be permissible under the Due Process Clause of the Fourteenth Amendment? See LA. REV. ST A T . ANN. § 13:3201(B) (2010); Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 242­43 (5th Cir. 2008). Resolving all disputed facts submitted by the plaintiff, as well as all facts contested in the affidavits, in favor of jurisdiction, we review the district court's dismissal for lack of personal jurisdiction de novo. See McFadin v. Gerber, 587 F.3d 753, 758 (5th Cir. 2009). Willow Bend must make only a prima facie showing of the predicate facts. See id.
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See Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 2006). Calder v. Jones, 465 U.S. 783, 790 (1984).

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A far cry from "minimum contacts," to be sure. As for Garcia, the district court o b s e r v e d that he too was a non-party to the financing agreement, finding "no e v id e n c e " that it would be reasonable to pierce the corporate veil and hold Garcia in d i v id u a lly liable or to conclude that Garcia acted in his individual capacity d u r in g contract negotiations. F o r reasons unexplained, Willow Bend acquiesces to the district court's fir s t conclusion--that no cause exists to veil pierce and hold Garcia accountable u n d e r Willow Bend's contract with Blue Dot--complaining only that it has " s u b m it t e d affidavits establishing that Garcia acted on his own behalf as well as o n behalf of his two corporate entities when he conducted activities in the forum s t a t e ." This, Willow Bend says, demonstrates that Garcia was "transacting b u s in e s s " in Louisiana and is now amenable to suit there. But because these a c t iv it ie s fell short of consummating a contractual relationship in Garcia's p e r s o n a l capacity or on Downtown ABQ's behalf, Willow Bend is left arguing t h a t "[t]he only distinction between Blue Dot and the other defendants is that B lu e Dot was party to a written agreement to buy Louisiana property." Y e t that written agreement is no throwaway: in fact, it is the critical forum c o n t a c t in this case, and the linchpin of the district court's exercise of jurisdiction o v e r Blue Dot. Willow Bend's winning breach of contract and breach of fiduciary d u t y claims against Blue Dot arose out of and resulted from Blue Dot's primary c o n t a c t with the state of Louisiana--its contract with Willow Bend. Without a c o n t r a c t tying the non-signatories Garcia and Downtown ABQ to Willow Bend's c la im s against them, however, those claims share an inadequate nexus to the fo r u m : they did not "arise out of or result from" the defendants' contacts with the s t a t e of Louisiana. In fact, those claims failed to arise altogether. Willow Bend s u e d for breach of contract and breach of fiduciary duty, after all, and a d e fe n d a n t cannot be said to have breached a contract it never made or to have s k ir t e d a duty it never assumed. Unlike Blue Dot, neither Garcia nor Downtown A B Q can be sued for breach of contract in this action because they were simply 4

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n o t parties to any contract with Willow Bend, while, for the same reason, Garcia o w e d no individual fiduciary duty to Willow Bend and so could not have b r e a c h e d that either.4 Willow Bend contracted with Blue Dot--and Blue Dot a lo n e -- a n d it is with Blue Dot that its claims for breach of contract and breach o f fiduciary duty must lie. A s this case demonstrates, specific jurisdiction is bound up with the claim a s s e r t e d -- it is claim-specific.5 Had Willow Bend put forth claims independent o f a contractual relationship--common law fraud, for instance--nothing said t o d a y would have necessarily precluded a finding of personal jurisdiction over

Willow Bend baldly asserts that "Garcia negotiated and promised to provide funds to permit the purchase of the Louisiana property in exchange for undivided interests in it," but it was Blue Dot--not Garcia or Downtown ABQ--that entered a written agreement with Willow Bend. And it is this contract, in which Blue Dot agreed to assist in financing the purchase of Louisiana real property and to litigate any resultant disputes under Louisiana law, that forms the basis of Willow Bend's claims. Willow Bend also claims that, "[a]t Garcia's request, Willow Bend's attorneys drafted documents to form Willow Bend NM Developments, LLC, with Willow Bend and [Downtown] ABQ as the sole members of the new limited liability company, which would become the owner of the property." But this agreement was never executed, and by all accounts it would have formed under the laws of New Mexico. For his part, Garcia did not so much as guarantee Blue Dot's contractual performance under the financing agreement between Blue Dot and Willow Bend. See Forsythe v. Overmyer, 576 F.2d 779, 784 (9th Cir. 1978) (finding personal jurisdiction over the chairman and sole stockholder of the defendant corporation because the chairman had personally guaranteed the corporation's contract with the plaintiff). In Louisiana, a cause of action for breach of fiduciary duty is subject to the ten-year prescriptive period typically associated with the enforcement of contractual rights. See Barksdale v. Lincoln Builders, Inc., 32,857 (La. App. 2 Cir. 6/21/00); 764 So.2d 223, 232, writ denied, 00-2646 (La. 2/9/01); 785 So. 2d 821.
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Seiferth, 472 F.3d at 274­75.

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G a r c ia .6 But Willow Bend did not so the district court's order dismissing Garcia a n d Downtown ABQ from this action is AFFIRMED.

See Calder, 465 U.S. at 789­90 (holding that a reporter's allegedly libelous article, written about a forum resident and distributed by the reporter's employer in the forum state, was an intentional act directed at the forum state that justified jurisdiction there); Seiferth, 472 F.3d at 272 (5th Cir. 2006) (stating, in a wrongful death suit, that it was "immaterial" whether the defendant acted within the scope of his employment because he directly committed the allegedly tortious action in the forum state); Lewis v. Fresne, 252 F.3d 352, 359 n.6 (5th Cir. 2001) (recognizing specific jurisdiction over the president of the defendant corporation as to the plaintiff's fraud claim because the president "deliberately misled" the plaintiff in order to get the money needed to keep the corporation "afloat"); Gen. Retail Servs., Inc. v. Wireless Toyz Franchise, LLC, 255 F. App'x 775, 794­95 (5th Cir. Oct. 5, 2007) (unpublished) (finding specific personal jurisdiction over non-resident corporate officer who sent allegedly fraudulent marketing materials to plaintiff in forum state); see also Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984) ("In Calder v. Jones, we today reject the suggestion that employees who act in their official capacity are somehow shielded from suit in their individual capacity. But jurisdiction over an employee does not automatically follow from jurisdiction over the corporation which employs him.") (internal citation omitted).

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