Bank of America et al v. Patel

Filing 16

MEMORANDUM OPINION AND ORDER denying 4 motion to dismiss, as further set out in order. Signed by Hon. Chief Judge Mark E. Fuller on 12/7/10. (Attachments: # 1 civil appeals checklist)(djy, )

-CSC Bank of America v. Patel

Doc. 16

IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF ALABAMA N O R T H E R N DIVISION B A N K OF AMERICA, P L A IN T IF F , v. G O R D H A N B H A I C. PATEL, DEFENDANT ) ) ) ) ) ) ) ) )

C A S E NO. 2:10-cv-735-MEF (W O - Publish)

M E M O R A N D U M OPINION AND ORDER T h is is an action to collect on a loan from the borrower's guarantor. This cause is p re s e n tly before the Court on a Motion to Dismiss (Doc. # 4) filed on October 4, 2010 by that g u a ra n to r, Gordhanbai Patel ("Patel"). Patel contend that this action is due to be dismissed o r transferred to his home state because this Court lacks personal jurisdiction over him. The C o u rt has carefully considered the submissions in support of and in opposition to the motion. F o r the reasons set forth below, the Court find that the motion is due to be DENIED. FACTUAL AND PROCEDURAL BACKGROUND M o n tg o m e ry Hospitality, L.L.C. ("Montgomery Hospitality"), is a limited liability c o m p a n y which owns and operates a hotel property located in Montgomery, Alabama. According to the Articles of Organization for Montgomery Hospitality, Patel is a Member a n d the Acting Manager of Montgomery Hospitality. Montgomery Hospitality borrowed $ 3 ,7 8 0 ,0 0 0 from Plaintiff in 2006. Patel executed an irrevocable and unconditional Guaranty o f the payment of the obligation as primary obligor of the debt. Montgomery Hospitality

Dockets.Justia.com

agreed to make monthly payments of $25,453.80. From 2006 until February of 2010, M o n tg o m e ry Hospitality made the payments. Neither Montgomery Hospitality, nor Patel m a d e the payments due on the loan after February of 2010. On August 11, 2010,

M o n tg o m e ry Hospitality filed its petition for protection under Chapter 11 of the U.S. B a n k ru p tc y Code in the United States Bankruptcy Court for the Middle District of Alabama. Patel signed the petition on behalf of Montgomery Hospitality. On August 30, 2010, Plaintiff f ile d this action against Patel seeking the amount due under the agreements relating to the lo a n and the Guaranty. Patel filed a Motion to Dismiss. He asks this Court to find that it lacks personal ju ris d ic tio n over him and to dismiss or transfer the action. Patel admits being a member of M o n tg o m e ry Hospitality and being designated as its "general manager." He admits that he re g u la rly communicated with an on-site manager of the hotel property Montgomery H o s p ita lity owned and operated via various means and traveled to Alabama no more than tw ic e a year for business purposes relating to Montgomery Hospitality. He also admits e x e c u tin g the Guaranty of the Montgomery Hospitality secured obligation at issue in this a c tio n .1 Nevertheless, he argues these contacts with Alabama are insufficient to support e ith e r general or specific personal jurisdiction. Plaintiff opposes this motion. In addition to the jurisdictional facts Patel admitted,

Patel did not submit an affidavit or any other evidence in support of his motion. He re lie s solely on the allegations of the Complaint and "admission" made by his counsel th ro u g h statements made in Defendant's Brief Supporting Dismissal (Doc. # 14). 2

1

Plaintiff offers evidence that Patel owns membership interests in as many as six Alabama e n titie s, including Montgomery Hospitality and that he signed Montgomery Hospitality's p e titio n for bankruptcy protection in an Alabama bankruptcy court. STANDARD FOR DISMISSAL FOR LACK OF PERSONAL JURISDICTION In the context of a motion to dismiss for lack of personal jurisdiction in which no e v id e n tia ry hearing is held, the plaintiff bears the burden of establishing a prima facie case o f jurisdiction over the movant, non-resident defendant. Morris v. SSE, Inc., 843 F.2d 489, 4 9 2 (11th Cir. 1988) (citations omitted). A prima facie case is established if the plaintiff p re s e n ts sufficient evidence to defeat a motion for a directed verdict. Morris, 843 F.2d at 4 9 2 . The court must construe the allegations in the complaint as true, to the extent they are u n c o n tro v e rte d by defendant's affidavits or deposition testimony. Id. (citations omitted). Moreover, where the evidence presented by the parties' affidavits and deposition testimony c o n f lic ts , the court must construe all reasonable inferences in favor of the non-movant p la in tif f . Delong Equip. Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir. 1 9 8 8 ). D IS C U SS IO N P a te l has moved to dismiss the complaint for lack of personal jurisdiction. D e te rm in in g personal jurisdiction requires two inquiries. The first step involves determining w h e th e r the forum state's long-arm statute provides a basis for jurisdiction. See Cable/Home C o m m c 'n Corp. v. Network Prods., Inc., 902 F.2d 829, 855 (11th Cir. 1990). If it does, then

3

the court must determine whether the exercise of personal jurisdiction over the defendants w o u ld offend "traditional notions of fair play and substantial justice." International Shoe Co. v . Washington, 326 U.S. 310, 316 (1945). A la b a m a 's long-arm statute provides for the exercise of personal jurisdiction over the d e f e n d a n t for (A) transacting any business in the state, (B) contracting to supply goods or s e rv ic e s in the state, (C) causing tortious injury or damage by an act or omission in the state; (D ) causing tortious injury by an act or omission outside the state while doing regular b u s in e s s in the state, (E) causing injury or damage in this state to any person by breach of w a rra n ty expressly or impliedly made in the sale of goods outside this state when the person m ig h t reasonably have expected such other person to use, consume, or be affected by the g o o d s in this state, provided that the person also regularly does business in the state (F) h a v in g an interest in real property in the state, (G) contracting to insure any person, property, o r risk located within this state at the time of contracting, (H) living in the marital re la tio n s h ip within this state notwithstanding subsequent departure from this state, as to p a rtic u la r obligations, if the other party to the marital relationship continues to reside in the s ta te , or (I) otherwise having sufficient minimum contacts such that it is fair and reasonable to require defense of suit in the state. Ala. R. Civ. P. 4.2(a)(2). Plaintiff argues that factors (A), (D) and (I) of the Alabama statute are met. J u ris d ic tio n of Alabama courts reaches the full extent permissible under the due process c la u s e of the Fourteenth Amendment. See Alabama Waterproofing Co., Inc. v. Hanby, 431

4

So. 2d 141, 145 (Ala.1983); see also Olivier v. Merritt Dredging Co., Inc., 979 F.2d 827, 830 (1 1 th Cir. 1992). The court will, therefore, turn to factor (I) to determine whether the e x e rc ise of in personam jurisdiction in this case satisfies due process. In personam

ju ris d ic tio n complies with due process when (1) the nonresident defendant has purposefully e s ta b lis h e d minimum contacts with the forum state, and (2) the exercise of jurisdiction will n o t offend traditional notions of fair play and substantial justice. Olivier, 979 F.2d at 830-31. There are two types of personal jurisdiction: specific and general. Specific personal ju ris d ic tio n is founded on a party's contacts with the forum state that are related to the cause o f action. Helicopteros Nacionales de Colombia, N.A. v. Hall, 466 U.S. 408, 414 n.8 & 9 (1 9 8 4 ). General personal jurisdiction arises from a party's contacts with the forum state that a re unrelated to the litigation. Id. Plaintiff has shown that Patel has extensive interest in various entities operating b u s in e sses around Alabama. Moreover, Patel and others invoked the benefits and protections o f Alabama law by forming Montgomery Hospitality under the Alabama Limited Liability A c t. Since the formation of Montgomery Hospitality Patel has regularly maintained a variety o f contacts with Alabama relating to managing Montgomery Hospitality's operation of a h o te l in Montgomery, Alabama. Patel regularly communicated with the on-site manager in M o n tg o m e ry via telephone, facsimile, and other electronic communications. He regularly tra v e le d to Alabama on business relating to Montgomery Hospitality's affairs over a period o f several years. Patel was no incidental guarantor of Montgomery Hospitality's debts to a

5

third party, rather he was an active manager who personally engaged in ongoing business tra n s a c tio n s relating to Montgomery Hospitality's business affairs. Moreover, the Guaranty P a te l signed relating to the loan to Montgomery Hospitality contained a choice of law p ro v is io n which specified that the Guaranty would be governed by Alabama law. Such a c la u s e makes it evident that Patel should have foreseen that he could have been hailed into c o u rt in Alabama relating to his obligations under that Guaranty T o constitute minimum contacts for purposes of specific jurisdiction, a defendant's c o n t a c ts with the applicable forum must satisfy three criteria: first, the contacts must be re la te d to the plaintiff's cause of action or have given rise to it; second, the contacts must i n v o l v e some act by which the defendant purposefully avails itself of the privilege of c o n d u c tin g activities within the forum, thus invoking the benefits and protections of its laws; a n d third, the contacts must be such that the defendant should reasonably anticipate being h a le d into court in the forum. See Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1546 (1 1 th Cir.1993), cert. denied, 508 U.S. 907 (1993). Based on the record before the Court, it is compelled to find that Patel engaged in sufficient acts to constitute minimum contacts w ith the State of Alabama for purposes of specific jurisdiction. Indeed, the Court also s u s p e c ts that Patel is subject to general jurisdiction in Alabama given the extent of his b u s in e s s activities here. Having found the existence of such minimum contacts, the Court also must determine w h e th e r exercise of jurisdiction over Patel complies with traditional notions of fair play and

6

substantial justice, the second aspect of jurisdictional due process. The factors entering into a n analysis of the fairness of jurisdiction over a given defendant include, among others, the b u rd e n s imposed on that defendant, the interests of the forum state in the ability of the p la in tif f s to maintain suit therein, and the plaintiff's interest in obtaining relief. Asahi Metal In d u s . Co., Ltd. v. Superior Ct. of Cal., Solano County, 480 U.S. 102, 113 (1987). However, " [ w ]h e n minimum contacts have been established, often the interests of the plaintiff and the f o ru m will justify even the serious burdens placed on the alien defendant." Id. While the C o u rt is cognizant that litigation in Alabama would be less convenient for Patel, than litig a tio n elsewhere, the Court cannot say that exercise of jurisdiction over Patel in this case w o u ld fail to comply with traditional notions of fair play and substantial justice. CONCLUSION F o r the foregoing reasons, the Motion to Dismiss is DENIED. DONE this the 7 day of December, 2010. /s/ Mark E. Fuller CHIEF UNITED STATES DISTRICT JUDGE
th

7