Hand et al v. Wholesale Auto Shop LLC

Filing 20

MEMORANDUM OF OPINION For the reasons stated within, the Hands' Motion for Default Judgment is DENIED for lack of personal jurisdiction. If the Court dismissed this action for lack of personal jurisdiction, it appears that the Hands' claims would most likely be time-barred because of the age of this case. Thus, the Hands have leave to file a motion to transfer this action to an appropriate jurisdiction within two weeks of the entry of this Memorandum of Opinion. If the Hands do not file a motion to transfer within the stated time period, the Court will dismiss this action without prejudice. Signed by Judge L Scott Coogler on 1/5/2018. (PSM)

FILED
2018 Jan-05 PM 03:55
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
DEREK L. HAND and
ASHLEY N. HAND,
Plaintiffs,
vs.
WHOLESALE AUTO SHOP,
LLC,
Defendants.

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7:15-cv-01838-LSC

MEMORANDUM OF OPINION
Before the Court is Plaintiffs Derek L. Hand (“Mr. Hand”) and Ashley N.
Hand (“Mrs. Hand”) (collectively the “Hands”)’s Motion for Default Judgment
as well as their Memorandum Regarding Personal Jurisdiction. (Docs. 17 & 19.)
Both issues have been adequately briefed and are ripe for adjudication. For the
following reasons, the Hands’ Motion for Default Judgment is due to be DENIED
for lack of personal jurisdiction.
I.

FACTS
The Hands are Alabama residents. Defendant Wholesale Auto Shop, LLC

(“Wholesale Auto”) is a Tennessee corporation whose principal place of business
is in Tennessee. In early 2014, Wholesale Auto listed a 2010 Jeep Wrangler Sport

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SUV 2D (the “Jeep”) with 66,692 miles on the website www.autotrader.com. Mr.
Hand saw the listing and through the website requested Wholesale Auto to call him
about the Jeep on his Alabama telephone number. Mr. Hand and Wholesale Auto
spoke on the phone three times, and Wholesale Auto dialed Mr. Hand for at least
two of those three calls. Additionally, Wholesale Auto faxed basic information
about the Jeep to Mr. Hand at his request to his local Brookwood, Alabama fax
number so that he could acquire financing for its purchase through Wells Fargo.
During their interactions, Mr. Hand asked Wholesale Auto if the Jeep’s
mileage was correct as its price was lower than he expected. Wholesale Auto
claimed that the mileage was accurate and that Wholesale Auto was able to provide
a low price because it had a good relationship with a local bank who had recently
recovered the vehicle. At no point did Wholesale Auto ever communicate to Mr.
Hand that there was a discrepancy between the advertised mileage and the Jeep’s
actual mileage. In one of the three calls, Mr. Hand agreed to pay Wholesale Auto’s
asking price for the Jeep. The Hands then drove to Chattanooga, Tennessee where
they purchased the Jeep and took possession of it.
When the Hands purchased the Jeep, the odometer read 66,692 miles, which
Wholesale Auto affirmed as accurate. When they sought to register the Jeep in
Alabama, however, the Hands learned that the Jeep’s true mileage at the time of

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purchase was 253,603. They then filed this action on October 20, 2015, alleging
violations of the Motor Vehicle Information and Cost Savings Act, 49 U.S.C.A. §
32710(b) (2012), the Alabama Deceptive Trade Practices Act, and state-law claims.
On December 9, 2015, the Court received a letter from Melissa Williams, the
owner of Wholesale Auto, purportedly on its behalf. The Court did not treat the
letter as an answer on behalf of Wholesale Auto, however, because Wholesale Auto
is a corporation, and Ms. Williams is not an attorney. (See Doc. 12.) After no
appearance or answer on behalf of Wholesale Auto, the Hands filed a motion for
default judgment on May 31, 2017. Because the Court doubted the existence of
personal jurisdiction over Wholesale Auto in Alabama, it asked the Hands during a
July 5, 2017 telephone conference to prepare a supplemental brief addressing that
issue, which they submitted on August 3, 2017.
II.

LEGAL STANDARD
Courts may raise the question of personal jurisdiction sua sponte when

deciding whether to enter a default judgment when the defendant has failed to
appear, provided the Court grants the parties the chance to argue why personal
jurisdiction exists. Lipofsky v. N.Y. State Workers Comp. Bd., 861 F.2d 1257, 1258
(11th Cir. 1988) (“In the absence of a waiver, a district court may raise on its own
motion an issue of defective venue or lack of personal jurisdiction; but the court

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may not dismiss without first giving the parties an opportunity to present their
views on the issue.”); see also Sys. Pipe & Supply, Inc. v. M/V Viktor Kurnatovskiy,
242 F.3d 322, 324 (5th Cir. 2001) (no error by district court to raise lack of personal
jurisdiction sua sponte upon plaintiff’s motion for default judgment); Smarter Every
Day, LLC v. Nunez, No. 2:15-CV-01358-RDP, 2017 WL 1247500, at *2 (N.D. Ala.
Apr. 5, 2017) (raising lack of personal jurisdiction sua sponte upon plaintiff’s motion
for default judgement); Turi v. Stacey, No. 5:13-CV-248-OC-22PRL, 2015 WL
403228, at *3 (M.D. Fla. Jan. 28, 2015), aff’d, 627 F. App’x 904 (11th Cir. 2015)
(same). Because a “defendant may defeat subsequent enforcement of a default
judgment in another forum by demonstrating that the judgment issued from a court
lacking personal jurisdiction,” Rash v. Rash, 173 F.3d 1376, 1381 (11th Cir. 1999),
raising the issue of personal jurisdiction at the default-judgment stage ultimately
conserves judicial resources. The Court has provided the Hands an opportunity to
show how personal jurisdiction exists in this case and they have presented their
arguments for why this action is properly before the Court. (See Doc. 19.)
“A federal district court sitting in diversity may exercise personal
jurisdiction to the extent authorized by the law of the state in which it sits and to
the extent allowed under the Constitution.” Meier ex rel. Meier v. Sun Int’l Hotels,
Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002); see also Daimler AG v. Bauman, 134 S.

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Ct. 746, 753 (2014) (“Federal courts ordinarily follow state law in determining the
bounds of their jurisdiction over persons.”). A district court may exercise personal
jurisdiction over a defendant when two conditions are met. First, jurisdiction must
be proper under the forum state’s long-arm statute. Sloss Indus. Corp. v. Eurisol,
488 F.3d 922, 925 (11th Cir. 2007). Second, exercising jurisdiction must not violate
the defendant’s rights under the Due Process Clause of the Fourteenth
Amendment, which requires that the defendant have sufficient “minimum
contacts” with the forum state so as not to offend “traditional notions of fair play
and justice.” Id. (citations omitted). In Alabama, “the two inquiries merge,
because Alabama’s long-arm statute permits the exercise of personal jurisdiction to
the fullest extent constitutionally permissible.” Id. Thus, the Court need only
consider the limits of the Due Process Clause. Mut. Serv. Ins. Co. v. Frit Indus., Inc.,
358 F.3d 1312, 1319 (11th Cir. 2004).
There are two types of personal jurisdiction, general and specific; the Hands
do not argue that general jurisdiction exists over Wholesale Auto. (Doc. 19 at 7
(“[P]laintiffs make no argument here concerning whether the Court can or cannot
assert general in personam jurisdiction over the defendant.”).) Instead, the Hands
state that specific jurisdiction exists over Wholesale Auto in Alabama.

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“Where a forum seeks to assert specific personal jurisdiction over a
nonresident defendant, due process requires the defendant have ‘fair warning’ that
a particular activity may subject him to the jurisdiction of a foreign sovereign.”
Madara v. Hall, 916 F.2d 1510, 1516 (11th Cir. 1990). The inquiry whether a forum
State may assert specific jurisdiction over a nonresident defendant focuses on “the
relationship among the defendant, the forum, and the litigation.” Keeton v. Hustler
Magazine, Inc., 465 U.S. 770, 775 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186,
204 (1977)). For a state to exercise jurisdiction consistent with due process, the
defendant’s suit-related conduct must create a substantial connection with the
forum state. Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014). The contacts with the
forum state must also be purposeful and created by the “defendant himself.” Id. at
1122 (“We have consistently rejected attempts to satisfy the defendant-focused
‘minimum contacts’ inquiry by demonstrating contacts between the plaintiff (or
third parties) and the forum State.”). Due process requires that a defendant be
subjected to specific jurisdiction of a State “based on his own affiliation with the
State, not based on the ‘random, fortuitous, or attenuated’ contacts he makes by
interacting with other persons affiliated with the State.” Id. at 1123 (quoting Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)).

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Specific jurisdiction does not require a large volume of contacts with the
forum state, as even a single purposeful contact may give rise to personal
jurisdiction. See McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223 (1957); see also
Licciardello v. Lovelady, 544 F.3d 1280, 1285 (11th Cir. 2008) (“The Court has
made clear . . . that ‘[s]o long as it creates a “substantial connection” with the
forum, even a single act can support jurisdiction.’” (quoting Burger King, 471 U.S.
at 475 n.18 (1985))). When the plaintiff alleges an intentional tort, personal
jurisdiction may be proper when the nonresident defendant has no other contacts
with the forum. Calder v. Jones, 465 U.S. 783, 789-91 (1984). The Eleventh Circuit
follows the Calder “effects” test for personal jurisdiction where the plaintiff alleges
an intentional tort, which requires (1) an intentional tort (2) aimed at the forum
state that (3) “caused harm that the defendant should have anticipated would be
suffered in the forum state.” Licciardello, 544 F.3d at 1286.
In Licciardello, the Florida plaintiff was an entertainer who had previously
employed the Tennessee defendant as his manager. Id. at 1282. Five years after the
plaintiff terminated their contract, the defendant posted the plaintiff’s trademarked
name and picture on his website, implying that the plaintiff endorsed him as a
personal manager. Id. Because the defendant’s actions were “expressly aimed” at

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the plaintiff and caused injury to him in the forum state, the court held that
personal jurisdiction was proper. Id. at 1288.
If the Court finds that sufficient contacts exist to subject an out-of-state
defendant to the forum state’s courts, the Court must also consider whether the
exercise of jurisdiction would “offend ‘traditional notions of fair play and
substantial justice.’” Asahi Metal Indus. Co. v. Superior Court of California, Solano
Cty., 480 U.S. 102, 113 (1987) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310,
316 (1945)). This analysis requires weighing various factors: the burden placed
upon the defendant, the interests of the forum state in deciding the dispute, the
plaintiff’s interest in litigating in that forum, the interests of the interstate judicial
system in an efficient resolution of disputes, and the interests of fundamental social
policies. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980);
see also Future Tech. Today, Inc. v. OSF Healthcare Sys., 218 F.3d 1247, 1251 (11th
Cir. 2000).
III.

DISCUSSION
Wholesale Auto does not have such minimum contacts with Alabama as to

be subject to its personal jurisdiction. Although Wholesale Auto’s advertisement
on autotrader.com was “easily viewable” in Alabama, it was likewise viewable
throughout the United States. National advertisements that do not target a specific

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state are not sufficient to establish minimum contacts. See Charia v. Cigarette
Racing Team, 583 F.2d 184 (5th Cir. 1978) (finding that an advertisement in a
nationally circulated magazine did not establish minimum contacts). 1
The communications between Mr. Hand and Wholesale Auto do not
constitute “purposeful availment” of the benefits of transacting business in
Alabama. Had Wholesale Auto initiated the negotiations, it may have
“purposefully availed” itself of the forum state; however, Mr. Hand initiated
contact with Wholesale Auto. See Benjamin v. Western Boat Building, 472 F.2d 723,
729 (5th Cir. 1973) (finding that “extensive communications” between buyer and
seller did not establish minimum contacts with the forum state when buyer initiated
negotiations). It is also irrelevant that Wholesale Auto called Mr. Hand twice
because those calls were part of the ongoing negotiations that Mr. Hand began.
Dialing an Alabama number does not rise to the level of establishing minimum
contacts with the State.
Finally, the transaction between Mr. Hand and Wholesale Auto took place
outside the forum state. While Mr. Hand orally agreed to purchase the Jeep during
one of the three phone calls while he was in Alabama, the Hands drove to
Tennessee where they paid for the Jeep. This is a considerably different situation
1

In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), the Eleventh
Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior
to October 1, 1981.
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than Licciardello where the defendants’ actions that gave rise to the suit occurred
outside of the forum state and reached into it. In Licciardello, the Tennessee
defendant created a website in Tennessee that infringed on the Florida plaintiff’s
name, creating reputational damage to him in Florida. 544 F.3d at 1282-83. In this
case, the Tennessee defendant sold the Alabama plaintiff a car in Tennessee. The
action giving rise to the suit occurred in Tennessee against two persons also
present in Tennessee. Wholesale Auto made certain fraudulent statements to the
Hands when they were present in Alabama, but no effects occurred in Alabama
until the Hands brought the Jeep into that jurisdiction. The Hands unilaterally
created the connection between the defendant and the forum state, which is not
sufficient to establish minimum contacts.
Even if the Hands could establish that Wholesale Auto had knowledge of
their residency, such knowledge alone would be insufficient to establish minimum
contacts. In Walden, the court of appeals had erroneously found sufficient contacts
“by shifting the analytical focus from petitioner’s contacts with the forum to his
contacts with respondents. Rather than assessing petitioner’s own contacts with
Nevada, the court of appeals looked to petitioner’s knowledge of respondents’
‘strong forum connections.’” 134 S. Ct. at 1124 (citing Rush, 444 U.S., at 332, 100
S.Ct. 571). Walden criticized this approach as “impermissible” on the grounds that

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it attributes the plaintiffs’ contacts with the forum to the defendant. Id. at 1125.
Under Walden, Wholesale Auto’s knowledge of the Hands’ residency is irrelevant
to this court’s analysis where no other conduct connects Wholesale Auto to
Alabama in a meaningful way.
The Hands rely on Summit Auto Sales, Inc. v. Draco, Inc., No. 2:15-CV00736-KOB, 2016 WL 706011 (N.D. Ala. Feb. 23, 2016), which found that personal
jurisdiction existed over a Maine defendant who allegedly made fraudulent
misrepresentations to a buyer located in Alabama. Summit Auto is not binding on
this Court and its facts differ significantly from this case. In Summit Auto, the
Alabama plaintiff purchased several vehicles from the Maine defendant with whom
it had prior dealings. Id. at *2. The plaintiff planned on reselling the vehicles to a
foreign country that would not accept them if they had been previously used as
taxis. Id. at *3. Over five different phone calls, the defendant denied that the
vehicles had been used as taxis when asked by the plaintiff, despite knowledge to
the contrary. Id. at *2. The defendant then faxed the plaintiff the bill of sale, which
the plaintiff signed and returned with a check to the defendant. Id. The plaintiff
arranged for a third party to send the vehicles to the plaintiff in Alabama. Summit
Auto found the defendant was subject to Alabama’s personal jurisdiction because
“[w]hen the actual content of communications with a forum gives rise to

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intentional tort causes of action, this alone constitutes purposeful availment.” Id. at
*11 (quoting Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 213 (5th Cir. 1999)).
Because of the fraudulent communications by the defendant in making the sale of
the vehicles by phone and fax to the plaintiff in Alabama, Summit Auto found the
defendant subject to Alabama’s personal jurisdiction.
Personal jurisdiction does not exist over Wholesale Auto under the reasoning
of Summit Auto. Both Wholesale Auto and the defendant in Summit Auto sent
communications which misrepresented facts about the cars they sought to sell to
buyers in Alabama. Summit Auto is distinguishable in that the plaintiffs remained in
Alabama to purchase the vehicles from the defendant by mailing a check, where the
Hands drove to Tennessee and purchased the car in person there. The defendant in
Summit Auto affirmatively completed the transaction by faxing the bill of sale and
title guarantee letters. Wholesale Auto completed the transaction wholly in
Tennessee, rather than in Alabama. The Hands have failed to show how any
intentional tort was directed at Alabama, rather than Tennessee. In Summit Auto,
the defendant’s “actual content of communications with a forum gives rise to
intentional tort causes of action” as all relevant acts occurred by remote
communications sent by defendant to Alabama. Here, Wholesale Auto made
certain fraudulent representations to the Hands in response to their inquiries, but

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the actual purchase of the Jeep occurred in Tennessee. The content of the
communications made by Wholesale Auto to Mr. Hand cannot “give rise to
intentional tort causes of action,” as no cause of action arose until the Hands
actually purchased the vehicle in Tennessee. Wholesale Auto’s subsequent
contacts with Alabama are “random, fortuitous, and attenuated” and based upon
the Hands driving the Jeep into Alabama. Walden, 134 S. Ct. at 1123 (quoting
Burger King, 471 U.S. at 475 (1985).
IV.

CONCLUSION
For the reasons stated above, the Hands’ Motion for Default Judgment is

DENIED for lack of personal jurisdiction. If the Court dismissed this action for
lack of personal jurisdiction, it appears that the Hands’ claims would most likely be
time-barred because of the age of this case. Thus, the Hands have leave to file a
motion to transfer this action to an appropriate jurisdiction within two weeks of the
entry of this Memorandum of Opinion. If the Hands do not file a motion to transfer
within the stated time period, the Court will dismiss this action without prejudice.
DONE and ORDERED on January 5, 2018.

_____________________________
L. Scott Coogler
United States District Judge
190485

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