Conway Steel Fabrication Inc v. Stabridg Construction Co Inc et al

Filing 37

ORDER denying 17 Motion to Dismiss and to Dismiss Party. Signed by Judge Kristine G. Baker on 5/10/13. (kpr)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION
CONWAY STEEL FABRICATION, INC.
v.

PLAINTIFF

Case No. 4:12CV00616 KGB

STABRIDG CONSTRUCTION CO., INC.;
DICK’S SPORTING GOODS, INC.;
RICHARD STACEY; KEITH BRIDGHAM;
ELAINE WEEMS

DEFENDANTS

OPINION AND ORDER
Plaintiff Conway Steel Fabrication, Inc. (“Conway Steel”) brings a number of state-law
causes of action against defendants Stabridg Construction Co., Inc. (“Stabridg”), Dick’s Sporting
Goods, Inc. (“Dick’s”), Richard Stacey, Keith Bridgham, and Elaine Weems, asserting it was not
paid for steel it fabricated for a construction project. This case started in Arkansas state court,
and Dick’s, with the consent of all remaining defendants, removed this case to federal court.
Currently pending before the Court is separate defendant Ms. Weems’s motion to dismiss for
lack of personal jurisdiction (Dkt. No. 17). Conway Steel has responded (Dkt. No. 24). For the
reasons set out below, the motion is denied.
I.

FACTUAL BACKGROUND

At this stage of the litigation, the pertinent facts are these. Conway Steel is an Arkansas
corporation with its principal place of business in Arkansas. Separate defendant Stabridg is an
Alabama corporation owned by separate defendants Mr. Stacey and Mr. Bridgham. Stabridg
served as the general contractor for the construction of a Dick’s store in Conway, Arkansas.
Stabridg ordered the structural steel for the project from Conway Steel.

Conway Steel

commenced work on the project and supplied fabricated steel as contracted pursuant to purchase
orders it submitted to Stabridg. That fabricated steel was delivered to the project site, was

accepted by Stabridg and Dick’s, and was incorporated into the building. Ms. Weems is an
Alabama resident and an employee of Stabridg.

Conway Steel alleges that Ms. Weems

conducted business in Arkansas.
Ms. Weems asserts that she “has never done business of any kind in Arkansas” (Dkt. No.
17, at 1). She states that she passed through Arkansas on a trip more than 10 years ago. Ms.
Weems further states that she was located in Alabama any time she talked or exchanged emails
with Conway Steel. She submits she was not an officer or stockholder of Stabridg at any time
pertinent to the matters alleged in the complaint. She also asserts that she did not have the
authority to sign checks or to decide what, when, if, or in what amount payments were made.
She claims she did not have the authority to determine when or how much Conway Steel would
be paid. Ms. Weems contends that she was not responsible for billing Dick’s or for making
payments to Conway Steel. In terms of payments to Conway Steel, Ms. Weems alleges that she
merely passed along to Conway Steel the information she received from Mr. Bridgham, the
president of Stabridg.
Conway Steel’s account of Ms. Weems’s involvement differs. In its complaint, Conway
Steel alleges that Ms. Weems “is an individual and resident of the state of Alabama and
conducted business in the state of Arkansas. Weems was materially involved in, and made
decisions and gave directions to obtain payment from Dick’s Sporting Goods based upon
Conway Steel’s goods and services and to divert those payments to others instead of paying
Conway Steel . . . .” (Dkt. No. 2, at 2). Conway Steel alleges that “Weems, individually and as
agent for Stabridg along with Stacey and Bridgham requested waiver of lien rights by Conway
Steel with the representation that Conway Steel would be paid from contract proceeds between

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Stabridg and Dick’s Sporting Goods” (Dkt. No. 2, at 4-5). “Dick’s Sporting Goods required
such lien waivers before funds would be advanced to Stabridg directly” (Dkt. No. 2, at 5).
On July 12, 2011, Ms. Weems emailed Conway Steel passing along a form titled “Waiver
of Lien to Date,” which Dick’s initially sent to Stabridg. Ms. Weems’s email included directions
for Conway Steel to fill out and return the form to Stabridg (Dkt. No. 2, at 19-20).
On September 21, 2011, Ms. Weems again emailed Conway Steel with “another form for
Dick’s Sporting Goods” (Dkt. No. 2, at 21). She sent an additional “Waiver of Lien to Date”
form for “$23,925.68, in order to complete the total amount of your [Conway Steel’s] invoice”
(Dkt. No. 2, at 21). Ms. Weems stated in that email that “[a]s soon as Dick’s pays us, we will be
sending our check to you” (Dkt. No. 2, at 21). In addition to these email communications
regarding the waiver of lien forms, Ms. Weems sent approximately nine other emails to Conway
Steel regarding its work and payment for its work on the project. These communications
occurred over the course of approximately eight months.
Conway Steel asserts that “[n]otwithstanding notice of Conway Steel’s claim and the
direct contradiction of the contract between Dick’s Sporting Goods and Stabridg and in violation
of the waiver of lien form required by Dick’s Sporting Goods, contract proceeds were paid
directly to Stabridg that belonged to Conway Steel” (Dkt. No. 2, at 5).
On February 27, 2012, Jeff Tarris with Dick’s emailed Mr. Freyaldenhoven with Conway
Steel and stated, “We have paid Stabridg for the steel package at this job. My understanding is
that Stabridg used that money to pay debts incurred on a residential project on the Gulf Coast
and is now attempting to collect money owed on that project to pay you. At least that is what
Keith has told me but I can not be certain” (Dkt. No. 2, at 24).

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Conway Steel maintains that “[a]s a result of the ongoing representation by Dick’s
Sporting Goods and Stabridg, Conway Steel did not assert its statutory mechanics and
materialmans lien rights in a timely manner. But for the representations by Dick’s Sporting
Goods and Stabridg, Conway would have perfected lien rights” on this project (Dkt. No. 2, at 6).
Conway Steel alleges that “[a]t all material times hereto, Stabridg, Stacy, Bridgham, and Weems
were all engaged in an effort to delay, hinder, and defraud Conway Steel” (Dkt. No. 2, at 6).
Conway Steel asserts causes of action against Ms. Weems, among others, for fraud and deceit,
civil conspiracy, violation of Ark. Code Ann. § 5-37-525, deceptive trade practices, and
promissory estoppel.
II.

STANDARD

“To survive a motion to dismiss for lack of personal jurisdiction, the plaintiff need only
make a prima facie showing of personal jurisdiction over the defendant.” Digi-Tel Holdings v.
Proteq Telecoms., 89 F.3d 519, 522 (8th Cir. 1996). Such a prima facie showing “must be
tested, not by the pleadings alone, but by the affidavits and exhibits presented with the motions
and opposition thereto.” Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004).
Although the plaintiff bears the ultimate burden of proof on personal jurisdiction when
confronted with a Federal Rule of Civil Procedure 12(b)(2) motion to dismiss, personal
jurisdiction over the defendant need not be proved by a preponderance of the evidence until trial
or until the Court holds an evidentiary hearing.

See Dakota Industries, Inc. v. Dakota

Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991) (citing Cutco Ind. v. Naughton, 806 F.2d
361, 365 (2d Cir. 1986)). “If the district court does not hold a hearing and instead relies on
pleadings and affidavits, . . . the court must look at the facts in the light most favorable to the
nonmoving party, and resolve all factual conflicts in favor of that party.” Id. (citations omitted).

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This action is in federal court based on diversity jurisdiction. See 28 U.S.C. § 1332(a).
Under Federal Rule of Civil Procedure 4(k)(1)(A), a federal court in a diversity action may
assume jurisdiction over non-resident defendants only to the extent permitted by the long-arm
statute of the forum state and by the Due Process Clause of the Fourteenth Amendment. Bell
Paper Box, Inc., v. U.S. Kids., Inc., 22 F.3d 816, 818 (8th Cir. 1994). The Arkansas “long-arm
statute extends jurisdiction over nonresidents to the limits permitted by the due process clause of
the United States Constitution.” Gould v. P.T. Krakatau Steel, 957 F.2d 573, 575 (8th Cir.
1992). The Court’s analysis in this case thus turns on whether the exercise of jurisdiction is
permitted by the Due Process Clause, which requires that the defendant “have certain minimum
contacts with [the forum state] such that the maintenance of the suit does not offend the
traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S.
310, 316 (1945).
Due process requires courts to consider the “quality and nature” of the defendant’s
activities. Id. at 319. Personal jurisdiction does not exist when the forum state “has no contacts,
ties, or relations” to the defendants. Id. The Supreme Court has held that “it is essential in each
case that there be some act by which the defendant purposefully avails himself of the privilege of
conducting activities within the forum State, thus invoking the benefits and protections of its
laws.” Hanson v. Denckla, 357 U.S. 235, 253 (1958).
In World-Wide Volkwagen Corp. v. Woodson, the Supreme Court concluded that “the
defendant’s conduct and connection with the forum State” were such that he could “reasonably
anticipate being haled into court there.” 444 U.S. 286, 297 (1980). “This ‘purposeful availment’
requirement ensures that a defendant will not be haled into a jurisdiction as a result of ‘random,’

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‘fortuitous,’ or ‘attenuated,’ contacts.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475
(1985) (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984)).
When deciding a personal-jurisdiction issue, this Court considers five factors to
determine whether the exercise of jurisdiction is consistent with due process, “with the first three
factors being of primary importance . . . .” Burlington Industries, Inc. v. Maples Industries, Inc.,
97 F.3d 1100, 1102 (8th Cir. 1996)).

The first three factors are: “(1) the nature and quality of

the contacts with the forum state; (2) the quantity of the contacts with the forum; [and] (3) the
relation of the cause of action to these contacts . . . .”

Digi-Tel Holdings, 89 F.3d at 522-23.

The last two secondary factors are: “(4) the interest of the forum state in providing a forum for
its residents; and (5) the convenience of the parties.” Id. See also Johnson v. Arden, 614 F.3d
785, 794 (8th Cir. 2010).
When a defendant avails herself “of the privilege of conducting business” in the forum
state such that her “activities are shielded by the benefits and protections of the forum’s laws it is
presumptively not unreasonable to require [her] to submit to the burdens of litigation in that
forum as well.” Burger King Corp., 471 U.S. at 476.

Moreover, “[j]urisdiction in these

circumstances may not be avoided merely because the defendant did not physically enter the
forum State.

Although territorial presence frequently will enhance a potential defendant’s

affiliation with a State and reinforce the reasonable foreseeability of suit there, it is an
inescapable fact of modern commercial life that a substantial amount of business is transacted
solely by mail and wire communications across state lines, thus obviating the need for physical
presence within a State in which business is conducted. So long as a commercial actor’s efforts
are purposefully directed toward residents of another State, we have consistently rejected the
notion that an absence of physical contacts can defeat personal jurisdiction there.” Id.

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Although mail, fax, and telephone communication do not alone establish personal
jurisdiction, “in conjunction with other contacts they may support the exercise of personal
jurisdiction.” Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A.,
51 F.3d 1383, 1388 (8th Cir. 1995). See also Acxiom Corp. v. Briggs, 4:12CV00165 SWW,
2012 WL 5185870 (E.D. Ark. Oct. 18, 2012) (“[C]ommunications directed to Arkansas via email
and telephone do not alone satisfy due process requirements, but they count toward minimum
contacts that support personal jurisdiction.” (citing Northrup King, 51 F.3d at 1388)).
Finally, as to any suggestion that a different standard should apply to the personal
jurisdiction analysis in regard to Ms. Weems given her position within Stabridg, in Calder v.
Jones, two individuals, a magazine editor and a reporter, were primary participants in the alleged
wrongdoing, the circulation of an allegedly libelous magazine article in another state. 465 U.S.
783 (1984). The Supreme Court determined that “their status as employees does not somehow
insulate them from jurisdiction.

Each defendant’s contacts with the forum State must be

assessed individually.” Id. at 790. This assessment is “not to be judged according to their
employer’s activities [in the forum state].” Id. at 790. See generally Torchmark Corp. v. Rice,
945 F.Supp. 172 (E.D. Ark. 1996).
The facts in the Calder case also gave rise to the Calder “effects test.” Under the Calder
“effects test,” when an intentional tort is alleged, the assertion of personal jurisdiction over a
nonresident defendant is allowed if that defendant’s actions “are performed for the very purpose
of having their consequences felt in the forum state.” Johnson, 614 F.3d at 796. This test,
however, “is merely an additional factor to consider when evaluating a defendant’s relevant
contacts with the forum state.” Id. at 796-97. The test is construed narrowly, “absent additional

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contacts, mere effects in the forum state are insufficient to confer personal jurisdiction.” Id. at
797
III.

ANALYSIS

The issue before the Court is whether Ms. Weems’s contacts with Arkansas are sufficient
to allow the Court to exercise personal jurisdiction over her consistent with due process. The
first three factors considered when evaluating personal-jurisdiction support this Court’s
exercising jurisdiction over Ms. Weems in this case. Ms. Weems’s relevant connection with
Arkansas was her sending emails to Conway Steel regarding payment allegedly owed by
Stabridg to Conway Steel. Although Ms. Weems focuses on her nearly nonexistent physical
contacts with Arkansas, it is clear that alone does not defeat an exercise of personal jurisdiction.
See Burger King Corp., 471 U.S. at 476. On at least two separate occasions, Ms. Weems sent
Conway Steel a request for waiver of lien rights. Other than those occasions, the record reflects
that Ms. Weems sent at least nine other emails regarding the status of Stabridg’s allegedly
pending payment to Conway Steel. The emails in question reflect that Conway Steel was not
getting paid as quickly as it would have liked and also reflect that Ms. Weems was Conway
Steel’s contact person regarding the status of payment. In her affidavit, Ms. Weems states that,
when Conway Steel inquired about payment, she “passed along the information given [to her] by
Keith Bridgham” (Dkt. No. 17-1, at 2).
By sending two requests for waiver of lien rights and being the contact person with
whom Conway Steel inquired about payment, on the record before the Court, it appears that
Conway Steel relied on Ms. Weems to provide it with information regarding the status of
payment and also communicated with her regarding other important matters with legal
ramifications, specifically the waivers of lien rights. Ms. Weems essentially asserts that she was

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just passing along information, but the record reflects that she repeatedly communicated with
Conway Steel about the status of Stabridg’s payment to Conway Steel. The issues surrounding
payment from Stabridg to Conway Steel ultimately gave rise to this lawsuit. Moreover, Ms.
Weems sent legal documents to Arkansas for an Arkansas company to execute in connection
with an Arkansas construction project. An assessment of Ms. Weemss contacts—judged apart
from Stabridg’s contacts—demonstrates that her contacts were not random or attenuated; rather,
her efforts were “purposefully directed toward” residents of Arkansas. See Burger King, 471
U.S. at 476.
Ms. Weems, on behalf of Stabrig, had numerous contacts with Conway Steel about issues
involving payment and having legal ramifications. Moreover, as Conway Steel argues, the issues
discussed in those emails are directly related to the allegations in this lawsuit. The Court
concludes based on the record before it that Ms. Weems purposefully availed herself of the
privilege of doing business in Arkansas, despite the fact that her relevant contacts were via
email. Because her status as an employee does not insulate her from an exercise of jurisdiction,
Calder, 465 U.S. at 790, the Court is not persuaded by Ms. Weems’s arguments regarding her
limited authority and role at Stabridg. Accordingly, the first three factors weigh in favor of this
Court exercising personal jurisdiction over Ms. Weems.
As to the fourth factor, Arkansas has an interest in providing a forum for Conway Steel, a
resident corporation. K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 595 (8th Cir.
2011). The fifth and final factor is essentially neutral. A trial in Alabama would be just as
inconvenient for Conway Steel as a trial in Arkansas would be for Ms. Weems.
Because some of Conway Steel’s causes of action against Ms. Weems are intentional
torts, the Court’s inquiry does not end with the five factors discussed thus far. The Court also

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must consider the Calder “effects test” where, as here, an intentional tort is alleged. Under this
test, the assertion of personal jurisdiction over a nonresident defendant is allowed if that
defendant’s actions “are performed for the very purpose of having their consequences felt in the
forum state.” Johnson, 614 F.3d at 796. This additional factor weighs in favor of this Court’s
asserting personal jurisdiction over Ms. Weems. As alleged, Conway Steel contends that Ms.
Weems’s communications regarding lien waivers and payment are the basis for intentional tort
claims and were performed for the purpose of having their consequences felt in Arkansas where
Conway Steel and this construction project were located.
Viewing the facts in the light most favorable to Conway Steel, as the Court is required to
do at this stage, the Court concludes that Conway Steel has made a prima facie showing of
personal jurisdiction over Ms. Weems.

The Court concludes that an exercise of personal

jurisdiction over Ms. Weems is consistent with due process. Accordingly, Ms. Weems’s motion
to dismiss is denied (Dkt. No. 17).
SO ORDERED this the 10th day of May, 2013.

___________________________________
Kristine G. Baker
United States District Judge

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