Concrete Washout Systems, Inc., v. Terrell Moran, Inc., et al.,

Filing 42

ORDER signed by Senior Judge William B. Shubb on 2/25/2015 ORDERING 24 that the motion of defendants Trucks and Equipment Rentals, LLC and Trucks and Machinery for Industry, LLC to dismiss for lack of personal jurisdiction pursuant to FRCP 12(b)(2) be, and the same hereby is, GRANTED, and this action is hereby DISMISSED as against said defendants. (Reader, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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CONCRETE WASHOUT SYSTEMS,
INC., a California
corporation,

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MEMORANDUM AND ORDER RE: MOTION
TO DISMISS

Plaintiff,

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CIV. NO. 2:14-0830 WBS CKD

v.
TERRELL MORAN, INC., TMI
SERVICES TRUCKS & EQUIPMENT
RENTALS LLC, TMI CONCRETE
WASHOUT TRUCKS & EQUIPMENT
RENTALS LLC, TERRELL MORAN,
TODD TERMINI, and Does 1-100,

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Defendants.

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----oo0oo----

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Plaintiff Concrete Washout Systems sued defendants for

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breach of contract and patent infringement.

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and Equipment Rentals, LLC and Trucks and Machinery for Industry,

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LLC (together “Trucks LLCs”)1 move to dismiss for lack of

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Defendants Trucks

According to the Trucks LLCs’ motion, plaintiff
incorrectly named these two defendants as, respectively, “TMI
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personal jurisdiction pursuant to Federal Rule of Civil Procedure

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12(b)(2).

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I. Factual and Procedural Background

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Concrete washout is a waste that comes from washing out

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cement trucks and other concrete equipment at the end of the day.

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(Compl. ¶ 8.)

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regulates the substance because its corrosive nature makes it an

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environmental risk.

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guidelines, many companies tried to develop best practices for

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The Environmental Protection Agency (“EPA”)

(Id.)

Following the issuance of EPA

the disposal of concrete waste water.

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(Id. ¶ 9.)

Plaintiff’s CEO Mark Jenkins developed a portable

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container that is an allegedly novel solution for concrete waste

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disposal.

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California corporation headquartered in Sacramento, to market and

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license his system.

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obtained several patents for the system, which are still in full

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force and effect.

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(Id. ¶ 11.)

Jenkins formed Concrete Washout, a

(Id. ¶¶ 1, 12.)

In October 2006, plaintiff

(Id. ¶¶ 2-21.)

Defendant Terrell Moran, Inc., (“TMI”) is a Louisiana

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corporation with a principal place of business in Gonzales,

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Louisiana.

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into a written Licensing Agreement for the Concrete Washout

(Id. ¶ 2.)

In April 2007, plaintiff and TMI entered

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Services Trucks and Equipment Rentals, LLC,” and “TMI Concrete
Washout Trucks and Equipment Rentals LLC.” (Mot. to Dismiss at 1
(Docket No. 24) (“[Plaintiff presumably meant to name Trucks and
Equipment and Trucks and Machinery . . . not ‘TMI Services Trucks
and Equipment Rentals, LLC’ or ‘TMI Concrete Washout and
Equipment Rentals, LLC.’”). For the purposes of this Order, the
court will use “Trucks LLCs” to refer to defendants named as TMI
Trucks & Equipment Rentals LLC and TMI Concrete Washout Trucks &
Equipment Rentals LLC.
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Systems containers.

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containers in exchange for a monthly sum.

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Licensing Agreement prohibited TMI from selling or transferring

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ownership of the containers without written consent from

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plaintiff.

(Id. ¶ 35.)

TMI purchased twenty-one
(Id. ¶¶ 36-37.)

The

(Id. ¶ 39.)

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Plaintiff alleges that despite this provision, in 2010,

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Terrell Moran met with Roydan Bozeman in Louisiana to discuss the

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acquisition of certain assets owned by TMI.

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Decl. ¶ 2.)

The sale went forward.

(Id. ¶ 2; Bozeman

(Compl. ¶ 58.)

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the transaction, Bozeman formed the Trucks LLCs.

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¶ 3.)

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To complete

places of business in Denham Springs, Louisiana.2

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(Bozeman Decl.

The Trucks LLCs are Delaware LLCs with their principal

Plaintiff alleges that the Trucks LLCs are infringing

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on his patent by operating their concrete washout business using

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the patented containers obtained from Moran.

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Plaintiff brings a breach of contract claim against TMI and

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patent infringement claims against all defendants, seeking

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injunctive relief and damages.

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LLCs make a special appearance to seek dismissal on the basis

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that the court does not exercise personal jurisdiction over them.

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II. Personal Jurisdiction Over Trucks Defendants

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(Id. ¶ 42.)

(Compl. ¶¶ 48-63.)

The Trucks

Federal Circuit precedent generally applies to

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determine whether the court may properly exercise personal

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jurisdiction over a defendant in patent cases.

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v. Tejas Research, LLC, Civ. No. 3:14-868 EMC, 2014 WL 4651654,

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Adobe Sys. Inc.

Plaintiff’s complaint alleges the LLCs are incorporated
in Louisiana, (Compl. ¶¶ 3-4) but this is supported by no
evidence and is controverted by certificates of incorporation
offered by the Trucks LLCs, (see Bozeman Decl. Exs. 1,3.)
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at *2 (N.D. Cal. Sept. 17, 2014); Deprenyl Animal Health, Inc. v.

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Univ. of Toronto Innovations Found., 297 F.3d 1343, 1348 (Fed.

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Cir. 2002) (“Federal Circuit law governs the issue of personal

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jurisdiction in this patent-related case.”).

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burden of demonstrating that the court has jurisdiction over the

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defendant.

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(Fed. Cir. 2012) (recognizing that the burden of establishing

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personal jurisdiction ordinarily falls on the plaintiff).

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Plaintiff bears the

See Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1294

Due process requires that for a nonresident defendant

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to be subject to the court’s jurisdiction, the defendant must

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“have certain minimum contacts with [the forum state] such that

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the maintenance of the suit does not offend traditional notions

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of fair play and substantial justice.”

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Washington, 326 U.S. 310, 316 (1945) (internal quotation marks

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and citation omitted).

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facie showing of either general or specific jurisdiction.

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Elecs. For Imaging, Inc. v. Coyle, 340 F.3d 1344 (Fed. Cir.

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2003).

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Int.’l Shoe Co. v.

Plaintiff must normally make a prima
See

The Trucks LLCs do no business outside of Louisiana and

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appear to have no contacts with California.

Rather than

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attempting to establish general or specific jurisdiction,

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plaintiff appears to argue that the Trucks LLCs can be deemed to

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have consented to personal jurisdiction in California.

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Pl.’s Opp’n at 6.)

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selection clause may give rise to waiver of objections to

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personal jurisdiction.”

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Am., Inc., 485 F.3d 450, 457 (9th Cir. 2007).

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Agreement between plaintiff and TMI contained a clause selecting

(See

“Under general contract principles, a forum

Holland Am. Line, Inc. v. Wartsila N.

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The Licensing

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California as the forum for litigation arising out of the

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agreement.3

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not parties to this Agreement--nor were they even in existence at

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the time the Agreement was executed, (Bozeman Decl. ¶ 3).

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forum selection clause does not apply to a nonresident defendant,

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unless the party assented to it.

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Plaintiff has not provided evidence that Bozeman assented to the

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Agreement’s terms.

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(See Compl. Ex. A.)

The Trucks LLCs, however, were

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See Holland, 485 F.3d at 458.

Plaintiff nevertheless argues that Bozeman’s awareness

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of the existence of the Agreement after the fact means the Trucks

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LLCs can be deemed to have consented to the forum selection

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clause.

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Bozeman was actually aware of the terms of the Agreement when he

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purchased TMI’s assets.4

(See Pl.’s Opp’n at 6.)

The parties dispute that

This dispute is immaterial.

Even if

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The full text of the provision states:

This Agreement shall be governed by and construed
according to the laws of the State of California.
Each party to this Agreement hereby submits to the
exclusive jurisdiction of the state and federal courts
sitting in the County of Sacramento in the State of
California, consents to the extra-territorial service
of process, and waives any jurisdictional, venue or
inconvenient forum objections to such courts.
All
legal proceedings arising out of or in connection with
the Agreement shall be based solely in the County of
Sacramento
in
the
State
of
California.
Not
withstanding the foregoing, CWS may, at its option,
apply for injunctive relief and other provisional
remedies in a State or Federal Court located in any
jurisdiction where violation of this Agreement may
occur.
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Moran states in an affidavit that he informed Bozeman
of the terms of the Agreement at the time Bozeman purchased TMI’s
assets. (Moran Decl. ¶ 3.) Todd Termini, a former employee of
T&E, and also named as a defendant, states in an affidavit that
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Bozeman was aware of the existence of the Licensing Agreement,

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that would not support the conclusion that plaintiff consented to

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jurisdiction in California.

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Holland recognized that if a nonparty to a contract

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containing a forum selection clause is nevertheless related to a

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signatory in such a way that it can be deemed to have

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participated in the transaction, then that nonparty would be

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subject to the forum selection clause.

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456 (holding that companies related to contract signatory who

See Holland, 485 F.3d at

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were among the “range of transaction participants” were subject

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to the agreement’s forum selection clause).

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apply to a situation where a non-party to a contract bears no

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relation to a signatory at the time of the execution of the

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contract, because such a non-party could not have participated in

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the transaction.

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involved in the transaction covered by the Licensing Agreement,

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nor were they related to TMI at the time the Agreement was

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executed.

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must be some independent evidence that the party agreed to the

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clause in order for that party to be bound by it.

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(declining to exercise personal jurisdiction over defendants who

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were not parties to the contract because, among other things,

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there was no evidence of defendants’ assent).

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Holland does not

Here, defendants the Trucks LLCs were not

Absent any participation in the transaction, there

See id. at 457

Having found no basis for exercising personal

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Moran told him that Moran fully informed Bozeman about the
licensing arrangement. (Termini Decl. ¶ 9.) Bozeman, however,
denies that Moran ever mentioned the Agreement; instead, he
claims, Moran represented to Bozeman that TMI was the owner of
the assets he was selling. (Bozeman Decl. ¶ 5.)
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jurisdiction over the Trucks LLCs, the court must dismiss them

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from this action.

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IT IS THEREFORE ORDERED that the motion of defendants

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Trucks and Equipment Rentals, LLC and Trucks and Machinery for

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Industry, LLC to dismiss for lack of personal jurisdiction

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pursuant to Federal Rule of Civil Procedure 12(b)(2) be, and the

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same hereby is, GRANTED, and this action is hereby DISMISSED as

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against said defendants.

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Dated:

February 25, 2015

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