Mitchell v. LEED HR, LLC et al

Filing 28

MEMORANDUM DECISION AND ORDER Defendants' Motion to Dismiss (Dkt. 16 ) is DENIED. Defendants' Motion to Strike (Dkt. 25 ) is DENIED. Signed by Judge Edward J. Lodge. (jp)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

JEFF RAY MITCHELL,
Case No. 2:14-CV-00026-EJL
Plaintiff,
MEMORANDUM DECISION AND
ORDER

v.
LEED HR, LLC and MICHAEL
SCHROERING,
Defendants.

Pending before the Court in the above-entitled matter is Defendants’ Motion to
Dismiss for Lack of Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(2) (Dkt. 16) and
Motion to Strike Plaintiff’s Sur-Reply (Dkt. 25). Having fully reviewed the record, the
Court finds that the facts and legal arguments are adequately presented in the briefs and
record. Accordingly, in the interest of avoiding further delay, and because the Court
conclusively finds that the decisional process would not be significantly aided by oral
argument, this matter shall be decided on the record before this Court without oral
argument.

MEMORANDUM DECISION AND ORDER - 1

FACTUAL BACKGROUND
Plaintiff Jeff Mitchell (Mitchell) filed a Complaint in state court on November 26,
2013 (Dkt. 2-2) and a First Amended Complaint on December 10, 2013 (Dkt. 2-3). The
First Amended Complaint alleges Defendant LEED HR, LLC (LEED) breached a
consulting contract and seeks recovery under the contract from LEED and the personal
guarantor, Michael Schroering (Schroering). Id. It is undisputed that Plaintiff is an Idaho
resident and both defendants do business or reside in Kentucky. As indicated in the
Notice of Removal, it is undisputed the amount in controversy exceeds $75,000 based on
the claimed damages in the First Amended Complaint (Dkt. 1). Defendants maintain this
Court lacks general or specific personal jurisdiction over them. Plaintiff argues
Defendants consented to personal jurisdiction when the general appearance was filed in
state court and there is factual support for specific jurisdiction under Idaho’s long arm
statute for personal jurisdiction.
Counsel for both named defendants filed a general notice of appearance in state
court on January 17, 2014 (Dkt. 2-6). The matter was removed to Federal Court on
January 21, 2014 (Dkt. 1). Counsel for Defendants moved to withdraw on February 6,
2014 (Dkt. 10) and that motion was granted by the Court on the same day (Dkt. 11) and
new counsel appeared for Defendants on February 26, 2014 (Dkt. 13). New counsel
requested and was granted an extension of time to file an answer (Dkts. 14 and 15).
Defendants filed their motion to dismiss for lack of personal jurisdiction on March 20,
MEMORANDUM DECISION AND ORDER - 2

2014 (Dkt. 16).
MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
When a defendant moves to dismiss a complaint for lack of personal jurisdiction,
the plaintiff “bears the burden of demonstrating that jurisdiction is appropriate.” Dole
Food, Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). The plaintiff “need only make
a prima facie showing of jurisdictional facts.” Sher v. Johnson, 911 F.2d 1357, 1361 (9th
Cir. 1990).
Where, as here, there is no applicable federal statute governing personal
jurisdiction, the law of the state in which the district court sits applies. Boschetto v.
Hansing, 539 F.3d 1101, 1015 (9th Cir. 2008). The Idaho Supreme Court has determined
that Idaho’s long-arm statute (Idaho Code § 5-514) allows a broader application of
personal jurisdiction than permitted under the Due Process Clause. See Smalley v. Kaiser,
950 P.2d 1248 (Idaho 1997). Thus, the Court need only decide whether asserting
personal jurisdiction complies with due process. Lake v. Lake, 817 F.2d 1416, 1420 (9th
Cir. 1987).
There are two types of personal jurisdiction—general and specific. Lake, 817 F.2d
at 1420. General jurisdiction is exercised by a state when personal jurisdiction is asserted
over a “defendant in a suit not arising out of or related to the defendant's contacts with the
forum.” Helicoptores Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 n. 9
(1984). This occurs when the defendant has “substantial” or “continuous and systematic”
contacts with the state to the extent that these contacts approximate physical presence.
MEMORANDUM DECISION AND ORDER - 3

Bancroft & Masters, Inc. v. Augusta Nat. Inc., 223 F.3d 1082 (9th Cir. 2000).
The parties eloquently argue the requirements for both types of jurisdiction, but the
Court finds it does not need to decide whether Plaintiff has carried his factual burden for
either general or specific jurisdiction, as Defendants waived their right to contest personal
jurisdiction when their attorney filed a general notice of appearance in state court.
When a case is removed to federal court, the federal court takes case in the posture
the case was in state court. Jenkins v. Commonwealth Land Title Insurance Company, 95
f.3d 791, 795 (9th Cir. 1996) (“[t]he longstanding principle is that ‘after removal, the
federal court ‘takes the case up where the State court left off.’”)(citations omitted).
Therefore, the state court procedural rules applied to the case until the case was removed
to federal court. Pursuant to Idaho Civil Rule of Procedure 4(i) (1) “[t]he voluntary
appearance of a party or service of any pleading by the party, except as provided in
subsection (2) hereof [special appearance to contest personal jurisdiction],constitutes
voluntary submission to the personal jurisdiction of the court.” The appearance filed in
this case was a general notice of appearance and did not reserve the right to challenge
personal jurisdiction. (Dkt. 2-6.) “Defendants can waive the defect of lack of personal
jurisdiction by appearing generally without first challenging the defect in a preliminary
motion.” Jackson v. Hayakawa, 682 F.2d 1344,1347 (9th Cir. 1982). That is what
happened in this case. At the time the case was removed to federal court in January of
2014, Defendants had already voluntarily consented to personal jurisdiction in Idaho.
Filing a motion to dismiss in federal court approximately two months after filing a
MEMORANDUM DECISION AND ORDER - 4

general appearance in state court cannot unwind the previously given consent to personal
jurisdiction.
While it is true the civil rules in state court differ from the federal court, this Court
cannot circumvent the state procedural rules that created a legal effect on the case prior to
it being removed. Once removed the federal rules of civil procedure began to apply, but
when the case was filed in state court, the state rules of civil procedure applied.
Moreover, the Defendants consented to the application of Idaho law when they executed
the contracts at issued in this case. Accordingly, the motion to dismiss for a lack of
personal jurisdiction must be denied.
MOTION TO STRIKE
The Court finds the motion to strike the sur-reply is not well-taken. New issues
were arguably raised in the Defendants’ reply brief that Plaintiff had not had an
opportunity to respond to. The proper practice would have been for Plaintiff to move for
leave to file the sur-reply prior to filing the sur-reply since the Local Rules do not allow a
sur-reply as a matter of right. Dist. Idaho Loc. Civ. R. 7.1. Regardless, the determinative
argument in this case regarding a waiver of personal jurisdiction in state court was raised

MEMORANDUM DECISION AND ORDER - 5

in Plaintiff’s response to the motion to dismiss so Defendants were not prejudiced by the
filing of the sur-reply. The motion to strike is denied.
ORDER
IT IS ORDERED:
1. Defendants’ Motion to Dismiss (Dkt. 16) is DENIED.
2. Defendants’ Motion to Strike (Dkt. 25) is DENIED.

DATED: October 20, 2014

Honorable Edward J. Lodge
U. S. District Judge

MEMORANDUM DECISION AND ORDER - 6