V-Soft Consulting Group, Inc. v. Logic Corporation

Filing 7

MEMORANDUM OPINION AND ORDER signed by Judge David J. Hale on 3/31/2017. Defendant's 4 Motion to Dismiss for Lack of Personal Jurisdiction is GRANTED. Action is DISMISSED without prejudice and STRICKEN from the Court's docket. cc: Counsel(RLK)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
V-SOFT CONSULTING GROUP, INC.,

Plaintiff,

v.

Civil Action No. 3:16-cv-425-DJH

LOGIC CORPORATION,

Defendant.
* * * * *

MEMORANDUM OPINION AND ORDER
Plaintiff V-Soft Consulting and Defendant Logic Corporation entered into a consulting
agreement. (Docket No. 4-1, PageID # 38) When a dispute arose over the agreement, V-Soft
filed suit against Logic in Jefferson County, Kentucky Circuit Court. (D.N. 1) After Logic
removed the case to this Court, Logic filed a motion to dismiss, asserting that it is not subject to
personal jurisdiction in Kentucky. (D.N. 4-1, PageID # 38–41) Because the Court finds that
Logic’s conduct does not fall under Kentucky’s long-arm statute, the Court will grant the motion
to dismiss.
I.

BACKGROUND
V-Soft Consulting “provides professional IT consulting services to third parties by the

temporary assignment of its employees to various client locations all across the United States.”
(D.N. 5-1, PageID # 54) V-Soft is a Texas corporation that is headquartered in Louisville,
Kentucky. (Id.; D.N. 4-1, PageID # 40) Defendant Logic is a “global information technology
recruiting . . . and consulting firm.” Logic is a Florida corporation with its principal place of
business in Florida. (D.N. 4-1, PageID # 37)
On October 13, 2015, V-Soft and Logic entered into a consulting agreement that called
for V-Soft to provide on-site consulting services to Logic’s client, Bloomberg LP, in New York.

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(Id., PageID # 38) V-Soft filed suit in Jefferson County, Kentucky Circuit Court, alleging that
Logic breached the contract by failing to pay V-Soft for these services, misrepresented its
relationship with Bloomberg, was unjustly enriched from its failure to pay, and committed theft
in violation of Ky. Rev. Stat. § 514.070. (D.N. 1-2, PageID # 9–12; D.N. 5-1, PageID # 54)
Logic removed the case to this Court and filed a motion to dismiss, arguing that it is not subject
to personal jurisdiction in Kentucky. (D.N. 4-1, PageID # 38–41) Logic claims that it is not
subject to Kentucky’s long-arm statute because it does not transact business in Kentucky. (Id.,
PageID # 39–40) In support, Logic states that it is not registered with the Kentucky Secretary of
State; it does not have a physical presence in Kentucky; no Logic representative traveled to
Kentucky to negotiate the agreement; and the agreement was not performed in Kentucky. (Id.)
According to Logic, its only connection to Kentucky is its consulting agreement with V-Soft.
(Id.)
In response, V-Soft argues that because it executed a contract with a party located in
Louisville, Kentucky, Logic transacted business in the Commonwealth under Kentucky’s longarm statute. (D.N. 5-1, PageID # 56) V-Soft then asserts that Logic has sufficient minimum
contacts with Kentucky for the following reasons: (1) the agreement referenced V-Soft’s location
in Kentucky; (2) the employee assigned to Bloomberg was in the United States on a visa and the
employee’s immigration issues were handled in Louisville; (3) Logic had “significant oral and
written communications” with V-Soft employees in Louisville; and (4) the payments were to go
to V-Soft’s headquarters in Louisville. (Id., PageID # 54–55) Alternatively, V-Soft claims that
Logic’s alleged failure to pay constitutes theft, which would be considered a “criminal act
occurring within the Commonwealth of Kentucky.” (Id., PageID # 58) According to V-Soft,

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“[t]hose criminal actions alone should satisfy the minimal contacts requirement of the 14th
amendment.” (Id., PageID # 58–59)
Logic also asserts that the action should be dismissed because of the forum-selection
clause contained in the parties’ consulting agreement.

(D.N. 4-1, PageID # 41–42)

The

agreement states:
This Agreement shall be governed by the laws of the state of Florida without
regard to choice of law principals, regardless of where Contractor’s work is
performed.
Company and Contractor hereby irrevocably submit to the
jurisdiction of any court (state or federal) located within the state of Florida in any
action, suit, or proceeding brought against or relating to or in connection with this
Agreement or any transaction contemplated thereby, and to the extent permitted
by applicable law, each party hereby waives and agrees not to assert by way of
motion, as a defense or otherwise, in any such suit, action or proceeding, any
claim that either he is not personally subject to the jurisdiction of such courts, that
the suit, action, or proceeding is brought in an inconvenient forum, that the venue
of the suit, action, or proceeding is improper, or that this Agreement or any
instrument, agreement or document referred to herein or the subject matter hereof
may not be litigated in or by such courts.
(Id., PageID # 41; D.N. 1-2, PageID # 23) Logic claims that this forum-selection clause is valid
and should be enforced. (D.N. 4-1, PageID # 41–42)
V-Soft responds that the forum-selection clause does not mandate dismissal of the
complaint. (D.N. 5-1, PageID # 59–60) According to V-Soft, the clause indicates that V-Soft
will submit to personal jurisdiction in Florida but does not establish Florida as the exclusive
jurisdiction for bringing suit.

(Id.)

Alternatively, V-Soft argues that the agreement was

terminated when Logic breached it by failing to pay V-Soft and thus is no longer valid. (Id.)
Next, V-Soft claims that the agreement was procured by fraud and misrepresentation because
Logic misrepresented its relationship with Bloomberg. (Id.) Finally, V-Soft asserts that it has
claims that are independent of the agreement and that those claims “may be pursued in any
appropriate forum.” (Id.)

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II.

DISCUSSION
A. Forum-Selection Clause
V-Soft first argues that the clause at issue does not establish Florida as the exclusive

jurisdiction for suits arising from the parties’ agreement. (Id.) The Court agrees.
Interpretation of a forum-selection clause is governed by federal common law. See Wong
v. PartyGaming Ltd., 589 F.3d 821, 827–28 (6th Cir. 2009). “Under federal common law, forum
selection clauses are to be interpreted by reference to ordinary contract principles” and “should
be upheld absent a strong showing that [they] should be set aside.” Crown Labs., Inc. v. Se.
Commercial Fin., LLC, No. 2:11-CV-185, 2012 WL 2126945, at *2 (E.D. Tenn. Apr. 30, 2012)
(citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991); In re Delta Am. Re Ins.
Co., 900 F.2d 890, 892 (6th Cir. 1990)).
“A forum selection clause may be either ‘mandatory’ or ‘permissive’ in nature.” Id.
(quoting Cornett v. Carrithers, 465 F. App’x 841, 843 (11th Cir. 2012)). “A mandatory clause
prescribes a specific forum in which litigation regarding the contracted-to subject matter must be
brought; a permissive clause, by contrast, identifies a forum in which such litigation permissibly
may be brought, but on a non-exclusive basis.” Cornett, 465 F. App’x at 843; see also Gen.
Elec. Co. v. G. Siempelkamp GmbH & Co., 29 F.3d 1095, 1099 (6th Cir. 1994).
The Tenth Circuit has explained that
[g]enerally speaking, the circuits that have addressed the issue are in agreement
that “where venue is specified in a forum selection clause with mandatory or
obligatory language, the clause will be enforced; where only jurisdiction is
specified in a forum selection clause, the clause will generally not be enforced
unless there is some further language indicating the parties’ intent to make venue
exclusive.”
K & V Sci. Co. v. Bayerische Motoren Werke Aktiengesellschaft, 314 F.3d 494, 499 (10th Cir.
2002) (alterations omitted) (quoting Paper Express, Ltd. v. Pfankuch Maschinen GmbH, 972
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F.2d 753, 757 (7th Cir. 1992)); see also Travelers Prop. Cas. Co. of Am. v. Centimark, Corp.,
No. 2:04-CV-0916, 2005 WL 1038842, at *3 (S.D. Ohio May 3, 2005).

“An agreement

conferring jurisdiction in one forum will not be interpreted as excluding jurisdiction elsewhere
unless it contains specific language of exclusion . . . or it leaves it in the control of one party with
power to force on its own terms the appropriate forum.” GMAC Commercial Mortg. Corp. v.
LaSalle Bank Nat’l Ass’n, 242 F. Supp. 2d 279, 282 (S.D.N.Y. 2002) (quoting City of New York
v. Pullman, 477 F. Supp. 438, 442 n.11 (S.D.N.Y. 1979)); see also IntraComm, Inc. v. Bajaj, 492
F.3d 285, 290 (4th Cir. 2007). “The normal construction of the jurisdiction rules includes a
presumption that, where jurisdiction exists, it cannot be ousted or waived absent a clear
indication of such a purpose.” Id. (quoting Pullman, 477 F. Supp. at 443).
For example, in Blanco v. Banco Industrial de Venezuela, the forum-selection clause
read:
[The parties agree] that any legal action or proceedings arising out of or in
connection with this Agreement may be brought in the High Court of Justice in
England, the Courts of the State of New York, the Courts of the United States of
America in New York or the Courts of the City of Caracas, Venezuela, [and]
irrevocably submit to the jurisdiction of each such court.
997 F.2d 974, 976 (2d Cir. 1993). The Second Circuit distinguished between clauses that used
permissive language, such as “may” and “irrevocably submit,” and clauses that used obligatory
language, such as “must,” in addressing the forum. Id. at 979. The court explained that the
former “left open the possibility that an action could be brought in any forum where jurisdiction
can be obtained either inside or outside of Venezuela.” Id. (quoting Proyecfin de Venezuela, S.A.
v. Banco Indus. de Venezuela, S.A., 760 F.2d 390, 396 (2d Cir. 1985)).
In this case, the forum-selection clause is permissive. (D.N. 1-2, PageID # 23) The
clause states that the parties “irrevocably submit to the jurisdiction of any court (state or federal)

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located within the state of Florida in any action, suit, or proceeding brought against or relating to
or in connection with this Agreement.” (Id.) This clause indicates that a suit may be filed in
Florida, but there is no language in the clause indicating that an action must be brought in
Florida. (Id.) Because there is no obligatory language that provides that Florida is the exclusive
venue for suit, the forum-selection clause will not be enforced. See K & V Sci. Co., 314 F.3d at
499.
B. Personal Jurisdiction
Logic also argues that it is not subject to personal jurisdiction in Kentucky because it
does not transact business in the Commonwealth. (D.N. 4-1, PageID # 38–41)
The burden is on V-Soft to demonstrate that personal jurisdiction exists. See Theunissen
v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). To make this showing, a plaintiff “may not
stand on [its] pleadings but must, by affidavit or otherwise, set forth specific facts”
demonstrating the Court’s jurisdiction. Id. When presented with a motion to dismiss for lack of
personal jurisdiction, the Court has three options: (1) “decide the motion upon the affidavits
alone,” (2) “permit discovery in aid of deciding the motion,” or (3) “conduct an evidentiary
hearing to resolve any apparent factual questions.” Id. (citing Serras v. First Tenn. Bank Nat’l
Ass’n, 875 F.2d 1212, 1214 (6th Cir. 1989)).
Neither party has requested jurisdictional discovery in this case. Nor does the Court find
that there are factual disputes necessitating an evidentiary hearing. Consequently, V-Soft’s
burden is relatively light: “Where the court relies solely on the parties’ affidavits to reach its
decision, the plaintiff must make only a prima facie showing that personal jurisdiction exists in
order to defeat dismissal.” Id. The Court must view the pleadings and affidavits in the light
most favorable to the plaintiff, without “weigh[ing] the controverting assertions” of the

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defendant. Id. at 1459. Dismissal is proper only “if all of the specific facts . . . alleged” by the
plaintiff “collectively fail[ ] to state a prima facie case for jurisdiction.” Id.
1. Long-Arm Statute
“Federal Rule of Civil Procedure 4(k)(1)(A) states that personal jurisdiction exists over
any properly-served defendant ‘who could be subjected to the jurisdiction of a court of general
jurisdiction in the state in which the district court is located.’” Flynn v. Greg Anthony Constr.
Co., 95 F. App’x 726, 739 (6th Cir. 2003) (quoting Fed. R. Civ. P. 4(k)(1)(A)). In Kentucky, the
Court must first look to Kentucky’s long-arm statute to determine whether “the cause of action
arises from conduct or activity of the defendant that fits into one of the statute’s enumerated
categories.” Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51, 57 (Ky. 2011). If the
statute is applicable, the Court must then apply the traditional test “to determine if exercising
personal jurisdiction over the non-resident defendant offends his federal due process rights.” Id.
Kentucky’s long-arm statute provides, in relevant part, that “[a] court may exercise
personal jurisdiction over a person who acts directly or by an agent, as to a claim arising from
the person’s . . . [t]ransacting any business in this Commonwealth.”

Ky. Rev. Stat. §

454.210(2)(a). Caesars clarified that “Kentucky’s long-arm statute is narrower in scope than the
federal due process clause.” Cox v. Koninklijke Philips, N.V., 647 F. App’x 625, 628 (6th Cir.
2016) (citing Caesars, 336 S.W.3d at 55–57). “There is little case law interpreting the meaning
of ‘transacting business’ . . . following Caesars, but, ‘even before Caesar[s] narrowed the scope
of Kentucky’s long arm statute, Kentucky courts . . . required a course of direct, affirmative
actions within a forum that result in or solicit a business transaction.’” Gentry v. Mead, No. CV
16-100-DLB-CJS, 2016 WL 6871252, at *3 (E.D. Ky. Nov. 21, 2016) (quoting Modern
Holdings, LLC v. Corning, Inc., No. 13-CV-405, 2015 WL 1481443, at *6 (E.D. Ky. Mar. 31,

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2015)). “[E]ven under the outer bounds of due process, ‘the mere existence of a contract . . . is
insufficient to confer personal jurisdiction.’”

Cox, 647 F. App’x at 628 (citation omitted)

(quoting Calphalon Corp. v. Rowlette, 228 F.3d 718, 722 (6th Cir. 2000)).
For example, in Gentry, the court held that “[e]ntering into a Note, by itself, does not
establish the minimum contacts needed for jurisdiction.” 2016 WL 6871252 at *3. The court
explained that the defendant “never traveled to Kentucky,” the note was not executed in
Kentucky, and the defendant’s “only contact with Kentucky was in entering into the Note with
Gentry, who resided there.”

Id.

Therefore, the Court found that the defendant had not

“transacted business” in Kentucky and his contacts were insufficient to establish personal
jurisdiction. Id.
Similarly, in Envirometric Process Controls, Inc. v. Adman Electric, Inc., the plaintiff, a
Kentucky corporation, subcontracted with the defendant, a Tennessee corporation, to provide
materials and services in Tennessee. No. 3:12CV-62-S, 2012 WL 4023789, at *2 (W.D. Ky.
Sept. 12, 2012). The Court held that the defendant had not “transact[ed] business” in Kentucky
because he was not licensed to do business in Kentucky; he had no physical presence in the
Commonwealth; the contract was performed outside Kentucky; and the contract was negotiated
over phone and email. Id. at * 2–3.
In Modern Holdings, the court held that a defendant corporation had not “transacted
business” in Kentucky because it had no offices, employees, manufacturing facilities, or agent
for service of process in the Commonwealth. 2015 WL 1481443 at *7. Additionally, the
corporation was never licensed to do business in Kentucky. Id.
In contrast, the court in Caesars found that the defendant “transacted business” in
Kentucky. 336 S.W.3d at 53. In that case, the plaintiff was injured on a casino boat owned by

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an Indiana corporation and docked in Indiana. Id. at 52–53. However, because the defendant
advertised heavily in Kentucky, including “mass media and billboard advertising in Kentucky,
direct mail advertising to Kentucky residents, preferred customer incentives directed to Kentucky
residents, and substantial civic and charitable activities in the Commonwealth,” the court found
that there was personal jurisdiction over the defendant in Kentucky. Id. at 58.
In this case, the Court finds that the defendants have not transacted business in the
Commonwealth. See Ky. Rev. Stat. § 454.210(2)(a). Similar to the defendants in Gentry,
Envirometric, and Modern Holdings, the only contact that Logic has with Kentucky is its
contract with V-Soft, a corporation headquartered in Kentucky. See Gentry, 2016 WL 6871252,
at *3; Envirometric, 2012 WL 4023789, at *2; Modern Holdings, 2015 WL 1481443, at *7. As
in Envirometric and Modern Holdings, Logic is not licensed to do business in Kentucky, has no
physical presence in Kentucky, and performed the contracts at issue outside Kentucky. See
Envirometric, 2012 WL 4023789, at *2–3; Modern Holdings, 2015 WL 1481443, at *7.
Therefore, the Court concludes that Logic has not “transacted business” in Kentucky, and it need
not consider Logic’s due process rights at this juncture. See Caesars, 336 S.W.3d at 57.
2. Theft
Alternatively, V-Soft argues that Logic’s alleged theft “satisf[ies] the minimal contacts
requirement of the 14th amendment.” (D.N. 5-1, PageID # 58) According to V-Soft, Logic
committed theft pursuant to Ky. Rev. Stat. § 514.070, part of the Kentucky Penal Code, and this
alleged criminal activity is a sufficient basis for personal jurisdiction in Kentucky. (Id.)
Ky. Rev. Stat. § 514.070 states in relevant part:
(1) A person is guilty of theft by failure to make required disposition of property
received when:

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(a) He obtains property upon agreement or subject to a known legal obligation to
make specified payment or other disposition whether from such property or its
proceeds or from his own property to be reserved in equivalent amount; and
(b) He intentionally deals with the property as his own and fails to make the
required payment or disposition.
Ky. Rev. Stat. § 514.070(1). “[T]he Supreme Court of Kentucky [has] held that [Ky. Rev. Stat.
§] 446.070 ‘creates a private right of action for the violation of any statute so long as the plaintiff
belongs to the class intended to be protected by the statute.’” Mercy Health Partners-Lourdes,
Inc. v. Hastings, No. 5:05CV-109-R, 2006 WL 1867453, at *5–6 (W.D. Ky. June 29, 2006)
(citing State Farm Mut. Auto. Ins. Co. v. Reeder, 763 S.W.2d 116, 118 (Ky. 1988)).
“[Ky. Rev. Stat.] § 446.070 is a negligence per se statute that provides a private right of
action for some Kentucky criminal statutes,” including Ky. Rev. Stat. § 514.070, “such that the
evidence needed to convict a defendant under the criminal statute necessarily overlaps, and in
some cases, largely envelops the evidence needed to prove the claim pursuant to KRS §
446.070.” Caudill Seed & Warehouse Co. Inc. v. Jarrow Formulas, Inc., No. 3:13-CV-82-H,
2013 WL 4048541, at *6 (W.D. Ky. Aug. 9, 2013). “To make a negligence per se claim for a
violation of a statute under Section 446.070, a plaintiff must show that he is within the class of
persons which the violated statute was intended to protect.” In re Marrowbone Clinic Pharmacy,
Inc., No. 12-70065, 2014 WL 1806787, at *8 (Bankr. E.D. Ky. May 7, 2014) (citing Davidson v.
Am. Freightways, Inc., 25 S.W.3d 94, 99–100 (Ky. 2000)).
Therefore, the Court first looks to whether V-Soft is within the class of persons that Ky.
Rev. Stat. § 514.070 was designed to protect. The Kentucky Court of Appeals has explained that
Ky. Rev. Stat. § 514.070(1) “is based upon section 223.8 of the American Law Institute’s Model
Penal Code.” Blanton v. Commonwealth of Ky., 562 S.W.2d 90, 92 (Ky. Ct. App. 1978).
Commentary to an earlier draft of that section of the Model Penal Code stated:
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The section applies also where statutes require certain classes of persons who
receive funds to reserve such funds for particular purposes. Examples of this
legislation are the building contractor statutes requiring payments received on the
building contract to be used to pay laborers and materialmen, statutes requiring
factors and commission merchants to remit the net proceeds of sale of agricultural
products to the consignor, and statutes requiring retailers to collect sales taxes to
be paid over to the state.
Id. (quoting ALI Model Penal Code, Tentative Draft # 2, at 81 (1954)). The court added, “[t]he
drafters of the penal code clearly intended KRS 514.070(1) to apply to contractors who failed to
apply payments received from the owner to claims for labor and material furnished on the job.”
Id.
In this case, V-Soft alleges that Logic received funds from Bloomberg that were meant to
be paid to V-Soft for its services. This is analogous to the example of a building contractor who
receives payments that are to be used to pay for labor and materials. See Blanton, 562 S.W.2d at
92. Therefore, the Court concludes that V-Soft is within the class of persons that Ky. Rev. Stat.
§ 514.070 is meant to protect.
To survive a motion to dismiss a claim under Ky. Rev. Stat. § 446.070, the plaintiff must
satisfy the pleading requirements of Rule 9. See In re Marrowbone Clinic, No. 2014 WL
1806787, at *8 (citing Fed. R. Civ. P. 9). “Rule 9 requires the plaintiff to plead the who, what,
when, where, and how of the fraud.” Id. To prove a claim of theft under Ky. Rev. Stat. §
514.070, V-Soft must show that Logic “obtain[ed] property upon an agreement or a known legal
obligation to make a specified payment or other disposition from that property; and second, [that
Logic] intentionally deal[t] with the property as [its] own and fail[ed] to make the required
payment or disposition.” Id. (citing Ky. Rev. Stat. § 514.070).
Here, V-Soft alleges that Logic owed it $83,800 under the service agreement but failed to
make payments from November 1, 2015 to March 11, 2016. (D.N. 1-2, PageID # 9–10) V-Soft

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further states that Logic received payments from its client, Bloomberg, but “failed to remit” these
payments to V-Soft despite a “known legal obligation to use the proceeds of the payments” from
Bloomberg to pay V-Soft. (Id., PageID # 11–12) The Court finds that V-Soft’s allegations are
sufficiently specific with respect to the “who, what, when, where, and how” of the alleged theft
to satisfy Rule 9’s pleading standards. See In re Marrowbone Clinic, No. 2014 WL 1806787, at
*8 (citing Fed. R. Civ. P. 9). Therefore, V-Soft has alleged a negligence per se claim against
Logic. See Caudill Seed, 2013 WL 4048541, at *6.
a. Long-Arm Statute
As explained above, to establish personal jurisdiction in Kentucky, the Court must first
determine whether the cause of action falls under the state’s long-arm statute. See Caesars, 336
S.W.3d at 57. Kentucky’s long-arm statute provides, in relevant part:
A court may exercise personal jurisdiction over a person who acts directly or by
an agent, as to a claim arising from the person’s:
...
3. Causing tortious injury by an act or omission in this Commonwealth;
4. Causing tortious injury in this Commonwealth by an act or omission
outside this Commonwealth if he regularly does or solicits business, or
engages in any other persistent course of conduct, or derives substantial
revenue from goods used or consumed or services rendered in this
Commonwealth, provided that the tortious injury occurring in this
Commonwealth arises out of the doing or soliciting of business or a persistent
course of conduct or derivation of substantial revenue within the
Commonwealth.
Ky. Rev. Stat. § 454.210(2)(a). A negligence per se claim brought pursuant to Ky. Rev. Stat. §
446.070 is a tort. See Sadler v. Advanced Bionics, Inc., 929 F. Supp. 2d 670, 681 (W.D. Ky.
2013). V-Soft has not specified which provision of the Kentucky long-arm statute its theft claim
falls under. The only provisions that may apply to the alleged tortious injury appear to be

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subparts 3 and 4. However, subpart 3 does not apply because V-Soft has not alleged that Logic
performed any act or omission in Kentucky that resulted in V-Soft’s injury. Rather, Logic was
located in Florida and executed the agreement in New York. (D.N. 4-1, PageID # 37–38)
Additionally, for the reasons discussed above, subpart 4 does not apply because V-Soft has not
demonstrated that Logic regularly did business in the Commonwealth. See Ky. Rev. Stat. §
454.210(2)(a)(4). Therefore, V-Soft has not demonstrated that Kentucky’s long-arm statute
applies.
b. Due Process
Even assuming that V-Soft could show that Logic’s alleged tort satisfied Kentucky’s
long-arm statute, the Court concludes that exercising personal jurisdiction over Logic would
offend its federal due process rights. See Caesars, 336 S.W.3d at 57. To satisfy a due process
analysis, V-Soft must “establish with reasonable particularity sufficient ‘minimum contacts’ with
[Kentucky] so that the exercise of jurisdiction over [Logic] would not offend ‘traditional notions
of fair play and substantial justice.’” Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883,
889 (6th Cir. 2002) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Due
process limits the Court’s exercise of both general and specific personal jurisdiction. General
jurisdiction “permits a court to assert jurisdiction over a defendant based on a forum connection
unrelated to the underlying suit,” whereas specific jurisdiction is based on a connection “between
the forum and the underlying controversy.” Walden v. Fiore, 134 S. Ct. 1115, 1120 n.6 (2014).
The paradigm forums for the exercise of general jurisdiction over a corporation are those
places where the corporation is incorporated and where it maintains its principal place of
business. See Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014). Logic is incorporated in
Florida and has its principal place of business in Florida. (D.N. 4-1, PageID # 37) It has no

13

offices or employees in Kentucky, and V-Soft has presented no evidence demonstrating that
Logic’s connections with Kentucky are so “continuous and systematic” as to render it “at home”
here. See id. at 760–61. Thus, the Court cannot exercise general jurisdiction over Logic.
For a court to exercise specific jurisdiction consistent with due process, “the defendant’s
suit-related conduct must create a substantial connection with the forum State.” Walden, 134 S.
Ct. at 1121–22. A plaintiff must show that the relationship between the defendant and the state
arises “out of contacts that the defendant himself creates with the forum State,” and the
relationship must be based on the “defendant’s contacts with the forum State itself, not the
defendant’s contacts with persons who reside there.” Id. at 1121–23 (citation omitted).
The Sixth Circuit applies a three-part test to determine whether a court’s exercise of
specific jurisdiction is consistent with due process:
First, the defendant must purposefully avail himself of the privilege of acting in
the forum state or causing a consequence in the forum state. Second, the cause of
action must arise from the defendant’s activities there. Finally, the acts of the
defendant or consequences caused by the defendant must have a substantial
enough connection with the forum state to make the exercise of jurisdiction over
the defendant reasonable.
S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968); see, e.g., SFS Check,
LLC v. First Bank of Del., 774 F.3d 351, 356 (6th Cir. 2014) (applying Mohasco test).
“Purposeful availment happens when the defendant personally takes actions that create a
‘substantial connection’ with the forum state such that he can ‘reasonably anticipate being haled
into court there.’” SFS Check, 774 F.3d at 356 (citing Neogen Corp., 282 F.3d at 889). “This
‘purposeful availment’ requirement ensures that a defendant will not be haled into a jurisdiction
solely as a result of ‘random,’ ‘fortuitous’ or ‘attenuated’ contacts.” LAK, Inc. v. Deer Creek
Enters., 885 F.2d 1293, 1300 (6th Cir. 1989) (quoting Burger King v. Rudzewicz, 471 U.S. 462,
475 (1985)). “There is a difference between . . . a mere ‘collateral relation to the forum
14

State,’ . . . and the kind of substantial relationship with the forum state that invokes, by design,
‘the benefits and protections of its laws.’” Id. (quoting World–Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 293 (1980); Hanson v. Denckla, 357 U.S. 235, 251 (1958)). “The
Supreme Court has emphasized, with respect to interstate contractual obligations, that ‘parties
who “reach out beyond one state and create continuing relationships and obligations with
citizens of another state” are subject to regulation and sanctions in the other State for the
consequences of their activities.’” Id. (quoting Burger King, 471 U.S. at 473).
In LAK, Inc. v. Deer Creek Enterprises, a Michigan corporation and an Indiana
partnership entered into a contract for the sale of a piece of land in Florida. Id. at 1293. The
Michigan corporation filed suit in Michigan, alleging that the Indiana corporation had breached
the contract. Id. at 1297. The Sixth Circuit held that a Michigan district court lacked personal
jurisdiction over the Indiana partnership. Id. at 1301–02. The Indiana partnership’s only contact
with Michigan was the sales contract it entered into with a Michigan corporation and related
communications with that corporation.

Id.

The Sixth Circuit concluded that the Indiana

partnership “did not ‘reach out’ to Michigan for the purpose of creating ‘continuing relationships
and obligations’ with any citizen of that state,” and explained that “[m]ere awareness that [the
Michigan corporation] and its legal counsel were from Michigan clearly was not enough.” Id.
(citing Asahi Metal Indus. Co., Ltd. v. Superior Court of Calif., Solano Cty., 480 U.S. 102, 105
(1987)).
V-Soft alleges that Logic has the following ties to Kentucky: (1) the agreement
referenced V-Soft’s location in Kentucky; (2) the employee assigned to Bloomberg was in the
United States on a visa and the employee’s immigration issues were handled in Louisville; (3)
Logic had “significant oral and written communications” with V-Soft employees in Louisville;

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and (4) the payments were to go to V-Soft’s headquarters in Louisville. (Id., PageID # 54–55)
However, these contacts are not sufficient to show that Logic “purposefully availed” itself of the
privilege of acting in Kentucky. See Lak, 885 F.2d at 1300–02. Rather, these ties are “precisely
the sort of ‘random,’ ‘fortuitous,’ and ‘attenuated’ contacts that the Burger King Court rejected
as a basis for haling non-resident defendants into foreign jurisdictions.” Id. at 1301. These ties
demonstrate nothing more than the fact that Logic was aware that V-Soft was located in
Louisville, Kentucky, which the Sixth Circuit has held is insufficient to establish purposeful
availment. See id. at 1301–02. As in Lak, the contract between the parties was Logic’s only tie
to the forum state and the contract was executed in a different state, which indicates that Logic
“did not ‘reach out’ to [Kentucky] for the purpose of creating ‘continuing relationships and
obligations’ with any citizen of that state.” Id. at 1300.
Because V-Soft has not satisfied the “purposeful availment” test, the Court need not
consider the remaining prongs of the Mohasco test because each prong “represents an
independent requirement, and failure to meet any one of the three means that personal
jurisdiction may not be invoked.” Id. at 1303. Nevertheless, the Court will briefly consider the
remaining prongs. See id.
In Lak, the Sixth Circuit was “not persuaded that [the Michigan corporation] ha[d] shown
that its cause of action ‘arose out of’ the defendant’s activities in Michigan.” Id. The Sixth
Circuit explained that “[w]here the defendant’s contacts with the forum state are as attenuated as
they are here, . . . we think it is incumbent on the plaintiff to show affirmatively that the
fraudulent misrepresentations were actually made in the forum state.” Id. (citing Serras v. First
Tenn. Bank N.A., 875 F.2d 1212 (6th Cir. 1989)).

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Logic’s contacts with Kentucky are similarly attenuated.

As in Lak, Logic’s only

contacts with Kentucky are its contract with a business headquartered in Kentucky and several
communications with that business. See id. at 1300–02. V-Soft does not allege that the contract
was negotiated, entered into, or executed in Louisville, Kentucky. Thus, the Court finds that the
cause of action does not arise out of Logic’s activities in Kentucky.
Finally, the Court concludes that it would not be reasonable to exercise jurisdiction over
Logic. “If the question is whether an individual’s contract with an out-of-state party alone can
automatically establish sufficient minimum contacts in the other party’s home forum, we believe
the answer clearly is that it cannot.” Lak, 885 F2.d at 1305 (quoting Burger King, 471 U.S. at
478). For example, in Pickens v. Hess, the Sixth Circuit “affirmed a district court finding that it
would not be reasonable for a Tennessee court to exercise jurisdiction in a dispute arising out of
a contract for the construction of a house in Arkansas, notwithstanding that the plaintiff builder
was from Tennessee and notwithstanding that the defendant’s architect was also from Tennessee
and had dealt directly with the plaintiff builder in that state with regard to the contract.” Id. at
1304 (citing 573 F.2d 380 (6th Cir. 1978)). Similarly, in Lak, the Sixth Circuit explained that the
fact “that a Michigan plaintiff “happen[ed] to be involved in the transaction is hardly enough” to
make it reasonable for a Michigan court to exercise personal jurisdiction over the Indiana
partnership. Id. at 1305.
As in Pickens and Lak, Logic entered into a contract with a corporation in the forum state
and had related communications with that corporation. See id. (citing Pickens, 573 F.2d at 380).
However, such contact with Kentucky is not sufficient to make it reasonable for the Court to
exercise jurisdiction over Logic. See id. at 1304–05. V-Soft has not shown that Logic had a
substantial connection with Kentucky that would make the exercise of jurisdiction reasonable.

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Accordingly, V-Soft has not demonstrated that exercise of personal jurisdiction is
consistent with Kentucky’s long-arm statute and federal due process rights. See Caesars, 336
S.W.3d at 57.
III.

CONCLUSION
For the reasons explained above, and the Court being otherwise sufficiently advised, it is

hereby
ORDERED that the defendant’s motion to dismiss for lack of personal jurisdiction (D.N.
4) is GRANTED. This action is DISMISSED without prejudice and STRICKEN from the
Court’s docket.

March 31, 2017

David J. Hale, Judge
United States District Court

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