Dreher v. DGU Insurance Associates, LLC et al
Filing
21
ORDER AND REASONS denying 9 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Susie Morgan. (bwn)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
PAUL DREHER,
CIVIL ACTION
Plaintiff
VERSUS
NO. 13-6792
DGU INSURANCE ASSOCIATES,
LLC, et al.
SECTION "E"
Defendants
ORDER AND REASONS
The Court has pending before it Defendant Rodney R. Ayer's motion to dismiss
for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).1
The Court has reviewed the briefs and the applicable law and now issues this Order and
Reasons.
BACKGROUND
In 2008, Plaintiff Paul Dreher accepted a job with Phoenix LLC as manager of its
New Orleans office.2 As a term of employment, Plaintiff negotiated for severance pay of
one year's salary. Defendant Rodney Ayer was President and sole member of Phoenix
LLC, and also the subject of a federal investigation for insurance fraud at the time. In
2010, Plaintiff was told Phoenix was "rebranding" and would henceforth do business
under the name of DGU Insurance Associates, also a Defendant in this case. In fact,
Phoenix sold all of its assets to DGU, which was a separate corporate entity. But from
Plaintiff's perspective, nothing changed and he continued to manage the New Orleans
R. Doc. 9.
Except where otherwise noted, the Court draws these facts from Plaintiff's state-court petition
and accepts them as true for the purpose of deciding this Rule 12 motion.
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2
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office under the apparent new name. In 2012 Phoenix LLC dissolved without Plaintiff's
knowledge. In 2013, Plaintiff was terminated by DGU and was not paid any severance.
Only at this time, Plaintiff discovered he had no employment contract with DGU and
Phoenix had dissolved.
Plaintiff filed suit in this Court against DGU and against Ayer "individually and in
his capacity as member of and successor in liability to Phoenix,"3 seeking his severance
pay from either or both. As relates to the Ayer's contacts with the forum, the petition
alleges that Ayer (1) offered the job to Plaintiff and confirmed the offer in a letter, and
(2) conducted email negotiations regarding the terms of employment.4
Ayer now moves to dismiss, contending that he is not subject to personal
jurisdiction in the Eastern District of Louisiana for claims arising out of the operation of
Phoenix, LLC. Ayer supplements Plaintiff's limited factual allegations with an affidavit
representing that all communication between him and Plaintiff were in his capacity as
an officer of Phoenix, and emphasizing his lack of any other contacts with Louisiana.5
LAW & ANALYSIS
"Where a defendant challenges personal jurisdiction, a party seeking to invoke
the power of the court bears the burden of proving that jurisdiction exists." Luv N'
Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006). "The plaintiff need not,
however, establish jurisdiction by a preponderance of the evidence; a prima facie
showing suffices." Id. The court "must resolve all undisputed facts submitted by the
plaintiff" in favor of jurisdiction. See id.
In this diversity action, the Court "has personal jurisdiction over a nonresident
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R. Doc. 1-2 at 1.
R. Doc. 1-2 at 2.
R. Doc. 9-4.
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defendant to the same extent as a state court" in Louisiana. See Walk Haydel & Assocs.,
Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 242 (5th Cir. 2008). The Louisiana longarm statute is "coextensive with constitutional due process limits." Id. Therefore, the
Court has personal jurisdiction over a defendant if "the defendant has purposefully
availed himself of the benefits and protections of the forum state by establishing
minimum contacts with the forum state, and (2) exercise of jurisdiction over that
defendant does not offend traditional notions of fair play and substantial justice." Id.
The Court has specific jurisdiction "when a nonresident defendant has purposefully
directed its activities at the forum state and the litigation results from alleged injuries
that arise out of or relate to those activities." Id.
Ayer contends that the Court lacks personal jurisdiction over him because of the
fiduciary shield doctrine, "which holds that an individual's transaction of business
within the state solely as a corporate officer does not create personal jurisdiction over
that individual though the state has in personam jurisdiction over the corporation."
Stuart v. Spademan, 772 F.2d 1185, 1197 (5th Cir. 1998). As set forth in his affidavit, all
his contacts with Louisiana were in his capacity as an officer of Phoenix and he lacks any
other substantial contacts with Louisiana. Therefore, he contends, due process forbids
asserting jurisdiction over him in Louisiana.6
Plaintiff responds that he needs jurisdictional discovery to challenge the facts
asserted in Ayer's affidavit. Plaintiff also contends that he has stated a prima facie case
of personal jurisdiction based on Ayer's ownership of Phoenix, which did business in
Louisiana, and based on Ayer's potential successor liability for Plaintiff's claim against
Phoenix.
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R. Doc. 9-1 at 5-7.
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The Court has reviewed the briefs and concludes that Plaintiff has established a
prima facie case of personal jurisdiction over Ayer as a successor to Phoenix's potential
liability to Plaintiff. It is beyond dispute that the Court would have specific personal
jurisdiction over Phoenix with respect to Plaintiff's claims if Phoenix still existed. It is
equally well-settled that a court can "exercise personal jurisdiction over an individual or
a corporation that would not ordinarily be subject to personal jurisdiction in that court
when the individual or corporation is an alter ego or successor of a corporation that
would be subject to personal jurisdiction in that court." Patin v. Thoroughbred Power
Boats, Inc., 294 F.3d 640, 653 (5th Cir. 2002). Thus, if Phoenix is potentially liable to
Plaintiff and Ayer is a successor to that liability, the Court can exercise personal
jurisdiction over Ayer.
Plaintiff contends he is owed severance pursuant to his employment contract,
either from Phoenix or DGU (or both). The record suggests that Phoenix was a New
Jersey-organized LLC and dissolved in 2010. New Jersey law, both before and after
recent amendment, sets forth a framework in which LLCs can notify creditors of
dissolution and avoid claims not asserted after that notice, but which exposes former
members of a dissolved LLC to personal liability for claims against the LLC by creditors
who did not receive proper notice. See N.J. Stat. Ann. §§ 42:2B-49.1, 49.2 (repealed
2012); N.J. Stat. Ann. §§ 42:2C-50, 51. Plaintiff asserts that Phoenix gave him no notice
of its dissolution or opportunity to file a claim to assert his contractual rights. At this
stage of the proceedings, when it is Plaintiff's burden only to show a prima facie case of
personal jurisdiction over Ayer, this suffices to establish Ayer's potential liability as a
successor to Phoenix's potential liability to Plaintiff.
In opposition to this successor-liability theory, Ayer contends that Plaintiff
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actually knew about the Phoenix/DGU asset sale, and that any claim against Phoenix
did not become viable until after it was dissolved.7
These arguments are directed
towards the merits of Plaintiff's claim. Thus, they are premature at this stage and can be
renewed in a motion for summary judgment after discovery and development of the
record.
CONCLUSION
For the foregoing reasons, the motion to dismiss is DENIED.
New Orleans, Louisiana, this 24th day of June, 2014
___________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE
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R. Doc. 2-4.
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