CG & JS Enterprises L.L.C. et al v. H&R Block, Inc.

Filing 26

ORDER denying 17 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Jay C. Zainey. (jrc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CG & JS ENTERPRISES, LLC, ET
AL.

CIVIL ACTION

VERSUS

NO: 14-1322

H&R BLOCK, INC., ET AL.

SECTION: "A" (1)

ORDER AND REASONS
Before the Court is a Motion to Dismiss for Lack of
Jurisdiction (Rec. Doc. 17) filed by defendant H&R Block, Inc.
Plaintiffs CG & JS Enterprises, LLC, Christopher Gibbens, and
Johnny Shaw oppose the motion. The motion, scheduled for
submission on October 22, 2014, is before the Court on the briefs
without oral argument.
Plaintiffs filed this action against H&R Block, Inc. for
damages arising out of the aborted purchase of an H&R Block
franchise located in Metairie, Louisiana. The franchise was owned
by David and Patricia Sewell. (Rec. Doc. 1-1, Petition ¶ 7).
Plaintiffs contend that after lengthy negotiations with the
Sewells, the parties reached a purchase agreement, subject to H&R
Block's right of first refusal. (Id. ¶ 9). According to
Plaintiffs, H&R Block initially approved the sale but then later
reneged. (Id. ¶¶ 12-13). Plaintiffs allege that H&R Block did not
balk at the sale until after Plaintiffs had already executed the
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sale with the Sewells and H&R Block's right of first refusal had
already expired. (Id. at ¶¶ 14-17). Plaintiffs claim that an
enforceable contract was reached and that Block's withdrawal from
the deal constituted a breach of that contract. (Rec. Doc. 1-1,
Petition ¶ 18). Alternatively, Plaintiffs claim that Block's
withdrawal constituted a tortious interference with the contract
between Plaintiffs and the Sewells. (Id. ¶ 21).
H&R Block, Inc. removed the suit to this Court based on
diversity jurisdiction. Plaintiffs are citizens of Louisiana and
H&R Block, Inc. is a citizen of Missouri. (Rec. Doc. 1, Notice of
Removal ¶¶ 12-13).
On August 26, 2014, Plaintiffs filed their Supplemental and
Amended Complaint (Rec. Doc. 16), which joined H&R Block Tax
Services, LLC as a defendant. According to Block, the amendment
followed discussions between counsel wherein counsel for Block
urged counsel for Plaintiffs to voluntarily dismiss the H&R
Block, Inc. entity because the correct defendant-entity is H&R
Block Tax Services, LLC. (Rec. Doc. 17-3, Memo in Support at 2).
H&R Block, Inc. (hereinafter "Block") now moves for
dismissal contending that it has no connection to either
Louisiana or to the transaction that forms the basis of this
action, so as to constitute "minimum contacts" for purposes of

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personal jurisdiction.1
Minimum contacts with a forum state may arise incident to a
federal court's "general" or "specific" jurisdiction over a
nonresident defendant. Guidry, 188 F.3d at 624 (citing Bullion v.
Gillespie, 895 F.2d 213, 216 (5th Cir. 1990)). Specific personal
jurisdiction exists when "the defendant has 'purposefully
directed' his activities at residents of the forum . . . and the
litigation results from alleged injuries that arise out of or
relate to those activities."2 Clemens v. McNamee, 615 F.3d 374,
378 (5th Cir. 2010) (quoting Burger King v. Rudzewicz, 471 U.S.
462, 472 (1985)). In other words, specific jurisdiction requires
a sufficient nexus between the non-resident's contacts with the
forum and the cause of action. Id. (citing Helicopteros
Nacionales de Colombia, SA, 466 U.S. 408, 414 n.8 (1984)).
When the court rules on a motion to dismiss for lack of
personal jurisdiction without holding an evidentiary hearing or

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Block moves for dismissal with prejudice but a Rule
12(b)(2) motion does not constitute an adjudication on the merits
with preclusive effect as to any issue except the jurisdictional
one. See Rolls-Royce Corp. v. Heros, Inc., 576 F. Supp. 2d 765,
777 (N.D. Tex. 2008). Thus, a dismissal for lack of personal
jurisdiction is effected without prejudice to the plaintiff's
right to refile the suit in a forum that can properly exercise
jurisdiction. Saudi v. S/T MARINE ATLANTIC, 159 F. Supp. 2d 505,
509 (S.D. Tex. 2000) (citing Guidry v. U.S. Tobacco Co., 188 F.3d
619, 623 (5th Cir. 1999)).
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It is clear from Plaintiffs' memorandum in opposition that
they are relying upon specific personal jurisdiction so the Court
limits its analysis to that species of jurisdiction.
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allowing discovery, the nonmoving party need only make a prima
facie showing of jurisdiction. Guidry, 188 F.3d at 625 (citing
Latshaw v. Johnson, 167 F.3d 208, 211 (5th Cir. 1999)). The court
must accept as true the nonmover's allegations and resolve all
factual disputes in its favor. Id. Any conflicts between the
facts as established by the respective parties' evidence must be
resolved in the plaintiff's favor. Jones v. Petty-Ray Geoph.
Geosource, Inc., 954 F.2d 1061, 1067 (5th Cir. 1992) (citing D.J.
Invests., Inc. v. Metzeler Motor. Tire Agent Gregg, Inc., 754
F.2d 542, 545 (5th Cir. 1985)).
The decision whether to allow jurisdictional discovery rests
within the sound discretion of the district court. Monkton Ins.
Servs., Ltd. v. Ritter, 768 F.3d 429 (5th Cir. 2014) (citing
Davila v. United States, 713 F.3d 248, 263-64 (5th Cir. 2013)).
The plaintiff, as the party opposing dismissal and requesting
discovery, bears the burden of demonstrating the necessity of
discovery. Id. A plaintiff is not entitled to jurisdictional
discovery when "the record shows that the requested discovery is
not likely to produce the facts needed to withstand a Rule
12(b)[2] motion." Id. (quoting Freeman v. United States, 556 F.3d
326, 342 (5th Cir. 2009)).
Block has submitted a report from the Louisiana Secretary of
State's website and this report indicates that Block is not a

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Louisiana corporation.3 (Rec. Doc. 17-1, Exhibit 1). Block has
also submitted a declaration from its Vice President and
Secretary, Mr. Scott W. Andreasen. Andreasen attests inter alia
that Block conducts no business with clients directly, is located
in Missouri, does not conduct business in Louisiana, has no
employees in Louisiana. (Rec. Doc. 17-1, Exhibit 2). These
assertions would undermine a claim of general personal
jurisdiction, but that type of jurisdiction is not at issue in
this case.
Relevant to specific jurisdiction, Andreasen attests that
Block was never a party to a franchise agreement with any party
to this lawsuit and was not involved in the process of reviewing,
approving, and disapproving Plaintiffs as potential franchisees.
Id. If these assertions are correct, then specific jurisdiction
will most likely be lacking.
But in opposition Plaintiffs have submitted correspondence
from persons who appear to be employees of some H&R Block entity.
An email to Plaintiffs from what appears to be an in-house
attorney indicates that her location is Missouri, where Block is
located. (Rec. Doc. 21 Exhibit A). Three letters from persons
affiliated with some Block entity are also in the record. (Id.
Exhibits B, C, & D). The letterhead is equivocal at best as to

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This point is an obvious one because if Block were a
Louisiana corporation then the Court would not have subject
matter jurisdiction over this action.
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which entity employed these persons and the letterhead contains
no office address to refute the suggestion that these employees
are located at Block's Missouri office.
The Court is persuaded that Plaintiffs should be given the
opportunity to conduct jurisdictional discovery. It would be
unfair to allow Block's self-serving assertion regarding the role
of its employees to control in light of the foregoing record
evidence. Block points out that Plaintiffs have not refuted the
assertion made in Andreasen's affidavit, (Rec .Doc. 23-2, Block's
reply at 2), but Plaintiffs cannot reasonably be expected to do
so without the benefit of jurisdictional discovery.
Finally, the Court notes that the record fails to establish
that Plaintiffs and the new defendant, H&R Block Tax Services,
LLC, are diverse in citizenship. The Amended Complaint alleges
that H&R Block Tax Services, LLC is "a Missouri limited liability
company" but this statement is inadequate for purposes of
determining the LLC's citizenship. See Harvey v. Grey Wolf
Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008) (holding that
the citizenship of an LLC is determined by the citizenship of all
of its members).
Accordingly, and for the foregoing reasons;
IT IS ORDERED that the

Motion to Dismiss for Lack of

Jurisdiction (Rec. Doc. 17) filed by defendant H&R Block, Inc. is
DENIED;
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IT IS FURTHER ORDERED that by Monday, November 10, 2014,
defendant H&R Block Tax Services, LLC shall file into the record
a declaration that lists all of the entity's members and their
citizenship.
October 31, 2014

_______________________________
JAY C. ZAINEY
UNITED STATES DISTRICT JUDGE

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