Engquist,Jr. v. Gulf Shores Power Sports, Inc.
Filing
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RULING granting 8 Motion to Dismiss. The Court does not have personal jurisdiction over Gulf Shores Power Sports, Inc.. Signed by Judge James J. Brady on 10/8/2013. (LLH)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
JOHN M. ENGQUIST, JR.
CIVIL ACTION
VERSUS
NO. 13-cv-324-JJB
GULF SHORES POWER SPORTS, INC.
RULING ON MOTION TO DISMISS
Before the Court is a motion to dismiss (doc. 8) filed by Defendant Gulf Shores Power
Sports, Inc. (“GSPS”) against Plaintiff John M. Engquist, Jr. (“Engquist”). Engquist filed an
opposition (doc. 11), and GSPS filed a reply (doc. 14). Oral argument is unnecessary. The
Court has jurisdiction over the state law claims presented in the complaint under 28 U.S.C. §
1332. For the reasons herein, the Court GRANTS the motion to dismiss.
I. Factual and Procedural Background
GSPS is a business located in Gulf Shores, Alabama, which sells and services
motorcycles, ATVs, jet skis, wave runners, boats, and vessels. GSPS does not have an office,
agent, or employee in Louisiana. GSPS has not sent any personnel to Louisiana to solicit
business. GSPS does have a website, located at www.gspowersports.com. The vessel at issue
was never shown on GSPS’s website.
In 2013, Plaintiff, a resident of Louisiana, saw an advertisement on BoatTrader.com and
subsequently began negotiating with Todd Kercher, arguably an agent of GSPS, in early May for
the purchase of a Yellow Fin boat, three Yamaha motors, and a boat trailer. Negotiations
occurred through email and telephone correspondence over a span of several weeks. During this
process, Purchase Agreements were exchanged and GSPS instructed Engquist to wire funds to
GSPS and obtain boat insurance.
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The vessel was located in Alabama. On May 9, 2013, Engquist wired a deposit payment
of $20,000 to GSPS’s bank in Alabama. After a first sea trial was canceled, Engquist traveled to
Alabama on May 17, 2013 for a test drive. That day, GSPS asserted that the sale would not be
completed. Engquist’s deposit was returned to him via overnight mail on May 17, 2013 and was
delivered to the provided address in Louisiana on May 20, 2013.
Engquist filed this suit against GSPS asserting breach of contract and requesting specific
performance. GSPS has filed a motion to dismiss, arguing that (1) this Court lacks personal
jurisdiction over GSPS; and (2) the Middle District of Louisiana is an improper venue. GSPS
argues this Court lacks personal jurisdiction because GSPS’s contacts with the state does not
give rise to either specific or general jurisdiction. GSPS further argues that the venue is improper
because there is another district where venue is proper, namely the Southern District of Alabama,
and Engquist incorrectly relied on 28 U.S.C. § 1391(c) instead of 28 U.S.C § 1391(b) in
asserting venue was proper.
II. Law and Analysis
When a nonresident defendant moves to dismiss for lack of personal jurisdiction, the
plaintiff bears the burden of establishing the district court’s jurisdiction over the nonresident,
which must be met by a prima facie showing. Choice Healthcare, Inc. v. Kaiser Found. Health
Plan of Colo., 615 F.3d 364, 368 (5th Cir. 2010). In deciding upon a motion to dismiss for lack
of personal jurisdiction, courts within the Fifth Circuit accept the plaintiff's allegations as true,
unless they are controverted by the defendant or are simply conclusory statements. Panda
Brandywine v. Potomac, 253 F.3d 865, 86 (5th Cir. 2001). Conflicts between the parties' facts
are resolved in the plaintiff's favor. Id. at 868.
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In a diversity action, a federal court may exercise personal jurisdiction over a defendant
to the extent permitted by applicable state law. Fed.R.Civ.P. 4(e)(1); Panda Brandywine, 253
F.3d at 868. Louisiana's long-arm statute authorizes the exercise of jurisdiction to the extent
allowable within the scope of the Due Process Clause. Nuovo Pignone, SpA v. STORMAN ASIA
M/V, 310 F.3d 374, 378 (5th Cir. 2002). A court's exercise of personal jurisdiction over a
nonresident defendant comports with the due process clause when (1) the defendant has
purposefully availed himself of the benefits and protections of the forum state by establishing
minimum contacts with that state and (2) the court's exercise of jurisdiction over that defendant
does not offend traditional notions of fair play and substantial justice. Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945).
The “minimum contacts” inquiry is fact intensive and no one element is decisive; rather,
the touchstone is whether the defendant purposely directed his activities towards the forum state,
such that he could reasonably foresee being hailed into court there. Luv N' Care Ltd. v. InstaMix,
Inc., 438 F.3d 465, 470 (5th Cir. 2006) (quoting World–Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 297 (1980)). “The ‘minimum contacts’ prong of the test is perhaps the most
difficult to ascertain and has been refined to determine two types of personal jurisdiction-specific
or general.” Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 418 (5th Cir. 1993).
Specific jurisdiction is present when the defendant “purposefully directed its activities at the
forum state and the litigation results from alleged injuries that arise out of or relate to those
activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). General jurisdiction is
present “[w]hen a State exercises personal jurisdiction over a defendant in a suit not arising out
of or related to the defendant's contacts with the forum,” but finds personal jurisdiction is proper
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due to the “sufficient contacts between the State and the [defendant].” Helicopteros Nacionales
de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.9 (1984).
GSPS asserts that neither general nor specific jurisdiction exists but even if this Court
determines that such jurisdiction exists, exercising jurisdiction over GSPS would offend the
notions of “fair play and substantial justice.”
To establish specific jurisdiction, a three-step analysis must be conducted, considering
“(1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely
directed its activities toward the forum state or purposefully availed itself of the privileges of
conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from
the defendant's forum-related contacts; and (3) whether the exercise of personal jurisdiction is
fair and reasonable.” Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 2006)
(citing Nuovo Pignone, SpA, 310 F.3d at 378). Purposely availing one’s self can occur through
creating “continuing obligations.” Burger King, 471 U.S. 462, 476. Merely contracting with a
resident of the forum state is insufficient to subject the nonresident to the forum's jurisdiction. Id.
at 472. If the plaintiff establishes the first two steps, the defendant has the burden to defeat
jurisdiction by showing that its exercise would be unfair or unreasonable. Nuovo Pignone, SpA,
310 F.3d at 382.
Here, the Court finds that GSPS did not purposely direct its activities towards this forum
state, nor did this litigation result from alleged injuries that arose out of, or related to, activities in
this state. GSPS has no offices in Louisiana, did not market directly to the Plaintiff, and no
representative went to Louisiana in conjunction with the transaction. Further, the email and
telephone communications were not sufficient to establish minimum contacts. See
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Freudensprung v. Offshore Tech. Servs. Inc., 379 F.3d 327, 344 (5th Cir. 2004); Antonini v. Blue
Gate Farm, LLC, 2012 WL 663211 (E.D. La. 2013).
When a cause of action does not arise out of a foreign defendant's purposeful contacts
with the forum, however, a court may exercise general jurisdiction when the defendant has
engaged in “continuous and systematic contacts” in the forum. Nuovo Pignone, SpA, 310 F.3d at
378. A general business presence is needed to exert general jurisdiction over a defendant. Access
Telecom, Inc. v. MCI Telecommunications Corp., 197 F.3d 694, 717 (5th Cir. 1999). “The
unilateral activity of those who claim some relationship with a nonresident defendant cannot
satisfy the requirement of contact with the forum State.” Hanson v. Denckla, 357 U.S. 235, 253
(1958). General jurisdiction has been found where a defendant company aimed a thorough
advertising campaign at Louisiana residents, which included radio and television advertisements;
where the defendant company conducted a three-day seminar in New Orleans, Louisiana, for the
purpose of developing business from Louisiana; and where the defendant company appointed a
sales representative to the Louisiana area specifically. See Pedelahore v. Astropark, Inc., 745
F.2d 346, 349 (5th Cir. 1984).
Here, the Court finds that GSPS did not have “continuous, systematic and substantial”
contacts sufficient to justify general jurisdiction. GSPS does not have an agent for service of
process, or any employees, representatives, or officers in Louisiana. GSPS does not own or rent
property, keep any offices, facilities, or operations in Louisiana. GSPS has not paid any taxes in
Louisiana, has no telephone listing in Louisiana, and has never filed suit in Louisiana.
Plaintiff argued that jurisdiction is established by the stream of commerce theory, which
holds that “a defendant's placing of its product into the stream of commerce with the knowledge
that the product will be used in the forum state is enough to constitute minimum contacts.”
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Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 419 (5th Cir. 1993) (citing WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298 (1980)). The stream of commerce theory
is inapplicable to this case as no contract was in existence and the vessel was never placed into
the stream of commerce by a transfer of title.
Further, Plaintiff argues that general jurisdiction is established by GSPS’s website. In
regards to websites, “the likelihood that personal jurisdiction can be constitutionally exercised is
directly proportionate to the nature and quality of commercial activity that an entity conducts
over the Internet.” Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa.
1997). The sliding scale articulated in Zippo Mfg. Co. has been adopted by the Fifth Circuit. See
Mink v. AAAA Dev. LLC, 190 F.3d 333, 336 (5th Cir. 1999)). However, it is noted that the sliding
scale “is not well adapted to the general jurisdiction inquiry, because even repeated contacts with
forum residents by a foreign defendant may not constitute the requisite substantial, continuous
and systematic contacts required for a finding of general jurisdiction-in other words, while it may
be doing business with [a state], it is not doing business in [a state].” Revell v. Lidov, 317 F.3d
467, 471 (5th Cir. 2002). Here, this Court finds that GSPS’s website did not establish general
jurisdiction.
Finding insufficient contacts, an analysis of the traditional notions of fair play and
substantial justice is not necessary, nor is a discussion of venue.
III. Conclusion; Order
Accordingly, defendants’ motion to dismiss (doc. 8) is GRANTED. The Court does not
have personal jurisdiction over Gulf Shores Power Sports, Inc.
Signed in Baton Rouge, Louisiana, on October 8, 2013.
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JAMES J. BRADY
UNITED STATES DISTRICT JUDGE
MIDDLE DISTRICT OF LOUISIANA
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