Allianz Global Corporate & Specialty et al v. Advantage Aviation Technologies, Inc.
Filing
20
ORDER Denying Defendant's 5 Motion to Dismiss and Deying Plaintiff's 9 Motion for Limited Discovery - Signed by District Judge Judith E. Levy. (FMos)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Allianz Global Corporate &
Specialty; Patton Holdings, Inc.;
Ann Arbor Aviation Partners,
LLC; Flagship Private Air, LLC,
Case No. 13-cv-14439
Hon. Judith E. Levy
Plaintiffs,
v.
Advantage Aviation Technologies,
Inc.,
Defendant.
________________________________/
ORDER DENYING DEFENDANT’S MOTION TO DISMISS [5]
AND DENYING AS MOOT PLAINTIFF’S
MOTION FOR LIMITED DISCOVERY [9]
This is a case arising from the alleged improper repair of the nose
gear of an airplane. This case is before the Court on defendant’s motion
to dismiss for lack of personal jurisdiction (Dkt. 5), and plaintiffs’
motion for limited discovery for facts supporting general jurisdiction
over defendant. (Dkt. 9.)
I.
Background
Plaintiffs Patton Holdings, Inc. (“Patton”), Ann Arbor Aviation
Partners, LLC (“AAAP”), and Flagship Private Air, LLC (“Flagship”),
and their subrogee, Allianz Global Corporate & Specialty (“Allianz”),
allege claims against defendant, Advantage Aviation Techs, Inc., a
Texas corporation, for breach of contract, negligence, breach of express
warranty, breach of implied warranty of fitness, breach of implied
warranty of merchantability, unjust enrichment, negligence per se, and
fraud. These claims arise from an October 31, 2012 incident in which a
2002 Piaggio P180 owned and operated by subrogor plaintiffs veered off
of a runway in Boyne City, Michigan, following defendant’s repair,
overhaul, and inspection of the plane’s landing gear systems.
For the purposes of a motion to dismiss a claim for lack of
personal jurisdiction under Fed. R. Civ. P. 12(b)(2), plaintiffs bear the
burden of making a prima facie case for jurisdiction. Welsh v. Gibbs,
631 F.2d 436, 438 (6th Cir. 1980).
The Court “does not weigh the
controverting assertions of the party seeking dismissal.” Theunissen v.
Matthews, 935 F.2d 1454, 1459 (6th Cir. 1991). As such, the following
recitation of background facts is derived solely from plaintiffs’ briefing
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on this motion, and should not be considered a finding by the Court as
this litigation advances.
In April 2012, Flagship sought bids for repair and overhaul of the
P180’s landing gear systems, including the nose gear system. Piaggo
representatives referred Flagship to defendant and another repair
facility.
On April 30, 2012, defendant’s sales representative sent a
signed quote to Flagship in Michigan promising to do the needed
repairs for $195,000, and offering a five-year or 2,500-landing warranty.
Flagship mailed the parts to defendant in July 2012. On July 16,
2012, defendant’s representative e-mailed Flagship to inform it that
defendant could begin repairs on the P180 after Flagship returned a
signed quote and paid a $75,000 deposit. Flagship did so on July 17th,
and AAAP paid the deposit on Flagship’s behalf. On the 17th and 18th
of July, defendant’s representative and Flagship corresponded via email concerning missing parts and other information about the repair.
On July 25, 2012, defendant’s representative e-mailed Flagship to
inform Flagship of different repairs defendant was doing on another
customer’s aircraft.
Defendant’s representative also stated that the
other customer was saving “quite a bit of money” and wanted to “pass
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this on to [Flagship] to see if [its repairs on those parts] are due.” (Dkt.
10-3, at 8.)
For the rest of July and August 2012, Flagship and defendant’s
representative exchanged electronic mail regarding various aspects of
the repair. On August 16, 2012, the representative e-mailed Flagship to
let it know that defendant was awaiting delivery of LEE plugs
necessary for the repairs, which were on backorder.
Rather than
continue waiting, defendant fabricated the plugs itself and slightly
delayed the return shipping date for the landing gear.
On September 5 and 6, 2012, defendant’s representative and
Flagship negotiated shipping and the final invoice cost; the parties
agreed that the landing gear systems would be shipped FOB to Flagship
in Michigan.
On September 11, 2012, AAAP paid defendant the
remaining balance due of $145,325.00 on behalf of Flagship. Defendant
shipped the landing gear systems back to Flagship on September 14,
2012; Flagship received the systems on September 16, 2012.
When Flagship received the parts on September 16th, it noticed
that the main landing gear actuators were improperly aligned. It called
defendant that day, and defendant instructed Flagship over the phone
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how to properly realign the actuators. Flagship also noticed that the
right hand main landing gear drag brace lower bushing was not
properly ground down. Flagship sent the bushing back to defendant for
resizing; defendant resized the part and returned it to Flagship on
September 18, 2012. These additional repairs were done pursuant to
defendant’s five-year warranty.
The runway incident occurred on October 31, 2012, which
plaintiffs determined occurred due defendant’s faulty repair of the
plane’s nose gear. Plaintiffs filed suit against defendant on October 23,
2013. The Court held a hearing on this motion on July 7, 2014, and oral
argument was heard.1
II.
Standard
The burden in a Rule 12(b)(2) motion is on plaintiffs to establish
jurisdiction over defendant.
Welsh, 631 F.2d at 438.
If the Court
The Court noted on the record that the hearing was taking place solely
on the briefs and oral argument, and it was not conducting a pretrial
evidentiary hearing. See Serras v. First Tenn. Bank Nat. Ass’n, 875
F.2d 1212, 1214 (6th Cir. 1989). No additional discovery was ordered,
nor was additional evidence beyond that contained in the briefing
considered. Accordingly, plaintiffs need only make a prima facie
showing that personal jurisdiction exists. Id. (holding that if an
evidentiary hearing is held, the plaintiff’s burden rises to a
preponderance of the evidence standard).
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determines that it will decide the issue based solely on the written
materials submitted, the plaintiff need only make a prima facie case for
jurisdiction. Id. The Court must consider the pleadings and affidavits
in the light most favorable to plaintiff. Id. at 439.
“[P]ersonal jurisdiction over a defendant exists if the defendant is
amenable to service of process under the [forum] state’s long-arm
statute and if the exercise of personal jurisdiction would not deny the
defendant[] due process.” Bird v. Parsons, 289 F.3d 865, 871 (6th Cir.
2002).
III.
Analysis
Plaintiffs argue that limited personal jurisdiction exists over
defendant based on three provisions of Michigan’s long-arm statute,
M.C.L. §§ 600.715(1), (2), and (5), which state:
The existence of any of the following relationships between a
corporation . . . and the state shall constitute a sufficient
basis of jurisdiction to enable [the Court] to exercise limited
personal jurisdiction over such corporation and to enable
such courts to render personal judgments against such
corporation arising out of the act or acts which create any of
the following relationships:
(1) The transaction of any business within the state.
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(2) The doing or causing any act to be done, or consequences
to occur, in the state resulting in an action for tort.
[. . . .]
(5) Entering into a contract for services to be performed or
for materials to be furnished in the state by the defendant.
Defendant argues that none of these provisions suffice to
establish jurisdiction over it, as it only conducts business in the
state of Texas.
A. Limited Jurisdiction Exists Under M.C.L. § 600.715(1)
When determining whether defendant did business in the
state of Michigan, the Court must determine whether defendant
has “reach[ed] out beyond one state [to] create continuing
relationships and obligations with citizens of another state.”
Travelers Health Ass’n v. Virginia, 339 U.S. 643, 647 (1950).
Jurisdiction “may not be avoided merely because the defendant
did not physically enter the forum State.” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 476 (1985).
A party need only
“purposefully direct[]” its efforts toward a citizen of another state.
Id.
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Under Michigan law, the phrase “any business” confers a
broad and sweeping scope of jurisdiction, encompassing the
“slightest” business transaction. Sifers v. Horen, 385 Mich. 195,
199 n.2 (1975). Plaintiff, based on its statement of facts outlined
above, has undeniably met its burden and shown that defendant
conducted business in the state of Michigan.
Defendant
performed repairs on airplane parts for Michigan customers.
Defendant fashioned parts for the customers as a part of the
repair. Defendant shipped those parts back to the customers, and
provided a five-year warranty on its repairs, knowing that
Michigan would be the primary place the repaired parts would be
used. Defendant honored that warranty twice, and did so once
over the phone while the customer performed further repairs, at
Defendant’s instruction, in the state of Michigan.
Further, at
least once during the repair process, defendant attempted to
solicit its Michigan customers for further business repairing other
airplane parts.
Defendant not only conducted business in
Michigan, it created a continuing relationship with and obligation
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to its Michigan customers by providing a five-year warranty on
the products it serviced.
Defendant denies that it did business in Michigan, and relies
heavily on a Sixth Circuit case, Kerry Steel, Inc. v. Paragon, to
support its argument. In that case, a Michigan company reached
out to and entered into a single-transaction contract with an
Oklahoma company to sell it steel coils. Kerry, 106 F.3d 147, 148
(6th Cir. 1997). The Michigan company delivered the coils to a
warehouse in Illinois, where the Oklahoma company took
possession but refused to pay the full purchase price because of
alleged nonconformity with agreed quality standards. Id. The
court determined that there was no jurisdiction in Michigan over
an Oklahoma defendant where that defendant never entered the
state, had no employees or offices in the state, and no employee of
defendant had ever entered the state. Id. at 151. The Oklahoma
defendant never “reached out” to do business in Michigan, and
never
“intended
to
establish
obligations in Michigan.”
continuing
relationships
and
Id. (internal quotation marks and
further citations omitted).
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That case is fundamentally different from this one. Kerry
concerned a one-shot transaction that physically took place in
Illinois; the parties had no intention of ever doing business with
each
other
again.
In
this
case,
defendant
repeatedly
communicated with the Michigan plaintiffs and mailed parts back
and forth between Michigan and Texas.
Moreover, defendant
actively solicited further business from plaintiffs and provided a
five-year warranty to plaintiffs – which they used, in Michigan,
immediately after receiving the parts back from defendant.
Kerry also concerned a transaction where the out-of-state
company never sent anything to nor received anything directly
from Michigan. Here, defendant received a shipment sent by its
Michigan customer, and sent a return shipment back to Michigan
which it warranted for five years. Further, defendant fabricated
and sent its own additional parts to Michigan, and warranted
those parts for five years.
Accordingly, plaintiffs have succeeded in making the
required showing that defendant conducted business within the
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state of Michigan. As a result, this section of Michigan’s long-arm
statute reaches defendant.
B. Limited Jurisdiction Exists Under M.C.L. § 600.715(2)
Jurisdiction exists under M.C.L. § 600.715(2) where “either
the tortious conduct or the injury . . . occur[s] in Michigan.” Green
v. Wilson, 455 Mich. 342, 352 (1997). Plaintiffs allege defendant
committed the tort of negligence, and that the injury from that
tort occurred in Boyne City, Michigan when the landing gear
defendant was to have repaired malfunctioned. Accordingly, this
section of Michigan’s long-arm statute reaches defendant.
C. Limited Jurisdiction Exists Under M.C.L. § 600.715(5)
Jurisdiction exists under M.C.L. § 600.715(5) where the
defendant has contracted to provide services or furnish materials
within the state of Michigan. Interpreting Michigan’s long-arm
statute, the Sixth Circuit has held that jurisdiction can exist
where a defendant performs acts as minor as providing passwords
or test results to customers, even where all of the substantive
services provided by a defendant were performed in another state.
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See Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 889
(6th Cir. 2002).
Defendant contracted to provide repaired airplane parts to
plaintiffs, and also fabricated additional materials for use in the
repairs.
It also contracted to provide warranty and support
services for a Michigan company, and did so. Defendant’s contract
with plaintiffs required it both to provide services and furnish
materials within the state of Michigan.
Defendant argues that there should be no jurisdiction under
this section because it sent the repaired parts to plaintiffs via
common carrier, and did not bring the parts to Michigan itself.
The Michigan Supreme Court has stated that the relevant inquiry
is not how the goods got to Michigan, but instead whether the
contract required delivery of goods to “a specific Michigan
address.” Starbrite Distrib., Inc. v. Excelda Mfg. Co., 454 Mich.
302, 304 (1997). Accordingly, this section of Michigan’s long-arm
statute also reaches defendant.
D. The Exercise of Jurisdiction Over Defendant Comports
With Due Process
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The Court now turns to whether the exercise of jurisdiction
will deny defendant due process. Bird, 289 F.3d at 871. To satisfy
due process, the Court must determine whether “the defendant's
conduct and connection with the forum state are such that he
should reasonably anticipate being haled into court [in the forum
state].” Mich. Coal. Of Radioactive Material Users, Inc. v.
Griepentrog, 954 F.2d 1174, 1176 (6th Cir. 1992) (citing World–
Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980))
(alterations in original). To make this determination, the Sixth
Circuit uses a three-part test:
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.
Id.
Defendant argues only that the second part of this test is not
met, because it did not conduct any activity in the state of
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Michigan. Regardless, the Court will address all three parts of
the test.
The first part of the test is met, as defendant contracted with
a Michigan resident, creating a continuing obligation lasting at
least five years. See Cole v. Mileti, 133 F.3d 433, 436 (6th Cir.
1998).
Defendant knew it was contracting with Michigan
residents, and knew that the residents would primarily be
conducting business in Michigan using the parts it repaired.
The second part of the test is met, as all of the causes of
action in the present case arise from defendant’s continuing
obligations in Michigan. Id. Defendant would have the Court
read the word “activities” as requiring the defendant to physically
perform an act in the forum state. Interpreting this prong of the
test in this manner would entirely negate the otherwise
permissible
exercise
of
jurisdiction
over
defendants
who
purposefully directed their activities at a forum state without
entering the state. See, e.g., Lanier v. Am. Bd. Of Endodontics,
843 F.2d 901, 906 (6th Cir. 1988) (holding that jurisdiction was
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proper where a non-Michigan resident communicated with a
Michigan resident exclusively via phone and mail).
The third part of the test is met, as defendant was aware it
was repairing plane parts for companies that operated primarily
out of Michigan. Any issue arising from defendant’s repairs of the
landing gears was overwhelmingly likely to happen in Michigan.
Further, the consequence defendant allegedly caused – the plane
veering off the runway – occurred in Michigan.
Defendant relies on the Supreme Court’s decision in Walden v.
Fiore, 571 U.S. ____, 134 S. Ct. 1115 (2014) to support its argument that
the exercise of jurisdiction over it does not comport with due process.
That case is readily distinguishable.
In Walden, a Georgia police
officer, who was serving as a deputized DEA agent, seized nearly
$97,000 in cash held by two people traveling from San Juan to Las
Vegas through the Atlanta airport. Id. at 1119. The officer received
communications from the travelers’ attorney in Nevada concerning the
legitimacy of the funds. Id. The officer also helped draft an affidavit to
show probable cause for the forfeiture of funds for the DEA.
Id.
Eventually, the DEA returned the funds to the travelers, and the
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travelers sued in Nevada, claiming a violation of their Fourth
Amendment rights. Id. at 1120.
The Court determined that the officer lacked sufficient minimum
contacts with Nevada to exercise personal jurisdiction, as his contacts
with Nevada were “random, fortuitous, or attenuated.”
(citing Burger King, 471 U.S. at 475).
Id. at 1123
In Walden, the officer was
stationed at the Atlanta airport, and seized a bag that could have been
headed anywhere. The officer’s purpose was to investigate potential
criminal activity occurring in the Atlanta airport, regardless of the
origin or destination of any evidence or person he investigated. The
officer did not purposefully target Nevada or any Nevada citizen, nor
did he intend for any action taken at the Atlanta airport to have
consequences in Nevada. That consequences occurred in Nevada was,
as the Supreme Court stated, random and attenuated to the defendant
officer’s action in Georgia.
The Walden opinion has no bearing on the exercise of jurisdiction
over defendant in this case.
There was nothing random, fortuitous, or
attenuated about defendant negotiating a landing gear repair contract
with Michigan residents for a plane regularly operated in Michigan,
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receiving parts from and returning parts to Michigan, providing a fiveyear warranty to the Michigan residents covering the work done and
parts used, and assisting with further repairs done in Michigan under
that warranty. Accordingly, the exercise of personal jurisdiction by the
Court comports with due process.
IV.
Conclusion
For the reasons set forth above,
Defendant’s motion to dismiss for lack of personal jurisdiction is
DENIED; and
Plaintiff’s motion for limited discovery is DENIED AS MOOT.
IT IS SO ORDERED.
Dated: July 22, 2014
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
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CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court=s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on July 22, 2014.
s/Felicia M. Moses
FELICIA M. MOSES
Case Manager
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