BioFuels Automation, Inc. v. Kiewit Energy Company et al

Filing 25

ORDER granting 4 Motion to Dismiss for Lack of Jurisdiction (Written Opinion). Signed by Senior Judge David S. Doty on 7/28/2010. (PJM)

BioFuels Automation, Inc. v. Kiewit Energy Company et al

Doc. 25

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA Civil No. 10-610(DSD/FLN) BioFuels Automation, Inc., Plaintiff, v. Kiewit Energy Company and Delta-T Corporation, Defendants. C. John Jossart, Esq., James J. Kretsch, Jr. and Kretsch & Gust, 5151 Edina Industrial Boulevard, Suite 650, Edina, MN 55439, counsel for plaintiff. Curtis D. Smith, Esq. and Moss & Barnett, 90 South Seventh Street, Suite 4800, Minneapolis, MN 55402, counsel. ORDER

This matter is before the court on the motion of defendant Kiewit Energy Company ("KEC")1 to dismiss for lack of personal jurisdiction. Based upon a review of the file, record and

proceedings herein, and for the following reasons, the court grants KEC's motion.

BACKGROUND This diversity action arises out of KEC's construction of an ethanol plant in Indiana in 2007 ("the Project"). (Gage Aff. ¶ 3.)

KEC is a Delaware corporation with its principal place of business in Houston, Texas. (Gage Aff. ¶ 2.) KEC provides engineering, procurement and construction services to the oil, gas and refining industries. (Id.) KEC is an independent, whollyowned subsidiary of Kiewit Corporation. (Id.)

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On September 25, 2007, KEC entered into a contract with defendant Delta-T Corporation ("Delta-T")2 wherein Delta-T agreed to procure materials for the Project. (Id. ¶ 4; Compl. ¶ 9.) In turn, on

July 19, 2008, Delta-T entered into a contract with plaintiff BioFuels Automation, Inc. ("BioFuels")3 wherein BioFuels agreed to sell control valves and other products to Delta-T for use in the Project. (Compl. ¶ 7.)

In August 2008, KEC, Delta-T and BioFuels entered into a joint check agreement (the "Agreement") wherein KEC agreed to pay for the products BioFuels supplied to Delta-T for the Project.

(Eschenbacher Aff. ¶ 2, Ex. 1; Gage Aff. ¶ 5.)

The Agreement

stated that KEC would deliver to Delta-T joint checks payable to Delta-T and BioFuels. (Eschenbacher Aff. ¶ 2, Ex. 1.) Delta-T (Id.) In

would then endorse and deliver the checks to BioFuels.

accordance with the Agreement, on August 21, 2008, KEC sent two checks to Delta-T at its office in Virginia, payable to Delta-T and BioFuels. (Id. ¶ 4, Ex. 2; Gage Aff. ¶ 6.) BioFuels claims that

KEC later stopped making payments for the products it supplied. (Eschenbacher Aff. ¶ 6.)

Delta-T is a Virginia corporation engaged in ethanol technology design with its principal place of business in Williamsburg, Virginia. (Compl. ¶ 4.) BioFuels is a Minnesota corporation with its principal place of business in Plymouth, Minnesota. (Compl. ¶ 2.) BioFuels provides materials, services and equipment to the renewable fuels industry. (Id.) 2
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BioFuels brought this action on March 2, 2010, asserting claims against KEC and Delta-T4 for breach of contract, unjust enrichment, replevin, conversion, account stated and estoppel. Specifically, BioFuels asserts that KEC and Delta-T owe it

$224,920.24 for products they received from BioFuels.

KEC now

moves to dismiss this action pursuant to Federal Rule of Civil Procedure 12(b)(2).

DISCUSSION I. Standard of Review To survive a motion to dismiss for lack of personal

jurisdiction pursuant to Rule 12(b)(2), a plaintiff must establish a prima facie case that the forum state has personal jurisdiction over the defendant. See Stevens v. Redwing, 146 F.3d 538, 543 (8th Cir. 1998). In the absence of an evidentiary hearing, a court

"must look at the facts in the light most favorable to the nonmoving party and resolve all factual conflicts in favor of that party." Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d A federal court

1384, 1387 (8th Cir. 1991) (citations omitted).

may assume jurisdiction over a nonresident defendant "only to the extent permitted by the long-arm statute of the forum state and by

On May 10, 2010, the Clerk of Court entered default judgment in favor of BioFuels against Delta-T in the amount of $225,080.94 pursuant to Federal Rule of Civil Procedure 55(b)(1). (Doc. No. 13.) 3

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the Due Process Clause."

Romak USA, Inc. v. Rich, 384 F.3d 979, Because the Minnesota to the fullest extent

984 (8th Cir. 2004) (quotations omitted). long-arm statute "confers jurisdiction

permitted by the Due Process Clause," the court need only consider due process requirements. Coen v. Coen, 509 F.3d 900, 905 (8th

Cir. 2007) (citation omitted). To satisfy due process, a defendant must have "sufficient minimum contacts" with the forum state such that maintaining the suit "does not offend traditional notions of fair play and

substantial justice."

Romak, 384 F.3d at 984.

"Sufficient

contacts exist when [a] defendant's conduct and connection with the forum state are such that [it] should reasonably anticipate being haled into court there." Coen, 509 F.3d at 905 (citation and

quotation omitted). A defendant should reasonably anticipate being haled into court in a forum state within which it "purposefully avail[ed] [it]self of the privilege of conducting activities, ... thus invoking the benefits and protections of [the state's] laws." Id. (citation omitted). A court considers five factors to measure

minimum contacts: "(1) the nature and quality of a defendant's contacts with the forum state; (2) the quantity of such contacts; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents

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and

(5)

the

convenience

of

the

parties."

Dever

v.

Hentzen

Coatings, Inc., 380 F.3d 1070, 1073-74 (8th Cir. 2004). gives significant weight to the first three factors. II. Jurisdictional Discovery As a preliminary matter, the court considers

The court

See id.

BioFuels's

request for additional jurisdictional discovery. information about the contacts of KEC's

BioFuels seeks corporation,

parent

subsidiaries, divisions and affiliated companies with Minnesota. The court may allow jurisdictional discovery if the plaintiff offers "documentary evidence, and not merely speculations or

conclusory allegations" of the defendant's minimum contacts with the forum state. 2008). Steinbuch v. Cutler, 518 F.3d 580, 589 (8th Cir.

In other words, a plaintiff's request for jurisdictional

discovery must be "specifically targeted to flesh out connections already shown to exist," not merely an attempt "to cast a wide net for potential contacts with the forum state." Greenbelt Res. Corp. v. Redwood Consultants, LLC, 627 F. Supp. 2d 1018, 1028 (D. Minn. 2008). "Personal jurisdiction can be properly asserted over a

corporation if another is acting as its alter ego, even if that alter ego is another corporation." Epps. v. Stewart Info. Servs.

Corp., 327 F.3d 642, 649 (8th Cir. 2003) (citations omitted); Lakota Girl Council, Inc. v. Havey Fund Raising Mgmt., Inc., 519 F.2d 634, 637 (8th Cir. 1975). 5 In such situations, "a court's

assertion of jurisdiction is contingent on the ability of the plaintiff[] to pierce the corporate veil." (citation omitted). Epps, 327 F.3d at 649

Under Minnesota law, the court applies the

"instrumentality" or "alter ego" approach to pierce the corporate veil, examining the "reality and not [the] form, [of] how the corporation operated and the individual defendant's relationship to that operation." Victoria Elevator Co. v. Meriden Grain Co., 283

N.W.2d 509, 512 (Minn. 1979); Assoc. of Mill & Elevator Mut. Ins. Co. v. Barzen Int'l, 553 N.W.2d 446, 449 (Minn. Ct. App. 1996) (applying Victoria Elevator to parent-subsidiary relationship). BioFuels asserts three arguments in support of its position that personal jurisdiction exists over KEC due to the activities of its related entities in Minnesota. First, BioFuels contends that

KEC and its related entities all use the same brand name "Kiewit." Second, BioFuels alleges that KEC's financial solvency Last, BioFuels certain

depends on the activities of its related entities. claims that KEC's related entities have

completed

construction projects in Minnesota and have submitted bids to obtain additional work in the state. In response, KEC maintains

that it is an independent, wholly-owned subsidiary of Kiewit Corporation. KEC also notes that it has already provided all BioFuels alleges, regarding the

relevant jurisdictional discovery to BioFuels. however, that KEC did not produce

information

contacts of its related entities with Minnesota. 6

After a review of the facts currently before the court, the court determines that only an attenuated relationship exists

between KEC and its related entities.

This relationship is

insufficient to pierce the corporate veil and subject KEC to personal jurisdiction in Minnesota based on the activities and contacts of its related entities. Accordingly, information on

KEC's related entities is irrelevant to this case, and the court denies BioFuels's request for additional jurisdictional discovery. III. General Personal Jurisdiction BioFuels first argues that the totality of KEC's contacts with Minnesota support a finding that general personal jurisdiction exists. General jurisdiction exists if a defendant has "carried on in the forum state a continuous and systematic, even if limited, part of its general business." Steinbuch, 518 F.3d at 586. If a

court has general jurisdiction over a defendant, "the alleged injury need not have any connection with the forum state." Id.

However, BioFuels has not shown that KEC carries on continuous and systematic business in Minnesota. Rather, the facts indicate that

KEC does not own offices or real property in Minnesota, is not licensed to do business in Minnesota and does not transact business in the state. (Gage Aff. ¶ 8.) Therefore, the court determines

that it lacks general personal jurisdiction over KEC.

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IV.

Specific Personal Jurisdiction BioFuels next argues that the court has specific personal

jurisdiction over KEC. Specific jurisdiction exists when the cause of action "arise[s] out of" or "relate[s] to" a defendant's activities within the forum state. St. Jude Med., Inc. v. Lifecare Int'l, Inc., 250 F.3d 587, 591 (8th Cir. 2001) (citation and internal quotation is marks omitted). in Minnesota According because to KEC BioFuels, proposed,

jurisdiction

proper

negotiated and executed the Agreement with BioFuels, a Minnesota corporation. BioFuels also notes that it met with KEC to discuss

the Agreement, that its representatives traveled to the Project site, and that it shipped products from Minnesota to KEC. BioFuels's arguments fail for three reasons. First, while the payments KEC made to BioFuels under the Agreement establish a contact between BioFuels and KEC, they do not establish a contact between KEC and Minnesota. See Inst. Food Mktg. Assocs., Ltd. v.

Golden State Strawberries, Inc., 747 F.2d 448, 456 (8th Cir. 1984) ("[I]t is a defendant's contacts with the forum state that are of interest in determining whether personal jurisdiction exists, not its contacts with a resident of the forum.") (citation omitted). Furthermore, the facts indicate that KEC sent the payments to Delta-T in Virginia, not to Minnesota. Second, the activities of

BioFuels, including shipping products from Minnesota and visiting the Project site, do not establish contacts between KEC and 8

Minnesota. See Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651, 654 (8th Cir. 1982) (unilateral activity of plaintiff

insufficient to establish personal jurisdiction over non-resident defendant). Lastly, absent other contacts with Minnesota, the mere fact that KEC entered into an Agreement with BioFuels, a Minnesota corporation, is insufficient to confer personal jurisdiction over KEC. See Minn. Mining & Mfg. Co. v. Nippon Carbide Indus. Co., 63 In this case, no contacts between

F.3d 694, 698 (8th Cir. 1995).

KEC and Minnesota exist: the facts indicate that no one from KEC visited Minnesota in connection with the formation or execution of the Agreement or for any other purpose related to the Project. In

light of these circumstances, the court determines that BioFuels has not shown that this action arises out of KEC's activities in Minnesota and, therefore, the court lacks specific personal

jurisdiction over KEC.

CONCLUSION Accordingly, based on the above, IT IS HEREBY ORDERED that KEC's motion to dismiss [Doc. No. 4] is granted.

LET JUDGMENT BE ENTERED ACCORDINGLY. Dated: July 28, 2010 s/David S. Doty David S. Doty, Judge United States District Court

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