Marquette Commercial Finance v. Austal USA, LLC

Filing 13

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendant's Motion to Dismiss is GRANTED 4 , and this matter is DISMISSED without prejudice. LET JUDGMENT BE ENTERED ACCORDINGLY. (Written Opinion) Signed by The Hon. Paul A. Magnuson on 03/09/2017. (LLM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Marquette Commercial Finance,

Case No. 16-cv-4104 (PAM/SER)

Plaintiff,
v.

MEMORANDUM AND ORDER

Austal USA, LLC,
Defendant.

This matter is before the Court on Defendant’s Motion to Dismiss.

For the

following reasons, the Motion is granted.
BACKGROUND
Defendant Austal USA is an Alabama company that builds ships. It ordered
piping system components from non-party Piping Systems International (“PSI”), a
company also based in Alabama.

PSI received a loan from Plaintiff Marquette

Commercial Finance, which was at that time a Minnesota company. Marquette took as
collateral the accounts receivable from Austal’s purchase, and Austal began to make
payments directly to Marquette.
Austal and PSI had a disagreement about the quality of the goods PSI provided to
Austal, and Austal stopped paying for those goods. The total amount Austal owes PSI is
more than $500,000. Marquette served Austal with a Minnesota state-court complaint on
November 17, 2016, and Austal removed that complaint to this Court on December 7,

2016. On December 6, 2016, Austal filed its own lawsuit in Alabama state court against
both PSI and Marquette.
Austal claims that it has insufficient contacts with Minnesota for the exercise of
either general or specific personal jurisdiction. Austal also contends that PSI is an
indispensable party and that the case should be dismissed for failure to join PSI. Finally,
Austal argues that the matter should be dismissed under forum non conveniens principles.
Marquette responds that Austal received notice that its account was assigned to
Marquette and Austal made payments to Marquette under that assignment, making
jurisdiction appropriate. Marquette also argues that PSI is not indispensable because
Marquette’s notice to Austal under Minn. Stat. § 336.9-406 is an enforceable agreement
between Marquette and Austal. Finally, Marquette contends that Minnesota is not an
inconvenient forum but that Alabama is more convenient, warranting a transfer to the
Southern District of Alabama.
DISCUSSION
The Court can exercise personal jurisdiction over a nonresident defendant if
(1) Minnesota’s long-arm statute, Minn. Stat. § 543.19, is satisfied; and (2) the exercise
of personal jurisdiction does not offend due process. Stanton v. St. Jude Med., Inc., 340
F.3d 690, 693 (8th Cir. 2003).

Because Minnesota’s long-arm statute extends the

personal jurisdiction of Minnesota courts as far as due process allows, see, e.g., In re
Minn. Asbestos Litig., 552 N.W.2d 242, 246 (Minn. 1996), the Court need only evaluate
whether the exercise of personal jurisdiction comports with the requirements of due

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process. See Guinness Import Co. v. Mark VII Distribs., Inc., 153 F.3d 607, 614 (8th Cir.
1998).
Due process requires that the defendant have “certain minimum contacts” with the
forum state “such that the maintenance of the suit does not offend ‘traditional notions of
fair play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316
(1945) (citation omitted). Sufficient minimum contacts exist when the “defendant’s
conduct and connection with the forum State are such that [it] should reasonably
anticipate being haled into court there.” World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 297 (1980). There must be some act by which the defendant “purposefully
avails itself of the privileges of conducting activities within the forum State, thus
invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253
(1958). In contrast, contacts that are merely random, fortuitous, attenuated, or that are
the result of “unilateral activity of another party or a third person” will not support
personal jurisdiction.

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985)

(citation omitted).
To determine the sufficiency of a defendant’s conduct with the forum state, the
Court examines five factors: (1) the nature and quality of the contacts; (2) the quantity of
the contacts; (3) the relation between the contacts and the action; (4) the forum state’s
interest in the litigation; and (5) the convenience of the parties. Epps v. Stewart Info.
Servs. Corp., 327 F.3d 642, 648 (8th Cir. 2003). The third factor distinguishes between
general and specific jurisdiction. Wessels, Arnold & Henderson v. Nat’l Med. Waste,
Inc., 65 F.3d 1427, 1432 (8th Cir. 1995). General jurisdiction is present whenever a
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defendant’s contacts with the forum state are so “continuous and systematic” that it may
be sued in the forum over any controversy, independent of whether the cause of action
has any relationship to the defendant’s activities within the state.

Helicopteros

Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 416 (1984). Specific jurisdiction
refers to jurisdiction over causes of action arising from or related to the defendant’s
actions within the forum state. Burger King, 471 U.S. at 472-73. The fourth and fifth
factors are secondary to the analysis. Minn. Min. & Mfg. Co. v. Nippon Carbide Indus.
Co., Inc., 65 F.3d 694, 697 (8th Cir. 1995). Finally, in examining these factors, the Court
may consider matters outside the pleadings. See Stevens v. Redwing, 146 F.3d 538, 543,
546 (8th Cir. 1998).
Marquette argues that this action arises out of Austal’s contacts with Minnesota in
the form of Austal’s payments to Marquette, which were made via wire transfer from
Austal in Alabama to Marquette’s bank in California. Marquette claims that Austal
“assented” to the choice-of-law and jurisdiction provisions in the underlying contract
between Marquette and PSI by making payments to Marquette pursuant to the
assignment. Marquette offers no legal authority to support its argument that a contract’s
forum-selection clause binds a non-party to that contract, likely because there is no such
authority. Austal did not assent to any terms of Marquette’s contract with PSI, and the
forum-selection clause in that contract does not bind Austal.
Marquette also contends that Austal’s payments to Marquette are sufficient to
allow Minnesota to exercise jurisdiction over Austal.

Marquette claims that Austal

“conduct[ed] business” with Marquette, but that is a misstatement of the parties’
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relationship. Austal did not seek out Marquette for a business deal. Rather, Austal
learned that payments to its vendor would have to be made to a different entity and it
made those payments. Austal’s payments to Marquette’s California bank are the result of
“unilateral activity of another party or a third person” that cannot support personal
jurisdiction. Burger King, 471 U.S. at 474.
Austal does not have sufficient contacts with Minnesota to allow for the exercise
of personal jurisdiction over it. Austal cannot be said to have “purposefully availed”
itself of Minnesota, such that it could anticipate being haled into court here. The exercise
of jurisdiction over Austal does not comport with the Due Process Clause.
Having determined that the Court lacks jurisdiction over Austal, it is not necessary
to reach the alternative grounds for either dismissal or transfer of venue.
CONCLUSION
Accordingly, IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss
(Docket No. 4) is GRANTED and this matter is DISMISSED without prejudice.

LET JUDGMENT BE ENTERED ACCORDINGLY.

Dated: March 9, 2017

s/ Paul A. Magnuson
Paul A. Magnuson
United States District Court Judge

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