Bartlett Grain Company, L.P. v. American International Group, Inc. et al
Filing
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ORDER and OPINION denying 33 Defendant Miller Insurance Services, LTD's motion to dismiss for lack of jurisdiction; denying 64 motion for leave to file. Signed on 08/16/2011 by District Judge Ortrie D. Smith. (Will-Fees, Eva)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
BARTLETT GRAIN COMPANY, L.P.,
Plaintiff,
vs.
AMERICAN INTERNATIONAL GROUP,
et al.,
Defendants.
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Case No. 11-0509-CV-W-ODS
ORDER AND OPINION DENYING (1) PLAINTIFF’S MOTION FOR LEAVE TO FILE
SURREPLY AND (2) DEFENDANT MILLER INSURANCE SERVICES, LTD.’S
MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
Pending is Miller Insurance Services, Ltd.’s (“Miller”) Motion to Dismiss for lack of
jurisdiction. Also pending is Plaintiff’s Motion for Leave to File Surreply. Both motions
(Doc. # 33 and Doc. # 64) are denied.
I. BACKGROUND
Plaintiff is a Missouri Limited Partnership with its principal place of business in
Kansas City, Missouri. Miller is incorporated under the laws of England and Wales, has
its principal place of business in London, England, and is engaged in the business of
brokering insurance and reinsurance contracts. Plaintiff’s business involves selling
grain to customers, who often require provision of trade credit to obtain the grain.
Plaintiff also purchases insurance to protect against the risk that the trade credit
will not be repaid. It would retain a broker to obtain the insurance, and one of the
brokers it utilized was Hays Companies (“Hays”). Plaintiff – through William Webster
(the Vice President of Plaintiff’s general partner) – often dealt with Hays Companies
(“Hays”); more specifically, Webster dealt with Kevin Cummings, who worked out of
Hays’ office in Kansas City, Missouri. In mid-2007, Webster and Cummings discussed
“the London trade credit insurance market;” Hays did not broker business in London, but
as a result of this conversation Cummings arranged for Webster to discuss the matter
with Miller (through its representative, Andrew Perry). According to Webster, a
conference call took place between himself, Perry, Cummings, and another Hays
representative in July 2007. Webster Affidavit, ¶ 4. Later that month, an agreement
was reached whereby Miller acted as Plaintiff’s agent for the purpose of obtaining trade
credit insurance in London. Through Miller’s efforts, a policy was procured in 2008, and
renewed in 2009 and 2010. During this time period, Miller – acting on Plaintiff’s behalf
and at Plaintiff’s direction – negotiated and arranged for several endorsements and
amendments.
In 2008, Plaintiff entered a credit agreement with several buyers whereby Plaintiff
extended $17 million of trade credit, resulting in Plaintiff’s delivery of grain to those
entities. This credit extension was covered by the insurance agreements arranged by
Miller. In the Spring of 2009, the buyers advised Plaintiff that they might lack the ability
to continue operating, thus undermining their ability to repay the credit. Concerned that
a default would occur if a capital infusion was not made, Plaintiff agreed to loan the
buyers $6 million. However, Webster first contacted Perry and explained Plaintiff would
fund the supplemental loan “only upon obtaining the underwriters[’] agreement that in
the event of [the buyers’] default, the Loan would have priority in any payment or
application of collateral.” Webster Affidavit, ¶ 24. Plaintiff alleges Miller negotiated such
an agreement from the underwriters on Plaintiff’s behalf, but that Miller never reduced
the agreement to writing. In its Amended Complaint, Plaintiff alleges Miller breached its
fiduciary duty (Count III), was negligent (Count IV), or breached its contract with Plaintiff
(Count V).
The parties generally agree that throughout their relationship there have been
numerous communications via mail, e-mail, and telephone. Some of these
communications were between Miller and Plaintiff, while others were between Miller,
Hays, and Plaintiff. Presently, it appears all such communications involving Hays were
sent to someone at its Kansas City, Missouri, office. Many communications were
initiated by Miller and directed to Plaintiff. All documentation and paperwork was
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transmitted between Plaintiff and Miller. Miller’s fees were paid by Plaintiff.1 Perry also
came to Kansas City twice in connection with its business on behalf of Plaintiff: once in
August 2008 and again in March 2010.
II. DISCUSSION
A. Surreply
In its Reply Suggestions, Miller cited the District Court’s opinion in K-V
Pharmaceutical Co. v. J. Uriach & CIA, S.A., 743 F. Supp. 2d 1073 (E.D. Mo. 2010), to
support its proposition that “a business relationship, standing alone, does not confer
jurisdiction.” Reply Suggestions at 3. This was not a new argument; the argument was
presented in Miller’s initial suggestions, but K.V. Pharmaceutical was not cited originally.
After the Reply Suggestions were filed, the Eighth Circuit reversed the decision in K.V.
Pharmaceutical. Plaintiff wishes to file a Surreply to address this fact, and Miller
opposes this request.
The Court does not deem a Surreply necessary. The argument was presented,
albeit with different authority, in the initial suggestions; Plaintiff had ample opportunity to
address the argument. Moreover, the Court does not view the matter as one justifying
lengthy additional discussion. It is sufficient to note that the Court is aware of the Eighth
1
For these reasons, Perry’s claim that he regarded Hays and not Plaintiff as
Miller’s client/contract partner (see Perry Affidavit, ¶ 27) is difficult to believe. It seems
clear that all decisions were made by Plaintiff, that there were occasions where Plaintiff
contacted Miller directly but appear to be none where Hays contacted Miller to arrange
something for Plaintiff, and that Plaintiff was intimately involved in all discussions
involving its insurance whereas Hays was not. Most importantly, the object of this
relationship involved procuring insurance for Plaintiff; Hays was not involved in this
process (as it did not do business in London), nor is there any indication that Hays was
financially compensated, much less involved, in these transactions. Ultimately, this
matter is probably of little importance: the issue is Miller’s contact with the forum in
connection with the business transacted, not necessarily the identity of its customer.
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Circuit’s decision and the Court believes it can apply the case without requiring the
expenditure of time and resources on additional briefing.
B. Personal Jurisdiction
“While it is true that the plaintiff bears the ultimate burden of proof . . . jurisdiction
need not be proved by a preponderance of the evidence until trial or until the court holds
an evidentiary hearing.” Dakota Indus. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387
(8th Cir. 1991). In this case, the Court has elected to decide the issue without holding an
evidentiary hearing. “If the district court does not hold a hearing and instead relies on
pleadings and affidavits . . . the court must look at the facts in the light most favorable to
the nonmoving party and resolve all factual disputes in favor of that party.” Id. (citations
omitted).
There are two broad categories of personal jurisdiction. “Specific jurisdiction
refers to jurisdiction over causes of action that ‘arise out of’ or ‘relate to’ a defendant’s
activities within a state.” Lakin v. Prudential Securities, Inc., 348 F.3d 704, 707 (8th Cir.
2003) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). “General
jurisdiction, on the other hand, refers to the power of a state to adjudicate any cause of
action involving a particular defendant, regardless of where the cause of action arose.”
Id. (quotation omitted). The issue in this case is whether Miller is subject to specific
jurisdiction; there is no need to discuss general jurisdiction further.
Specific jurisdiction is proper “if the injury giving rise to the lawsuit occurred
within or had some connection to the forum state, meaning that the defendant purposely
directed its activities at the forum state and the claim arose out of or relates to those
activities.” Steinbuch v. Cutler, 518 F.3d 580, 586 (8th Cir. 2008) (citing Burger King
Corp., 471 U.S. at 472)). The Constitutional analysis2 requires the Court to consider
2
Missouri’s long-arm statute “‘authorizes the exercise of jurisdiction over nonresidents to the extent permissible under the due process clause, [so] we turn
immediately to the question whether the assertion of personal jurisdiction would violate
the due process clause.’” Romak USA, Inc. v. Rich, 384 F.3d 979, 984 (8th Cir. 2004)
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[t]he nonresident defendant’s conduct and connection with the forum state
[and whether it] should reasonably anticipate being haled into court there,
and it is essential that there be some act by which the defendant
purposefully avails itself of the privilege of conducting activities within the
forum State, thus invoking the benefits and protections of its laws.
Purposeful availment means that the defendant’s contacts with the forum
state must not be random, fortuitous, attenuated, or the result of unilateral
activity of a third person or another party.
Guiness Import Co. v. Mark VII Distributors, Inc., 153 F.3d 607, 614 (8th Cir. 1998)
(internal citations omitted); see also Dever v. Hentzen Coatings Inc., 380 F.3d 1070,
1073-74 (8th Cir. 2004). These considerations have resulted in a framework consisting
of the following components: “(1) the nature and quality of contacts with the forum state;
(2) the quantity of these contacts; (3) the relationship between the contacts and the
cause of action; (4) the interest of the forum state; and (5) the convenience of the
parties.” Wines v. Lake Havasu Boat Mfg., 846 F.2d40, 42 (8th Cir. 1988). The first
three factors are of primary importance. E.g., Austad Co. v. Pennie & Edmonds, 823
F.2d 223, 226 (8th Cir. 1987). Ultimately, “[t]he existence of personal jurisdiction . . .
depends upon . . . a sufficient connection between the defendant and the forum State to
make it fair to require defense of the action in the forum.” Kulko v. Superior Court of
Cal., 436 U.S. 84, 91 (1978); see also World-Wide Volkswagon Corpo. v. Woodson, 444
U.S. 286, 295 (1980)).
Miller’s argument essentially boils down to this: virtually all of its contacts with
Missouri took the form of letters and e-mails initiated in London and sent to Missouri.
This is significant because, in its view, letters and e-mails are to be totally ignored in
evaluating minimum contacts. Such broad statements appear in reported decisions; for
instance, in 2002 the Eighth Circuit stated “[c]ontact by phone or mail is insufficient to
justify exercise of personal jurisdiction under the due process clause.” Porter v. Berall,
293 F.3d 1073, 1076 (8th Cir. 2002). Despite this seemingly-conclusive statement, the
Eighth Circuit has never ignored contacts by phone or mail in the manner Miller now
(quoting Porter v. Berrall, 293 F.3d 1073, 1075 (8th Cir. 2002)); see also Bell Paper Box,
Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th Cir. 1994).
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advocates. In Porter, the Court of Appeals seemed to back away from this statement,
suggesting the true impediment was the lack of contacts other than phone calls and
letters.3 Later, in Johnson v. Woodcock, the Court of Appeals cited Porter and
concluded “[t]he occasional correspondences between Johnson and Woodcock similarly
do not support jurisdiction.” 444 F.3d 953, 957 (8th Cir. 2006) (emphasis supplied).
Even if this backdrop is somewhat unclear, the Eighth Circuit’s most recent
discussion in K-V Pharmaceutical clarifies the issue. There, the Court of Appeals cited
Burger King Corp. in holding that in a contractual setting it is appropriate to consider
prior negotiations, contemplated consequences, the contract’s terms, and the parties’
course of dealing – all in the context of evaluating “the real object of the business
transaction” – to determine whether it is fair to subject a defendant to jurisdiction in the
forum. K-V Pharmaceutical Co. v. J. Uriach & CIA, S.A., No. 10-3403, slip op. at 5 (8th
Cir. Aug. 3, 2011). The Court of Appeals then listed a series of factors in bullet-point
fashion, most of which described letters and other communications directed into
Missouri. The mere existence of “[l]etters, emails and telephone calls to KV” was the
very first factor. The second factor noted the number and duration of communications,
leading to “the conclusion that the parties had significant contacts over the life of the
contract.” The fourth factor consisted of requests for action or information from the
defendant to the Missouri-based plaintiff. Id. at 6-7.4
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It could be argued that the Porter court’s single statement was not meant to be
interpreted so rigidly, given that the Eight Circuit has previously held that physical
contacts that are “admittedly slight” may support jurisdiction because “the minimum
contacts required by due process need not include physical presence at all. The
Supreme Court instructs that ‘[j]urisdiction . . . may not be avoided merely because the
defendant did not physically enter the forum State.’” Bell Paper, 22 F.3d at 820 (quoting
Burger King Corp., 471 U.S. at 476).
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While the contract in K-V Pharmaceutical also required payments and products
to be sent from the foreign defendant into the forum, this is not the sole basis for the
court’s holding. If it were, there would have been no need for the court to discuss the
phone calls and letters; the court could have simply relied on the contract’s
requirements as the basis for jurisdiction.
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The Court holds that letters, e-mails, and phone calls are relevant in ascertaining
whether a foreign defendant has the necessary minimum contacts to satisfy the Due
Process Clause.5 This holding is consistent with Supreme Court precedent as well the
majority of (and the most recent) decisions of the Eighth Circuit.
Turning to the case at bar, the Record reflects a relationship stretching over three
years, during which Miller directed communications of various sorts into Missouri.
Some of those communications requested information from Plaintiff in Missouri. Miller’s
role in the relationship was as an agent or intermediary charged with the task of
procuring insurance for a Missouri business, pursuant to the instructions and terms set
by that Missouri business. On two occasions, Miller sent representatives to Missouri to
meet with Plaintiff’s representatives. While these meetings did not relate specifically to
the breach alleged by Plaintiff, they do relate to the relationship between the parties and
are relevant to the fairness inquiry. Ultimately, the Court concludes the first three
factors from Wines demonstrate it is reasonable and fair for Miller to defend a claim in
Missouri.
The last two factors (which, as noted earlier, are less important) are, at worst,
inconclusive. Missouri’s only interest in providing a forum is that Plaintiff’s principal
place of business is in Missouri. In any event, the Court cannot say Missouri has no
interest in providing a forum. Finally, with respect to inconvenience, the Court
concludes Missouri is just as inconvenient for Miller as London is for Plaintiff.
Ultimately, however, for more than three years Miller (1) communicated with, (2)
provided services to, (3) did business with, (4) requested information from, (5) took, and
acted on instructions, from, and (5) accepted payment from a Missouri business – so its
claims of inconvenience strike the Court as somewhat contrived.
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This conclusion is completely consistent with reality, given that technological
advances have eliminated the need or desirability for people to travel great distances to
negotiate contracts and conduct business.
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III. CONCLUSION
For these reasons, Miller Insurance Services, Ltd.’s Motion to Dismiss is denied.
IT IS SO ORDERED.
/s/ Ortrie D. Smith
ORTRIE D. SMITH, SENIOR JUDGE
UNITED STATES DISTRICT COURT
DATE: August 16, 2011
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