Elletson et al v. Chalmers Automotive, LLC et al

Filing 14

ORDER denying 8 Motion to Dismiss. Signed by Judge James C. Mahan on 7/13/2017. (Copies have been distributed pursuant to the NEF - JM)

1
2
3
4

UNITED STATES DISTRICT COURT

5

DISTRICT OF NEVADA

6

***

7

PENN AND SANDI ELLETSON,

8

Plaintiff(s),

9
10

Case No. 2:17-CV-1107 JCM (VCF)
ORDER

v.
CHALMERS AUTOMOTIVE, LLC, et al.,

11

Defendant(s).

12
13

Presently before the court is a motion to dismiss filed by defendants Chalmers Automotive,

14

LLC, Albert J. Chalmers, Michael Ferris, and David Green (collectively, as “defendants”). (ECF

15

No. 8). Plaintiffs Penn Elleston and Sandi Elleston (collectively, as “plaintiffs”) filed a response

16

(ECF No. 10),1 to which defendants replied (ECF No. 13).

17

I.

Facts

18

The instant action involves a contract for the purchase and delivery of a Mercedes-Benz

19

Luxury Sprinter Van, VIN number WD3FE8CC5FP125554 (the “van”), to Nevada. Chalmers

20

Automotive, LLC (“Chalmers Automotive”) delivers vehicles to purchasers in different states and

21

advertises its services on its website. (ECF No. 1). Ferris is Chalmers Automotive’s national sales

22

manager. (ECF No. 1).

23

Plaintiffs allege that they paid defendants $97,500.00 to modify and deliver the van into

24

Nevada. (ECF No. 1). Plaintiffs further allege that defendants made false representations to

25

plaintiffs regarding the van, to which defendants did not have title. (ECF No. 1).

26
27
1

28
James C. Mahan
U.S. District Judge

Pursuant to Local Rule IC 2-2(b), a separate document must be filed on the docket for
each purpose. The court cannot consider plaintiffs’ requests for leave to amend their complaint
and/or for jurisdictional discovery unless they are filed separately, as a motion.

1

On April 21, 2017, plaintiffs filed the underlying complaint, alleging eight causes of action:

2

(1) fraud against all defendants; (2) consumer fraud against all defendants; (3) conversion against

3

Ferris, Chalmers, and Chalmers Automotive; (4) breach of contract against Chalmers Automotive;

4

(5) unjust enrichment against Chalmers Automotive; (6) detrimental reliance against Chalmers

5

Automotive; (7) piercing the corporate veil against Chalmers Automotive; and (8) civil conspiracy

6

against Chalmers, Green, and Ferris. (ECF No. 1).
In the instant motion, defendants move to dismiss for lack of personal jurisdiction pursuant

7
8

to Federal Rule of Civil Procedure 12(b)(2). (ECF No. 8).

9

II.

Legal Standard

10

Federal Rule of Civil Procedure 12(b)(2) allows a defendant to move to dismiss for lack of

11

personal jurisdiction. To avoid dismissal under Rule 12(b)(2), a plaintiff bears the burden of

12

demonstrating that its allegations would establish a prima facie case for personal jurisdiction. See

13

Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Allegations in plaintiff’s complaint

14

must be taken as true and factual disputes should be construed in the plaintiff’s favor. Rio Props,

15

Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1019 (9th Cir. 2002).

16

When no federal statute governs personal jurisdiction, the district court applies the law of

17

the forum state. Boschetto, 539 F.3d at 1015; see also Panavision Int’l L.P. v. Toeppen, 141 F.3d

18

1316, 1320 (9th Cir. 1998). Where a state has a “long-arm” statute providing its courts jurisdiction

19

to the fullest extent permitted by the due process clause, as Nevada does, a court need only address

20

federal due process standards. See Arbella Mut. Ins. Co. v. Eighth Judicial Dist. Court, 134 P.3d

21

710, 712 (Nev. 2006) (citing Nev. Rev. Stat. § 14.065); see also Boschetto, 539 F.3d at 1015.

22

An assertion of personal jurisdiction must comport with due process. See Wash. Shoe Co.

23

v. A-Z Sporting Goods Inc., 704 F.3d 668, 672 (9th Cir. 2012). To satisfy due process, a court

24

may exercise personal jurisdiction over a defendant only where the defendant has certain minimum

25

contacts with the forum state “such that the maintenance of the suit does not offend traditional

26

notions of fair play and substantial justice.” Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945).

27
28
James C. Mahan
U.S. District Judge

-2-

1

Two categories of personal jurisdiction exist: (1) general jurisdiction; and (2) specific

2

jurisdiction. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413–15 (1984);

3

see also LSI Indus., Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000).

4

General jurisdiction arises where the defendant has continuous and systematic ties with the

5

forum, even if those ties are unrelated to the litigation. See Tuazon v. R.J. Reynolds Tobacco Co.,

6

433 F.3d 1163, 1171 (9th Cir. 2006) (citing Helicopteros Nacionales de Columbia, S.A., 466 U.S.

7

at 414–16). “[T]he plaintiff must demonstrate the defendant has sufficient contacts to constitute

8

the kind of continuous and systematic general business contacts that approximate physical

9

presence.” In re W. States Wholesale Nat’l Gas Litig., 605 F. Supp. 2d 1118, 1131 (D. Nev. 2009)

10

(internal quotation marks and citations omitted).

11

For example, a state court has general jurisdiction over the state’s own residents. The

12

United States Supreme Court recently clarified, however, that general jurisdiction exists only

13

where the defendant is at “home” in the forum state. See Daimler AG v. Bauman, --- U.S. ----, ---

14

-,134 S. Ct. 746, 760–62 (2014).

15

“The purposeful availment prong of the minimum contacts test requires a qualitative

16

evaluation of the defendant's contact with the forum state, in order to determine whether [the

17

defendant’s] conduct and connection with the forum State are such that [the defendant] should

18

reasonably anticipate being haled into court there.” Harris Rutsky & Co. Ins. Servs., Inc. v. Bell

19

& Clements Ltd., 328 F.3d 1122, 1130 (9th Cir. 2003) (internal quotation marks and citations

20

omitted).

21
22
23
24
25
26
27

The Ninth Circuit has established a three-prong test for analyzing an assertion of specific
personal jurisdiction:
(1) The non-resident defendant must purposefully direct his activities or
consummate some transaction with the forum or resident thereof; or perform some
act by which he purposefully avails himself of the privilege of conducting activities
in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant’s forumrelated activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice,
i.e., it must be reasonable.

28
James C. Mahan
U.S. District Judge

-3-

1

Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). “The plaintiff bears

2

the burden of satisfying the first two prongs of the test. If the plaintiff fails to satisfy either of

3

these prongs, personal jurisdiction is not established in the forum state.” Id. (citations omitted).

4

III.

Discussion

5

As an initial matter, no general jurisdiction exists over defendants in Nevada as they are

6

citizens of Missouri and are not “at home” in Nevada. Plaintiffs are citizens of Nevada; defendants

7

are citizens of Missouri. (ECF No. 1). Accordingly, to withstand dismissal under Rule 12(b)(2),

8

plaintiffs must demonstrate that their allegations establish a prima facie case for specific

9

jurisdiction. See Boschetto, 539 F.3d at 1015.

10

In other words, plaintiffs must satisfy the first two prongs of the test for specific

11

jurisdiction. See Schwarzenegger, 374 F.3d at 802. The first prong of the specific jurisdiction test

12

refers to both purposeful direction and purposeful availment. Mavrix Photo, Inc. v. Brand Techs.,

13

Inc., 647 F.3d 1218, 1228 (9th Cir. 2011). “A purposeful direction analysis . . . is most often used

14

in suits sounding in tort.” Schwarzenegger, 374 F.3d at 802.

15

Purposeful direction is analyzed under the “Calder-effects” test, wherein “the defendant

16

allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3)

17

causing harm that the defendant knows is likely to be suffered in the forum state.” Brayton Purcell

18

LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010) (quoting Yahoo! Inc. v. La

19

Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006)); see also

20

Calder v. Jones, 465 U.S. 783, 788–89 (1984) (establishing an “effects doctrine” for intentional

21

action aimed at the forum).

22

Defendants must not only cause harm to a person who they know will feel a “judicially

23

sufficient amount of harm” in the forum state (Nevada), but the intentional activity must also be

24

directed to the forum state itself. See Yahoo! Inc., 433 F.3d at 1207. Activity is not “aimed at” a

25

forum state merely because it is expected that its effects will be felt there, otherwise the third

26

element of the Calder-effects test would swallow the second. See Poor Boy Prods. v. Fogerty,

27

No. 3:14-CV-00633-RCJ, 2015 WL 5057221, at *3 (D. Nev. Aug. 26, 2015).

28
James C. Mahan
U.S. District Judge

-4-

1

In the instant motion, defendants argue that plaintiffs have failed to show that defendants

2

purposefully availed themselves of Nevada or Nevada law. (ECF No. 8 at 4). Citing to Burger

3

King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985), defendants further contend that a contract

4

between a nonresident defendant and a resident plaintiff, alone, is insufficient to establish specific

5

jurisdiction. (ECF No. 8 at 4).

6

In response, plaintiffs contend that defendants interjected themselves into Nevada by

7

making false representations to plaintiffs while they (plaintiffs) were in Nevada. (ECF No. 10 at

8

9). Plaintiffs thus maintain that Nevada has specific jurisdiction over defendants. (ECF No. 10).

9

Plaintiffs have sufficiently alleged that defendants purposefully directed their activities at

10

residents of Nevada. Plaintiffs’ complaint alleges that defendants falsely represented that they had

11

legal title to the van, that defendants and plaintiffs entered into a contract—under which plaintiffs

12

would pay defendants $97,915.00 to modify and deliver the van to plaintiffs in Nevada, that

13

plaintiffs paid the agreed upon amount to defendants, and that defendants never delivered the van.

14

(ECF No. 1). Therefore, plaintiffs have sufficiently alleged that defendants committed intentional

15

acts directed at Nevada and Nevada’s residents, which caused harm that defendants knew would

16

likely be suffered in Nevada.

17

The causes of action alleged in plaintiffs’ complaint arise from defendants’

18

misrepresentations (i.e., intentional acts), thereby satisfying the second prong of the specific

19

jurisdiction test.

20

Defendants bear the burden of satisfying the third prong of the specific jurisdiction test.

21

See Schwarzenegger, 374 F.3d at 802 (“If the plaintiff succeeds in satisfying both of the first two

22

prongs, the burden then shifts to the defendant to ‘present a compelling case’ that the exercise of

23

jurisdiction would not be reasonable.” (quoting Burger King Corp., 471 U.S. at 476–78)).

24

Defendants have failed to meet their burden as their motion fails to address the third prong entirely.

25

Accordingly, defendants’ motion to dismiss (ECF No. 8) will be denied as specific

26

jurisdiction over defendants exists.

27

...

28

...

James C. Mahan
U.S. District Judge

-5-

1

IV.

Conclusion

2

Accordingly,

3

IT IS HEREBY ORDERED, ADJUDGED, and DECREED that defendants’ motion to

4
5
6
7

dismiss (ECF No. 8) be, and the same hereby is, DENIED.
DATED July 13, 2017.
__________________________________________
UNITED STATES DISTRICT JUDGE

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
James C. Mahan
U.S. District Judge

-6-