GE Mobile Water, Inc. v. Red Desert Reclamation, LLC et al
Filing
19
ORDER denying 15 Motion to Dismiss for Failure to State a Claim. So Ordered by Judge Paul J. Barbadoro.(jna)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
GE Mobile Water, Inc.
v.
Case No. 13-cv-357-PB
Opinion No. 2014 DNH 049
Red Desert Reclamation, LLC, et al.
MEMORANDUM AND ORDER
In February 2012, GE Mobile Water, Inc. entered into a
contract with Red Desert Reclamation, LLC to lease water
treatment equipment for use at Red Desert’s Wyoming facility.
After Red Desert failed to make payments required under the
contract, GE Mobile sued it and two affiliated entities, Clean
Runner, LLC and Cate Street Capital, Inc.
Red Desert has moved to dismiss the complaint for lack of
personal jurisdiction.
I.
BACKGROUND1
Red Desert is a Wyoming limited liability company.
In
2012, it operated a facility in Rawlins, Wyoming for recycling
water used in the hydraulic fracturing of natural gas reserves.
1
Unless otherwise specified, the facts are taken from the
complaint. Doc. No. 1.
Red Desert used water treatment technology for its Wyoming
facility developed by Clean Runner, a Delaware limited liability
company.
Red Desert and Clean Runner are managed by Cate
Street, a Delaware corporation with an office in Portsmouth, New
Hampshire.
Cate Street planned to use the Wyoming facility as a
platform to showcase Clean Runner’s technology, with the goal of
operating similar hydraulic fracturing water treatment
facilities throughout the country.
Doc. Nos. 18-2, 18-4, 18-5,
18-6.
Beginning in September 2011, Steven Fischer, a GE Mobile
employee, began working with Judson J. Cleveland on a proposed
contract to lease water processing and treatment equipment for
use at the Red Desert facility.
At the time, Cleveland was a
Managing Director of Cate Street, Chief Operating Officer of Red
Desert, and President of Clean Runner.
Barry Glichenhaus and
Samuel Olson of Cate Street were also involved in negotiating
and finalizing the contract.
When Fischer contacted his
counterparts regarding the contract, he did so either at offices
they maintained in their homes or at Cate Street’s Portsmouth,
New Hampshire office.
Negotiations culminated in a Proposal from GE Mobile and a
$3.264 million Purchase Order from Red Desert.
The Purchase
Order states that it was submitted by “Red Desert Reclamation,
2
LLC, One Cate Street, Suite 100, Portsmouth, NH 03801 USA.”
The
“ship to” section of the Purchase Order lists the same address.
Cleveland signed the Purchase Order on behalf of Red Desert on
February 28, 2012.
Under his signature, Cleveland wrote,
“President, Clean Runner.”
The following day, a representative
of GE Mobile accepted the Purchase Order by signing it and the
Proposal.
GE Mobile delivered equipment to the Wyoming facility in
April 2012 and subsequently sent several invoices to Red Desert
at the Portsmouth, New Hampshire address.
In August 2012,
Cleveland emailed Fischer a proposal to address Red Desert’s
failure to make any of the payments required under the contract.
Cleveland’s email identified him as “Judson C.
Cleveland/President/CEO/Clean Runner, Inc., One Cate Street,
Portsmouth, NH 03801-7108.”
Approximately one week later, GE
Mobile received a check from Red Desert for $20,000.
The check
was drawn on an account that listed the account holder as “Red
Desert Reclamation, LLC/1 Cate Street, Suite 100, Portsmouth, NH
03801.”
GE Mobile received no further payments, and the parties
ultimately agreed to close the Wyoming facility.
After giving
notice, GE Mobile removed its equipment and technicians from the
site in early October 2012.
3
On February 27, 2013, GE Mobile received a letter from
Clean Runner on Red Desert letterhead.
The letter listed Red
Desert’s address as One Cate Street, Portsmouth, New Hampshire,
and stated that both Clean Runner and Red Desert were beginning
the process of winding down operations.
Doc. No. 18-11.
The
letter offered Clean Runner’s and Red Desert’s creditors a
global settlement of $300,000 on an acknowledged debt of $1.147
million.
II.
A.
PERSONAL JURISDICTION
Standard of Review
In objecting to a motion to dismiss for lack of personal
jurisdiction, the plaintiff must establish that personal
jurisdiction exists.
Astro-Med, Inc. v. Nihon Kohden Am., Inc.,
591 F.3d 1, 8 (1st Cir. 2009).
Because I have not held a
hearing on the motion, GE Mobile must make a prima facie showing
that this court has personal jurisdiction.
Med. Ctr., 600 F.3d. 25, 31 (1st Cir. 2010).
See Cossaboon v. Me.
A prima facie
showing requires the plaintiff to “proffer[] evidence which, if
credited, is sufficient to support findings of all facts
essential to personal jurisdiction.”
Lechoslaw v. Bank of Am.,
N.A., 618 F.3d 49, 54 (1st Cir. 2010) (internal quotation marks
omitted); see also Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26
4
(1st Cir. 2008) (a plaintiff asserting jurisdiction cannot rest
upon the pleadings but is “obliged to adduce evidence of
specific facts”).
I consider GE Mobile’s assertions to the
extent they are supported by the evidence of specific facts set
forth in the record, and I consider the facts offered by Red
Desert “to the extent that they are uncontradicted.”
See
Cossaboon, 600 F.3d at 31 (internal quotation marks omitted).
I
construe the facts “in the light most congenial to the
plaintiff’s jurisdictional claim.”
275, 279 (1st Cir. 2008).
Hannon v. Beard, 524 F.3d
Despite this liberality, I will not
“credit conclusory allegations or draw farfetched inferences.”
Negron-Torres v. Verizon Commc’ns, Inc., 478 F.3d 19, 23 (1st
Cir. 2007).
B.
Analysis
Whether a court has personal jurisdiction in a diversity
action over a nonresident defendant depends on whether both the
forum state’s long-arm statute and the due process requirements
of the United States Constitution are satisfied.
F.3d at 29 n.1.
Cossaboon, 600
New Hampshire’s long-arm statute permits a
court to exercise personal jurisdiction over a defendant to the
extent allowed by due process.
680, 685 (2010).
Hemenway v. Hemenway, 159 N.H.
I thus turn to the constitutional analysis,
which requires “sufficient minimum contacts with the state, such
5
that maintenance of the suit does not offend traditional notions
of fair play and substantial justice.”
Adelson v. Hananel, 510
F.3d 43, 49 (1st Cir. 2007) (citing Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945) (internal quotation marks
omitted)).
A court may exercise either general or specific personal
jurisdiction depending on the nature of the defendant’s contacts
with the forum state.
Carreras v. PMG Collins, LLC, 660 F.3d
549, 552 (1st Cir. 2011).
At issue here is specific
jurisdiction, which “may only be relied upon where the cause of
action arises directly out of, or relates to, the defendant’s
forum-based contacts.”
Cossaboon, 600 F.3d at 31.
The Supreme Court has recognized that a court can acquire
specific personal jurisdiction over a principal based on the
actions of an agent.
(2014).
Daimler AG v. Bauman, 134 S.Ct. 746, 754
Further, both this Court and the First Circuit have
consistently found that “[u]nder basic principles of agency law,
forum-related contacts made by an agent acting within the scope
of an agency relationship are attributable to the principal.”
25 CP, LLC v. Firstenberg Mach. Co., 2009 DNH 185, 26-27 (citing
Dagesse v. Plant Hotel N.V., 113 F.Supp.2d 211, 216 n.2 (D.N.H.
2000)).
See also Sawtelle v. Farrell, 70 F.3d 1381, 1389, n. 4
(1st Cir. 1995); Daynard v. Ness, Motley, Loadholt, Richardson &
6
Poole, P.A., 290 F.3d 42, 55 (1st Cir. 2002).
I determine whether the court has sufficient “minimum
contacts” with the forum state to support a finding of specific
personal jurisdiction by considering three factors: relatedness,
purposeful availment, and reasonableness.
See Adelson, 510 F.3d
at 49.
1.
Relatedness
The relatedness inquiry requires that “the underlying claim
‘arise out of’ or be ‘related to’ the activities within the
forum state.”
Id.
Relatedness is a “flexible, relaxed standard
which focuses on the nexus between the defendant’s contacts and
the plaintiff’s cause of action.”
Id. (internal citations and
quotation marks omitted).
The claims against Red Desert are primarily contractual in
nature.
“[I]n contract claims, we may look to and draw
inferences from ‘the parties’ prior negotiations and
contemplated future consequences, along with the terms of the
contract and the parties’ actual course of dealing.’”
Id.
(citing Daynard, 290 F.3d at 52); see Bluetarp Fin., Inc. v.
Matrix Constr. Co, Inc., 709 F.3d 72, 80 (1st Cir. 2013).
“Furthermore, where the cause of action is for an alleged breach
of contract, we ask whether the defendant’s activity in the
forum state was ‘instrumental either in the formation of the
7
contract or its breach.’”
Adelson, 510 F.3d at 49 (internal
citations omitted).
GE Mobile has submitted evidence to support its contention
that its contract negotiations with Red Desert’s agents occurred
in New Hampshire.
This evidence includes emails about the
contract with Portsmouth, New Hampshire addresses in the
signature lines as well as affidavits attesting that GE Mobile
officials contacted Red Desert’s representatives regarding the
proposed contract either at their home offices or at Cate
Street’s office in Portsmouth, New Hampshire.
Doc. Nos. 1-2,
18-7.
The contract itself also explicitly links Red Desert to New
Hampshire.
The contract contains two sections, a Proposal sent
by GE Mobile and a Purchase Order sent by Red Desert.
In the
Proposal, GE Mobile listed Rawlins, Wyoming as Red Desert’s
location, with no mention of New Hampshire.
In the Purchase
Order, however, Red Desert listed a New Hampshire address in
both the “Ordered By” and “Ship to” sections.
The phone and fax
numbers listed on the Purchase Order have New Hampshire area
codes.
In entering the contract, Red Desert was making its ties
to New Hampshire clear.
This made it reasonable for GE Mobile
and Red Desert to believe that the intended future consequences
of the contract would require relations between the parties in
8
New Hampshire.
The parties’ course of dealing after signing the contract
also evidences their relationship with New Hampshire.
Red
Desert argues that the scope of GE Mobile’s actual performance
was limited to delivering goods and services in Wyoming, and
that its occasional contacts with agents in New Hampshire are
insufficient to establish minimum contacts.
This argument,
however, ignores a considerable body of contradictory evidence.
Red Desert characterizes GE Mobile’s act of mailing invoices to
Red Desert’s address in New Hampshire as a unilateral action,
yet GE Mobile sent these invoices to Red Desert’s New Hampshire
address because the contract provided that the invoices were to
be sent to that address.
Moreover, the sole payment that Red
Desert made on the contract was made via a Red Desert corporate
check issued from its Portsmouth, New Hampshire address.
No. 18-10.
Doc.
GE Mobile has also submitted correspondence received
on Red Desert letterhead with a Portsmouth, New Hampshire
address and presented evidence in the form of emails from Red
Desert and Cate Street employees with New Hampshire addresses in
the signature lines.
Doc. Nos. 1-4, 1-5.
GE Mobile further
alleges by sworn affidavit that it engaged in telephone
conversations concerning late payments with Red Desert and Cate
Street employees located in New Hampshire.
9
The First Circuit found specific jurisdiction lacking when
the only contacts between a defendant and forum state involved
the defendant mailing a previously negotiated contract to the
forum state for a signature, followed by three emails to sort
out final logistics.
Phillips, 530 F.3d at 29.
This case is
more analogous, however, to the First Circuit’s recent decision
in Bluetarp.
See 709 F.3d at 80.
As in Bluetarp, negotiations
and formation of the contract between GE Mobile and Red Desert
occurred in part in the forum state, and “the resulting
relationship contemplated the future consequences of
[defendants] . . . continuing to interact with [GE Mobile] in
[the forum state].”
See id.
“[A]s evidenced by the billing
statements and phone and email communications between the
parties, just such interplay did take place.”
Id.
GE Mobile’s
claim unequivocally relates to Red Desert’s activities within
New Hampshire.
2.
Purposeful Availment
The purposeful availment requirement ensures that
jurisdiction is “not based on merely ‘random, isolated or
fortuitous’ contacts with the forum state.”
at 50 (citing Sawtelle, 70 F.3d at 1391.
Adelson, 510 F.3d
Courts focus on
whether the defendant’s actions are voluntary and the assertion
of jurisdiction over the defendant is foreseeable.
10
See Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (defendant’s
actions are voluntary when they are unilateral); World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (assertion
of jurisdiction is foreseeable when the defendant’s actions are
sufficient for him or her to “reasonably anticipate being haled
into court there”).
By invoking the benefits and protections of
a state’s laws, a defendant makes its presence before the
state’s courts foreseeable.
Daynard, 290 F.3d at 60.
Red Desert’s contacts with New Hampshire were
unquestionably voluntary: it listed a New Hampshire address on
the Purchase Order, corresponded with GE Mobile using letterhead
listing a New Hampshire address, and listed New Hampshire
telephone and fax numbers in its contact information.
“managed” its business out of New Hampshire.
It
The sheer
abundance of representations acknowledge an ongoing relationship
with New Hampshire that establishes the foreseeability of
litigation within the state.
See Adelson, 510 F.3d at 50.
Moreover, GE Mobile has submitted additional public records
showing that Red Desert considered its Portsmouth, New Hampshire
address to be a forum from which it conducted its business.
Red
Desert listed Portsmouth, New Hampshire as its “principal
address” on its official corporate filing with the State of
Wyoming.
It also included its Portsmouth, New Hampshire address
11
on its radio license, its State of Wyoming environmental
permits, and other public filings.
14.
Doc. Nos. 18-3, 18-13, 18-
In publically holding itself to be a corporation with its
primary address in New Hampshire, Red Desert freely and of its
own volition represented its strong New Hampshire contacts to
the entire world.
See Adelson, 510 F.3d at 50; Carreras, 660
F.3d at 555 (“when a defendant deliberately targets its behavior
toward the society or economy of a particular forum, the forum
should have the power to subject the defendant to judgment
regarding that behavior”).
These voluntary actions make it
foreseeable – even expected – that Red Desert could be haled
into court in New Hampshire in the event of a contract dispute.
3.
Reasonableness
Even if a court finds that the relatedness and purposeful
availment requirements are met, specific personal jurisdiction
may nevertheless only be exercised if it is reasonable for the
court to do so.
Factors that courts consider in assessing
reasonableness include (1) the defendant’s burden of appearing
in the forum state; (2) the forum state’s interest in
adjudicating the dispute; (3) the plaintiff’s interest in
convenient and effective relief; (4) the judicial system’s
interest in obtaining the most effective resolution; and (5) the
common interests of all sovereigns in promoting substantive
12
social policies.
Adelson, 510 F.3d at 51 (citing Burger King,
471 U.S. at 477).
A consideration of these factors indicates that it is
reasonable to exercise specific personal jurisdiction here.
Red
Desert would have no significant burden in appearing in New
Hampshire.
Cleveland, its President, is a managing director at
Cate Street, with offices based in New Hampshire.
The company
represented that its “managers” worked from Cate Street’s New
Hampshire offices.
GE Mobile also has a significant interest in bringing suit
against Red Desert in New Hampshire because it is suing Cate
Street and Clean Runner here based on the same contractual
relationship.
It would thus be convenient and efficient for GE
Mobile to present its claims against Red Desert in this
jurisdiction.
Similarly, litigating the dispute in one forum
would be most convenient for the judicial system to come to an
effective and efficient resolution.
The other factors - New Hampshire’s interest in
adjudicating the dispute and the common interests of sovereigns
in promoting substantive social policies – are of negligible
import given the weight of the first three factors, which all
favor exercising jurisdiction here.
Accordingly, Red Desert’s
contract-related contacts with New Hampshire in this case
13
constitute sufficient “minimum contacts” so as not to “offend
traditional notions of fair play and substantial justice.”
See
Adelson, 510 F.3d at 52 (quoting Int’l Shoe, 326 U.S. at 316).
III.
CONCLUSION
For the reasons discussed above, I deny Red Desert’s motion
to dismiss for lack of personal jurisdiction.
Doc. No. 15.2
SO ORDERED.
/s/Paul Barbadoro
Paul Barbadoro
United States District Judge
March 7, 2014
cc:
Danielle Andrews Long, Esq.
Scott H. Harris, Esq.
2
Clean Runner and Cate Street have moved to dismiss the claims
brought against them on different grounds. I will address their
arguments in a separate order.
14
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?