Santander Consumer USA Inc v. Union Pontiac-GMC Inc
MEMORANDUM OPINION AND ORDER granting and denying 10 MOTION to Dismiss for Lack of Jurisdiction or, Alternatively, Motion to Transfer. Although the Court determines that it lacks personal jurisdiction over Defendant, rather than to dismiss the case for lack of personal jurisdiction, the Court hereby transfers this action to the District Court for the District of New Jersey, pursuant to 28 U.S.C. § 1406(a). All other relief not specifically granted is DENIED. The Court ORDERS that this case be promptly transferred to the United States District Court for the District of New Jersey. (Ordered by Chief Judge Barbara M.G. Lynn on 5/31/2017) (ykp)
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
SANTANDER CONSUMER USA,
UNION PONTIAC-GMC, INC.,
CIVIL ACTION NO. 3:16-CV-2420-M
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Union Pontiac-GMC, Inc.’s Motion to Dismiss for Lack of
Personal Jurisdiction, or Alternatively, Motion to Transfer [ECF No. 10]. After carefully
reviewing the motions, the Court determines that it lacks personal jurisdiction over the
Defendant. However, rather than dismiss for lack of personal jurisdiction, the Court transfers
this action to the United States District Court for the District of New Jersey, pursuant to 28
U.S.C. § 1406(a).
This case involves a contract dispute between Plaintiff Santander Consumer USA, Inc.,
an Illinois corporation with its principal place of business in Dallas County, Texas, and Union
Pontiac-GMC, Inc., a Delaware corporation with its principal place of business in New Jersey.
Pl. Pet. [ECF No. 1-3] ¶¶ 2–3. The parties entered into a Non-Recourse Dealer Retail
Agreement (the “Agreement”) governing the sale and purchase of retail installment sales
contracts in connection with the sale of automobiles. Id. ¶ 7.
According to the allegations in Plaintiff’s Petition, filed in state court prior to removal,
Plaintiff is in the business of purchasing automobile retail installment sales contracts from
automobile dealers such as Defendant. Id. ¶ 6. Plaintiff alleges that Defendant assigned four
separate retail installment contracts (the “Missing Equipment Contracts”) to Plaintiff, in which
Defendant misrepresented the condition of the vehicles, and the equipment options included with
the vehicles. Id. ¶¶ 9–10. Plaintiff maintains that these misrepresentations violate paragraph 8(J)
of the Agreement, which obligated Defendant to repurchase the Missing Equipment Contracts.
Id. Further, Plaintiff maintains that Defendant misrepresented customer information in violation
of paragraph 8(h) of the Agreement, obligating Defendant to repurchase 102 contracts. Id. ¶ 14.
Plaintiff also alleges various other violations of the Agreement, including failure to tender
payment for cancelled “Additional Products and Services,” pursuant to paragraph 4(c) of the
Agreement, and failure to pay the value of reserve amounts. Id. ¶¶ 11–13.
Defendant contends that it is not a Texas business, does not maintain any physical
presence or employees in Texas, does not solicit or advertise in Texas, and does not own or lease
property in Texas. Defendant also contends that the Agreement was not negotiated or signed in
Texas, does not reference Texas, and does not impose any contractual obligations to be
performed in Texas.
On July 26, 2016, Plaintiff filed its Original Petition in the 192nd Judicial District Court
in Dallas County, Texas. Defendant timely removed the case to this Court on the basis of
diversity jurisdiction. Defendant now moves to dismiss this action for lack of personal
jurisdiction or, in the alternative, to transfer the case to the United States District Court for the
District of New Jersey.
2. Legal Standard
a. Personal Jurisdiction
When a defendant challenges personal jurisdiction, the plaintiff bears the burden of
“mak[ing] a prima facie showing that personal jurisdiction is proper.” Monkton Ins. Servs., Ltd.
v. Ritter, 768 F.3d 429, 431 (5th Cir. 2014) (citing Luv N' Care, Ltd. v. Insta–Mix, Inc., 438 F.3d
465, 469 (5th Cir. 2006)). The Court “must accept the plaintiff’s uncontroverted allegations, and
resolve in [its] favor all conflicts between the facts contained in the parties’ affidavits and other
documentation.” Monkton, 768 F.3d at 431 (quoting Revell v. Lidov, 317 F.3d 467, 469 (5th Cir.
2002)). In reviewing a motion to dismiss for lack of personal jurisdiction, the Court “may
consider ‘affidavits, interrogatories, depositions, oral testimony, or any combination of the
recognized methods of discovery.’” Revell, 317 F.3d at 469 (quoting Stuart v. Spademan, 772
F.2d 1185, 1192 (5th Cir. 1985)).
The Court has the power to exercise personal jurisdiction over a defendant only if the
following conditions are satisfied: “(1) the long-arm statute of the forum state confers personal
jurisdiction over that defendant; and (2) exercise of such jurisdiction by the forum state is
consistent with due process under the United States Constitution.” In re Chinese–Manufactured
Drywall Prods. Liab. Litig., 753 F.3d 521, 535 (5th Cir. 2014) (quoting Ainsworth v. Moffett
Eng’g, Ltd., 716 F.3d 174, 177 (5th Cir. 2013)). Because “[t]he Texas long-arm statute extends
to the limits of the Constitution,” only the second prong of the test is at issue. Stroman Realty,
Inc. v. Antt, 528 F.3d 382, 385 (5th Cir. 2008).
There are two categories of personal jurisdiction, general and specific. Daimler AG v.
Bauman, 134 S. Ct. 746, 754 (2014). General jurisdiction exists when a foreign corporation's
“affiliations with the State are so ‘continuous and systematic’ as to render them essentially at
home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 2846,
2851 (2011) (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 317 (1945)). For the Court to
exercise specific jurisdiction over a nonresident who has not consented to suit in the forum, the
nonresident must have contacts with the forum state that “arise from or are directly related to the
cause of action.” Marathon Oil Co. v. A.G. Ruhrgas, 182 F.3d 291, 295 (5th Cir. 1999) (citing
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)).
Plaintiff, as the party seeking to invoke the Court’s power, bears the burden of
establishing the Court’s jurisdiction over Defendant. See Pervasive Software Inc. v. Lexware
GmbH & Co. KG, 688 F.3d 214, 219 (5th Cir. 2012) (citing cases). If a district court, as here,
decides a motion to dismiss without holding an evidentiary hearing, a prima facie case suffices to
establish jurisdiction. See Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994) (citing Thompson v.
Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985)). A court must take uncontroverted
allegations in the complaint as true, and it must resolve all factual conflicts favor of the plaintiff.
Pervasive Software, 688 F.3d at 220 (citing Freudensprung v. Offshore Technical Servs., Inc.,
379 F.3d 327, 343 (5th Cir. 2004)). In deciding the motion, a court may consider “affidavits,
interrogatories, depositions, oral testimony, or any combination of the recognized methods of
discovery.” Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338, 344 (5th Cir. 2002) (citing
Thompson, 755 F.2d at 1165).
Defendant moves to dismiss for lack of personal jurisdiction under Federal Rule of Civil
Procedure 12(b)(2), and for improper venue under Rule 12(b)(3). The Court will address each
a. Personal Jurisdiction
As a preliminary matter, the Court notes that in other cases filed in this District, under
circumstances similar to those in this case, Santander has asserted that a court has personal
jurisdiction over a nonresident car dealership. The courts to have considered this question have
reached differing results. Compare Santander Consumer USA, Inc. v. Car Smart, Inc., No. 3:09cv-2317-G, 2010 WL 3703848 (N.D. Tex. Sept. 20, 2010) (finding personal jurisdiction over
nonresident car dealership), with Santander Consumer USA, Inc. v. Anchor Motor Co., Inc., No.
3:13-cv-154-N, 2013 WL 10914281 (N.D. Tex. Apr. 30, 2013) (finding the court lacked
personal jurisdiction over nonresident car dealership), and Santander Consumer USA, Inc. v.
Shults Ford, Inc., No. 3:11-cv-614-L, 2011 WL 2601520 (N.D. Tex. June 30, 2011) (concluding
that the defendant lacked sufficient contacts with the State of Texas to establish personal
Here, it is clear, and the parties do not appear to contest, that the Court lacks general
jurisdiction over Defendant, which is incorporated in Delaware and maintains its principal place
of business in New Jersey. See Daimler, 134 S. Ct. at 749–50. The remaining question is
whether the Court has specific jurisdiction over Defendant. In deciding that question, the Court
focuses on “the relationship between the defendant, the forum, and the litigation.” In re
Chinese–Manufactured Drywall, 753 F.3d at 529. The Fifth Circuit mandates a three-step
inquiry for an analysis of specific jurisdiction: (1) whether the defendant has minimum contacts
with the forum state, i.e., whether it purposely directed its activities toward the forum state or
purposefully availed itself of the privileges of conducting activities there; (2) whether the
plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and
(3) whether the exercise of personal jurisdiction is fair and reasonable. Monkton, 768 F.3d at
433. If the plaintiff establishes the first two prongs, then the burden shifts to the defendant to
show that the exercise of personal jurisdiction over it would not be fair or reasonable. Id.
The minimum contacts test is a fact-intensive inquiry, the touchstone of which is
“whether the defendant's conduct shows that it ‘reasonably anticipates being haled into court’ [in
the forum].” McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009) (quoting Luv N’ Care, 438
F.3d at 470). Specific jurisdiction cannot be established through random, fortuitous, or
attenuated contacts, nor from the “unilateral activity of a third party or another person.”
McFadin, 587 F.3d at 759 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)).
In deciding whether a defendant purposefully availed itself of the privileges of conducting
business in the forum state, for purposes of a breach of contract claim, the Fifth Circuit has
considered the place where the contract was negotiated, the physical presence of the defendant's
representatives in the forum, where contract performance is to take place, and any other contract
clauses that show that the defendant should have reasonably anticipated being haled into court in
the forum. See, e.g., Moncrief Oil Int’l Inc. v. OAO Gazprom, 481 F.3d 309, 311 (5th Cir. 2007);
Cent. Freight Lines Inc. v. APA Transp. Corp., 322 F.3d 376, 382 (5th Cir. 2003).
Defendant maintains that it lacks jurisdictional contacts with the state of Texas. Plaintiff
points to several alleged contacts that, it maintains, show a sufficient connection to Texas to give
rise to specific jurisdiction. Some contacts alleged by Plaintiff appear to be Plaintiff’s unilateral
actions, which are insufficient to establish specific jurisdiction.1 The majority of the contacts
For instance, Plaintiff contends that (1) the Agreement was negotiated and executed in part in Dallas, Texas; and
(2) the Agreement “was in fact performed in significant part in Dallas County, Texas.” Pl. Resp. at 14–15.
However, these alleged contacts must refer to Plaintiff’s actions in preparing, executing, and acting under the
Agreement, because Defendant maintains that none of its employees visited Texas in connection with the
Agreement, the terms of the Agreement were preprinted and were not negotiated between Defendant and Plaintiff,
and the Agreement was not signed by Defendant in Texas. Def. Mot. App., Aff. Manganelli [ECF No. 12 at 3] ¶ 5.
Furthermore, Defendant maintains that printed information related to the loans was mailed to Plaintiff at a mailing
address in Tennessee, not Texas. Id. ¶¶ 9–10. Indeed, the evidence presented by Plaintiff indicates that aspects of
the Agreement that occurred in Texas were all performed by Plaintiff. Pl. Resp. App., Cherry Aff. [ECF No. 17 at
alleged by Plaintiff relate to Defendant’s entry into the Agreement and the parties’ subsequent
actions pursuant to the Agreement.2 Plaintiff also points to the Texas choice of law clause
contained in the Agreement as a basis for personal jurisdiction. Pl. Resp. [ECF No. 16] at 15.
The Agreement, standing alone, is insufficient to establish minimum contacts. See
Anchor Motor Co., 2013 WL 10914281, at *3 (“The Supreme Court and the Fifth Circuit have
long held that a nonresident defendant's contract with a resident plaintiff does not establish
minimum contacts.” (citing Burger King, 471 U.S. at 478; Moncrief Oil, 481 F.3d at 311)).
Furthermore “[a]n exchange of communications in the course of developing and carrying out a
contract also does not, by itself, constitute the required purposeful availment of the benefits and
protections of Texas law.” Moncrief Oil, 481 F.3d at 312. Other than the choice of law clause,
which states that the Agreement “shall be interpreted pursuant to the laws of the State of Texas,”
the Agreement makes no reference to Texas. Pl. App. [ECF No. 17] at App. 012. And while a
choice of law clause is relevant to a personal jurisdiction analysis, it is not determinative.
Electrosource, Inc. v. Horizon Battery Techs, Ltd., 176 F.3d 867, 873 (5th Cir. 1999) (“[A]
4] ¶ 5 (“Santander performs all of its functions under the Dealer Agreement at Santander’s offices in Dallas County,
Texas . . . .”). Plaintiff’s unilateral activities in Texas are insufficient to establish personal jurisdiction over
Defendant. McFadin, 587 F.3d at 759. “[A] plaintiff's unilateral activities in Texas do not constitute minimum
contacts where the defendant did not perform any of its obligations in Texas, the contract did not require
performance in Texas, and the contract is centered outside of Texas.” Moncrief Oil Int’l Inc. v. OAO Gazprom, 481
F.3d 309, 312 (5th Cir. 2007).
For instance, Plaintiff point to the following alleged contacts in support of specific jurisdiction: (1) Defendant’s
sale to Plaintiff of retail installment contracts pursuant to the Agreement; (2) Defendant’s election to sell the
contracts under the Agreement to Plaintiff, a Texas resident; (3) Defendant’s selection of Plaintiff as the assignee of
those contracts; (4) under the Agreement, Defendant indemnified Plaintiff for claims arising from Defendant’s
conduct under the Agreement; and (5) Defendant granted Plaintiff, a Texas resident, power of attorney to take
certain actions on behalf of Defendant in performing under the Agreement. Pl. Resp. [ECF No. 16] at 14–15. The
Court considers the first three alleged contacts to be coextensive with Defendant’s actions pursuant to the
Agreement, which the Court will discuss. See Anchor Motor Co., 2013 WL 10914281, at *3 n.2. The fourth and
fifth contacts are not contacts separate from the Agreement itself. See id.; Shults, 2011 WL 2601520, at *5 (noting
that indemnity agreement was not “part of an enduring or substantial business relationship between the parties, such
that Defendant had purposefully availed itself of the privilege of conducting business with Texas”).
Plaintiff contends that (1) the Agreement was negotiated and executed in part in Dallas, Texas; and (2) the
Agreement “was in fact performed in significant part in Dallas County, Texas.” Pl. Resp. at 14–15.
choice-of-law provision should neither be ignored nor considered sufficient alone to confer
jurisdiction.”); Anchor Motor Co., 2013 WL 10914281, at *3.
Even considering the Agreement in context with the parties’ relationship and future
obligations, Plaintiff has failed to establish minimum contacts to establish specific jurisdiction
over Defendant. “In a breach of contract case, to determine whether a party purposefully availed
itself of a forum, a court must evaluate ‘prior negotiations and contemplated future
consequences, along with the terms of the contract and the parties’ actual course of dealing.’”
Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999) (quoting Burger King, 471 U.S. at 479).
The facts of the case surrounding the parties’ Agreement do not indicate that Defendant
purposefully availed itself of Texas. First, it appears that the parties never negotiated or did
business together prior to their conversations about the Agreement. Any negotiations between
the parties were not extensive; Defendant maintains that the Agreement was “on a preprinted
form” and the terms were not bargained for. Def. Mot. App., Manganelli Aff. [ECF No. 12 at 4]
¶ 5. Discussions between the parties prior to entering the Agreement appear to have taken place
in New Jersey; Defendant maintains that Plaintiff’s representative traveled to Defendant’s
dealership in New Jersey to solicit Defendant’s business. Def. Reply App., Manganelli Aff.
[ECF No. 21 at 5] ¶ 5.
Second, concerning contemplated future consequences, the Agreement merely provides a
framework through which the parties may sell or purchase consumer contracts. By itself, the
Agreement does not require either party to perform, let alone perform in Texas. Pl. Resp. App.
at 9 (“If Dealer wishes [Plaintiff] to purchase a Contract hereunder, Dealer shall furnish . . . .”
(emphasis added)). The Agreement does not contemplate future royalties, payments, or
minimum sales, and does not require Defendant to act should it choose not to sell contracts to
Plaintiff. Therefore, the Agreement does not appear to contemplate any lasting or significant
relationship between the parties, let alone consequences or possible obligations in Texas. See
Anchor Motor Co., 2013 WL 10914281, at *5 (“The Agreement’s silence as to future
consequences, like the parties’ prior negotiations, suggests that Anchor did not establish
minimum contacts with Texas.”).
Third, the terms of the Agreement do not establish a connection to Texas. Other than the
choice of law clause specifying Texas, the Agreement makes no reference to Texas. The Texas
choice of law clause does indicate some connection to Texas, but it does not appear to be a
significant one. Instead, the Agreement’s terms suggest that the center of the parties’
relationship is at Defendant’s dealership, which is in New Jersey. For instance, the Agreement
contains provisions centered around Defendant’s dealership, such as terms governing the
collection of down payments from Defendant’s dealership customers, Defendant’s proper license
to conduct business in the state, and whether Defendant shall identify Plaintiff in any advertising
on its premises. Pl. Resp. App. at 9–13. Furthermore, the consumer contracts at issue in this
case were originated at Defendant’s dealership in New Jersey. See Shults, 2011 WL 2601520, at
*4 (finding that dealership’s home state “is clearly the center of the parties’ activities”).
Fourth, the course of dealing between the parties was minimal. Although Defendant sold
at least 100 consumer contracts to Plaintiff pursuant to the Agreement, the parties’ relationship
appears to have been limited in scope, and do not show that Defendant could have reasonably
anticipated being haled into court in Texas. See McFadin, 587 F.3d at 759. Plaintiff presents
evidence that Defendant transmitted loan information to Plaintiff’s offices in Texas “through
electronic communication.” Pl. Resp. App., Cherry Aff. [ECF No. 17 at 5] ¶ 7. However,
Defendant describes the electronic system for submitting proposed loans to Plaintiff as being a
web-based interface and a toll-free phone number, both of which lacked any indication that
Plaintiff was reviewing loan documents in Texas. Def. Reply App. Manganelli Aff. ¶¶ 7–9.
Defendant also describes how after Plaintiff purchased a contract, Defendant would send
physical copies of funding materials to Plaintiff via Federal Express to an address in Tennessee.
Id. ¶ 10.
Considering all of these factors together, the Court concludes that the Agreement and the
course of the parties’ dealings in association with the Agreement are insufficient to establish
personal jurisdiction over Defendant in Texas. The sole justification for personal jurisdiction
appears to be Defendant’s contractual relationship with Plaintiff under the Agreement, which
rests on “the mere fortuity that [Plaintiff] happens to be a resident of the forum.” Anchor Motor
Co., 2013 WL 10914281, at *6 (quoting Holt Oil, 801 F.2d at 778). Accordingly, the Court
concludes that it lacks personal jurisdiction over Defendant.
All that remains is to determine whether the Court should dismiss for lack of personal
jurisdiction or transfer the action. The Fifth Circuit has recognized that § 1406 allows a transfer
of venue “where the first forum chosen is improper due to the existence of some obstacle to
adjudication on the merits,” including the lack of personal jurisdiction. Herman v. Cataphora,
Inc., 730 F.3d 460, 466 (5th Cir. 2013). Upon a finding that it lacks personal jurisdiction, a
district court can correctly cite § 1406(a) for the authority to transfer a case if it is in the interest
of justice. Id. “The language of § 1406(a) is amply broad enough to authorize the transfer of
cases, however wrong the plaintiff may have been in filing his case as to venue, whether the
court in which it was filed had personal jurisdiction over the defendants or not.” Goldlawr, Inc.
v. Heiman, 369 U.S. 463, 466 (1962). Courts “generally prefer transfer to dismissal.” Wolf
Network, LLC v. AML Diagnostics, Inc., No. 3-15-cv-3797, 2016 WL 1357742, at *3 (N.D. Tex.
Apr. 5, 2016).
Transfer is generally preferable to dismissal, and the factors in this case weigh heavily
toward transfer. Wolf Network, 2016 WL 1357742, at *3. When venue is improper, a court may,
in the interest of justice, transfer the case to “any district or division in which it could have been
brought.” 28 U.S.C. § 1406(a). Under the general venue statute, venue is proper in a judicial
district in which the Defendant resides, or a judicial district in which a substantial part of the
events or omissions giving rise to the claim occurred. Id. § 1391(b)(1)–(2).
Venue is proper in the District of New Jersey. The Defendant’s principal place of
business is in New Jersey, and therefore Defendant resides in New Jersey, and it has sufficient
contacts with New Jersey so as to establish personal jurisdiction over it there. Furthermore,
Defendant consents to personal jurisdiction in New Jersey. The record before the Court also
indicates that a substantial part of the events giving rise to Plaintiff’s claim occurred in New
Jersey; specifically, the origination of the retail installment contracts at issue took place at
Defendant’s dealership in Union, New Jersey, as well as signing of the Agreement by Defendant.
Based on the foregoing, although the Court determines that it lacks personal jurisdiction
over Defendant, rather than to dismiss the case for lack of personal jurisdiction, the Court hereby
transfers this action to the District Court for the District of New Jersey, pursuant to 28 U.S.C.
§ 1406(a). All other relief not specifically granted is DENIED. The Court ORDERS that this
case be promptly transferred to the United States District Court for the District of New Jersey.
May 31, 2017.
BARBARA M. G. LYNN
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