DCA Services Inc v. Communications III Inc et al

Filing 16

ORDER granting 6 Motion to Dismiss by Halliday. Defendant Halliday dismissed for lack of personal jurisdiction. Signed by Honorable Timothy D. DeGiusti on 2/29/2016. (mb)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
DCA SERVICES, INC.,

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Plaintiff,
v.
COMMUNICATIONS III, INC.,
COMMUNICATIONS OPTIONS, INC.,
TELECOM VENTURES, LLC, and
SCOTT B. HALLIDAY,
Defendants.

Case No. CIV-15-256-D

ORDER
Before the Court is Defendant Scott B. Halliday’s (“Defendant Halliday”) Motion
to Dismiss [Doc. No. 6], which seeks dismissal of Plaintiff’s fourth cause of action
pursuant to Fed. R. Civ. P. 12(b)(2) and (b)(6), and, therefore, dismissal of Defendant
Halliday from the case. 1

Plaintiff has responded in opposition [Doc. No. 11], and

Defendant Halliday has replied [Doc. No. 12]. The Motion is fully briefed and at issue.
Plaintiff’s Petition (henceforth, “Complaint”) [Doc. No. 1-1]2 contains four causes
of action, only one of which is against Defendant Halliday. Plaintiff asserts that, on
October 1, 2013, it entered into a service agreement (“Service Agreement”) with
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Because the Court is obliged to address jurisdiction as a threshold matter, the
Court need only address Defendant Halliday’s 12(b)(2) argument.
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Plaintiff’s Complaint was filed in the District Court of Oklahoma County on
February 3, 2015 under case number CJ-2015-703. Defendants filed a Notice of Removal
[Doc. No. 1] with this Court on March 3, 2015.
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Communications III, Inc., Communications Options, Inc., and Telecom Ventures, LLC
(collectively, the “Corporate Defendants”). Plaintiff further asserts that, on August 1,
2014, it entered into an equipment purchase agreement (“Equipment Purchase
Agreement”) with the Corporate Defendants.
According to Plaintiff, in October 2014, the Corporate Defendants fell behind on
their monthly payments under both the Service Agreement and the Equipment Purchase
Agreement. Plaintiff asserts that it entered into negotiations with Defendant Halliday,
acting on behalf of the Corporate Defendants. Plaintiff further asserts that, on January 8,
2015, Defendant Halliday agreed on behalf of the Corporate Defendants to a payment plan
which required an immediate payment of $45,000 and subsequent weekly payments of
$12,500 until amounts due and owing became current.

According to Plaintiff, the

Corporate Defendants only made the initial $45,000 payment and one $12,500 weekly
payment.
Plaintiff asserts that sometime after January 20, 2015, Defendant Halliday informed
Plaintiff of the Corporate Defendants’ immediate cancellation of both the Service
Agreement and the Equipment Purchase Agreement. Plaintiff asserts that Defendant
Halliday was aware of the Corporate Defendants’ plans to cease operations when he was
negotiating with Plaintiff on their behalf, and that during such negotiations, Defendant
Halliday falsely represented to Plaintiff that the Corporate Defendants intended to remain
in business and fulfill their payment obligations under the agreed payment plan. Plaintiff

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further asserts that it relied on Defendant Halliday’s representations to its detriment and,
therefore, is seeking damages for fraud.
Regarding jurisdiction in Oklahoma, the Complaint merely states “[t]his Court has
subject matter jurisdiction over this action pursuant to the contracts at issue herein and
because the events described in this Petition arose or occurred, in full or in part, in
Oklahoma County, Oklahoma.”

Comp. [Doc. No. 1-1] at 2.

However, Plaintiff’s

Response to Defendant Halliday’s Motion to Dismiss asserts that this Court’s exercise of
personal jurisdiction over Defendant Halliday is proper because “[t]he negotiations
occurred by and through numerous telephone conferences and electronic mail
communications,” and Defendant Halliday was aware that “[a]t all times, [Plaintiff’s]
agents and representatives to the negotiations were located in Oklahoma City, Oklahoma.”
Pl. Resp. [Doc. No. 11] at 3. Therefore, Plaintiff asserts the material representations made
by Defendant Halliday in the negotiations with Plaintiff were “expressly aimed . . . at an
Oklahoma resident” (Id. at 6), and that Defendant Halliday “knew the brunt of the injury
caused by his fraudulent representations would be felt in Oklahoma” (Id. at 7). Plaintiff
contends that Defendant Halliday’s tortious conduct purposely directed at an Oklahoma
resident permits an exercise of jurisdiction over him in this forum, even though he was
acting on behalf of corporate entities.
Standard of Decision
When jurisdiction is challenged via a 12(b)(2) motion, the plaintiff bears the burden
of establishing personal jurisdiction. OMI Holdings v. Royal Ins. Co. of Can., 149 F.3d
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1086, 1091 (10th Cir. 1998). This burden is light in the preliminary stages of litigation.
Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). When there has been no
evidentiary hearing, a plaintiff must only present competent proof in the form of affidavits
and other written materials that, if true, would establish a prima facie showing that
jurisdiction is proper. Id. To defeat such a showing by the plaintiff, a defendant must
come forward with a “compelling case” that other considerations render jurisdiction
unreasonable.

OMI Holdings, 149 F.3d at 1091 (quoting Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 477 (1985)); Rambo v. Am. S. Ins. Co., 839 F.2d 1415, 1417
(10th Cir. 1988). In the absence of a hearing, the court accepts a plaintiff’s well-pled
allegations as true to the extent they are not controverted by the defendant’s affidavits.
Wenz, 55 F.3d at 1505; Conoco Phillips Co. v. Jump Oil Co., 948 F. Supp. 2d 1272, 1277
(N.D. Okla. 2013). If a factual dispute arises, it is preliminarily resolved in the plaintiff’s
favor. AST Sports Sci., Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1056 (10th Cir. 2008).
To obtain personal jurisdiction over a nonresident defendant in a diversity action, a
plaintiff must show jurisdiction is proper under the laws of the forum state and that the
exercise of jurisdiction does not offend the Due Process Clause of the Fourteenth
Amendment. Walden v. Fiore, __ U.S. __, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014).
Oklahoma’s long-arm statute provides “[a] court of this state may exercise jurisdiction on
any basis consistent with the Constitution of this state and the Constitution of the United
States.” 12 OKLA. STAT. § 2004(F). The long-arm statute is coextensive with the
constitutional limitations imposed by the Due Process Clause. Intercon, Inc. v. Bell Atl.
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Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir. 2000). “[T]o exercise jurisdiction
in harmony with due process, [a nonresident defendant] must have ‘minimum contacts’
with the forum state, such that having to defend a lawsuit there would not ‘offend
traditional notions of fair play and substantial justice.’” Dudnikov v. Chalk & Vermilion
Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008) (quoting Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945)). “Minimum contacts must be found as to each
defendant over whom the court exercises jurisdiction.” Home-Stake Prod. Co. v. Talon
Petroleum, C.A., 907 F.2d 1012, 1020 (10th Cir. 1990). “Such contacts may give rise to
personal jurisdiction over a [nonresident] defendant either generally, for any lawsuit, or
specifically, solely for lawsuits arising out of particular forum-related activities.” Shrader
v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011).
A court may not exercise general jurisdiction over a nonresident unless the
defendant has “continuous and systematic” business contacts with the forum state.
Emp’rs. Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1160 n.5 (10th Cir. 2010).
The Supreme Court recently reiterated this standard in Daimler AG v. Bauman, __ U.S. __,
134 S.Ct. 746, 187 L.Ed.2d 624 (2014), wherein it stated general jurisdiction refers to a
court’s power to hear claims against a nonresident when its contacts “with the [s]tate are so
continuous and systematic as to render [it] essentially at home in the forum state.” Id. at
751 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. __, 131 S.Ct.
2846, 2851, 180 L.Ed.2d 796 (2011)).

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To exercise specific jurisdiction over a nonresident, a court must engage in a
two-step inquiry regarding the defendant’s contacts with the forum state. First, a court
must consider whether the defendant’s conduct and connection with the forum state are
such that he should reasonably anticipate being haled into court there. Walden, 134 S.Ct.
at 1121 n.6 (specific jurisdiction “depends on an ‘affiliatio[n] between the forum and the
underlying controversy’ (i.e., an ‘activity or occurrence that takes place in the forum [s]tate
and is therefore subject to the [s]tate’s regulation’)”) (quoting Goodyear Dunlop Tires
Operations, S.A., 131 S.Ct. at 2851). Such connections cannot be random, fortuitous, or
attenuated. OMI Holdings, 149 F.3d at 1094. The plaintiff cannot be the only link
between the defendant and the forum. Walden, 134 S.Ct. at 1122.
Second, if the defendant’s actions create sufficient minimum contacts, the court
must then consider whether the exercise of personal jurisdiction over the defendant offends
traditional notions of fair play and substantial justice. Melea, Ltd. v. Jawer SA, 511 F.3d
1060, 1065 (10th Cir. 2007); Boatright Family, LLC. v. Reservation Ctr., Inc., No.
CIV-13-192-D, 2015 WL 2345299 at *2 (W.D. Okla. May 14, 2015) (citing Benton v.
Cameco Corp., 375 F.3d 1070, 1075 (10th Cir. 2004)). Whether a nonresident’s activities
in the forum are sufficient to confer personal jurisdiction depends on “the totality of facts.”
Premier Corp. v. Newsom, 620 F.2d 219, 222 (10th Cir. 1980); Bricktown Res., Inc. v.
KTM Servs., Inc., No. CIV-08-928-F, 2008 WL 4723012 at *4 (W.D. Okla. Oct. 23, 2008).
The Tenth Circuit has endorsed a three-pronged analysis for use when examining
whether a nonresident defendant has sufficient minimum contacts with the forum to satisfy
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constitutional requirements: (1) the nonresident must do some act or consummate some
transaction with the forum or perform some act by which it purposefully avails itself 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 results from the
defendant’s forum-related activities; and (3) the exercise of jurisdiction must be
reasonable. See Rambo, 839 F.2d at 1419 n.6.3 Purposeful availment is indicated by (1)
“an intentional action,” (2) “expressly aimed at the forum state,” (3) with “knowledge that
the brunt of the injury would be felt in the forum state.” Shrader, 633 F.3d at 1240
(quoting Dudnikov, 514 F.3d at 1072).
Discussion
General Jurisdiction
Plaintiff’s Complaint fails to allege any continuous or systematic contacts
Defendant Halliday maintains with the forum state. Further, Plaintiff does not dispute that
Defendant Halliday lives and works in Ohio, maintains no residence or office in

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Despite the foregoing analysis, requirements of personal jurisdiction may be
waived through consent. Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de
Guinee, 456 U.S. 694, 703 (1982). When a defendant consents to personal jurisdiction in
a certain forum, there is no need to analyze the forum state’s long-arm statute or the
defendant=s contacts with the forum state. See Williams v. Life Sav. and Loan, 802 F.2d
1200, 1202 (“Once waived, lack of personal jurisdiction may not be raised by the court.”)
(citing Zelson v. Thomforde, 412 F.2d 56, 58 (3d Cir. 1969)). The Corporate Defendants
filed their Answer and Counterclaim [Doc. No. 5] to Plaintiff’s Complaint [Doc. No. 1-1]
on March 19, 2015. In so doing, the Corporate Defendants waived any objection to this
Court’s exercise of personal jurisdiction over them.
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Oklahoma, and does not regularly do business here. Therefore, this Court’s analysis will
center on its potential exercise of specific jurisdiction over Defendant Halliday.
Specific Jurisdiction
Plaintiff’s Response utilizes a jurisdictional analysis employed by the Supreme
Court in Calder v. Jones, 465 U.S. 783 (1984), from which the court of appeals in
Dudnikov distilled the previously-listed factors regarding purposeful availment to support
an exercise of personal jurisdiction over a nonresident defendant. Plaintiff also cites to
non-binding case law in further support of its argument.4 However, more recently in
Walden, the Supreme Court held that minimum contacts necessary for the exercise of
personal jurisdiction over the nonresident defendant “must arise out of contacts that the
defendant himself creates with the forum [s]tate” and that “however significant the
plaintiff’s contacts with the forum may be, those contacts cannot be decisive in
determining whether the defendant’s due process rights are violated.” Walden, 134 S.Ct.
at 1122 (internal quotation marks and original emphasis omitted). Walden went on to
state that the “‘minimum contacts’ analysis looks to the defendant’s contacts with the
forum [s]tate itself, not the defendant’s contacts with persons who reside there,” and that
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Plaintiff cites Rossi v. Wohl, 246 Fed. Appx. 856, 858-59 (5th Cir. 2007) stating
“allegations that nonresident attorneys communicated false information to the plaintiff in
Texas were sufficient to establish minimum contacts with Texas,” and Hafen v. Strebeck,
338 F. Supp. 2d 1257, 1259-63 (D. Utah 2004) noting a “finding [that] minimum contacts
existed where the defendant made a number of allegedly fraudulent telephone calls to the
plaintiff in Utah, sent a letter confirming the alleged misrepresentations to the plaintiff in
Utah, and placed one allegedly fraudulent telephone call while both parties were present in
Utah.” Pl. Resp. [Doc. No. 11] at 7.
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“the plaintiff cannot be the only link between the defendant and the forum.”

Id.

Similarly, in Rockwood Select Asset Fund XI (6)-1, LLC v. Devine, Millimet & Branch, 750
F.3d 1178 (10th Cir. 2014), the Tenth Circuit held that a plaintiff’s formation and
transaction of business in the forum state was insufficient for personal jurisdiction under
Walden, 134 S.Ct. 1115, and that a defendant’s act of sending a letter to an address in the
forum state and communicating via telephone with the plaintiff while the plaintiff was in
the forum state was insufficient for personal jurisdiction under Trierweiler v. Croxton
Trench Holding Corp., 90 F.3d 1523 (10th Cir. 1996), even when the contents of those
communications were what gave rise to the lawsuit. Rockwood, 750 F.3d at 1180-81.
In light of Walden and Rockwood, the telephone conferences and electronic mail
communications between Plaintiff (in Oklahoma) and Defendant Halliday (in Ohio)
involved here are insufficient to establish minimum contacts necessary for the exercise of
personal jurisdiction over a nonresident defendant. Without more, Plaintiff fails to carry
its burden of establishing minimum contacts. Accordingly, the Court need not consider
whether the exercise of personal jurisdiction over Defendant Halliday is reasonable in light
of the circumstances surrounding this case.
Conclusion
For these reasons, the Court finds Defendant Halliday’s Motion to Dismiss [Doc.
No. 6] is hereby GRANTED pursuant to Fed. R. Civ. P. 12(b)(2). Accordingly, Plaintiff’s

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action against Defendant Halliday is dismissed for lack of personal jurisdiction.
IT IS SO ORDERED this 29th day of February, 2016.

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