First Bank & Trust v. Greene Enterprise, LLC et al

Filing 19

MEMORANDUM OPINION AND ORDER granting 7 MOTION to Dismiss. Signed by U. S. District Judge Lawrence L. Piersol on 12/3/13. (CMS) Modified execution date on 12/4/2013 (CMS).

FILED
UNITED STATES DISTRlCT COURT
DISTRlCT OF SOUTH DAKOTA

DEC 042013

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SOUTHERN DIVISION

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CIV. 13-4017
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Plaintiff,
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MEMORANDUM OPINION
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vs.
AND ORDER GRANTING
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MOTION TO DISMISS
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GREENE ENTERPRlSE, LLC, JAMES GREENE, *
and RESOLUTE FOREST PRODUCTS,
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Defendants.
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FIRST BANK & TRUST d/b/a
FIRSTLINE FUNDING GROUP,

Pending before the Court is Defendant Resolute Forest Products' unopposed motion to
dismiss for lack ofpersonal jurisdiction and insufficient service ofprocess pursuant to Federal Rules
of Civil Procedure 12(b)(2) and 12(b)(5). (Docket 7.) For the reasons set forth below, the motion
will be granted.

FACTUAL BACKGROUND
Plaintiff First Bank & Trust (Bank), a South Dakota banking corporation, brought this
diversity action against defendants Greene Enterprise, a Tennessee limited liability company, James
Greene (Greene), a resident of Georgia, and Resolute Forest Products (Resolute), a company that
conducts business and maintains an office in Tennessee. The Bank's Complaint alleges that it entered
into a factoring agreement with Greene and Greene Enterprise whereby it became the assignee and
owner ofall Greene Enterprise accounts with the sole right to collect the proceeds thereof The Bank
claims that it notified Resolute ofthe assignment ofGreene Enterprise accounts, but Resolute paid
Greene Enterprise rather than the Bank for certain invoices, and Greene Enterprise failed to remit
those funds back to the Bank pursuant to the factoring agreement. In its complaint, the Bank asserts
a cause of action against Resolute for failure to pay pursuant to statutory notification.

The pertinent facts, according to the complaint, are as follows:
Plaintiff Bank is a South Dakota banking corporation. Defendant Greene Enterprise is a
Tennessee limited liability company. Defendant Greene is a resident of Georgia, and defendant
Resolute is a business entity doing business in and maintaining an office in Tennessee.
On June 13, 2011, the Bank and Greene Enterprise entered into a factoring and security

agreement and guaranty agreement whereby the Bank agreed to purchase certain accounts ofGreene
Enterprise on a recourse basis. As the assignee and owner of all Greene Enterprise accounts, the
Bank has the sole right to collect the proceeds thereof
Greene prepared and sent false, inflated invoices to the Bank for purchase. Greene Enterprise
has been paid directly from Resolute for certain valid invoices and failed to remit the funds to the
Bank pursuant to the agreement between Greene and the Bank.

The facts set forth by Resolute in the Declaration of Jacques P. Vachon, the senior vice
president of corporate affairs and chieflegal officer of Resolute, are:
Resolute FP US Inc. produces paper and pulp products. It is a Delaware corporation
registered to do business in Tennessee. Resolute FP US Inc. had a business relationship with Greene
Enterprise in the state of Tennessee, with no connections to the state of South Dakota. Greene
Enterprise was one ofthe carriers that provided transportation delivery services for Resolute FP US
at its Calhoun mill in Tennessee. Resolute FP US Inc. was not a party to the agreement between the
Bank and Greene Enterprise, and it has never entered into an agreement with the Bank. In regard
to the company's lack ofties to South Dakota, Vachon states: Resolute FP US Inc. is not registered
to do business and it does not do business in South Dakota; it does not own or lease any real or
personal property, nor does it have any facilities in South Dakota; it does not have bank accounts and
it has not borrowed money in South Dakota; it has no relationship with the Bank; it has no phone
listing or mailing address in South Dakota; a review of Resolute's records since 201 0 shows it has
not paid any taxes or filed a sales tax return in South Dakota during that time; it does not have any
officers, employees, or agents operating in South Dakota; it does not purchase advertising in South
Dakota or target advertising specifically toward South Dakota.

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The Bank attempted to serve its summons on Resolute FP US Inc. in Tennessee, but Vachon
states that, to the extent the Bank's action may be against Resolute Forest Products Inc., Resolute
Forest Products Inc. is the parent company ofResolute FP US Inc. It is a Delaware corporation with
its main office in MontreaL Quebec, Canada. It does not do business and is not registered to do
business in South Dakota. It maintains a website that is not specifically or intentionally targeted at
South Dakota or its residents. Resolute Forest Products Inc. had no business dealings with Greene
or Greene Enterprise.

DISCUSSION
An action can be dismissed, following a motion by defendants, for lack ofpersonal jurisdiction
under Federal Rule ofCivil Procedure 12(b)(2). "To survive a motion to dismiss for lack ofpersonal
jurisdiction, a plaintiff must state sufficient facts in the complaint to support a reasonable inference
that [the defendants] can be subjected to jurisdiction within the state." Dever v. Hentzen Coatings,

Inc., 380 F.3d 1070, 1072 (8th Cir. 2004) (internal quotations omitted). If personal jurisdiction is
contested, ''the plaintiffhas the burden ofproving facts supporting personal jurisdiction." Miller v.

Nippon Carbon Co., Ltd., 528 F.3d 1087, 1090 (8th Cir. 2008). The plaintiff "need[] only make a
prima facie showing of jurisdiction." Id.

This prima facie showing must be tested, not by the

complaint alone, but by the affidavits and exhibits presented with the motion to dismiss and in
opposition to the motion to dismiss. Block Indus. v. DHJ Indus.• Inc., 495 F.2d 256, 259-260 (8th
Cir. 1974). The court must "view the evidence in the light most favorable to the plaintiff and resolve
all factual conflicts in its favor in deciding whether the plaintiff made the requisite showing." K-V

Pharm. Co. v.1. Uriach & CIA, S.A., 648 F.3d 588,592 (8th Cir. 2011).

The determination of whether a court has personal jurisdiction over a non-defendant is
normally a two-step analysis. Northrup King Co. v. Compania Productora Semillas Algodoneras

Selectas, S.A., 51 F.3d 1383, 1387 (8th Cir. 1995). First, the applicable state long-arm statute must
be satisfied, and second, the court's exercise ofjurisdiction must comport with due process.Id. South
Dakota construes its long-arm statute to confer jurisdiction to the fullest extent permitted by the Due
Process Clause. Dakota Indus., Inc. v. Ever Best Ltd., 28 F.3d 910,915 (8th Cir. 1994). As such,
the analysis collapses into one step: the due process analysis. Id.

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Due process requires that a defendant have "minimum contacts" with the State such that
maintaining the suit "does not offend 'traditional notions offair play and substantial justice. ", World­

Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980); International Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945). The nonresident defendant's conduct and connection with
the forum state must be such that he "should reasonably anticipate being haled into court there."

World-Wide Volkswagen Corp., 444 U.S. at 297. To evaluate personal jurisdiction under the due
process clause, the Court must consider five factors: (1) the nature and quality of the defendant's
contacts with South Dakota; (2) the quantity of its contacts with this state; (3) the relation of the
cause ofaction to the contacts; (4) the interest ofSouth Dakota in providing a forum for its residents;
and (5) the convenience ofthe parties. Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100,
1102 (8th Cir. 1996); Land-O-Nod Co. v. Bassett Furniture Indus., Inc., 708 F.2d 1338, 1340 (8th
Cir. 1983). The latter two issues are secondary and ofless importance than the first three factors.

Id. Whenjudging minimum contacts, a court should focus on "the relationship among the defendant,
the forum, and the litigation." Id. (quoting Shaffer v. Heitner, 433 U.S. 186,204 (1977)).

Here, the Bank did not allege contacts between Resolute and South Dakota in its complaint.
Furthermore, the Bank failed to oppose Resolute's motion to dismiss and, thus, has not carried its
burden of establishing jurisdictional facts through sworn affidavits or other competent evidence.
Resolute's uncontroverted evidence shows that Resolute has no contacts with the state of South
Dakota. There is no evidence that Resolute purposely directed activities toward South Dakota, or
that the company conducted activities here. The secondary considerations ofthe convenience ofthe
parties and South Dakota's interest in providing a forum for its residents do not compel the Court
to exercise jurisdiction over Resolute in this case.

The Bank has not made a prima facie showing of jurisdiction over Resolute sufficient to
support the exercise o fpersonal jurisdiction over the defendant in this Court. Having determined that
no minimum contacts exist to exercise jurisdiction over Resolute, after considering the totality ofthe
circumstances, the applicable law and specific factors for evaluation, this Court determines that due
process considerations preclude it from having jurisdiction over Resolute in this case. Accordingly,

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IT IS ORDERED that Resolute Forest Products' motion to dismiss (Docket 7) is granted.
Dated this 3rd day of December, 2013.

BY THE COURT:

a(blWLu.l~~
wrence L. Piersol
United States District Judge

ATTEST:
JOS~EP.H
HAAAASS" C
CLLEE~ . '
.

BY:~
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Deputy

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