Martichuski et al v. Wu et al [TV2]
Filing
17
MEMORANDUM, OPINION AND ORDER denying dft Hospitality International Group's 6 Motion to Dismiss for Lack of Jurisdiction. Signed by Chief District Judge Thomas A Varlan on 8/14/15. (ABF)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
JOHN MARTICHUSKI and JMI, INC.,
Plaintiffs,
v.
DAVID HUI WU, BOBBY CHEN SABAS,
and HOSPITALITY INTERNATIONAL
GROUP, LLC,
Defendants.
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No.:
3:14-CV-292-TAV-CCS
MEMORANDUM OPINION AND ORDER
This civil action is before the Court on the Motion to Dismiss [Doc. 6] filed by
defendant Hospitality International Group, LLC (“HIG”). Defendant HIG moves the
Court to dismiss plaintiffs’ complaint for lack of personal jurisdiction, pursuant to Rule
12(b)(2) of the Federal Rules of Civil Procedure, and improper venue, pursuant to Rule
12(b)(3) of the Federal Rules of Civil Procedure. Plaintiffs have responded in opposition
[Doc. 13], and HIG has replied [Doc. 16]. For the reasons that follow, the Court will
deny HIG’s motion.
I.
Standard of Review
A.
Motion to Dismiss for Lack of Personal Jurisdiction
A federal plaintiff bears the burden of establishing the existence of personal
jurisdiction. Air Prods. & Controls, Inc. v. Safetech Int’l, Inc., 503 F.3d 544, 549 (6th
Cir. 2007) (citing Serras v. First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212, 1214 (6th Cir.
1989)). Thus, “in the face of a properly supported motion for dismissal, the plaintiff may
not stand on his pleadings, but must, by affidavit or otherwise, set forth specific facts
showing that the court has jurisdiction.” Theunissen v. Matthews, 935 F.2d 1454, 1458
(6th Cir. 1991) (citing Weller v. Cromwell Oil Co., 504 F.2d 927, 930 (6th Cir. 1974)).
Here, HIG has submitted two affidavits of David Wu in support of its motion to dismiss
[Doc. 6-1; Doc. 16-1], and plaintiffs have submitted an affidavit of John Martichuski
along with other evidence, including email communications, in opposition [Doc. 13-1;
Doc. 13-2; Doc. 13-3; Doc. 15; Doc. 15-1; Doc. 15-2; Doc. 15-2; Doc. 15-4].
In considering a properly supported and opposed motion to dismiss pursuant to
Rule 12(b)(2), the Court may decide the motion on the parties’ submissions, permit
limited discovery, or hold an evidentiary hearing. Id. Upon review of the record in this
case, the Court concludes that “the disputed jurisdictional facts are intimately intertwined
with the parties’ dispute on the merits.” Serras, 875 F.2d at 1215. Therefore, the Court
elects to rule on the present motion based on the parties’ submissions, reserving all
factual determinations on the issue of personal jurisdiction for trial. Id.
Accordingly, at this stage of the proceedings, “plaintiff[s] need only make a prima
facie showing of jurisdiction.” Indah v. S.E.C., 661 F.3d 914, 920 (6th Cir. 2011)
(citation omitted) (internal quotation marks omitted). In deciding whether plaintiffs have
made such a showing, the Court views the pleadings and the affidavits in the light most
favorable to plaintiffs and does “not weigh ‘the controverting assertions of the party
seeking dismissal.’” Air Prods., 503 F.3d at 549 (quoting Theunissen, 935 F.2d at 1458).
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B.
Motion to Dismiss for Improper Venue
A federal plaintiff also “bears the burden of proving that venue is proper.” Audi
AG & Volkswagen of Am., Inc. v. Izumi, 204 F. Supp. 2d 1014, 1017 (E.D. Mich. 2002).
In considering a Rule 12(b)(3) motion to dismiss for improper venue, the Court “may
examine facts outside of the complaint but must draw all reasonable inferences and
resolve factual conflicts in favor of the plaintiff.” Id. (citations omitted). If the Court
concludes that venue is not proper in this judicial district, the Court has the discretion to
dismiss or transfer the case pursuant to 28 U.S.C. § 1406(a). First of Mich. Corp. v.
Bramlet, 141 F.3d 260, 262 (6th Cir. 1998).
II.
Facts
Viewing the parties’ submissions in the light most favorable to plaintiffs, the
record supports the following prima facie facts. Plaintiff John Martichuski is a Tennessee
resident [Doc. 15 p. 1]. He is the owner and president of plaintiff JMI, Inc. (“JMI”), a
Tennessee corporation with its principal place of business in Knoxville, Tennessee [Id. at
p. 1–2]. Mr. Martichuski is a general contractor for restaurant construction projects
across the United States, and he often provides general contracting services through JMI
[Id.].
Defendant HIG is a Florida limited liability company with its principal place of
business in Tampa, Florida [Doc. 1 p. 2; Doc. 6-1 p. 1–2]. HIG primarily engages in the
development and operation of various fast food restaurant chains across the United States
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[Doc. 6-1 p. 2]. Defendants Bobby Sabas and David Wu are managers or members of
HIG who reside in the State of Nevada [Doc. 1 p. 1–2; Doc. 6-1 p. 1].
The parties’ relationship began in 2009, when Mr. Sabas contacted Mr.
Martichuski concerning a Chicken Now restaurant project in Johnson City, Tennessee
[Doc. 15 p. 3]. At the time, HIG was involved with the construction of a ChinaMax
restaurant in Johnson City, Tennessee, and HIG subsequently contracted with Mr.
Martichuski “in reference to the construction of the ChinaMax” [Id.].1
Between approximately 2009 and 2012, Mr. Martichuski individually and on
behalf of JMI entered into a number of verbal and written agreements with HIG and its
agents, including Mr. Sabas and Mr. Wu, for the provision of general contracting services
in connection with the construction of restaurants in various locations outside of
Tennessee [Id. p. 2–3].
These locations included: Livermore, California; Solano,
California; Baltimore, Maryland; Hadley, Massachusetts; Massapequa, New York;
Riverhead, New York; Raleigh, North Carolina; Bethel Park, Pennsylvania; and
Charleston, South Carolina [Doc. 1 p. 3–6; Doc. 15 p. 2–3].
Along with the parties’ agreements for the provision of general contracting
services, plaintiffs allege that JMI and Mr. Wu also entered into a partnership agreement
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HIG disputes plaintiffs’ assertions that it initiated contact with plaintiffs through Mr.
Sabas in 2009, and that it was involved with the construction of a ChinaMax restaurant in
Johnson City, Tennessee [Doc. 16 p. 2; Doc. 16-1 p. 2]. Plaintiffs have filed an affidavit of Mr.
Martichuski averring to these facts [Doc. 15 p. 3]. Therefore, the Court does not consider HIG’s
countervailing assertions of fact at this stage of the proceedings. Air Prods., 503 F.3d at 549
(citing Theunissen, 935 F.2d at 1459).
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in February of 2011 [Doc. 1 p. 4]. The partnership agreement provided that Mr. Wu
would give JMI a legally-binding franchise agreement for JMI to operate a restaurant
franchise with defendants [Id.].
At all relevant times during the formation and execution of the agreements at issue
in this case, Mr. Martichuski was a citizen and resident of Tennessee, and JMI was a
Tennessee corporation [Doc. 15 p. 1–2]. Plaintiffs represented to HIG that Knoxville,
Tennessee, was their principal place of business [Id.]. Over the course of the parties’
business relationship, Mr. Martichuski regularly communicated with employees of HIG
regarding the negotiation of agreements, execution of agreed-upon work, and payment
for services provided [Doc. 15 p. 2–3; see, e.g., Doc. 15-1; Doc. 15-2; Doc. 15-3; Doc.
15-4].
Plaintiffs initiated this action on June 25, 2014 [Doc. 1]. In their complaint,
plaintiffs claim that defendants breached the parties’ agreements by failing to remit full
payment for plaintiffs’ services and failing to provide the franchise agreement
contemplated by the partnership agreement between JMI and Mr. Wu [Doc. 1 p. 3–10].
Plaintiffs also bring claims for common law fraud, negligent misrepresentation, and civil
conspiracy [Doc. 1 p. 7–9]. HIG’s motion to dismiss followed.
III.
Analysis
A.
Personal Jurisdiction
“A federal district court sitting in diversity must apply the law of the forum state
to determine whether it may exercise jurisdiction over the person of a non-resident
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defendant.” Theunissen, 935 F.2d at 1459. Tennessee courts are permitted to exercise
personal jurisdiction upon “[a]ny basis not inconsistent with the constitution of this state
or of the United States.”
Tenn. Code Ann. § 20-2-214(a)(6).
The due process
requirements of the Tennessee Constitution are “co-extensive with those of the United
States Constitution.” State v. NV Sumatra Tobacco Trading Co., 403 S.W.3d 726, 741
(Tenn. 2013) (citation omitted). Therefore, if the exercise of personal jurisdiction passes
constitutional muster under the United States Constitution, it is permissible under
Tennessee law. Id at 740–41.
Federal “[d]ue process requires that a defendant have ‘minimum contacts . . . with
the forum State . . . such that he should reasonably anticipate being haled into court
there.’” Schneider v. Hardesty, 669 F.3d 693, 701 (6th Cir. 2012) (alterations in original)
(quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 297 (1980)).
This requirement “ensures that the exercise of jurisdiction does not offend traditional
notions of fair play and substantial justice.” Id. (citations omitted) (internal quotation
marks omitted).
There are two types of personal jurisdiction: general and specific. Air Prods., 503
F.3d at 549–50; Bird v. Parsons, 289 F.3d 865, 873 (6th Cir. 2002). “General jurisdiction
exists when a defendant has ‘continuous and systematic contacts with the forum state
sufficient to justify the state’s exercise of judicial power with respect to any and all
claims.’” Aristech Chem. Int’l Ltd. v. Acrylic Fabricators Ltd., 138 F.3d 624, 627 (6th
Cir. 1998) (quoting Kerry Steel, Inc. v. Paragon Indus., Inc., 106 F.3d 147, 149 (6th Cir.
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1997)). In contrast, “specific jurisdiction is confined to adjudication of issues deriving
from, or connected with, the very controversy that establishes jurisdiction.” Indah, 661
F.3d at 920 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, — U.S. — , — ,
131 S. Ct. 2846, 2851 (2011)) (internal quotation marks omitted). Because the Court
finds that it has specific personal jurisdiction over HIG in this case, the Court does not
reach the question of whether it has general personal jurisdiction.
As first set forth in Southern Machine Company v. Mohasco Industries, there are
three criteria for determining whether the exercise of specific personal jurisdiction over a
nonresident defendant is constitutionally permissible:
First, the defendant must purposefully avail himself of the
privilege of acting in the forum state or causing a
consequence in the forum state. Second, the cause of action
must arise from the defendant’s activities there. Finally, the
acts of the defendant or consequences caused by the
defendant must have a substantial enough connection with the
forum state to make the exercise of jurisdiction over the
defendant reasonable.
Bird, 289 F.3d at 874 (quoting S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381
(6th Cir. 1968)) (internal quotation marks omitted).
1.
The “Purposeful Availment” Requirement
“[I]t is essential in each case that there be some act by which the defendant
purposefully avails itself of the privilege of conducting activities within the forum State,
thus invoking the benefits and protections of its laws.” Burger King Corp. v. Rudzewicz,
471 U.S. 462, 475 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958))
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(internal quotation marks omitted). “[T]he purposeful availment requirement ‘gives a
degree of predictability to the legal system that allows defendants to structure their
primary conduct with some minimum assurance as to where that conduct will and will
not render them liable to suit.’” Kerry Steel, 106 F.3d at 150 (quoting World-Wide
Volkswagen, 444 U.S. at 297). Thus, the requirement “ensures that a defendant will not
be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’
contacts, or of the ‘unilateral activity of another party or a third person.’” Neogen Corp.
v. Neo Gen Screening, Inc., 282 F.3d 883, 891 (6th Cir. 2002) (quoting Burger King, 471
U.S. at 475).
Purposeful availment is “something akin to a deliberate undertaking to do or cause
an act or thing to be done in [the forum state] or conduct which can be properly regarded
as a prime generating cause of the effects resulting in [the forum state], something more
than a passive availment of [the forum state’s] opportunities.” Neogen Corp., 282 F.3d at
891 (citation omitted) (internal quotation marks omitted).
“[W]here the defendant
deliberately has engaged in significant activities within a State, or has created continuing
obligations between himself and residents of the forum, he manifestly has availed himself
of the privilege of doing business there.” Burger King, 471 U.S. at 475–76 (internal
citations omitted). Consequently, a defendant need not be physically present in the forum
state in order to have purposefully availed itself of the privilege of acting there.
CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1264 (6th Cir. 1996). The proper focus of
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the inquiry into purposeful availment is on the “quality rather than the quantity of the
contacts.” Calphalon Corp. v. Rowlette, 228 F.3d 718, 722 (6th Cir. 2000).
In this case, viewing the evidence in the light most favorable to plaintiffs, HIG
contacted plaintiffs in 2009 regarding restaurant construction projects in Tennessee. HIG
thereafter initiated a business relationship between the parties in reference to those
projects. In the course of this relationship, HIG repeatedly engaged plaintiffs to provide
general contracting services for out-of-state projects over a three-year period. During this
period of time, the parties had regular discussions via telephone and email regarding the
manner in which plaintiffs would provide their general contracting services. Plaintiffs’
base of operations for performing these services was located in Tennessee. HIG was
aware that plaintiffs’ business was located in Tennessee, and payment for services was to
be remitted there.
On these prima facie facts, the Court concludes that HIG purposefully initiated,
created, and sustained a business relationship and concomitant contractual obligations
with a Tennessee corporation and a Tennessee resident. See Burger King, 471 U.S. at
473 (“[P]arties who reach out beyond one state and create continuing relationships and
obligations with citizens of another state are subject to regulation and sanctions in the
other State for the consequences of their activities.” (citations omitted) (internal quotation
marks omitted)). Therefore, HIG “could reasonably anticipate being haled into court” in
Tennessee. Functional Pathways of Tenn., LLC v. Wilson Senior Care, Inc., 866 F. Supp.
2d 918, 926 (E.D. Tenn. 2012) (citing Burger King, 471 U.S. at 475).
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HIG argues that it did not purposefully avail itself of the privilege of acting within
Tennessee because all of the construction projects at issue in this case were located
outside of Tennessee. In support of this argument, HIG cites Calphalon, 228 F.3d 718,
and Kerry Steel, 106 F.3d 147.
In Calphalon, an Ohio corporation (Calphalon) filed a federal lawsuit against a
Minnesota resident (Jerry Rowlette) in Ohio, seeking a declaration that it had lawfully
terminated a contract between the parties. Calphalon, 228 F.3d at 720–21. Prior to the
lawsuit, Mr. Rowlette had been an exclusive representative for Calphalon in Minnesota,
Iowa, North Dakota, South Dakota, and Nebraska. Id at 720. The parties’ business
relationship had lasted for seventeen years, and within the last two years, they had
executed a manufacturer’s representative agreement that contained an Ohio choice of law
provision. Id at 720–21. Mr. Rowlette had twice visited Ohio, once for a mandatory
sales meeting and once to accompany a client on a tour of Calphalon’s facilities. Id at
720. After being notified by Calphalon that it did not intend to renew the parties’
agreement, Mr. Rowlette sent a demand letter to Calphalon notifying it of claims for
breach of contract and unpaid commissions. Id. at 720–21. Calphalon’s declaratory
judgment action followed. Id. at 721.
A divided Sixth Circuit panel held that the federal district court in Ohio did not
have personal jurisdiction over Mr. Rowlette. Id. at 724. In reaching this conclusion, the
majority explained that the “mere existence of a contract” is “insufficient to confer
personal jurisdiction,” id. at 722, and that Mr. Rowlette’s contacts with Ohio “were
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precisely the type of ‘random,’ ‘fortuitous,’ and ‘attenuated’ contacts that the purposeful
availment requirement is meant to prevent from causing jurisdiction,” id. at 723.
Several courts in this circuit have noted that a broad reading of Calphalon
conflicts with Supreme Court precedent in Burger King, 471 U.S. at 473. See Functional
Pathways, 866 F. Supp. 2d at 925 (collecting cases). As one district court has explained
in attempting to reconcile the two cases:
If there is a distinction to be made between the critical facts in
Calphalon and Burger King, it perhaps can be derived from
the absence of any activity by Rowlette himself directed into
the forum state. For all that can be determined from the
opinion in that case, it appears that Rowlette simply arranged
sales in other states and reported on market conditions there.
He never remitted payment for any goods to Calphalon’s
headquarters, nor did he ‘reach out beyond’ Minnesota for the
purpose of deriving the benefit of affiliating with a
‘nationwide organization,’ as did John Rudzewicz in the
Burger King case. Moreover, the lawsuit in that case was a
declaratory judgment action in which Calphalon sought a
ruling that it owed nothing to Rowlette, not that Rowlette had
damaged Calphalon.
Frankenmuth Mut. Ins. Co. v. Appalachian Underwriters, Inc., 2004 WL 1406121, at *9
(E.D. Mich. June 21, 2004) (citing Burger King, 471 U.S. at 479–80); see Light Source,
Inc. v. Display Dynamics, Inc., 2010 WL 2351489, at *6 (E.D. Mich. June 8, 2010)
(adopting the reasoning of Frankenmuth, 2004 WL 1406121, at *9). The Court agrees
with this interpretation of the law.
Here, HIG’s contacts with Tennessee involved much more than the “mere
existence of a contract.” Calphalon, 228 F.3d at 722. Based on the prima facie facts,
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HIG directed activity into Tennessee by reaching out to plaintiffs for the purpose of
initiating and sustaining a continuous business relationship there, which carried with it
mutual obligations for performance within the state.
See Tharo Sys., Inc. v. Cab
Produkttechnik GMBH & Co. KG, 196 F. App’x 366, 370 (6th Cir. 2006) (“[W]hen a
nonresident defendant transacts business by negotiating and executing a contract via
telephone calls and letters to an Ohio resident, then the defendant has purposefully
availed himself of the forum by creating a continuing obligation in Ohio.” (citations
omitted) (internal quotation marks omitted)). Therefore, Calphalon does not control the
outcome of this case.
HIG’s reliance on Kerry Steel is similarly unavailing. In Kerry Steel, a Michigan
company (Kerry Steel) had approached an Oklahoma company (Paragon Industries) with
an offer to sell steel coils. 106 F.3d at 148. Paragon Industries accepted the offer via
telephone and took possession of the steel coils in Illinois, with payment to be remitted in
Michigan. Id. Upon taking possession of the coils, Paragon Industries refused to pay the
full purchase price because the coils allegedly did not conform to agreed quality
standards. Id. Kerry Steel sued Paragon Industries in federal district court in Michigan.
Id. The district court held that it lacked personal jurisdiction, and the Sixth Circuit
affirmed. Id. at 148, 154.
The business relationship in Kerry Steel involved a one-time contract for the sale
of goods. It required little negotiation, did not recur, and took place entirely outside of
the forum state except for Kerry Steel’s initial solicitation and the location to which
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payment was to be remitted. Id. at 148. Here, to the contrary, the prima facie facts show
that the parties formed a business relationship for the provision of general contracting
services, which covered multiple projects over the course of three years. These services,
by their very nature, could not be completed at a single point in time and involved regular
communication between the parties to and from plaintiffs’ principal place of business in
Tennessee. Therefore, the nature of the parties’ agreements in this case was qualitatively
different than the nature of the parties’ agreement in Kerry Steel, and Kerry Steel does not
control the outcome here.
Accordingly, viewing the evidence in the light most favorable to plaintiffs, the
Court concludes that the “purposeful availment” requirement has been satisfied in this
case.
2.
The “Arising From” Requirement
“The ‘arising from’ prong is met when the operative facts arise from the
defendant’s contacts with the state.” Harris v. Lloyds TSB Bank, PLC, 281 F. App’x 489,
495 (6th Cir. 2008) (citing Intera Corp. v. Henderson, 428 F.3d 605, 617 (6th Cir.
2005)).
“Physical presence is not required; personal jurisdiction may exist over a
defendant if he ‘purposefully directs communications into the forum, and those
communications form the heart of the cause of action.’” Id. (quoting Intera, 428 F.3d at
617–18). “‘If a defendant’s contacts with the forum state are related to the operative facts
of the controversy, then an action will be deemed to have arisen from those contacts.’”
Bird, 289 F.3d at 875 (quoting CompuServe, 89 F.3d at 1267).
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When a defendant has purposefully availed itself of acting in the forum state by
entering into a contract with a party there, and “the cause of action is for breach of that
contract, as it is here, then the cause of action naturally arises from the defendant’s
activities in [the forum state].” Cole v. Mileti, 133 F.3d 433, 436 (6th Cir. 1998) (citing
CompuServe, 89 F.3d at 1267). In other words, “a breach of contract action arises from
the defendant’s contact with the state because the contract ‘is necessarily the very soil
from which the action for breach grew.’” Calphalon, 228 F.3d at 724 (citation omitted).
“Only when the operative facts of the controversy are not related to the defendant’s
contact with the state can it be said that the cause of action does not arise from that
contract.” Southern Mach., 401 F.2d at 384 n.29 (citations omitted).
Here, HIG’s contacts with Tennessee are related to the operative facts of the
controversy. Although the ultimate goal of the parties’ agreements was the physical
construction of restaurants in states other than Tennessee, plaintiffs provided the agreedupon services from their headquarters in Tennessee. For example, the parties regularly
communicated electronically about the manner in which plaintiffs were providing their
general contracting services, which included directing work and limiting the costs
incurred for construction [Doc. 15-2]. Additionally, plaintiffs solicited, selected, and
coordinated subcontractors remotely [Doc. 15-3; Doc. 15-4]. Thus, even though the
physical manifestation of plaintiffs’ efforts occurred elsewhere, Tennessee was the locus
of plaintiffs’ business resources and at least a portion the work that they performed. HIG
allegedly breached the parties’ agreements by failing to remit payment for this work.
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Therefore, viewing the evidence in the light most favorable to plaintiffs, the Court
concludes that the cause of action in this case arises from HIG’s contacts in Tennessee.
3.
The Exercise of Personal Jurisdiction is Reasonable
The exercise of personal jurisdiction is reasonable when there is a sufficiently
substantial connection between the defendant and the forum state so that the exercise of
jurisdiction “comport[s] with traditional notions of fair play and substantial justice.”
CompuServe, 89 F.3d at 1267–68 (citation omitted) (internal quotation marks omitted).
In determining whether the exercise of personal jurisdiction is reasonable, the Court
considers “the burden on the defendant, the interest of the forum state, the plaintiff’s
interest in obtaining relief, and the interest of other states in securing the most efficient
resolution of controversies.” Id. at 1268 (citation omitted) (internal quotation marks
omitted).
Here, HIG will be somewhat burdened by defending this case in Tennessee as
opposed to its principal place of business in Florida. Nevertheless, HIG established
contacts with Tennessee when it reached out to a Tennessee corporation and a Tennessee
individual for the purpose of receiving general contracting services from them, and
entered into a business relationship with them. See Asahi Metal Indus. Co. v. Super. Ct.,
480 U.S. 102, 114 (1987) (“When minimum contacts have been established, often the
interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the
serious burdens placed on the alien defendant.”). Tennessee has a strong interest in
resolving a contract dispute involving a Tennessee business, when the business
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performed at least a portion of the agreed-upon work within Tennessee. Similarly,
plaintiffs have a strong interest in obtaining relief in the state where they reside. And
Tennessee is an efficient state in which to resolve the present controversy, because it is
the hub of all of the construction projects underlying the parties’ dispute.
Moreover, where, as here, the first two Southern Machine criteria have been met,
an inference arises that the exercise of personal jurisdiction is reasonable, CompuServe,
89 F.3d at 1268, and “only the unusual case will not meet this third criterion,” Aristech
Chem. Int’l, 138 F.3d at 628 (citations omitted) (internal quotation marks omitted). HIG
does not suggest that this case is “unusual,” nor does the record support such a finding.
Viewing the evidence in the light most favorable to plaintiffs, the Court concludes
that there is a sufficiently substantial connection between HIG and Tennessee in this case
to make the exercise of personal jurisdiction over HIG reasonable. Therefore, all three of
the Southern Machine criteria have been satisfied, and plaintiffs have made a prima facie
showing that the Court has personal jurisdiction over HIG.
B.
Venue
It is not enough, however, that a federal action be brought in a court with personal
jurisdiction over the defendant. A federal action must also be brought in a judicial
district where venue is proper. Venue is proper in:
(1) a judicial district in which any defendant resides, if all
defendants are residents of the State in which the district is
located;
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(2) a judicial district in which a substantial part of the events
or omissions giving rise to the claim occurred, or a substantial
part of property that is the subject of the action is situated; or
(3) if there is no district in which an action may otherwise be
brought as provided in this section, any judicial district in
which any defendant is subject to the court’s personal
jurisdiction with respect to such action.
28 U.S.C. § 1391(b). Thus, a plaintiff may file his or her complaint in “any forum where
a substantial part of the events or omissions giving rise to the claim arose; this includes
any forum with a substantial connection to the plaintiff’s claim.” Bramlet, 141 F.3d at
263 (emphasis added) (comparing the 1990 revisions to the venue statute with the
previous provisions of the venue statute); see Alltech, Inc. v. Carter, 2010 WL 988987, at
*2 (E.D. Ky. Mar. 15, 2010) (explaining that “the issue is not whether this district is the
‘best’ venue, but whether the district has a ‘substantial’ connection to plaintiffs’ claims,
even if other district[s] have greater contacts.” (citing Bramlet, 141 F.3d at 263)).
“Substantiality is intended to preserve the element of fairness so that a defendant
is not haled into a remote district having no real relationship to the dispute.” Capitol
Specialty Ins. Corp. v. Splash Dogs, LLC, 801 F. Supp. 2d 657, 672 (S.D. Ohio 2011)
(citations omitted) (internal quotation marks omitted). In determining whether there is a
sufficiently substantial connection to the judicial district, “courts focus their inquiry on
the defendant’s relevant activities.” Id. (citation omitted).
Here, as discussed above, HIG has a sufficiently substantial connection to the
State of Tennessee so as to render the exercise of personal jurisdiction by a Tennessee
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court reasonable. All of the relevant jurisdictional facts of this case are connected to the
Eastern District of Tennessee, where HIG engaged the services of plaintiffs, regularly
directed communications in the course of the parties’ business relationship, and was
supposed to remit payment for services. For the same reasons that there is a sufficiently
substantial connection to Tennessee for a Tennessee court to exercise personal
jurisdiction over HIG, the Court concludes that the Eastern District of Tennessee is a
venue in which “a substantial part of the events or omissions giving rise to the claim[s]
occurred.” 28 U.S.C. § 1391(b)(2). Therefore, viewing the evidence in the light most
favorable to plaintiffs, the Court finds that venue is proper in this district.
IV.
Conclusion
For these reasons, the Motion to Dismiss [Doc. 6] filed by defendant Hospitality
International Group, LLC, is DENIED.
IT IS SO ORDERED.
s/ Thomas A. Varlan
CHIEF UNITED STATES DISTRICT JUDGE
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