Rhodes Enterprises, LLC v. Financial Carrier Services, Inc. et al
Filing
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MEMORANDUM OPINION OF THE COURT. Signed by District Judge Todd J. Campbell on 12/11/14. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(afs)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
RHODES ENTERPRISES, LLC,
D/B/A/ MIDDLE TENNESSEE
FREIGHT,
Plaintiff,
v.
FINANCIAL CARRIER SERVICES,
INC.,
and
RICKIE WILLIAMS, individually,
D/B/A/ RICKIE WILLIAMS
TRUCKING,
Defendants.
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) NO. 3-14-1723
) JUDGE CAMPBELL
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MEMORANDUM
Pending before the Court are Defendants’ Motions to Dismiss (Docket Nos. 5 and 8). For
the reasons stated herein, Defendants’ Motions are GRANTED, and this action is DISMISSED
without prejudice.
FACTS
Plaintiff, a Tennessee limited liability company, filed this action against Defendant
Financial Carrier Services, Inc., a Florida corporation (“FCS”), and Rickie Williams d/b/a Rickie
Williams Trucking, an Alabama sole proprietorship (“RW Trucking”), based upon (1) an oral
agreement for Plaintiff to perform work as a subcontractor of R.W. Trucking in the
transportation of freight across the United States (the “Trucking Agreement”), and (2) a written
contract between R.W. Trucking and FCS for the provision of factoring services (the “Factoring
Agreement”).1 Plaintiff contends that R.W. Trucking breached the Trucking Agreement by
failing to pay Plaintiff for services rendered. Plaintiff contends, based upon an allegation of
third party beneficiary status, that FCS breached the Factoring Agreement by failing to pay
Plaintiff for the same services rendered. Plaintiff also alleges that both RW Trucking and FCS
are liable to Plaintiff under the theories of conversion, quantum meruit, and unjust enrichment.
Jurisdiction in this Court is based upon diversity of citizenship pursuant to 28 U.S.C. §
1332. Plaintiff alleges that venue is proper in this Court pursuant to 28 U.S.C. § 1391.
Defendants have moved to dismiss the action for lack of personal jurisdiction.2 Defendants
contend that they have insufficient contacts with Tennessee for Plaintiff to carry its burden of
establishing a basis for either general or specific personal jurisdiction.
PERSONAL JURISDICTION
The procedural structure which guides the district court in ruling upon Rule 12(b)
motions to dismiss for lack of personal jurisdiction is well-settled. Plaintiff bears the burden to
establish that jurisdiction exists. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991).
Plaintiff must do so for each defendant independently. Days Inns Worldwide, Inc. v. Patel, 445
1
A “factoring company” such as FCS pays trucking companies up front for the
freight or cargo hauling services provided by those companies in exchange for a commission.
The factoring company collects payments from individual vendors to whom such services are
provided. Trucking companies bill a factoring company directly for services rendered and
receive payment from the factoring company in return. See Complaint (Docket No. 1), ¶ 7-8.
2
Defendants also move the Court to dismiss the Complaint for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6). Because the Court resolves this matter
based upon the threshold issue of personal jurisdiction, the Court need not discuss this
alternative basis for relief.
2
F.3d 899, 904 (6th Cir. 2006) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105
S.Ct. 2174, 85 L.Ed.2d 528 (1985)).
Where, as here, a district court rules on a jurisdictional motion to dismiss made pursuant
to Rule 12(b)(2) without conducting an evidentiary hearing, the court must consider the
pleadings and affidavits in a light most favorable to the nonmoving party. Beydoun v. Wataniya
Restaurants Holding, Q.S.C., 768 F.3d 499, 504 (6th Cir. 2014) (citing CompuServe, Inc. v.
Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996)). The Court must not consider facts proffered by
Defendants which conflict with those offered by the Plaintiff. Neogen Corp. v. Neo Gen
Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002). Plaintiff must make only a prima facie
showing of jurisdiction that personal jurisdiction exists in order to defeat dismissal. Beydoun,
768 F.3d at 504. Here, Plaintiff can meet that burden by establishing with reasonable
particularity sufficient contacts between Defendants and Tennessee to support jurisdiction.
Neogen, 282 F.3d at 887. Dismissal in this procedural posture is proper only if all of the specific
facts which Plaintiff alleges collectively fail to state a prima facie case for jurisdiction. Kerry
Steel, Inc. v. Paragon Industries, Inc., 106 F.3d 147, 149 (6th Cir. 1997).3
A federal court sitting in a diversity action must apply the law of the forum state to
determine whether it may exercise jurisdiction over the person of a non-resident, subject to
constitutional limitations. Reynolds v. Int’l Amateur Athletic Federation, 23 F.3d 1110, 1115
(6th Cir. 1994) (citing Welsh v. Gibbs, 631 F.2d 436, 439 (6th Cir. 1980)). A federal court's
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Neither Plaintiff nor FCS filed an affidavit in connection with the briefing of the
pending motions. Defendant RW Trucking has filed the affidavit of Rickie Williams (the
“Williams Affidavit”). The Court, therefore, limits its consideration of the facts of this matter to
the allegations made in the Complaint and the statements contained in the Williams Affidavit.
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exercise of personal jurisdiction in a diversity of citizenship case must therefore be both (1)
authorized under the forum state’s long-arm statute, and (2) in accordance with the Due Process
Clause of the Fourteenth Amendment.” Beydoun, 768 F.3d at 504 (quoting Neogen, 282 F.3d at
888). In Tennessee, the long-arm statute extends the personal jurisdiction of the Tennessee
courts to the maximum allowed under the U.S. Constitution. Welsh, 631 F.2d at 439 (citing
Pickens v. Hess, 573 F.2d 380, 385 (6th Cir. 1978)); Williams v. Firstplus Home Loan Owner
Trust 1998-4, 310 F. Supp. 2d 981, 990 (W.D. Tenn. 2004); see also Tenn. Code. Ann. § 20-2214(a)(6) (2004).
In order for there to be jurisdiction consistent with due process, a defendant must have
sufficient “minimum contacts” with Tennessee such that the exercise of personal jurisdiction
“does not offend traditional notions of fair play and substantial justice.” Neal v. Janssen, 270
F.3d 328, 331 (6th Cir. 2001) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct.
154, 90 L.Ed. 95 (1945)). Personal jurisdiction may be either general or specific, depending on
the nature of the defendant's contacts with the forum state. Third Nat'l Bank in Nashville v.
WEDGE Group, Inc., 882 F.2d 1087, 1089 (6th Cir. 1989).
General personal jurisdiction arises when a defendant’s contacts with the forum state are
of such a continuous and systematic nature that the state may exercise personal jurisdiction over
the defendant even if the action is unrelated to the defendant’s contacts with the forum state. Id.
The U.S. Supreme Court has recently clarified that such “continuous and systematic” activity
within the forum state must be so extensive as to render a defendant “essentially at home” there.
Daimler AG v. Bauman, __ U.S. __, 134 S.Ct. 746, 760-61, 187 L.Ed.2d 624 (2014) (citing
Goodyear Dunlop Tires Operations, S.A. v. Brown, __ U.S. __, 131 S.Ct. 2846, 2851, 180
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L.Ed.2d 796 (2011)). The Supreme Court noted that this typically requires a showing that the
non-resident defendant is either incorporated in the forum state or maintains a principal place of
business there. Id. Absent exceptional circumstances, any broader formulation of the criteria for
general personal jurisdiction is “unacceptably grasping.” Id.
Specific jurisdiction arises when a defendant has sufficient minimum contacts that arise
from or are related to the cause of action. Williams, 310 F. Supp. 2d at 991. This requirement is
met if (1) the defendant purposefully availed himself of the privilege of acting in the forum state
or intentionally caused a consequence in the forum state, (2) the cause of action arose from the
defendant's activities in the forum state, and (3) the acts of the defendant or consequences caused
by the defendant have a substantial enough connection with the forum state to make the exercise
of jurisdiction reasonable. Neogen, 282 F.3d at 889; (citing S. Mach. Co. v. Mohasco Indus.,
Inc., 401 F.2d 374, 381 (6th Cir.1968)).
The most important of these criteria is purposeful availment – the “constitutional
touchstone” of specific personal jurisdiction. Neogen, 282 F.3d at 889; Kerry, 106 F.3d at 150.
The purposeful availment requirement is satisfied when the defendant’s contacts with the forum
state proximately result from actions by the defendant himself that create a substantial
connection with the forum state, and when the defendant’s conduct and connection with the
forum state are such that he should reasonably anticipate being haled into court there.
Bridgeport Music, Inc. v. Still N The Water Publishing, 327 F.3d 472, 478 (6th Cir. 2003).4
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The existence of a contract with a citizen of the forum state, standing alone, is not
sufficient to confer personal jurisdiction over a foreign defendant. Nationwide Mut. Ins. Co. v.
Tryg Int'l Ins. Co., LTD, 91 F.3d 790, 795 (6th Cir. 1996) (citing Burger King, 471 U.S. at 478).
Rather, prior negotiation and contemplated future consequences, along with the terms of the
contract and the parties’ actual course of dealing must be evaluated in determining whether the
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Purposeful availment requires something more than a passive benefit from the forum state’s
opportunities. Id.; Neogen, 282 F.3d at 891. The purposeful availment requirement “allows
potential defendants to structure their primary conduct with some minimum assurance as to
where that conduct will and will not render them liable to suit.” World–Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Furthermore, it 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 third person. Neogen, 282
F.3d at 889.
A.
Defendant RW Trucking
Plaintiff’s Complaint alleges that, in March of 2014, Plaintiff entered into the oral
Trucking Agreement with RW Trucking “for the purposes of obtaining freight jobs across the
United States.” Compl., ¶ 6. The Complaint alleges that Plaintiff and RW Trucking “opened a
joint bank account for the purposes of receiving funds owed for services performed.” Id. As
consideration for the use of RW Trucking’s Motor Carrier Number, Plaintiff paid RW Trucking
$5,000 per month during the two and one-half month existence of the Trucking Agreement. Id.
The Complaint also alleges that, during the period of March through May 2014, Plaintiff
completed numerous trucking orders. Id., ¶ 8. The Complaint does not, however, specify where
any alleged contractual performance occurred. Id., passim. The Complaint is also silent
concerning how and where the Trucking Agreement was negotiated or the bank account was
opened. Id.
RW Trucking contends that it has no presence in Tennessee and has not committed any
defendant purposefully established minimum contacts within the forum state. Id.
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act in or directed at Tennessee. RW Trucking maintains that all of the business transacted with
Plaintiff occurred in Alabama, including the negotiation of the Trucking Agreement at an
Alabama truck stop and the opening of a joint bank account at an Alabama bank branch. See
Williams Aff. at 1-2 and Ex 1. Mr. Williams, the sole proprietor of RW Trucking, states under
oath that he has never entered Tennessee or transacted any business there. Id.
Here, RW Trucking is an Alabama sole proprietorship with its principal place of business
in Birmingham, Alabama. Compl., ¶ 5. RW Trucking conducts no business in Tennessee and
thus has no offices or employees in Tennessee. Williams Aff. (Docket No. 8) at 1-2. RW
Trucking does not offer, sell or manufacture goods or services in Tennessee. Id. There has been
no showing that any employee of RW Trucking has ever been in Tennessee for the purpose of
conducting business. Accordingly, RW Trucking does not have the continuous and systematic
presence in Tennessee required for the exercise of general personal jurisdiction. See Daimler,
134 S.Ct. at 751-61.
There is also no evidence that RW Trucking reached out to Tennessee or purposefully
availed itself of the privilege of acting within this State. The existence of the Trucking
Agreement alone is not sufficient to confer specific personal jurisdiction. Nationwide, 91 F.3d at
795. The Complaint is devoid of factual allegations concerning the negotiation or intended
future consequences of the Trucking Agreement, aside from an acknowledgment that it was
“expected to last no more than a few months.” Compl., ¶ 6. In this factual vacuum, the evidence
of RW Trucking bespeaks that it was Plaintiff who traveled to Alabama to negotiate the
Trucking Agreement and open a bank account. See William Aff. at 1-2. Furthermore, while the
Complaint generally alleges that Plaintiff undertook trucking orders as a subcontractor of RW
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Trucking throughout the United States, it fails to allege any actual activity in Tennessee that
could be attributed to RW Trucking. The Court finds no evidence that RW Trucking intended to
establish “continuing relationships and obligations” in Tennessee. See Burger King, 471 U.S. at
473.
Plaintiff cannot satisfy the minimum contacts requirement by unilateral activity aimed at
a non-resident defendant. Am. Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988). It
is RW Trucking which must purposefully avail itself of the privilege of conducting activities
within Tennessee. Id. Given that there is no evidence of purposeful availment by RW Trucking,
Plaintiff cannot meet its burden of establishing with reasonable particularity sufficient contacts
between RW Trucking and Tennessee to support the exercise of specific personal jurisdiction.
B.
Defendant FCS
Plaintiff’s Complaint alleges that FCS “[does] business throughout the United States.”
Compl., ¶ 4. The Complaint also alleges that, pursuant to the Factoring Agreement between FCS
and RW Trucking, FCS made approximately $90,000 in payments to Plaintiff for unspecified
trucking orders during the two and one-half month existence of the Trucking Agreement. Id., ¶
8. The Complaint does not allege the existence of any contract between Plaintiff and FCS;
rather, Plaintiff claims to be a third-party beneficiary of the Factoring Agreement between FCS
and RW Trucking. Id., ¶ 7. FCS, on the other hand, contends that it has no contacts with
Tennessee beyond the alleged payments to Plaintiff.
Here, FCS is a Florida corporation with its principal place of business in Fort Lauderdale,
Florida. Id., ¶ 4. There has been no allegation that FCS conducts any routine business in
Tennessee or has offices or employees in Tennessee. There has been no allegation that FCS
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offers, sells or manufactures goods or services in Tennessee. There has also been no showing
that any employee of FCS has ever been in Tennessee for the purpose of conducting business.
Accordingly, FCS does not have the continuous and systematic presence in Tennessee required
for the exercise of general personal jurisdiction. See Daimler, 134 S.Ct. at 751-61.
The only evidence that FCS reached out to Tennessee or purposefully availed itself of the
privilege of acting within this State is the alleged fact that FCS transmitted $90,000 in payments
to Plaintiff while Plaintiff was a resident of Tennessee. However, the Complaint does not allege
that those payments were mailed to Plaintiff in Tennessee, as opposed to, for example, deposited
into the bank account opened in Alabama for purposes of the Trucking Agreement. Even if the
Court were to assume Plaintiff received the payments in Tennessee, the mailing of income to a
party in a forum state alone is insufficient to confer specific jurisdiction. See Hanson v. Denkla,
357 U.S. 235, 250-55 (1958). Accordingly, Plaintiff cannot meet its burden of establishing with
reasonable particularity sufficient contacts between FCS and Tennessee to support the exercise
of specific personal jurisdiction.5
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Plaintiff appears to contend that jurisdiction is proper because it is a third party
beneficiary of the Factoring Agreement, and thus specific personal jurisdiction arises because
Plaintiff seeks to remedy a breach of that agreement. This argument is a non-starter because the
factual allegations of the Complaint preclude third party beneficiary status here. Specifically,
the Complaint concedes that the Factoring Agreement was in place between FCS and RW
Trucking prior to Plaintiff’s dealings with either party. Under Tennessee law, the fundamental
requirement of third party beneficiary status is that the relevant contract must be “made and
entered into directly and primarily for the benefit” of the purported third party beneficiary.
Owner-Operator Independent Drivers Ass’n, Inc. v. Concord EFS, Inc., 59 S.W.3d 63, 69 (Tenn.
2001). Because there is no allegation that either FCS or RW Trucking knew of Plaintiff’s
existence when they executed the Factoring Agreement, Plaintiff cannot claim to invoke
jurisdiction over FCS to enforce the rights of RW Trucking vis a vis the Factoring Agreement.
See Hanson, 357 U.S. at 244. Regardless, even if the Court were to indulge Plaintiff’s third
party beneficiary theory, Plaintiff still cannot allege facts concerning the Factoring Agreement –
which was executed by parties foreign to Tennessee without any involvement of Tennessee
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C.
Conclusion
The Court finds that Plaintiff has failed to carry its burden of establishing sufficient
minimum contacts for this Court to assert general or specific personal jurisdiction over either
Defendant. Accordingly, FCS’s Motion to Dismiss (Docket No. 5) is GRANTED and RW
Trucking’s Motion to Dismiss (Docket No. 8) is GRANTED. This action is DISMISSED,
without prejudice, for lack of personal jurisdiction. The Clerk of Court shall close the case.
IT IS SO ORDERED.
___________________________________
TODD J. CAMPBELL
UNITED STATES DISTRICT JUDGE
whatsoever – sufficient to establish minimum contacts that would make the exercise of
jurisdiction comport with traditional notions of fair play and substantial justice. Int’l Shoe Co.,
326 U.S. at 315.
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