Blueskygreenland Environmental Solutions, LLC v. Rentar Environmental Solution, Inc. et al

Filing 29

MEMORANDUM AND ORDER GRANTING 5 MOTION to Dismiss for lack of personal jurisdiction.(Signed by Judge Keith P Ellison) Parties notified.(sloewe)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BLUESKYGREENLAND
ENVIRONMENTAL SOLUTIONS,
LLC,
Plaintiff,
V.
RENTAR ENVIRONMENTAL
SOLUTIONS, INC., et al.,
Defendants.

§
§
§
§
§
§
§
§
§
§
§
§

Civil Action No. 4:11-cv-01745

MEMORANDUM AND ORDER
Before the Court is Defendants 21st Century Planet Fund LLC and Gregory E.
Georgas’ Motion to Dismiss for Lack of Personal Jurisdiction (“Motion to Dismiss”).
(Doc. No. 5.) After considering the Motion to Dismiss, all responses and replies thereto,
and the applicable law, the Court concludes that the Motion to Dismiss should be
GRANTED.
I.

BACKGROUND1

Plaintiff Blueskygreenland Environmental Solutions, LLC (“Plaintiff” or
“Bluesky”) is a Texas limited liability company that exports environmentally-friendly
United States products and services. Rentar Environmental Solutions, Inc. (“Rentar”)
manufactures an in-line pre-combustion fuel catalyst (“RFC”), which treats fuel to
enhance combustion, thus increasing fuel efficiency and reducing emissions. In 2007,
Bluesky and Rentar entered into a contract granting Bluesky a distributorship of Rentar’s
1

All facts are taken from Plaintiff’s First Amended Complaint. (Doc. No. 26.)

1

product in various countries, including India. The contract was set to expire in 2010.
Bluesky claims that it invested more than $250,000 and three years of research to market
RFC to potential customers in India. Bluesky states that these efforts, which Bluesky
alone paid for, created goodwill and name recognition for the product among potential
Indian customers. Prior to 2010, any inquiries about Rentar products from the Indian
market were allegedly forwarded to Bluesky, and Rentar acknowledged Bluesky as the
sole distributor of its products in India. Although the written agreement between the
companies stated that the distributorship was non-exclusive, Bluesky believes that
telephone and email communications established Bluesky as the exclusive Indian
distributor.
Bluesky states that, in summer of 2010, Rentar introduced Bluesky by phone to
Mike Hoban (“Hoban”), the business agent of Gregory E. Georgas (“Georgas”). Bluesky
claims that it was informed that Hoban’s “group in India” employed someone named
Venkat Kumar Tangirala (“Venkat Tangirala”). In June 2010, Rentar allegedly arranged
conference calls between itself, Bluesky, and Hoban concerning business affairs in India.
According to Bluesky, the parties then met in person in West Palm Beach, Florida in July
2010, and also exchanged various emails. Pursuant to Hoban’s request, Bluesky claims
that he provided Venkat Tangirala with all of its research and marketing materials. Once
he received the materials, Bluesky alleges, Targirala realized “the very large scope and
the commercial viability of the business in the huge Indian market.” Bluesky believes
that, as a result, Venkat Tangirala began negotiations with Rentar and Hoban to persuade
them to drop Bluesky as the exclusive distributor in India and to substitute Venkat
Tangirala and a new entity in Bluesky’s place. Georgas then allegedly formed a Florida

2

corporation, 21st Century Planet Fund, LLC (“21st Century”), to participate in the India
venture. In July 2010, Bluesky explains, Bluesky and 21st Century entered into a written
contract to split the profits equally on sales to APSRTC, the India State bus line.
Thereafter, Bluesky claims, 21st Century dissolved and reformed as a Delaware
corporation for the purpose of avoiding contractual liability to Bluesky.
According to Bluesky, Tangirala’s brother, Ravi Kumar Tangirala (“Ravi
Tangirala”) then facilitated an agreement between Rentar, 21st Century, and Hoban for
the Indian market. Bluesky explains that this agreement established 21st Century and the
Tangirala brothers as the exclusive distributors of Rentar’s product in India. This
agreement was allegedly signed while Rentar’s contract with Bluesky was still in effect.
Bluesky argues that the purpose of the agreement was to appropriate and steal the
extensive scientific and marketing work Bluesky had done to prepare the Indian market
for Rentar’s product.
Bluesky brought this suit in Texas state court against Rentar, Georgas, 21st
Century, Hoban, Venkat Tangirala, and Ravi Tangirala (collectively, “Defendants”).
Defendants then removed this lawsuit pursuant to this Court’s diversity jurisdiction. In its
First Amended Complaint, Bluesky brings actions against Defendants for promissory
estoppel/detrimental reliance, unjust enrichment, common law fraud, civil conspiracy,
interference with a business relationship, and interference with a contract. Bluesky seeks
general, special, and exemplary damages, as well as attorneys’ fees. Defendants 21st
Century and Georgas filed this Motion to Dismiss for Lack of Personal Jurisdiction.
II.

LEGAL STANDARD

3

“Absent a rule or statute to the contrary, . . . a federal court [may] exercise
jurisdiction over only those defendants who are subject to the jurisdiction of courts of the
state in which the court sits.” Point Landing, Inc. v. Omni Capital Intern., Ltd., 795 F.2d
415, 419 (5th Cir. 1986), aff’d sub nom. Omni Capital Intern., Ltd. v. Rudolf Wolff & Co.,
Ltd., 484 U.S. 97 (1987). Becausee the Texas long-arm statute, Tex. Civ. Prac. & Rem.
Code Ann. §§ 17.041-17.045, is coterminous with the Due Process Clause of the
Fourteenth Amendment to the United States Constitution, the Court’s constitutional due
process inquiry into personal jurisdiction also serves as an inquiry into personal
jurisdiction under the Texas long-arm statute. Command-Aire Corp. v. Ontario Mech.
Sales & Service Inc., 963 F.2d 90, 93-94 (5th Cir. 1992).
Plaintiffs bear the burden of demonstrating facts sufficient to support personal
jurisdiction over any nonresident defendants. United Galvanizing, Inc. v. Imperial Zinc
Corp., No. H-08-0551, 2008 WL 4746334, at *3 (S.D. Tex Oct. 27, 2008). To comport
with constitutional due process, plaintiffs must show that: (1) defendants purposefully
availed themselves of the benefits and protections of Texas law, thereby establishing
“minimum contacts” with Texas such that defendants could reasonably have anticipated
being haled into court there; and (2) under the circumstances, the exercise of personal
jurisdiction does “not offend traditional notions of fair play and substantial justice.”
Command-Aire Corp., 963 F.2d. at 94 (citing Asahi Metal Industry Co. v. Superior Court
of California, 480 U.S. 102 (1987); Burger King Corp. v. Rudzewicz, 471 U.S. 462
(1985); and Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784 (5th Cir.1990)). “‘There are two
types of minimum contacts: those that give rise to specific personal jurisdiction and those
that give rise to general personal jurisdiction.’” Johnston v. Multidata Systems Intern.

4

Corp., 523 F.3d 602, 609 (5th Cir. 2008) (quoting Lewis v. Fresne, 252 F.3d 352, 358
(5th Cir. 2001)).
Specific jurisdiction exists “[w]hen a nonresident defendant has purposefully
directed its activities at the forum state and the litigation results from alleged injuries that
arise out of or relate to those activities.” Cent. Freight Lines, Inc. v. APA Transp. Corp.,
322 F.3d 376, 381 (5th Cir. 2003) (citation omitted). “The non-resident’s purposefully
directed activities in the forum must be such that he could reasonably anticipate being
haled into court in the forum state.” Clemens v. McNamee, 615 F.3d 374, 378 (5th Cir.
2010) (citing Burger King, 471 U.S. at 474). See also Choice Healthcare, Inc. v. Kaiser
Foundation Health Plan of Colo., 615 F.3d 364, 369 (5th Cir. 2010) (“The ‘purposeful
availment’ element ensures that a defendant will not be haled into court in a jurisdiction
solely as a result of random, fortuitous, or attenuated contacts or the unilateral activity of
another person or third party.”). Further, specific jurisdiction “requires a sufficient nexus
between the non-resident’s contacts with the forum and the cause of action.” Clemens,
615 F.3d at 378-79. Indeed, the non-resident defendant must purposefully avail herself of
the privilege of conducting activities in the forum state. Id. at 379.
General jurisdiction, in contrast, can be exercised when a defendant’s contacts
with the forum state are substantial, continuous, and systematic, though unrelated to the
litigation. Cent. Freight Lines, Inc., 322 F.3d at 381. The “continuous and systematic
contacts test is a difficult one to meet, requiring extensive contacts between a defendant
and a forum.” Johnston, 523 F.3d at 609.
Although the party seeking to invoke the power of the court bears the burden of
proving that jurisdiction exists, a prima facie showing suffices, and the plaintiff need not

5

establish jurisdiction by a preponderance of the evidence. Luv N’ Care, Ltd. v. Insta-Mix,
Inc., 438 F.3d 465, 469 (5th Cir. 2006) (citation omitted). Moreover, the “court must
resolve all undisputed facts submitted by the plaintiff, as well as all facts contested in the
affidavits, in favor of jurisdiction.” Id. (citation omitted). “‘The court may determine the
jurisdictional issue by receiving affidavits, interrogatories, depositions, oral testimony, or
any combination of the recognized methods of discovery.’” Allred v. Moore & Peterson,
117 F.3d 278, 281 (5th Cir. 1997) (quoting Stuart v. Spademan, 772 F.2d 1185, 1192 (5th
Cir. 1985)).
III.

DISCUSSION

According to 21st Century and Georgas, this dispute has no connection to the State
of Texas. Indeed, they assert, Rentar and 21st Century, neither of which is a Texas entity,
entered into a distribution agreement for sales in India. Similarly, 21st Century and Edge
Solutions, LLC (“Edge”), which also is not a Texas entity, entered into a consulting
agreement relating to sales in India. According to 21st Century and Georgas, none of the
contracts at issue was negotiated or performed in Texas, and 21st Century and Georgas do
not conduct business in Texas or otherwise have minimum contacts with the State.
Specifically, 21st Century is a Delaware limited liability company with its principal place
of business in West Palm Beach, Florida. Georgas, as the managing and only member of
21st Century, is a resident of and domiciled in Florida. According to 21st Century and
Georgas, their contact with Bluesky was limited to a single telephone call, which Rentar
initiated, concerning an arrangement that Bluesky ultimately rejected. Georgas was in
Florida at the time of the call, and he was unaware of the location of Mr. Ansari, who
conducted the call on behalf of Bluesky.

6

Based on these facts, 21st Century and Georgas argue that they do not have
sufficient minimum contacts with Texas to support personal jurisdiction. First, there is no
specific jurisdiction because, 21st Century and Georgas assert, the underlying contracts
and business dealings in this case concern sales of products in India, and were not
performed in Texas. Furthermore, they insist, Bluesky’s Texas residence does not confer
specific jurisdiction over either Georgas or 21st Century. Second, 21st Century and
Georgas explain, their contacts are insufficient to support general jurisdiction because
they are not substantial, continuous and systematic.
Bluesky responds that its Original Complaint may have created confusion, as it
appears to assert claims for breach of contract against 21st Century and Georgas, which
Bluesky did not intend. As reflected in its First Amended Complaint, Bluesky now brings
only tort claims against 21st Century and Georgas. Thus, Bluesky argues, any personal
jurisdiction analysis should be based on the fact that 21st Century and Georgas allegedly
committed a tort against a Texas resident.
Bluesky argues that this Court has personal jurisdiction over 21st Century and
Georgas because Edge,2 acting as 21st Century and Georgas’ agent, repeatedly conducted
phone calls with Bluesky when Bluesky was located in Texas. In their Reply to Bluesky’s
Response to the Motion to Dismiss, 21st Century and Georgas deny that Edge was their
agent, insisting instead that Edge was an independent contractor. Furthermore, they
claim, even if Edge were their agent, his phone calls with Bluesky are insufficient to
establish personal jurisdiction.

2

In its Response, Bluesky refers to Hoban as 21st Century and Georgas’ agent. Hoban operated under the
trade name of Edge and, in that capacity, participated in numerous telephone calls with Bluesky. (Resp. to
Mot. Dismiss, Doc. No. 9 at 13.) To avoid confusion, the Court will refer to Edge throughout this
Memorandum and Order.

7

A.

Jurisdiction Based on Actions by 21st Century and Georgas’
Alleged Agent

Actions by an agent in a forum state may be sufficient to establish personal
jurisdiction over the principal. Daynard v. Ness, Motley, Loadholt, Richardson & Poole,
P.A., 290 F.3d 42, 55 (1st Cir. 2002); In re IFS Financial Corp., No. 02-39553, 2007 WL
2692237, at *11 (Bankr. S.D. Tex. Sept. 11, 2007); Williamson v. Petrosakh Join Stock
Co. of the Closed Type, 952 F.Supp. 495, 498 (S.D. Tex. 1997); O’Quinn v. World Indus.
Constr., Inc., 874 F.Supp. 143, 145 (E.D. Tex.), aff’d, 68 F.3d 471 (5th Cir. 1995). To
support the exercise of personal jurisdiction based on an alleged agent’s activities in the
forum state, a plaintiff must cite or proffer facts from which the court could infer an
agency relationship. Sunshine Kids Found. v. Sunshine Kids Juvenile Prod., Inc., No. H09-2496, 2009 WL 5170215, at *14 (S.D. Tex. Dec. 18, 2009). Conclusory assertions,
without evidence in the record, are insufficient to infer agency relationship for the
purposes of establishing personal jurisdiction. United Galvanizing Inc., 2008 WL
4746334, at *6; Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 459 (10th
Cir. 1996).
“Under Texas Law, ‘[a]gency is the consensual relationship between two parties
when one, the agent, acts on behalf of the other, the principal, and is subject to the
principal’s control.’” Indian Harbor Ins. Co. v. Valley Forge Ins. Group, 535 F.3d 359,
364 (5th Cir. 2008) (quoting Happy Indus. Corp. v. Am. Specialties, Inc., 983 S.W.2d
844, 852 (Tex.App.-Corpus Christi 1998, pet. dism’d w.o.j.)). “‘To prove agency,
evidence must establish that the principal has both the right: (1) to assign the agent’s task;
and (2) to control the means and details of the process by which the agent will
accomplish the task.’” Id. (quoting Happy Indus. Corp., 983 S.W.2d at 852). “‘It is the

8

principal’s extent of control over the details of accomplishing the assigned task that
primarily distinguishes the status of independent contractor from that of agent.’” Id.
(quoting Happy Indus. Corp., 983 S.W.2d at 852). If, for example, a contract provides
little direction as to when, where, or how an individual is to perform his work, he or she
is likely an independent contractor. O’Quinn, 874 F.Supp. at 145.
Bluesky alleges that Edge was an agent of 21st Century and Georgas. Bluesky
provides no support for his position, however, beyond stating that 21st Century and
Georgas admit that there is an agency relationship in their Motion to Dismiss. Contrary to
Bluesky’s assertion, the Motion to Dismiss does not appear to describe Edge as an agent.
Furthermore, the Edge Solutions Marketing Agreement (“Agreement”) between Edge and
21st Century, attached as an exhibit to the Motion to Dismiss, expressly states that Edge is
an “independent contractor.” (Ex. 4 to Doc. No. 5, at 2.) Georgas’ affidavit also confirms
that Edge was an independent contractor. (Ex. 2 to Doc. No. 5, Georgas Aff. ¶ 13.)
Indeed, the Agreement displays no direction as to when, where, or how Edge was to
perform its work for 21st Century and Georgas, which implies an independent contractor
relationship. (Id.); O’Quinn, 874 F.Supp. at 145. Bluesky has introduced no facts to
support its allegations that Edge was 21st Century and Georgas’ agent, and the facts in the
record strongly suggest that Edge was an independent contractor. Thus Edge’s contacts
with Texas, even if sufficient to establish personal jurisdiction over Edge, do not permit
this Court to assert personal jurisdiction over 21st Century and Georgas.
B.

General Jurisdiction Over 21st Century and Georgas

There is no basis for the Court to assert general jurisdiction over 21st Century and
Georgas. As 21st Century and Georgas explain, 21st Century is incorporated in Delaware

9

and has its principal place of business in Florida. Georgas lives and resides in Florida.
Neither Georgas nor 21st Century have ever maintained an office or place of business in
Texas; maintained a registered agent for service process in Texas; maintained local
listings in telephone or business directories in Texas; owned any property or assets in
Texas; paid taxes in Texas; had employees, managers, officers, directors, or agents in
Texas; advertised in Texas; recruited any Texas residents; sold products or services in
Texas; or maintained a website. “Even repeated contacts with forum residents by a
foreign defendant may not constitute the requisite substantial, continuous and systematic
contacts required for a finding of general jurisdiction.” Johnston, 523 F.3d at 609
(quotation omitted). Indeed, “[r]andom, fortuitous, or attenuated contacts are not
sufficient to establish jurisdiction.” Id. at 610 (quotation omitted). Furthermore, “vague
and overgeneralized assertions that give no indication as to the extent, duration, or
frequency of contacts are insufficient to support general jurisdiction.” Id. (citation
omitted). Bluesky offers no evidence of substantial, continuous, and systematic contacts
of 21st Century or Georgas with Texas. The single phone call between Bluesky and 21st
Century is simply “too insignificant and sporadic to ‘constitute a general presence in the
state.’” Id. (quoting Dalton v. R&W Marine, Inc., 897 F.2d 1359, 1362 (5th Cir. 1990)).
C.

Specific Jurisdiction Over 21st Century and Georgas

Nor does the single phone call between Bluesky and 21st Century give rise to
specific jurisdiction. “A single act by a defendant can be enough to establish personal
jurisdiction if that act gives rise to the claim asserted.” FCA Investments Co. v. Baycorp
Holdings, Ltd., No. 01-20717, 2002 WL 31049442, at *2 (5th Cir. 2002) (citing Lewis v.
Fresne, 252 F.3d 352, 358-59 (5th Cir. 2001)). The Fifth Circuit has observed that

10

“[w]hen the actual content of communications with a forum gives rise to intentional tort
causes of action, this alone constitutes purposeful availment” for the purposes of
establishing personal jurisdiction. Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 213 (5th
Cir. 1999) (emphasis added); see also FCA Investments Co., 2002 WL 31049442, at *2
(“In cases alleging the intentional tort of fraud, the defendant’s participation in a single
telephone call is enough to establish personal jurisdiction if the content of the call gave
rise to the fraud claim.” (citing Lewis, 252 F.3d at 359)). When “communications merely
solicit[] business from the forum, negotiate[] a contract, form[] an initial attorney-client
relationship, or involve[] services not alleged to form the basis of the complaint,”
however, there is no purposeful availment. Id. The single phone call in this case did not
give rise to Bluesky’s claims. It is therefore insufficient to establish personal jurisdiction
over 21st Century and Georgas.
D.

Personal Jurisdiction Based on Bluesky’s Location in Texas

Bluesky does not appear to assert that this Court has personal jurisdiction because
Bluesky is located in Texas. To the extent that Bluesky intends to make this argument,
however, it is unavailing. Bluesky cannot make a prima facie showing of personal
jurisdiction based only on the fortuity that it resides in Texas. Panda Brandywine Corp.
v. Potomac Elec. Power Co., 253 F.3d 865, 869 (5th Cir. 2001). If the Court were to
accept this argument, “a nonresident defendant would be subject to jurisdiction in Texas
for an intentional tort simply because the plaintiff’s complaint alleged injury in Texas to
Texas residents regardless of the defendant’s contacts.” Id. at 870. “Such result would
completely vitiate the constitutional requirement of minimum contacts and purposeful

11

availment.” Id. Bluesky’s presence in Texas, therefore, is insufficient to give rise to
personal jurisdiction.
E.

Fair Play and Substantial Justice

Even if Bluesky and Georgas did have minimum contacts with Texas, personal
jurisdiction in these circumstances would offend traditional notions of fair play and
substantial justice. Once minimum contacts are shown, the Court has jurisdiction unless
the defendant can make a compelling case that traditional notions of fair play and
substantial justice would be violated by the exercise of jurisdiction. Johnston, 523 F.3d at
615. To evaluate the reasonableness of exercising jurisdiction, the Court should consider:
“(1) the burden on the defendant; (2) the interest of the forum state in adjudicating the
dispute; (3) the plaintiff’s interest in obtaining convenient and effective relief; and (4) the
shared interests of the several states.” Id. 21st Century and Georgas have made a
compelling case that personal jurisdiction in these circumstances would offend fair play
and substantial justice. First, 21st Century and Georgas will be substantially burdened if
forced to litigate in Texas, as they are both located in Florida. Second, Texas has little
interest in adjudicating a case involving contracts negotiated outside of Texas for
distribution of goods outside of Texas. Finally, Florida surely has a greater interest in the
dispute between Bluesky and 21st Century and Georgas than Texas does, as the contracts
were negotiated in Florida, the majority of the parties are located in Florida, and the
contract mandates that Florida law will govern any dispute between the parties.
IV.

CONCLUSION

The Court finds that it does not have personal jurisdiction over 21st Century and
Georgas. Bluesky has not succeeded in making a prima facie showing that 21st Century

12

and Georgas have minimum contacts with Texas. Even if Bluesky had succeeded in
making a prima facie showing, however, the Court would decline to exercise personal
jurisdiction because doing so would offend traditional notions of fair play and substantial
justice. Therefore, 21st Century and Georgas’ Motion to Dismiss is GRANTED. The
Court does not, of course, express any opinion as to the underlying merits of this case or
as to any claims that may subsequently be brought.

IT IS SO ORDERED.
SIGNED on this the 14th day of November, 2011.

KEITH P. ELLISON
UNITED STATES DISTRICT COURT JUDGE

13