Lonestar Livestock Equipment Co. Inc v. Southern Livestock Systems, LLC

Filing 19

ORDER GRANTING 16 Second MOTION to Dismiss .(Signed by Judge Gray H. Miller) Parties notified.(rkonieczny, 4)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
LONESTAR LIVESTOCK EQUIPMENT CO . INC.,
Plaintiff,
v.
SOUTHERN LIVESTOCK SYSTEMS, LLC,
Defendant.

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CIVIL ACTION H:15-447

O RDER
Pending before the court is defendant Southern Livestock Systems, LLC’s (“Southern
Livestock”) motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure
12(b)(2) and, in the alternative, to transfer venue to Florida pursuant to 28 U.S.C. § 1404(a). Dkt.
16. Having considered the motion, response, reply, and applicable law, the court is of the opinion
that the motion to dismiss should be GRANTED and plaintiff Lonestar Livestock Equipment Co.
Inc.’s (“Lonestar”) claims should be DISMISSED.
I. BACKGROUND
Lonestar, a livestock equipment manufacturer located in Montgomery County, Texas,
brought this suit in Texas state court claiming that Southern Livestock breached a contract between
the parties by failing to pay for labor and livestock equipment provided by Lonestar. Dkt. 1. The
case was removed to federal court on February 18, 2015, after Southern Livestock filed a motion to
remove based on federal diversity jurisdiction. Dkt. 1. On February 25, 2015, Southern Livestock
filed a motion to dismiss for lack of personal jurisdiction. Dkt. 6. On March 5, 2015, Lonestar filed
an amended complaint. Dkt. 11. Then, on March 6, 2015, Lonestar responded to the motion to
dismiss, and on March 16, 2015, Southern Livestock replied. Dkts. 12, 15. However, because the

amended complaint had been filed, the court mooted Southern Livestock’s first motion to dismiss.
On March 19, 2015, Southern Livestock timely filed a second motion to dismiss for lack of personal
jurisdiction. Dkt. 16. Lonestar did not timely file a response to the second motion to dismiss, but
the court considers Lonestar’s response to the first motion to dismiss in its consideration of the
second motion to dismiss.1
In its response and amended complaint, Lonestar alleges that this court has specific
jurisdiction or, alternatively, general jurisdiction over Southern Livestock. Dkts. 11, 12. Lonestar
alleges that Southern Livestock is subject to specific jurisdiction in Texas because Southern
Livestock engaged in the following contacts with Lonestar, a Texas business: Southern Livestock
provided plans to Lonestar, routinely contracted and communicated with Lonestar via email and text
messages, and arranged to make payment to Lonestar in Texas for equipment that Lonestar
manufactures in Texas. Dkts. 11, 12. Lonestar alleges these contacts are sufficient to support the
exercise of specific jurisdiction over Southern Livestock because Lonestar’s claims arise from these
contacts. Dkts. 11, 12. Lonestar further alleges that Southern Livestock is subject to general
jurisdiction in Texas because Southern Livestock representatives traveled to Texas, negotiated with
Lonestar and other Texas businesses to distribute Southern Livestock’s products in Texas, and
advertised that Southern Livestock was doing business in Texas. Dkts. 11, 12.

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By Southern Livestock’s own admission, the second motion to dismiss was filed only “[o]ut of an abundance
of caution,” and is nearly identical to the first motion. Dkt. 16. Regardless of whether the court considers the motion
as unopposed due to a lack of response, or with the response to the original motion to dismiss, the outcome is the same:
The court concludes that Lonestar has not established personal jurisdiction. Therefore, rather than “exalt form over
substance,” the court will consider Lonestar’s response to the first motion to dismiss when ruling on the second. Thomas
v. Miramar Lakes Homeowners Ass’n, No. 4:13-CV-1479, 2014 W L 3897809, at *4-5 (S.D. Tex., Aug. 6, 2014)
(Harmon, J.) (considering defendant’s initial response as though it were directed at plaintiff’s amended complaint
because the arguments were equally applicable). The court will also consider Southern Livestock’s reply to Lonestar’s
response.

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Southern Livestock contends that it is subject to neither general nor specific jurisdiction in
Texas. Dkt. 16. Southern Livestock asserts that general jurisdiction is inappropriate because it is
a Florida-based company, formed under the laws of Florida, with no place of business outside of
Florida. Dkt. 16. Southern Livestock disclaims any affiliations with Texas outside of its contacts
with Lonestar and its representative’s single, unrelated visit to Texas in April 2014. Dkt. 16.
Southern Livestock further denies issuing marketing or directing any advertising towards Texas.
Dkt. 16. As to specific jurisdiction, Southern Livestock asserts that the contacts Lonestar alleges are
insufficient to sustain specific jurisdiction. Dkt. 16. Further, Southern Livestock swears, through
the affidavit of its General Operations Manager, Michael Reed, that, contrary to Lonestar’s
allegations, the contract arose and performance was to be completed in Florida, not Texas. Dkt. 16.
II. ANALYSIS
Southern Livestock moves to dismiss under Federal Rule of Civil Procedure 12(b)(2) because
it asserts that the court lacks either general or specific personal jurisdiction over Southern Livestock.
Alternatively, Southern Livestock moves to transfer venue pursuant to 28 U.S.C. § 1404(a).
A. Lack of Personal Jurisdiction
1.

Legal Standard

A court must dismiss an action when it lacks personal jurisdiction over the defendant. FED .
R. CIV . P. 12(b)(2). When a nonresident defendant moves to dismiss for lack of personal
jurisdiction, the resident plaintiff has the burden of establishing personal jurisdiction over the
nonresident. Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir. 2001). When a district court rules on
personal jurisdiction without an evidentiary hearing, the plaintiff must make a prima facie showing
of jurisdiction, and the court may consider the entire contents of the record, including affidavits.
Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 609 (5th Cir. 2008). “The allegations of the
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complaint, except insofar as controverted by opposing affidavits, must be taken as true, and all
conflicts in the facts must be resolved in favor of the plaintiffs for purposes of determining whether
a prima facie case for personal jurisdiction has been established.” Thompson v. Chrysler Motors
Corp., 755 F.2d 1162, 1165 (5th Cir. 1985) (citing DeMelo v. Toche Marine, Inc., 711 F.2d 1260,
1270–71 (5th Cir. 1983)). However, “the prima-facie-case requirement does not require the court
to credit conclusory allegations, even if uncontroverted.” Panda Brandywine Corp. v. Potomac Elec.
Power Co., 253 F.3d 865, 869 (5th Cir. 2001).
In a diversity action, a federal court may exercise personal jurisdiction over a non-resident
defendant if: (1) the long-arm statute of the forum state allows the exercise of personal jurisdiction
over that defendant; and (2) the exercise of personal jurisdiction over that defendant is consistent
with due process under the U.S. Constitution. Clements v. McNamee, 615 F.3d 374, 378 (5th Cir.
2010). This two-step personal jurisdiction inquiry collapses into one federal due process analysis
because the Texas long-arm statute extends to the limits of federal due process. Id. (citing
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413–14, 104 S. Ct. 1868 (1984)).
A plaintiff seeking to establish the court’s personal jurisdiction over a nonresident defendant
must show that “(1) the defendant purposefully availed himself of the benefits and protections of the
forum state by establishing ‘minimum contacts’ with the forum state, and (2) the exercise of personal
jurisdiction over that defendant does not offend traditional notions of ‘fair play and substantial
justice.’” Moncrief Oil Int’l Inc. v. OAO Gazprom, 481 F.3d 309, 311 (5th Cir. 2007) (quoting Int’l
Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154 (1945)). Minimum contacts are
established through the assertion of either general or specific jurisdiction. Panda Brandywine, 253
F.3d at 867. Specific jurisdiction refers to a suit “arising out of or related to the defendant’s contacts
with the forum.” Helicopteros, 466 U.S. at 414 n. 8. General jurisdiction refers to a suit which does
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not arise from the nonresident’s contacts with the forum, and is asserted only over defendants who
maintain “continuous and systematic” contacts in a particular forum. Id. at 415.
If minimum contacts are established, the second prong of the due process test requires that
the exercise of personal jurisdiction does not offend traditional notions of “fair play and substantial
justice.” Int’l Shoe, 326 U.S. at 316. To determine whether the exercise of jurisdiction is fair and
reasonable, the court examines five factors: (1) the nonresident defendant’s burden; (2) the forum
state’s interests; (3) the plaintiff’s interest in convenient and effective relief; (4) the judicial system’s
interest in efficient resolution of controversies; (5) and the states’ shared interests in furthering
fundamental social policies. McFadin v. Gerber, 587 F.3d 753, 759–60 (5th Cir. 2009).
2.

Specific Jurisdiction

“Specific jurisdiction is appropriate when the nonresident defendant’s contacts with the
forum state arise from, or are directly related to, the cause of action.” Wilson v. Belin, 20 F.3d 644,
647 (5th Cir. 1994) (citing Helicopteros, 466 U.S. at 414 n. 8). In this circuit, “specific personal
jurisdiction is a claim-specific inquiry” that asks “‘(1) whether the defendant has minimum contacts
with the forum state, i.e., whether it purposely directed its activities toward the forum state or
purposefully availed itself of the privileges of conducting activities there; (2) whether the plaintiff’s
cause of action arises out of or results from the defendant’s forum-related contacts; and (3) whether
the exercise of personal jurisdiction is fair and reasonable.’” McFadin, 587 F.3d at 759 (quoting
Sieferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 2006)). When analyzing specific
jurisdiction, the court’s focus is only on the defendant’s contacts with the forum state specific to the
cause of action, not the plaintiff’s contacts, nor contacts unrelated to the cause of action. Walden
v. Fiore, __ U.S. __, 134 S.Ct. 1115, 1122 (2014) (The Court has “consistently rejected attempts to
satisfy the defendant-focused ‘minimum contacts’ inquiry by demonstrating contacts between the
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plaintiff (or third parties) and the forum State.”) (emphasis added) (quoting Helicopteros, 466 U.S.
at 417); McFadin, 587 F.3d at 759 (specific jurisdiction requires the “cause of action [to arise] out
of or [result] from the defendant’s forum-related contacts . . . .”).
The Fifth Circuit has outlined several types of contacts that are insufficient to show that a
defendant purposely availed itself of the privilege of conducting business in the forum state. For
example, “merely contracting with a resident of the forum state is insufficient to subject the
nonresident to the forum’s jurisdiction.” Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 778 (5th
Cir. 1986). Traveling to the forum state to inspect plaintiff’s facilities and resolve a contractual
dispute is insufficient. Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700 F.2d at 1026, 1029 (5th
Cir. 1983). Communications with the plaintiff in the forum state are insufficient. Holt, 801 F.2d
at 778. Mailing payments or agreements to Texas is insufficient. Id.; Hydrokinetics, 700 F. 2d at
1029. Even several of these contacts alleged together is not enough. In Holt, the Fifth Circuit found
that the nonresident defendant’s contacts with Texas were insufficient to exercise specific
jurisdiction where the defendant entered into a contract with a Texas corporation; sent a final, joint
operating agreement from Oklahoma to Texas; sent three checks from Oklahoma to Texas in partial
performance of the contract; and engaged in extensive telephonic and written communication with
the Texas corporation. 801 F.2d 773, 778.
The court begins by analyzing Lonestar’s undisputed allegations that Southern Livestock
engaged in the following contacts with Lonestar: Southern Livestock exchanged 530 texts and emails
and 457 phone calls with Lonestar; Southern Livestock arranged to make payment to Lonestar’s bank
in Texas; and Southern Livestock contracted with Lonestar to buy equipment that Lonestar
manufactures in Texas. Dkt. 11 at 2-3.

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At the outset, the court notes that whether Lonestar manufactures equipment in Texas or
utilizes a Texas bank is irrelevant to the analysis because the court focuses on Southern Livestock’s
contacts with Texas. Walden, 134 S. Ct. at 1122. Further, the fact that Southern Livestock
contracted with Lonestar alone, is an insufficient contact. Hydrokinetics, 700 F.2d at 1028–30; Holt,
801 F.2d at 778. The fact that the parties exchanged hundreds of phone calls, texts, and emails are
also insufficient contacts. Holt, 801 F.2d at 778. Even alleged together, Fifth Circuit precedent
demonstrates that these types of contacts do not show that the defendant purposely availed itself of
the privileges of conducting business in Texas. Hydrokinetics, 700 F.2d at 1028–30; Holt, 801 F.2d
at 778.
Lonestar also makes allegations that Southern Livestock directly disputes. Lonestar alleges
in its complaint that Southern Livestock provided preliminary project plans to Lonestar in Texas.
Dkt. 11 at 2. Southern Livestock, however, swears in an affidavit that the contract was formed in
Florida, and that Lonestar’s representative received the plans in Florida when Lonestar’s
representative traveled to Florida in June, 2014. Dkt. 16-1 at 4. At this stage of the case, conflicts
in the allegations generally must be resolved in favor of the plaintiff; but the court is not required
to credit conclusory allegations, or allegations controverted by opposing affidavits.

Panda

Brandywine, 253 F.3d at 869; Thompson, 755 F.2d at 1165. Lonestar’s assertion that the project
plans were provided to it in Texas is conclusory in and of itself as there is no location, date, or other
detail attached to the assertion. Even if Lonestar’s allegation was not conclusory, it is controverted
by Southern Livestock’s sworn affidavit alleging Lonestar’s trip to Florida and the method by which
Lonestar received the plans. Dkt. 16-1 at 4; Thompson, 755 F.2d at 1165. The court need not credit
Lonestar’s conclusory and controverted allegation that the plans were delivered in Texas. For all

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these reasons, Lonestar has not alleged contacts sufficient to demonstrate a prima facie case that
specific jurisdiction exists.
3.

General Jurisdiction

For general jurisdiction to exist, defendant’s contacts with the forum state must be more than
single or isolated activities. Int’l Shoe Co., 326 U.S. at 317. “The minimum contacts inquiry is
broader and more demanding when general jurisdiction is alleged, requiring a showing of substantial
activities in the forum state.” Jones v. Petty-Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1068
(5th Cir. 1992). Doing business with Texas businesses will not subject a nonresident defendant to
general jurisdiction absent a physical presence in Texas. Access Telecom, Inc. v. MCI Telecomms.
Corp., 197 F.3d 694, 718 (5th Cir. 1999). The Supreme Court has recently stated that the relevant
inquiry in determining general jurisdiction is whether the defendant’s contacts “‘render it essentially
at home in the forum State.’” Daimler AG v. Bauman, __ U.S. __, 134 S. Ct. 746, 761 (2014)
(quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, __ U.S. __, 131 S. Ct. 2846, 2851
(2011)). “[P]urchases and related trips, standing alone, are not a sufficient basis for a State’s
assertion of [general personal] jurisdiction.” Helicopteros, 466 U.S. at 417. At this point,
“[e]stablishing a prima facie case still requires the plaintiff to show the nonresident defendant’s
purposeful availment of the benefits and protections of and minimum contacts in the forum State.”
Panda Brandywine Corp., 253 F.3d at 868.
Lonestar first alleges that Southern Livestock markets and distributes its products in Texas;
but, nowhere in its 150 pages of exhibits does Lonestar tell the court what products are being
marketed or where they are being distributed or sold. Further, the allegations are directly
controverted by Southern Livestock’s opposing affidavit that swears Southern Livestock “does not
issue any marketing or advertising directed towards Texas” and “does not continuously or
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systematically sell or distribute any products in Texas.” Dkt. 16. Southern Livestock also swears
it does not have offices in Texas, does not rent or lease property in Texas, does not have any
employees in Texas, and does not maintain any mailing address or telephone listing in Texas. The
court is not required to rely on Lonestar’s bare assertions as true. Thompson, 755 F.2d at 1165.
Lonestar’s reference to the numerous phone calls and emails from Southern Livestock, along
with Southern Livestock’s Facebook posts, do not establish that Southern Livestock is “essentially
at home” in Texas. Rather, such references merely establish that Southern Livestock did business
and communicated with Lonestar, which is insufficient to subject a nonresident defendant to general
jurisdiction. See Access Telecom, 197 F.3d at 718 (continuous and systematic contacts with Texas
are not enough to prove business in Texas, which is required to exercise general jurisdiction). That
Southern Livestock made payments to Lonestar’s Texas bank “is not an appropriate consideration.”
Helicopteros, 466 U.S. at 417 (plaintiff’s choice of bank is a unilateral activity which is insufficient
to subject a nonresident defendant to personal jurisdiction). The duplicative copies of Southern
Livestock’s Facebook posts only prove a single point of sale— unrelated to this cause of action—and
a single trip to Texas, neither of which individually, or collectively, constitutes “substantial
activities.” Dkt. 14, Ex. D at 1, 3, 4, 19–23. Lonestar alleges that Southern Livestock’s Facebook
post—stating that it was making a delivery of products to Texas and thanking Lonestar for
Lonestar’s purchase—was an advertisement of Lonestar’s relationship with Southern Livestock as
the distributor of Southern Livestock’s products in Texas. Dkt. 12-1 at 4, 5. Affording a single
Facebook post the most generous inference of being an advertisement still “does not help establish
continuous and systematic contacts.” Access Telecom, 197 F.3d at 718 (yellow page ad soliciting
ads was insufficient to establish business in Texas without naming cities, time and duration of sales,
or proof that ads were actually placed). Finally, by Lonestar’s own admission, Southern Livestock
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“may not have yet set up roots in Texas” and merely has “intent to expand its business into Texas.”
Dkt. 12 at 9. Accordingly, Lonestar has not discharged its burden of establishing that Southern
Livestock is “essentially at home” in Texas. Daimler AG, 134 S. Ct. at 761.
4.

Conclusion

The court need not address whether the exercise of personal jurisdiction comports with
notions of fair play and substantial justice because Lonestar has failed to meet its burden under the
first prong of the test. Southern Livestock’s limited contacts with Texas are insufficient to prove the
purposeful availment which would support the exercise of specific jurisdiction. The exercise of
general jurisdiction is also improper because Lonestar has only made bare assertions regarding
Southern Livestock’s systematic and continuous contacts with Texas and has failed to prove
Southern Livestock’s presence in Texas. For the foregoing reasons, the court finds that Lonestar has
not established personal jurisdiction.
B. Transfer of Venue
Because the court has already determined that it does not have personal jurisdiction, it need
not consider Southern Livestock’s alternate motion to transfer venue. 28 U.S.C. § 1406(a).
III. CONCLUSION
Southern Livestock’s motion to dismiss (Dkt. 16) is GRANTED. All claims made by
Lonestar are hereby DISMISSED WITHOUT PREJUDICE for lack of personal jurisdiction.
Signed at Houston, Texas on June 16, 2015.

___________________________________
Gray H. Miller
United States District Judge
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