Global Fibres, Inc. v. Frank Parsons, Inc. et al

Filing 26

MEMORANDUM OPINION. It is so ORDERED. Signed by District Judge James R. Spencer on 05/18/2011. (walk, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
RICHMOND DIVISION
GLOBAL FIBRES, INC.,
Plaintiff,
v.

Action No. 3:10BCVB673

FRANK PARSONS, INC., J. MICHAEL
LANE, and FRANK CURRAN,
Defendants.

MEMORANDUM OPINION
This matter comes before the Court on defendants’ Motion to Dismiss or Transfer Venue.
Plaintiff Global Fibres, Inc. (“Global Fibres”), sued Frank Parsons, Inc. (“Frank Parsons”), on
various theories flowing from allegations that Frank Parsons was deficient on payments on a paper
delivery account. This case is now stayed as to Frank Parsons, because the corporation is in
bankruptcy proceedings. The Complaint includes a conversion claim against Frank Parsons and
two Frank Parsons executives, J. Michael Lane and Frank Curran. Lane and Curran urge the
Court to transfer the case or dismiss the claim for lack of personal jurisdiction. The Court grants
the Motion on the latter basis.
Global Fibres allegedly began distributing paper to Frank Parsons in June 2006. The two
corporations entered into a Seller Owned Inventory Agreement (“SOI Agreement”). Under the
SOI Agreement, Global Fibres shipped paper to Frank Parsons warehouses, one of which was in
Richmond, in response to Frank Parsons purchase orders. Global Fibres owned any paper it
shipped until Frank Parsons either sold the paper or possessed it for 150 days. The SOI
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Agreement charged Frank Parsons with sending Global Fibres a monthly Usage Report, which
documented the amount of paper Frank Parsons sold or held in inventory for 150 days. Under the
SOI Agreement, Global Fibres shipped over $450,000 worth of paper to the Frank Parsons
warehouse in Richmond.
The Complaint alleges Frank Parsons retains an outstanding balance on the SOI
Agreement. Paper delivered to the Frank Parsons warehouse in Richmond accounts for some, but
not all, of this alleged balance. Global Fibres claims Curran and Lane converted Global Fibres’s
property by participating in the sale of unpaid-for paper. Lane and Curran both reside and work in
Maryland. Lane serves as Frank Parsons’s chief executive officer, and Curran as its president.
Lane and Curran contend this Court lacks jurisdiction over them. Upon a challenge to a
court’s personal jurisdiction, the parties raise a question of fact for the judge, to be decided by a
preponderance of the evidence. Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir. 1993).
See Fed. R. Civ. P. 12(b)(2). The plaintiff carries the burden of proof. Mylan Labs., 2 F.3d at
59-60. The court must draw all reasonable fact inferences in the plaintiff’s favor. Id.
Global Fibres must prove the Court’s jurisdiction over Lane and Curran under both
Virginia’s long-arm statute and the Due Process Clause of the Fourteenth Amendment. Peanut
Corp. of Am. v. Hollywood Brands, Inc., 696 F.2d 311 (4th Cir. 1982). The Virginia long-arm
statute permits a court to assert personal jurisdiction over a claim “arising from the person’s”:
(1) Transacting any business in this Commonwealth;
(2) Contracting to supply services . . . in this Commonwealth;
(3) Causing tortious injury by an act or omission in this Commonwealth; [or]
(4) Causing tortious injury in this Commonwealth by an act or omission outside
this Commonwealth if he regularly does or solicits business, or engages in any other
persistent course of conduct, or derives substantial revenue from goods used or consumed
or services rendered, in this Commonwealth[.]

Va. Code § 8.01-328.1 (2009). Virginia’s long-arm statute extends the boundaries of personal

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jurisdiction as widely as the Due Process Clause of the Fourteenth Amendment allows. New
Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir. 2005). Virginia
is a “single act” state, such that a single act of transacting business can permit a court to exercise
personal jurisdiction. D’Addario v. Geller, 264 F.Supp.2d 367, 379 (E.D. Va. 2003).
Under the Fourteenth Amendment, a court can only assert jurisdiction over a defendant if
the defendant has minimum contacts with the forum and jurisdiction does not offend “traditional
notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316
(1945). See Reynolds & Reynolds Holdings, Inc. v. Data Supplies, Inc., 301 F.Supp.2d 545, 549
(E.D. Va. 2004). A plaintiff must demonstrate that the non-resident defendant “purposefully
availed” himself of the privileges of the forum’s laws, so that the non-resident defendant has
warning that his activities may subject him to litigation in the forum state. Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 474 (1985); Hanson v. Denckla, 357 U.S. 235, 253 (1958); Peanut
Corp., 696 F.2d at 314. A court also must conclude that the plaintiff’s claims arise out of the
activities by which he purposely availed himself of the laws of the forum. Mitrano v. Hawes, 377
F.3d 402, 407 (4th Cir. 2004) (citation omitted).
Even though they are officers in a corporation over which this Court may possess
jurisdiction, Global Fibres must prove that Lane and Curran individually established jurisdictional
contacts with the Commonwealth. A corporation’s contacts with the forum state are not
reflexively attributed to a corporate agent for jurisdictional purposes. ePlus Tech., Inc. v. Aboud,
313 F.3d 166, 177 (4th Cir. 2002). While a defendant is not immune from a court’s jurisdiction
simply because he makes contacts with the forum state on behalf of the corporation, a court must
decide whether a corporate agent himself established sufficient contacts with the Commonwealth.
Id. It is irrelevant whether the agent established contacts in his corporate or personal capacity.
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D’Addario, 264 F.Supp.2d at 380. Instead, the relevant inquiry is simply whether the defendant
had minimum contacts with the Commonwealth, “whatever role he may have occupied[.]” Id.
(quoting Columbia Briargate Co. v. First Nat’l Bank, 713 F.2d 1052, 1058 (4th Cir. 1983)).
Global Fibres has not proven that Lane and Curran individually availed themselves to the
Virginia forum. The Complaint alleges Frank Parsons and Global Fibres entered the SOI
Agreement, pursuant to which Global Fibres delivered paper to a Frank Parsons warehouse in
Richmond. The Complaint does not, however, make specific allegations about Lane’s and
Curran’s roles in creating Frank Parsons’s contacts with Virginia. It merely alleges Global Fibres
sold over $285,000 worth of unpaid-for paper—only $19,500 of which was ever housed in
Richmond—“under [the] direction” of Lane and Curran. (Compl. ¶ 36.) Nowhere does Global
Fibres allege or prove, for example, Lane and Curran communicated with Global Fibres personnel
in Virginia or negotiated the SOI Agreement with Global Fibres personnel in Virginia.
Global Fibres contends the Court has jurisdiction over Lane and Curran on the basis of
Frank Parsons’s business dealings with Global Fibres in Virginia. According to Global Fibres,
the allegations demonstrate (1) that Global Fibres delivered paper goods under the SOI Agreement
to the Frank Parsons warehouse in Richmond, Virginia, and that (2) Lane, Curran, and Frank
Parsons sold over $285,000 of the unpaid-for paper. From these facts, Global Fibres urges the
Court to infer Lane and Curran decided “how to dispose of warehouse inventory, including
inventory at the warehouse in Richmond,” which would establish personal jurisdiction. (Pl.’s
Mem. in Opp’n 14, Docket No. 15.)
Global Fibres’s characterization of the facts rests on a fatal omission. Neither the
Complaint nor Global Fibres’s responsive memorandum includes a specific allegation or evidence
that Lane and Curran individually decided “how to dispose of warehouse inventory[.]” (Pl.’s
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Mem. in Opp’n 14.) Lane is Frank Parsons’s CEO, and Curran is its president. A president and
CEO of one company may decide how to dispose of warehouse inventory, while the president and
CEO of another may not. Based on the materials in front of the Court, it is impossible to
determine which category Frank Parsons falls within. While the Court is bound draw all
reasonable inferences in favor of Global Fibres, the Court cannot draw any such inference in favor
of Global Fibres when, based on the record, there are no facts giving rise to the inference that either
defendant has any connection to this state.
Nor can the Court rely on its jurisdiction over Frank Parsons, assuming that it exists, to
assume jurisdiction over Lane and Curran. Global Fibres must show Lane and Curran themselves
engaged in conduct in Virginia related to Frank Parsons’s Virginia business for the Court to
exercise jurisdiction. ePlus Tech., Inc., 313 F.3d at 177. Neither the Complaint nor Global
Fibres’s briefing papers show that Lane and Curran personally transacted business in Virginia,
contracted to supply goods in Virginia, caused tortious injury in Virginia, engaged in a persistent
course of conduct in Virginia, or established minimum contacts with Virginia. See Virginia Code
§ 8.01-328.1(1), (2), (3), and (4); Reynolds & Reynolds Holdings, 301 F.Supp.2d at 549.
Let the Clerk send a copy of this Order to all counsel of record.
It is SO ORDERED.

_______________/s/_____________
James R. Spencer
Chief United States District Judge

ENTERED this

18th day of May 2011

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