Knisely v. National Better Living Association, Inc et al

Filing 183

MEMORANDUM OPINION AND ORDER GRANTING NATIONAL BETTER LIVING ASSOCIATION, INC.'S MOTION 175 TO DISMISS IN PART. Defendant National Better Living Association, Inc. is DISMISSED from this action. Signed by Chief Judge Gina M. Groh on 7/22/2015. (tlg)

IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF WEST VIRGINIA
MARTINSBURG
DAVID KNISELY,
Plaintiff,
v.

CIVIL ACTION NO.: 3:14-CV-15
(GROH)

NATIONAL BETTER LIVING ASSOCIATION, INC.,
ALLIED HEALTH BENEFITS, INC., CORPSAVERS
HEALTHCARE, INC., PREMIERE ADMINISTRATIVE
SOLUTIONS, INC., G. DANIEL SIEWERT, III,
TIMOTHY SIEWERT, MICHAEL C. SIEWERT,
ANGUS MORRISON, GEORGE SPALDING,
LANDON JORDAN and JESS JORDAN,
Defendants.
MEMORANDUM OPINION AND ORDER GRANTING NATIONAL BETTER LIVING
ASSOCIATION, INC.’S MOTION TO DISMISS IN PART
Currently pending before the Court is Defendant National Better Living Association,
Inc.’s (“NBLA”) Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(2), (6) and
(7). ECF 175. For the following reasons, the Court GRANTS this motion IN PART.
I. Background1
This case concerns an alleged scheme of Timothy Siewert, G. Daniel Siewert, III,
Michael Siewert, Angus Morrison and George Spalding to use NBLA, CorpSavers
Healthcare, Inc. and Allied Health Benefits, Inc. to market medical discount cards as a
comprehensive health insurance policy. NBLA sold memberships purporting to offer such
a policy with American Medical and Life Insurance Company (“AMLI”) and gave its profits

1

This section assumes the amended complaint’s factual allegations are true and construes them in
the light most favorable to the plaintiff.

to Allied Health Benefits. Allied Health Benefits’ parent company, CorpSavers, had
contracted with Jess Jordan for his company, National Health Care Advisors, Inc., to
market NBLA. Jess and Landon Jordan also owned and operated a call center that sold
NBLA memberships.
On March 25, 2011, while living in West Virginia, Knisely saw a television
advertisement for health insurance through NBLA. He called the number advertised and
left his contact information. Sheila Sanchez returned his call. She told Knisely an NBLA
membership offered a health insurance policy with AMLI that covered his pre-existing
medical conditions when it would not. Knisely purchased an NBLA membership. He gave
Sanchez the bank account information of Don Mock, his roommate, for the activation fee
on the condition NBLA not charge the account for anything else. Sanchez agreed and
transferred Knisely to another call center agent who made more misrepresentations about
the membership and policy.
Knisely tried to use the policy at his doctor’s office and learned it did not cover
anything. Knisely called NBLA on April 18, 2011 to cancel his membership. Brandon
Holmes answered and told Knisely to complete a form to cancel. Knisely objected. Holmes
replied he had cancelled Knisely’s membership.
In February 2012, Knisely was hospitalized. His medical bills exceeded $100,000.
He did not file a claim under the policy for the hospitalization because he believed NBLA
cancelled it. Knisely alleges the policy covered $30,000 of these bills.
In December 2012, Mock discovered NBLA was still deducting funds from his
account. Mock called NBLA and demanded a refund. He was told NBLA’s membership
dues were nonrefundable. On January 8, 2013, Mock told Knisely about the deductions
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and NBLA’s refusal to refund them. Knisely alleges he must repay Mock these funds.
Later on January 8, Knisely called NBLA and spoke with Tavorice Smith. He demanded
a refund or payment of his medical bills.

Smith replied NBLA’s premiums were

nonrefundable and transferred him to an AMLI representative. The representative denied
his claim as untimely. Knisely responded he could not have reported the claim earlier
because he thought the policy was canceled when he was hospitalized.
In May 2013, Knisely’s counsel contacted NBLA to discuss his claim. NBLA
responded it had no record of a claim. Knisely’s counsel later gave AMLI his medical bills
and requested reimbursement. AMLI denied the claim as untimely, canceled his coverage
and stated it would give Knisely a partial refund. AMLI never issued the refund.
Based on the foregoing allegations, Knisely sued NBLA, AMLI and John/Jane Does
in state court, raising six claims: (1) Racketeer Influenced and Corrupt Organizations Act
(“RICO”) violations; (2) West Virginia Unfair Trade Practices Act (“UTPA”) violations; (3)
Discount Medical Plan Organizations and Discount Prescription Drug Plan Act Organization
Act (“the Plan Act”) violations against NBLA; (4) bad faith and breach of contract against
AMLI; (5) fraud and (6) unconscionability.
NBLA and AMLI removed this case to this Court. NBLA moved to dismiss the
complaint for failure to state a claim upon which relief can be granted and lack of personal
jurisdiction. AMLI moved for judgment on the pleadings. The Court granted these motions
in part. As to NBLA’s motion, the Court dismissed the RICO claim, granted NBLA leave
to file a motion to dismiss challenging personal jurisdiction and denied the rest of the
motion without prejudice. As to AMLI’s motion, the Court dismissed the RICO claim, the
bad faith and breach of contract claim and several of the UTPA claims.
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Then, NBLA again moved to dismiss for lack of personal jurisdiction and failure to
state a claim upon which relief can be granted. Knisely moved for leave to amend his
complaint, seeking to add Allied Health Benefits, CorpSavers, Premiere Administrative
Solutions, Timothy Siewert, G. Daniel Siewert, III, Michael Siewert, Angus Morrison,
George Spalding, Landon Jordan and Jess Jordan as defendants and modify his claims.
The Court granted Knisely’s motion to amend in part, allowing him to add the new
defendants and raise these claims: (1) RICO against the new defendants; (2) UTPA against
AMLI and Premiere Administrative Solutions; (3) fraud based on alleged false cancellation
statements and (4) indemnification. The Court denied NBLA’s motion to dismiss for lack
of personal jurisdiction without prejudice and the rest of its motion as moot. After this
ruling, Knisely settled with AMLI. NBLA then filed the instant motion to dismiss for lack of
personal jurisdiction, failure to state a claim upon which relief can be granted and failure
to join a necessary and indispensable party under Rules 12(b)(2), (6) and (7).
II. Discussion
NBLA first argues that this Court lacks personal jurisdiction over it.2 To defeat a
motion to dismiss challenging personal jurisdiction, a plaintiff must prove “the existence of
a ground for jurisdiction by a preponderance of the evidence.” In re Celotex Corp., 124
F.3d 619, 628 (4th Cir. 1997) (quotation marks and citation omitted). When a court decides
whether personal jurisdiction exists “without an evidentiary hearing, the plaintiff need prove
only a prima facie case of personal jurisdiction.” Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56,
2

Knisely argues the law of the case doctrine bars NBLA from challenging personal jurisdiction. The
Court declines to invoke this doctrine, which is discretionary. See CNF Constructors, Inc. v. Donohoe Const.
Co., 57 F.3d 395, 397 n.1 (4th Cir. 1995). Addressing this issue is appropriate as NBLA’s prior motion did not
concern whether the amended complaint sufficiently pleaded jurisdiction and the Court denied that motion
without prejudice.

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60 (4th Cir. 1993). In considering this issue, courts “construe all relevant pleading
allegations in the light most favorable to the plaintiff, assume credibility, and draw the most
favorable inferences for the existence of jurisdiction.” Universal Leather, LLC v. Koro AR,
S.A., 773 F.3d 553, 558 (4th Cir. 2014) (citation and quotation marks omitted). But courts
“need not credit conclusory allegations or draw farfetched inferences.” Sonoco Prods. Co.
v. ACE INA Ins., 877 F. Supp. 2d 398, 405 (D.S.C. 2012) (quotation marks and citations
omitted). “A plaintiff must also base his claim for personal jurisdiction on specific facts set
forth in the record.” Id. (quotation marks and citation omitted).
A court has personal jurisdiction over a non-resident defendant if (1) a statute
authorizes service of process on the defendant and (2) the service of process comports
with the Due Process Clause. In re Celotex Corp., 124 F.3d at 627. Because West
Virginia’s long-arm statute “is coextensive with the full reach of due process,” the statutory
and Constitutional inquiries merge. Id. at 628. Thus, the Court considers only whether
personal jurisdiction “is consistent with the Due Process Clause.” Id.
Exercising “jurisdiction over a nonresident defendant comports with due process if
the defendant has ‘minimum contacts’ with the forum, such that to require the defendant
to defend its interests in that state ‘does not offend traditional notions of fair play and
substantial justice.’” Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390,
397 (4th Cir. 2003) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
There are two types of personal jurisdiction, specific and general jurisdiction. Id. Knisely
argues the Court has both types of jurisdiction over NBLA.
A.

Specific Personal Jurisdiction

If NBLA’s contacts with West Virginia provide the basis for this suit, “those contacts
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may establish ‘specific jurisdiction.’” Id. Courts in this Circuit assess three factors to
determine whether specific jurisdiction exists: “(1) the extent to which the defendant
purposefully availed itself of the privilege of conducting activities in the State; (2) whether
the plaintiffs' claims arise out of those activities directed at the State; and (3) whether the
exercise of personal jurisdiction would be constitutionally reasonable.” Consulting Eng’rs
Corp. v. Geometric Ltd., 561 F.3d 273, 278 (4th Cir. 2009) (citation and quotation marks
omitted).
“The first prong articulates the minimum contacts requirement of constitutional due
process that the defendant purposefully avail himself of the privilege of conducting business
under the laws of the forum state.” Id. Courts determine whether purposeful availment
occurred in light of a non-exhaustive list of eight factors:
(1) whether the defendant maintains offices or agents in the forum state; (2)
whether the defendant owns property in the forum state; (3) whether the
defendant reached into the forum state to solicit or initiate business; (4)
whether the defendant deliberately engaged in significant or long-term
business activities in the forum state; (5) whether the parties contractually
agreed that the law of the forum state would govern disputes; (6) whether the
defendant made in-person contact with the resident of the forum in the forum
state regarding the business relationship; (7) the nature, quality and extent
of the parties' communications about the business being transacted; and (8)
whether the performance of contractual duties was to occur within the forum.
Universal Leather, LLC, 773 F.3d at 560 (quotation marks and citation omitted). To satisfy
the second prong, NBLA’s contacts with West Virginia must “form the basis of the suit.”
Consulting Eng’rs Corp., 561 F.3d at 578-79.
The Court found Knisely adequately pleaded these factors when allowing him to
amend his complaint. First, the Court found NBLA purposefully availed itself of the privilege
of doing business in West Virginia by authorizing the television advertisement that
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prompted Knisely to call NBLA and purchase a membership. Second, the Court found the
UTPA claim and fraud claim based on statements made in the television advertisement and
call where Knisely purchased the membership arose from NBLA’s forum-related activities.
Finally, the Court held West Virginia’s interest in affording its residents a convenient forum
for redressing injuries satisfied the third factor.
Presently, NBLA contests the second factor. NBLA argues the claims against
it–fraud concerning the alleged cancellation statements and indemnification–arise from a
contact Knisely made, the call to cancel his membership. Knisely counters NBLA’s
advertisement and NBLA failing to cancel his membership caused him to be defrauded and
owe Mock money.
Knisely has not made a prima facie showing of specific personal jurisdiction. His
fraud claim alleges NBLA falsely stated it canceled Knisely’s membership. Similarly, the
indemnification claim asserts Knisely must repay Mock funds deducted from his bank
account because NBLA did not cancel his membership as promised. NBLA’s contacts with
West Virginia do not underlie these claims. Rather, these claims are based on Knisely’s
allegation that NBLA should have canceled his membership when he called NBLA but did
not do so. Because Knisely made the contact where this occurred (i.e., the phone call),
NBLA’s contacts with West Virginia do not form the basis of the claims against it. Thus,
this Court lacks specific personal jurisdiction over NBLA.
B.

General Personal Jurisdiction

Because specific personal jurisdiction is lacking, personal jurisdiction must arise
from NBLA’s “general, more persistent, but unrelated contacts with” West Virginia.
Carefirst of Md., Inc., 334 F.3d at 397. A plaintiff establishes general jurisdiction by
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showing the defendant has “continuous and systematic” activities in the state. Id. (citations
and quotation marks omitted). “[T]he threshold level of minimum contacts to confer general
jurisdiction is significantly higher than for specific jurisdiction.” ESAB Grp., Inc. v. Centricut,
Inc., 126 F.3d 617, 623 (4th Cir. 1997) (citation omitted). “The hallmark of general
jurisdiction is that the defendant's contacts with the forum state are so extensive that it
should reasonably foresee being haled into court there.” Byard v. Verizon W. Virginia, Inc.,
Civil Action No. 1:11CV132, 2012 WL 1085775, at *8 (N.D.W. Va. Mar. 30, 2012) (citing
World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 297 (1980)).
Knisely argues general jurisdiction exists because NBLA sold him and another West
Virginia resident memberships. Selling memberships to two West Virginia residents falls
far short of “continuous and systematic” contacts with West Virginia. See Carefirst of Md.,
Inc., 334 F.3d at 397. Indeed, courts have declined to find general jurisdiction with much
more evidence of sales, such as a defendant’s proportionate sales in the state. See, e.g.,
Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1200 (4th Cir. 1993) (affirming finding of no
general jurisdiction where defendant had seventeen to twenty-one employees and two
percent of total sales in the state); Ricks v. Armstrong Int'l, Inc., Civil Action No.
4:14-CV-37-BO, 2014 WL 2873189, at *1 (E.D.N.C. June 24, 2014) (holding two sales
representatives, participation in job fairs and 9.86% of total sales in state “nowhere near”
establishing general jurisdiction); Kuennen v. Stryker Corp., Civil Action No. 1:13CV00039,
2013 WL 5873277, at *4 (W.D. Va. Oct. 30, 2013) (finding general jurisdiction lacking over
defendant with less than one-half of one percent of total sales in the state). Moreover, to
the extent Knisely alleges NBLA advertised in West Virginia, “advertising and solicitation
activities alone do not constitute the ‘minimum contacts’ required for general jurisdiction.”
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Nichols, 991 F.2d at 1200. Accordingly, general jurisdiction does not exist. Having found
no basis for exercising personal jurisdiction over NBLA, the Court grants NBLA’s motion
to dismiss for lack of personal jurisdiction and denies the remainder of its motion as moot.
III. Conclusion
For the foregoing reasons, the Court GRANTS NBLA’s Motion to Dismiss IN PART.
Specifically, the Court GRANTS the Motion to Dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(2) and DENIES AS MOOT NBLA’s Motions to Dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6) and (7).
Accordingly, the Court DISMISSES Defendant National Better Living Association,
Inc. from this action.
The Clerk is directed to transmit copies of this Order to counsel of record herein.
DATED: July 22, 2015

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