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March-Westin Company, Inc. v. Swinerton Builders, Inc.

United States District Court, N.D. West Virginia

June 1, 2018

MARCH-WESTIN COMPANY, INC., Plaintiff,
v.
SWINERTON BUILDERS, INC., Defendant.

          MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS [DKT. NO. 6]

          IRENE M. KEELEY UNITED STATES DISTRICT JUDGE

         Pending is the defendant's motion to dismiss this case for lack of personal and subject matter jurisdiction. For the reasons that follow, the Court GRANTS the motion (Dkt. No. 6).

         I. BACKGROUND

         The facts alleged in the complaint are as follows.[1] The plaintiff, March-Westin Company, Inc. (“March-Westin”), “is a full-service engineering, general contracting and design-building enterprise headquartered in Morgantown, West Virginia” (Dkt. No. 1 at 2). The defendant, Swinerton Builders, Inc. (“Swinerton”), is a California corporation that offers “general contracting services, including, without limitation, project management and supervision services and subcontractor administration.” Id. at 1-2.

         In June 2016, Viega LLC retained Swinerton to manage the construction of two buildings in Broomfield, Colorado (“the Project”). When Swinerton sought bids from subcontractors in January 2017, LignaTerra Global, LLC (“LignaTerra”), submitted a preliminary bid to provide “cross-laminated” and “glue-laminated” timber, which are uncommon building materials in the United States. Id. at 2-3. March-Westin “originally corresponded with LignaTerra . . . to assist it in its methodology in developing its bid, ” but LignaTerra subsequently determined that it would not be able “to meet prequalification requirements to be a subcontractor on the project.” Id. at 3. In April 2017, Swinerton asked March-Westin to provide its own bid for the timber products, with LignaTerra acting as March-Westin's vendor. Id.

         As early as April 24, 2017, Swinerton began communicating with March-Westin and its principal, Phillip Weser (“Weser”), and continued to do so over the course of the following two months. In reliance on Swinerton's requests for a bid, requests for performance and payment bonds, and transmission of draft contracts, March-Westin prepared a bid, which it eventually submitted to Swinerton on June 26, 2017. Id. at 3-4.

         After March-Westin submitted its bid, Swinerton transmitted drafts of a Master Service Agreement (“MSA”), which Weser executed on behalf of March-Westin on July 7, 2017.[2] After Weser executed the MSA, Swinerton transmitted draft work orders, including one on July 21, 2017. In reliance on Swinerton's correspondence, March-Westin “paid $137, 000 to LignaTerra to cover certain project costs including a payment to Hess Timber Limitless (a German timber supplier) in order to guarantee [Swinerton's] construction schedule.” Id. at 4. Thereafter, March-Westin incurred internal costs related to the Project. Id. at 4-5.

         Despite having March-Westin's bid in its possession, Swinerton transmitted draft work orders containing incorrect prices. Upon inquiry, Swinerton repeatedly stated that these errors were clerical and would be corrected. Nevertheless, because revised drafts consistently contained the inaccurate price, March-Westin never executed them. Id. at 5. March-Westin alleges that Swinerton's communications were designed to induce it to believe that a contract existed and to continue to devote time and effort to the Project. On August 14, 2017, Swinerton sent March-Westin a “Notice of Intent to Not Award, ” which advised that the work order and MSA “should be considered rescinded.” Id. Since that time, Swinerton has worked “directly with the timber supplier procured by LignaTerra and [March-Westin], ” and “has made use of and benefitted from the cost estimates, designs and techniques introduced to the project by [March-Westin].” Id. at 5-6.

         In its complaint filed on November 21, 2017, March-Westin claims relief for 1) Fraudulent or Negligent Inducement, 2) Breach of Contract, 3) Unjust Enrichment, 4) Promissory Estoppel, and 5) Conversion. Id. at 6-9. Swinerton was served through the Secretary of State on December 6, 2017 (Dkt. No. 3). After the parties stipulated to an extension of time for it to do so, Swinerton moved to dismiss the complaint on January 15, 2018 (Dkt. Nos. 5; 6). The Court heard argument on the motion at a scheduling conference on February 22, 2018.

         II. DISCUSSION

         A. Personal Jurisdiction

         Swinerton argues that March-Westin's complaint should be dismissed for lack of personal jurisdiction (Dkt. No. 7 at 14-17). “Under Rule 12(b)(2), a defendant must affirmatively raise a personal jurisdiction challenge, but the plaintiff bears the burden of demonstrating personal jurisdiction at every stage following such a challenge.” Grayson v. Anderson, 816 F.3d 262, 267 (4th Cir. 2016). “[W]hen . . . the court addresses the question on the basis only of motion papers, supporting legal memoranda and the relevant allegations of a complaint, the burden on the plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis to survive the jurisdictional challenge.” Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).

         “Ultimately, however, a plaintiff must establish facts supporting jurisdiction over the defendant by a preponderance of the evidence, ” and the Court should “follow a procedure that allows it to dispose of the [issue] as a preliminary matter.” Grayson, 816 F.3d at 268. “[I]f a court requires the plaintiff to establish facts supporting personal jurisdiction by a preponderance of the evidence prior to trial, ” it must “afford the parties a fair opportunity to present both the relevant jurisdictional evidence and their legal arguments.” Id.

         In this case, both Swinerton and March-Westin have presented evidence outside the pleadings in the course of briefing the motion to dismiss. As well, the Court has heard oral argument on the motion, and, after fair consideration of the arguments of the parties, concludes that the parties have had “a fair opportunity to present both the relevant jurisdictional evidence and their legal arguments.” Grayson, 816 F.3d at 268. In light of the evidence, the Court further concludes that March-Westin has failed to establish the existence of this Court's personal jurisdiction over Swinerton under either a prima facie or preponderance of the evidence standard.

         1. Standard of Review

         “A federal district court may only exercise personal jurisdiction over a foreign corporation if such jurisdiction is authorized by the long-arm statute of the state in which it sits and application of the long-arm statute is consistent with the due process clause of the Fourteenth Amendment.” Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273, 277 (4th Cir. 2009). “[B]ecause the West Virginia long-arm statute is coextensive with the Due Process Clause, it is unnecessary . . . to go through the normal two-step formula for determining the existence of personal jurisdiction. Rather, the statutory inquiry necessarily merges with the Constitutional inquiry.” Shelton v. Crookshank, No. 3:17-CV-108, 2018 WL 527423, at *3 (N.D.W.Va. Jan. 24, 2018) (quoting In re Celotex Corp., 124 F.3d 619, 627-28 (4th Cir. 1997)).

To satisfy the constitutional due process requirement, a defendant must have sufficient “minimum contacts” with the forum state such that “the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” The minimum contacts test requires the plaintiff to show that the defendant “purposefully directed his activities at the residents of the forum” and that the plaintiff's cause of action “arise[s] out of” those activities. This test is designed to ensure that the defendant is not “haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts.” It protects a defendant from having to defend himself in a forum where he should not have anticipated being sued. Because a sovereign's jurisdiction remains territorial, to justify the exercise of personal jurisdiction over a non-resident defendant, the defendant's contacts with the forum state must have been so substantial that “they amount to a surrogate for presence . . . .”

Geometric, 561 F.3d at 277-78 (internal citation omitted).

         The Fourth Circuit “has synthesized the due process requirements for asserting specific personal jurisdiction in a three part test in which ‘we consider (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.'” Id. at 278 (quoting ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002)).[3] Under the first prong, in the business context, courts consider various nonexclusive factors, including “whether the defendant maintains offices or agents in the forum state, ” “whether the defendant owns property in the forum state, ” “whether the defendant reached into the forum state to solicit or initiate business, ” “whether the defendant deliberately engaged in significant or long-term business activities in the forum state, ” “whether the parties contractually agreed that the law of the forum state would govern disputes, ” “whether the defendant made in-person contact with the resident of the forum state in the forum state regarding the business relationship, ” “the nature, quality and extent of the parties' communications about the business being transacted, ” and “whether performance of the contractual duties was to occur within the forum.” Id. (internal citations omitted). Only if the first prong is satisfied does the Court analyze the second and third prongs. Id.

         2. Discussion

         The threshold inquiry in this case is whether Swinerton meets “the minimum contacts requirement of constitutional due process that [it] purposefully availed [itself] of the privilege of conducting business under the law of the forum state.” Geometric, 561 F.3d at 278. Swinerton contends that it lacks sufficient contacts with West Virginia (Dkt. Nos. 7 at 17; 10 at 8-10), while March-Westin contends that Swinerton's contacts were much more than “random, fortuitous, or attenuated” (Dkt. No. 9 at 6). Because the Court's analysis is fact-intensive, it is instructive to survey how other courts have considered similar matters.

         In Burger King Corp. v. Rudzewicz, the Supreme Court found that Florida could exercise personal jurisdiction over a Michigan franchisee whose dispute with the franchiser “grew directly out of ‘a contract which had a substantial connection with [Florida], '” despite the fact that he had no physical ties with the state. 471 U.S. 462, 479 (1985) (quoting McGee v. Int'l Life Ins., Co., 355 U.S. 220, 223 (1957) (emphasis added)). The defendant had deliberately reached out to a “Florida corporation for the purchase of a long-term franchise.” Id. at 480. In doing so, he “entered into a carefully structured 20-year relationship that envisioned continuing and wide-reaching contacts with Burger King in Florida, ” including contractual provisions that selected the law of Florida to govern any disputes. Id. at 480-81. In other words, he voluntarily accepted “long-term and exacting regulation of his business from Burger King's Miami headquarters.” Id. at 480. Moreover, by breaching the franchise agreement, the defendant had caused foreseeable injury in Florida. The “quality and nature” of his relationship with Florida was thus much more than random, fortuitous, or attenuated. Id.

         In Consulting Engineers Corp. v. Geometric Ltd., Consulting Engineers Corp. (“CEC”), a Virginia corporation, had a business relationship with Structure Works, LLC (“Structure Works”) and Geometric Software Solutions (“Geometric”), Colorado and Indian corporations respectively. 561 F.3d 273, 275 (4th Cir. 2009). Structure Works retained Geometric to work on a design project, and introduced Geometric to CEC, which it believed might be able to assist with an aspect of the project. Thereafter, following several emails and phone calls, CEC entered into non-disclosure agreements with both Geometric and Structure Works. Id. at 275-76. During the four subsequent months of negotiation regarding CEC's ...


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