Gulf Coast Bank & Trust Co. v. Designed Conveyor S ( 2017 )

Case: 17-30062 Document: 00514284227 Page: 1 Date Filed: 12/22/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 17-30062 FILED
December 22, 2017
GULF COAST BANK & TRUST COMPANY, Lyle W. Cayce
Clerk
Plaintiff - Appellant
v.
DESIGNED CONVEYOR SYSTEMS, L.L.C.,
Defendant - Appellee
Appeal from the United States District Court
for the Middle District of Louisiana
USDC No. 3:16-CV-412
Before REAVLEY, SOUTHWICK, and HAYNES, Circuit Judges.
PER CURIAM:*
Gulf Coast Bank & Trust Co. (“Gulf Coast”) sued Designed Conveyor
Systems, L.L.C. (“DCS”) in Louisiana. The district court dismissed the suit for
lack of personal jurisdiction over DCS, an LLC registered under the laws of
Indiana with a primary place of business in Tennessee. Gulf Coast appeals,
contending that personal jurisdiction is proper on two theories. First, it argues
that because DCS registered to do business in Louisiana, it consented to
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 17-30062 Document: 00514284227 Page: 2 Date Filed: 12/22/2017
No. 17-30062
personal jurisdiction for any lawsuit in Louisiana. Second, Gulf Coast argues
that DCS had sufficient minimum contacts to create specific jurisdiction. We
disagree with both arguments. Consequently, we affirm.
I. Standard of Review
Where there is no factual dispute, we review de novo the district court’s
determination that it lacks personal jurisdiction. Bullion v. Gillespie, 895 F.2d
213, 216 (5th Cir. 1990). The party seeking to invoke the court’s jurisdiction
has the burden to establish it is proper. See Luv n’ care, Ltd. v. Insta-Mix, Inc.,
438 F.3d 465, 469 (5th Cir. 2006). “A federal court sitting in diversity may
exercise personal jurisdiction over a non-resident defendant (1) as allowed
under the state’s long-arm statute; and (2) to the extent permitted by the Due
Process Clause of the Fourteenth Amendment.” Mullins v. TestAmerica, Inc.,
564 F.3d 386, 398 (5th Cir. 2009).
II. Background
The Plaintiff in this case, Gulf Coast Bank, identifies itself as “a
Louisiana state bank domiciled in the Parish of Orleans.” The Defendant,
DCS, identifies itself as “an Indiana limited liability company, with its
principal place of business in Franklin, Tennessee.” None of its members are
domiciled in Louisiana.
At the heart of this dispute are two separate agreements. The first
agreement is between DCS and Vinex Global, LLC (“Vinex”), a nonparty to this
suit. On June 19, 2015, DCS entered into a subcontract agreement with Vinex
related to a Colorado-based project, “Ontrac Denver.” Under this subcontract
agreement, Vinex was to furnish all labor, equipment, and materials, for the
project.
The second agreement is a Receivables Purchase Agreement between
Vinex and Gulf Coast, under which Vinex can sell its accounts receivables to
Gulf Coast. Pursuant to this agreement, on September 3, 2015, Vinex offered
2
Case: 17-30062 Document: 00514284227 Page: 3 Date Filed: 12/22/2017
No. 17-30062
to sell to Gulf Coast an invoice in the amount of $64,311.00 owed by DCS to
Vinex. That same day, Gulf Coast sent a letter entitled “Invoice
Acknowledgment Agreement” to DCS. This letter was addressed to DCS at its
Tennessee office and stated as follows:
[Vinex] has requested that [Gulf Coast] accept an
assignment of the invoice(s) listed below . . . in order
to extend financial accommodations secured by a
collateral assignment of its accounts receivables.
Accordingly, payment of the invoice(s) listed below and
any future invoices must be made directly to [Gulf
Coast] . . . .
The letter went on to provide two locations for payment of the invoice: one in
Dallas, Texas, and the other in New Orleans, Louisiana. The Invoice
Acknowledgment Agreement further “request[ed] [DCS’s] acknowledgment
that the invoice(s) described herein are currently due in the amount indicated
below, represents payment for merchandise delivered and/or services
rendered, free of any defense, off-set, counterclaim, recoupment or any other
limitation.” A representative of DCS signed the Invoice Acknowledgment
Agreement while in Tennessee.
Beginning in December 2015, Gulf Coast and DCS exchanged
correspondence regarding DCS’s payment of the invoice, which was
outstanding. DCS refused to pay the invoice because “Vinex[,] without
justification and without advance notice[,] walked off the job on October 16,
2015.” DCS maintained that Vinex thereby breached its contract with DCS
and that it had to hire replacement contractors at an increased price.
Gulf Coast initially sued DCS in the Civil District Court for the Parish
of Orleans and asserted claims under Louisiana’s open account statute, as well
as for breach of contract and detrimental reliance. DCS removed the suit to
federal court based on diversity jurisdiction, and then moved to dismiss under
Federal Rules of Civil Procedure 12(b)(2), 12(b)(3) and 12(b)(6), or alternatively
3
Case: 17-30062 Document: 00514284227 Page: 4 Date Filed: 12/22/2017
No. 17-30062
to transfer. Gulf Coast voluntarily dismissed the suit and the same day filed
this case in the 19th Judicial District Court for the Parish of East Baton Rouge.
DCS again removed to federal court and again sought dismissal or transfer.
The district court granted dismissal for lack of personal jurisdiction and
denied a subsequent motion for reconsideration. Gulf Coast now appeals,
arguing that personal jurisdiction over DCS is proper.
III. Discussion
A. Consent Theory of Jurisdiction
Gulf Coast principally argues that Louisiana may exercise personal
jurisdiction over DCS because DCS, a foreign entity, registered to do business
in Louisiana. Such registration by itself, Gulf Coast argues, amounts to
consent to personal jurisdiction in Louisiana for any suit filed there. This
argument potentially poses the question of whether a state can, without
violating the Due Process Clause, explicitly require businesses registering in
the state to consent to suit in the state by any plaintiff for any act committed
anywhere. We do not have to resolve this question because we conclude that
Louisiana does not have such an explicit requirement.
Relying heavily on Pennsylvania Fire Insurance Co. of Philadelphia v.
Gold Issue Mining & Milling Co., 243 U.S. 93 (1917), Gulf Coast maintains
that appointing a registered agent amounts to consent to jurisdiction for all
suits. In Pennsylvania Fire, the Supreme Court determined that an insurance
company was subject to personal jurisdiction in Missouri where it was licensed
to do business in Missouri and had consented to service of process in the state.
Id. at 94–96. Gulf Coast reads Pennsylvania Fire to establish a rule that
registering an agent for service of process in a state acts as express consent to
be sued by any party in the state.
Whether Pennsylvania Fire survived the Court’s later decision in
International Shoe v. State of Wash., Office of Unemployment Compensation &
4
Case: 17-30062 Document: 00514284227 Page: 5 Date Filed: 12/22/2017
No. 17-30062
Placement, 326 U.S. 310 (1945), is far from certain. The Supreme Court has
stated that “all assertions of state-court jurisdiction must be evaluated
according to the standards set forth in International Shoe and its progeny.”
Shaffer v. Heitner, 433 U.S. 186, 212 (1977). The Court explicitly determined:
“To the extent that prior decisions [decided on the rationales of Pennoyer v.
Neff, 95 U.S. 714 (1877)] are inconsistent with [International Shoe], they are
overruled.” Id. at 212 n.39. Pennsylvania Fire may be one of the many cases
that the Supreme Court has explicitly declared overruled by International
Shoe.
We need not decide the issue because, even assuming Pennsylvania Fire
survived International Shoe and does not fall within the overruling stated in
Shaffer, Gulf Coast fails to fit this case into its scope. Nowhere in Pennsylvania
Fire did the Court hold that registering to do business in a state or appointing
an agent for service of process acts as consent to any suit of any kind in that
state. Instead, it merely concluded that defendants had consented to service
of process in Missouri, resting largely on the fact that the state court had
construed the Missouri statute to require such consent to suit for the service
at issue. Id. at 95–96.
This case lacks what Pennsylvania Fire had: a clear statement from the
state court construing the statute to require consent. Gulf Coast does not
identify any statute or agreement that requires foreign entities to expressly
consent to any suit in Louisiana. None of the forms that DCS filled out as part
of its registration with the Secretary of State indicate that by registering DCS
consented to suit. None of the statutes covering registration informs a
company that by registering it consents to suit. See La. Stat. Ann. § 12:1342
(admission requirements of foreign LLC); id. § 12:1347 (effect of certificate of
authority); id. § 12:1350 (registered agent requirements). The statute
governing personal jurisdiction only purports to grant Louisiana courts
5
Case: 17-30062 Document: 00514284227 Page: 6 Date Filed: 12/22/2017
No. 17-30062
authority to exercise jurisdiction; it does not inform any foreign entities that
by registering to do business that they consent to jurisdiction. See id. § 13:3201
(personal jurisdiction over nonresidents).
Gulf Coast tries, but fails, to identify a clear directive from a Louisiana
court. Its argument hinges mostly on a single line from a single Louisiana
Supreme Court decision addressing a different issue to establish consent. In
Phillips Petroleum Co. v. OKC Ltd. Partnership, the Louisiana Supreme Court
stated that that a “consequence of designating an agent for service of process
is to subject the foreign corporation to jurisdiction in a Louisiana court.” 634
So. 2d 1186, 1187 (La. 1994). That statement is a conclusion about personal
jurisdiction, not a construction of its statutes that supports the theory that all
foreign entities consent to any suit in the state. Without more, we cannot know
whether the Louisiana Supreme Court based its conclusion on a consent theory
or on some other outdated view of general jurisdiction.
Furthermore, that single line from Phillips Petroleum was completely
incidental to the Louisiana Supreme Court’s resolution of the case before it.
The court was resolving whether a third party was required to appear and
produce documents pursuant to a subpoena. Id. at 1187. It rejected the
argument that being subject to personal jurisdiction was coextensive with the
party’s obligation to respond to a subpoena, and resolved the case on entirely
different grounds. Id. at 1187–88. Subsequent opinions from Louisiana courts
have explicitly warned against plucking that one line from Phillips Petroleum
and wringing too much meaning from it. See Taylor v. Arellano, 928 So. 2d 55,
58 (La. Ct. App. 2005) (warning against a broad reading of Phillips
6
Case: 17-30062 Document: 00514284227 Page: 7 Date Filed: 12/22/2017
No. 17-30062
Petroleum). 1 It is hardly the sort of explicit directive discussed in Pennsylvania
Fire.
Louisiana law, therefore, does not require a foreign entity to consent to
jurisdiction as a condition of doing business in the state. The outcome of this
case is accordingly controlled by Wenche Siemer v. Learjet Acquisition Corp.,
which concluded that absent state law explicitly requiring consent, the court
would not consider “appointment of an agent for process” to be “a waiver of
[the] right to due process protection.” 966 F.2d 179, 183 (5th Cir. 1992); see
also id. (rejecting consent theory of jurisdiction because “[n]o Texas state court
decision has held that this provisions acts as a consent to jurisdiction over a
corporation in a case such as ours”). Even assuming arguendo that consent
jurisdiction is a viable theory, personal jurisdiction over DCS would be
improper under a consent theory of personal jurisdiction in this case.
B. Specific Jurisdiction
Gulf Coast also argued that DCS had sufficient minimum contacts with
Louisiana to be subject to specific jurisdiction. Gulf Coast asserts the Invoice
Acknowledgment Agreement as its basis for concluding DCS has the requisite
minimum contacts with Louisiana for specific jurisdiction. 2 But we conclude
that DCS’s contacts do not meet this threshold.
1Furthermore, a single sentence unrelated to the holding of that single case cannot
be the basis for establishing the law in Louisiana’s civil law system under the doctrine of
jurisprudence constante. See Chevron USA, Inc. v. Vermilion Par. Sch. Bd., 377 F.3d 459,
462 (5th Cir. 2004); Doerr v. Mobil Oil Corp., 774 So. 2d 119, 128 (La. 2000), opinion corrected
on reh’g, 782 So. 2d 573 (La. 2001) (per curiam).
In its reply, Gulf Coast appears to argue that DCS’s registration to do business and
2
appointment of an agent for process serve as contacts supporting specific jurisdiction. This
argument appears to conflate specific and general jurisdiction, as Gulf Coast’s claim is wholly
unrelated to DCS’s appointment of a registered agent and previous business in the state. See
Bristol-Myers Squibb Co. v. Superior Court of Cal., 137 S. Ct. 1773, 1781–82 (2017) (noting
that “unconnected activities” in a state does not justify specific jurisdiction over a claim
unrelated to that conduct).
7
Case: 17-30062 Document: 00514284227 Page: 8 Date Filed: 12/22/2017
No. 17-30062
To establish that a defendant has minimum contacts with a forum, a
plaintiff must “identify some act whereby it ‘purposely avail[ed] itself of the
privilege of conducting activities [there], thus invoking the benefits and
protections of its laws.’” Luv n’ care, 438 F.3d at 469–70 (alterations in
original) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Only “contacts
that the ‘defendant himself’ creates with the forum State” may serve as the
basis for specific jurisdiction. Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014)
(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). As we
have previously noted, “it is now well settled that an individual’s contract with
an out-of-state party alone [cannot] automatically establish sufficient
minimum contacts in the other party’s home forum.” Pervasive Software Inc.
v. Lexware GmbH & Co. KG, 688 F.3d 214, 222–23 (5th Cir. 2012) (alteration
in original) (quoting Burger King, 471 U.S. at 478). Instead, a court must
evaluate “prior negotiations and contemplated future consequences, along with
the terms of the contract and the parties’ actual course of dealing . . . in
determining whether the defendant purposefully established minimum
contacts within the forum.” Id. at 223 (quoting Burger King, 471 U.S. at 479).
A defendant who merely agrees to send payments to a state has not
purposefully availed itself of the privilege of conducting business within that
state or invoked the benefits and protections of that state’s laws. See
Hydrokinetics, Inc. v. Alaska Mech., Inc., 700 F.2d 1026, 1029 (5th Cir. 1983).
Further, it is well established that
the combination of mailing payments to the forum
state, engaging in communications related to the
execution and performance of the contract, and the
existence of a contract between the nonresident
defendant and a resident of the forum are insufficient
to establish the minimum contacts necessary to
support the exercise of specific personal jurisdiction
over the nonresident defendant.
8
Case: 17-30062 Document: 00514284227 Page: 9 Date Filed: 12/22/2017
No. 17-30062
Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 344 (5th Cir. 2004).
DCS’s contacts with Louisiana are insufficient to subject it to specific
jurisdiction in Louisiana. Only DCS’s contacts with Louisiana and Gulf Coast,
not Vinex’s, may be considered. See Walden, 134 S. Ct. at 1122. DCS’s mere
sending of payment to Louisiana does not constitute purposeful availment to
establish minimum contacts. See Hydrokinetics, 700 F.2d at 1029; see also
Stuart v. Spademan, 772 F.2d 1185, 1194 (5th Cir. 1985) (“The agreement to
mail payment checks into the forum state does not weigh heavily in the
calculus of contacts.”). Regardless, while the acknowledgment allowed DCS to
deliver payment to Louisiana, it did not require it. DCS was permitted by the
acknowledgment’s terms to deliver payment to Texas with no interaction with
Louisiana whatsoever. While DCS has paid invoices to Gulf Coast in Louisiana
over the course of DCS and Gulf Coast’s dealing, this dispute does not arise out
of those invoices. Gulf Coast points out that DCS’s contemplated future
consequence of the acknowledgment was to ensure Vinex received funding
from Gulf Coast, which was “a crucial part of [Vinex’s] funding for payroll.”
But that benefit relates to Texas, where Vinex appears to reside, or Colorado,
where the project was to be completed—not in Louisiana. See Hydrokinetics,
700 F.2d at 1029–30 (no personal jurisdiction in Texas where, although the
goods would be manufactured in Texas, they would be delivered to
Washington).
Gulf Coast attempts to analogize DCS’s acknowledgment to the guaranty
in Marathon Metallic Building Co. v. Mountain Empire Construction Co.,
which was determined to be sufficient to confer specific jurisdiction. 653 F.2d
921 (5th Cir. Unit A Aug. 1981) (per curiam). In Marathon, a Texas corporation
sued a Colorado resident in Texas after the obligations he had guaranteed went
unperformed. 653 F.2d at 922. Specifically, the Colorado resident and another
party had “executed an instrument by which they guaranteed, without
9
Case: 17-30062 Document: 00514284227 Page: 10 Date Filed: 12/22/2017
No. 17-30062
monetary limit and in broad terms, the payment of [the Colorado corporation]’s
obligations to [the Texas corporation].” Id. Gulf Coast argues the
acknowledgment agreement is effectively the same as this guaranty and, as
such, the acknowledgment similarly confers specific jurisdiction. However,
Marathon is distinguishable from the facts of this case in three key ways.
First, the defendants in Marathon sent the guaranty on their own accord
rather than in response to a request from the plaintiff, as was done here.
Second, the contemplated result of the advancement of the guaranty in
Marathon was to purchase and take title of merchandise in the forum state,
whereas the purpose of DCS’s acknowledgment was to generate funds for work
in a different state (Colorado) from the forum (Louisiana). Third, the
guarantors in Marathon actually agreed to be bound by specific terms rather
than merely acknowledging that an invoice owed to a third party was valid and
free of defenses, as here. Accordingly, Marathon does not support the existence
of minimum contacts for specific jurisdiction here.
Thus, Gulf Coast failed to meet its burden of demonstrating a prima facie
showing of DCS’s minimum contacts with Louisiana.
IV. Conclusion
For the foregoing reasons, we AFFIRM the judgment below.
10