Bean Sprouts LLC v. Lifecycle Const. Serv. LLC ( 2022 )

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2022 PA Super 28BEAN SPROUTS LLC : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
:
v. :
:
:
LIFECYCLE CONSTRUCTION : No. 1467 EDA 2021
SERVICES LLC :
Appeal from the Order Entered June 16, 2021
In the Court of Common Pleas of Monroe County
Civil Division at No(s): 001268-CV-2021
BEFORE: PANELLA, P.J., DUBOW, J., and McCAFFERY, J.
OPINION BY PANELLA, P.J.: FILED FEBRUARY 17, 2022
Bean Sprouts, LLC, appeals from the order granting the preliminary
objections filed by LifeCycle Construction Services, LLC, for lack of personal
jurisdiction and dismissing Bean Sprouts’ amended complaint without
prejudice. On appeal, Bean Sprouts contends LifeCycle is subject to specific
personal jurisdiction in Pennsylvania, and, therefore, the case should proceed
in Pennsylvania. We affirm.
Bean Sprouts, a construction and excavating company, has its principal
place of business in East Stroudsburg, Pennsylvania. LifeCycle, a federal prime
contractor engaging in construction projects on military installations
throughout the country, has its principal place of business in Fredericksburg,
Virginia.
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Beginning in 2017, LifeCycle and Bean Sprouts had a
contractor/subcontractor relationship for work on five different out-of-state
projects, including for the construction of a convention center at Fort Rucker,
Alabama, and a recreational vehicle park at Fort Irwin, California. Relevantly,
the parties’ contracts for the work at Fort Rucker and Fort Irwin included
provisions that any dispute would be subject to the laws of Virginia and
mediation in Virginia. Further, the contracts specified that any change orders
must be submitted in writing.
Nevertheless, the parties established a business practice whereby
LifeCycle would verbally issue change orders and Bean Sprouts would
complete the work and submit an informal invoice for payment. LifeCycle
made payments to Bean Sprouts, by check, mailed to Bean Sprouts’ office in
Pennsylvania. In August 2019, LifeCycle discontinued payment for verbal
change orders on the Fort Irwin and Fort Rucker contracts. Bean Sprouts
completed its work based upon LifeCycle’s representations regarding future
payment; however, LifeCycle failed to make further payments to Bean Sprouts
on those contracts. Pursuant to the terms of the contracts, the parties
engaged in mediation in Virginia but did not come to a resolution.
Subsequently, Bean Sprouts filed a complaint, and thereafter, an
amended complaint in Pennsylvania, alleging LifeCycle had breached the Fort
Rucker and Fort Irwin contracts by withholding money owed to Bean Sprouts
for work completed. Specifically, Bean Sprouts averred that LifeCycle owed
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approximately $180,000 under the Fort Rucker contract and $600,000 under
the Fort Irwin contract. LifeCycle filed preliminary objections, arguing that
LifeCycle did not have the requisite minimum contacts with Pennsylvania, and,
therefore, Bean Sprouts did not have personal jurisdiction over LifeCycle in
Pennsylvania.
LifeCycle attached to the preliminary objections an affidavit from its
CEO, Sean Haynes. In the affidavit, Haynes stated that LifeCycle does not
have physical office space and is not incorporated, organized, or registered to
do business in Pennsylvania; LifeCycle’s members, managers, and officers live
and work in Virginia; and LifeCycle does not target or solicit any residents of
Pennsylvania for any work. Haynes indicated that aside from general
nationwide subcontractor internet solicitation, LifeCycle does not engage in
any advertising targeted to Pennsylvania residents. Haynes emphasized that
LifeCycle sought subcontracting bids from numerous companies, including
Bean Sprouts. Haynes noted that the contracts were electronically signed by
Bean Sprouts and LifeCycle via DocuSign, and no employees travelled to
Pennsylvania to negotiate or execute the contracts. Haynes further stated that
no in-person meetings between the parties took place in Pennsylvania. Haynes
acknowledged LifeCycle had a prior contract for work at a government facility
in Carlisle, Pennsylvania in 2015; however, Bean Sprouts did not work on that
project.
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Bean Sprouts filed an answer to LifeCycle’s preliminary objections.
Attached to the answer was an affidavit from John Caruso, the manager of
Bean Sprouts. Caruso indicated that representatives from LifeCycle contacted
Bean Sprouts and requested that Bean Sprouts bid on the subject contracts.
Caruso stated that Bean Sprouts moved equipment and employees from
Pennsylvania to complete the contracted work at Fort Rucker and Fort Irwin.
Caruso further noted that Bean Sprouts communicated with LifeCycle from its
Pennsylvania offices but acknowledged that the parties only had in-person
meetings in Virginia, California, or Alabama. Caruso also stated that Bean
Sprouts’ three primary fact witnesses reside in Pennsylvania. Finally,
according to Caruso, LifeCycle has withheld payments to Bean Sprouts under
the Fort Rucker contract because it sought to protect itself from liability
incurred by Bean Sprouts’ Pennsylvania employees.
Ultimately, the trial court granted LifeCycle’s preliminary objections for
lack of personal jurisdiction and dismissed Bean Sprouts’ amended complaint
without prejudice. This appeal followed.
On appeal, Bean Sprouts raises the following questions for our review:
1. Did the trial court err in finding that no specific personal
jurisdiction existed when it det[e]rmined that LifeCycle lacked
the minimum contacts with Pennsylvania for specific personal
jurisdiction to attach?
2. Did the trial court err in finding that “fair play and substantial
justice” did not support Pennsylvania’s maintaining
jurisdiction?
Brief for Appellant at 5 (capitalization omitted).
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When reviewing an order sustaining preliminary objections, our
standard of review is de novo, and our scope of review is plenary. See Trexler
v. McDonald’s Corp., 118 A.3d 408, 412 (Pa. Super. 2015). Therefore, this
Court must determine whether the trial court erred as a matter of law. See
id. “Moreover, when deciding a motion to dismiss for lack of personal
jurisdiction the court must consider the evidence in the light most favorable
to the non-moving party.” Nutrition Mgmt. Servs. Co. v. Hinchcliff, 926
A.2d 531, 535 (Pa. Super. 2007) (citation omitted).
In its first claim, Bean Sprouts contends LifeCycle is subject to specific
personal jurisdiction in Pennsylvania. See Brief for Appellant at 14. Bean
Sprouts argues that LifeCycle’s lack of physical contacts with Pennsylvania is
not dispositive in determining whether it had minimum contacts in
Pennsylvania. See id. at 16, 25. Bean Sprouts asserts LifeCycle solicited, and
then selected, Bean Sprouts as its subcontractor for the subject contracts, and
engaged in continuous, systematic contacts with Pennsylvania over the course
of its long-term and ongoing contractual relationships with Bean Sprouts. See
id. at 18-20, 22-23; see also id. at 24 (noting that the contracts were not
formed in Virginia). Bean Sprouts highlights that it moved its equipment and
employees from Pennsylvania to the worksites; LifeCycle communicated with
Bean Sprouts in Pennsylvania regarding the contracts and work to be
completed; and LifeCycle paid Bean Sprouts by sending checks to its
Pennsylvania office. See id. at 18, 19, 23, 24. Bean Sprouts further points
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out that LifeCycle sought to protect itself from third-party liability, which
established that LifeCycle knew that it could become legally liable to Bean
Sprouts’ employees in Pennsylvania. See id. at 19-20. Bean Sprouts also
claims Pennsylvania has an interest in protecting businesses from nonpayment
for services. See id. at 23.
Pennsylvania’s authority to exercise personal jurisdiction over a non-
resident defendant is tested against our long-arm statute, see 42 Pa.C.S.A. §
5322, and the Due Process Clause of the United States Constitution. See
Hammons v. Ethicon, Inc., 240 A.3d 537, 554 (Pa. 2020). Under
Pennsylvania’s long-arm statute, courts are permitted to exercise personal
jurisdiction over a non-resident defendant “to the fullest extent allowed under
the Constitution of the United States and may be based on the most minimum
contact with this Commonwealth allowed under the Constitution of the United
States.” 42 Pa.C.S.A. § 5322(b).
In assessing personal jurisdiction over out-of-state corporate
defendants, courts have recognized a distinction between “general” or “all-
purpose” jurisdiction and “specific” or “case-related jurisdiction.” Hammons,
240 A.3d at 555. Here, Bean Sprouts raises issues based only on specific
jurisdiction. See Brief for Appellant at 14. Three requirements must be met
for a forum to exercise specific jurisdiction over an out-of-state defendant:
(1) Did the plaintiff’s cause of action arise out of or relate to the
out-of-state defendant’s forum-related contacts?
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(2) Did the defendant purposely direct its activities, particularly
as they relate to the plaintiff’s cause of action, toward the
forum state or did the defendant purposely avail itself of the
privilege of conducting activities therein?
(3) [W]ould the exercise of personal jurisdiction over the
nonresident defendant in the forum state satisfy the
requirement that it be reasonable and fair?
Hammons, 240 A.3d at 555 (citation omitted).
As LifeCycle objected to the court’s exercise of personal jurisdiction,
Bean Sprouts bore the burden of establishing the first two requirements of
specific jurisdiction. See id. at 561. If Bean Sprouts met its burden, LifeCycle
bore the burden of negating the third requirement. See id.
The trial court concluded Bean Sprouts had failed to establish the first
two requirements. Further, the court determined that even if Bean Sprouts
had established those requirements, LifeCycle had sustained its burden of
proving that jurisdiction in Pennsylvania would be neither reasonable nor fair.
Several considerations impact our review of all three of these
requirements. First, we must focus on LifeCycle’s connection with
Pennsylvania, and not merely LifeCycle’s association with Bean Sprouts. See
Walden v. Fiore, 571 U.S. 277, 286 (2014). Bean Sprouts cannot be the
only link between LifeCycle and Pennsylvania. See id. at 285. Instead, we
must focus on whether LifeCycle’s actions are sufficient to establish that it
intentionally relied on the machinery of Pennsylvania justice in some fashion.
See id. Finally, we must remain cognizant of the conduct that forms the basis
of Bean Sprouts’ claim: LifeCycle’s failure to pay for work done in Alabama
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and California. See id. at 289; Bristol-Myers Squibb Co. v. Superior Ct.
of Cal, San Francisco County, 137 S.Ct. 1773, 1780 (2017) (“specific
jurisdiction is confined to adjudication of issues deriving from, or connected
with, the very controversy that establishes jurisdiction”) (citation omitted).
On appeal, Bean Sprouts argues the trial court erred. Bean Sprouts
highlights several circumstances that it believes establish jurisdiction over
LifeCycle: (1) LifeCycle maintained a longstanding business relationship
through numerous contracts with Bean Sprouts, a Pennsylvania based
company; (2) LifeCycle solicited bids from Bean Sprouts in Pennsylvania for
the subcontracting work; (3) LifeCycle sent communications to Bean Sprouts
in Pennsylvania; (4) LifeCycle’s attempt to avoid third-party liability; (5)
LifeCycle sent payments under the contracts to Pennsylvania; (6) Bean
Sprouts moved equipment and employees from Pennsylvania to the worksites;
and (7) LifeCycle injured Bean Sprouts in Pennsylvania.
We begin by noting that these circumstances at most establish
LifeCycle’s relationship with Bean Sprouts, not the state of Pennsylvania. And
other than LifeCycle sending a request for a bid to Bean Sprouts’ Pennsylvania
address and communicating about the contracts while Bean Sprouts was in
Pennsylvania, none of them represent a purposeful contact with the state.
Even then, the request for a bid represents perhaps the slightest possible
contact; it was not a legally binding offer, but merely a narrow advertisement
directed solely at Bean Sprouts. Likewise, the fact that LifeCycle corresponded
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with Bean Sprouts, whose offices were in Pennsylvania, does not by itself
constitute purposeful availment of Pennsylvania as a forum. See Hinchcliff,
926 A.2d at 538.
Further, the fact that Bean Sprouts allegedly suffered its injury in this
matter in Pennsylvania, while not totally irrelevant, nonetheless does not
persuade us that the trial court erred. Bean Sprouts’ injury is only relevant so
far as it can establish that LifeCycle’s actions connected it to Pennsylvania.
Here, the only connection is that LifeCycle allegedly mailed payment to Bean
Sprouts’ Pennsylvania address. The trial court was permitted to devalue this
factor, as these circumstances do not clearly establish that LifeCycle was
purposefully availing itself of Pennsylvania as a forum.
Bean Sprouts relies heavily on two precedents issued by this Court:
Aventis Pasteur, Inc. v. Alden Surgical Co., 848 A.2d 996 (Pa Super.
2004) (concluding that a New York company, which had no office or employees
in Pennsylvania and placed 16 purchase orders valued at nearly $1 million
over a two-month period from a Pennsylvania business, was subject to specific
personal jurisdiction in Pennsylvania based upon its purposeful and voluntary
contacts with the forum), and GMAC v. Keller, 737 A.2d 279, 282 (Pa. Super.
1999) (finding specific jurisdiction over defendant, who lived in Florida, but
purchased a vehicle in Pennsylvania, because he availed himself of the
jurisdiction by submitting his application for credit to a Harrisburg business,
sought financing for automobile purchases from Pennsylvania companies on
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two prior occasions, and submitted his payments on the present contract to a
Pennsylvania address). We note that it is unclear whether these precedents
survive Walden intact. However, we need not reach that issue, as both GMAC
and Aventis are distinguishable. Both cases involved out-of-state defendants
who intentionally sought out Pennsylvania corporations to do business, and
the work encompassed within those contracts was performed in Pennsylvania.
Here, LifeCycle merely advertised to Bean Sprouts, who then submitted an
offer to LifeCycle. More importantly, while some incidental labor under the
contracts may have occurred in Pennsylvania, the crux of the contractual
duties occurred in other jurisdictions. Further, the only in-person meetings
about the contracts between the parties occurred outside Pennsylvania. As
such, neither GMAC nor Aventis requires that we reverse the trial court here.
Under the circumstances, the trial court was within its discretion to find
that LifeCycle’s contacts with Pennsylvania pursuant to the contracts were
based on where Bean Sprouts chose to locate its office, not because LifeCycle
sought to further its business in Pennsylvania or create continuous and
substantial consequences in Pennsylvania. See Moyer, 979 A.2d at 349; see
also Walden, 571 U.S. at 285-86.1 Finally, we observe that LifeCycle’s
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1 Moreover, while the choice of law provision in the contracts for Virginia is
not dispositive in determining jurisdiction, see Burger King, 471 U.S. at 482
(stating that a choice of law provision, though alone insufficient to establish
jurisdiction, can “reinforce [a] deliberate affiliation with the forum State and
the reasonable foreseeability of possible litigation there.”), the provision raises
(Footnote Continued Next Page)
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alleged attempt to avoid third-party liability under Pennsylvania law does not,
on its own, establish that LifeCycle purposefully availed itself of Pennsylvania’s
legal machinery. While this alleged attempt would not necessarily negate
other conduct that established purposeful availment, it is logically the opposite
of conduct intended to foster a relationship with Pennsylvania as a forum.
Relating to the second Hammons factor, Bean Sprouts makes much of
the fact that LifeCycle previously worked in Pennsylvania. However, Bean
Sprouts was not involved in the project and did not present any evidence
about the circumstances of that contract. There is no evidence of how that
contract was performed, or even what it involved. In any event, that contract
is wholly irrelevant to the conduct at issue here – whether LifeCycle breached
its contract with Bean Sprouts. We cannot conclude the trial court erred in
determining this prior contract did not establish a connection between
LifeCycle and the state of Pennsylvania.
Accordingly, we conclude that, despite the parties’ long-term
relationship, the trial court did not err or abuse its discretion in finding that
Bean Sprouts failed to establish, under the totality of the circumstances,
LifeCycle has sufficient minimum contacts with Pennsylvania to justify the
exercise of personal jurisdiction. Because we discern no error in these findings,
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questions regarding the foreseeability that LifeCycle could be haled into court
in Pennsylvania.
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we need not address whether the trial court erred in concluding that specific
jurisdiction would not be fair and reasonable under the circumstances here.2
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/17/2022
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2 Nevertheless, even if we addressed this claim, we would find no error in the
trial court’s conclusion that the exercise of personal jurisdiction over LifeCycle
in Pennsylvania is not reasonable and fair. In this regard, we agree with the
trial court’s analysis, which found that the interstate judicial system’s interest
in obtaining the most efficient resolution to the controversies would be better
served if this case was held in Virginia. See Trial Court Opinion, 6/16/21, at
8-9. The trial court noted that Virginia is where most of LifeCycle’s witnesses
are located, LifeCycle’s business and assets are located, mediation has already
been held, and the laws of Virginia apply. See id.
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