Intercontinental Services of Delaware, LLC v. Kent.

FIFTH DIVISION
MCFADDEN, P. J.,
BRANCH and BETHEL, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
October 30, 2017
In the Court of Appeals of Georgia
A17A0917. INTERCONTINENTAL SERVICES OF DELAWARE,
LLC v. KENT.
BETHEL, Judge.
Intercontinental Services of Delaware, LLC (“Intercontinental”) brings this
interlocutory appeal from a trial court order denying its motion to dismiss for lack of
personal jurisdiction. Intercontinental argues that the trial court erred when it
determined that Georgia courts could exercise personal jurisdiction over it pursuant
to OCGA § 9-10-91 (1) and (3). Specifically, Intercontinental argues that the court
erred when it determined that Intercontinental, through its ongoing business activities
and its allegedly tortious acts giving rise to this suit, had transacted business in
Georgia and that it had committed a tortious injury in Georgia while regularly
soliciting business in Georgia, engaging in a persistent course of conduct in Georgia,
and deriving substantial revenue from services provided in Georgia. Because we
agree that Georgia courts cannot exercise personal jurisdiction over Intercontinental
pursuant to either provision of the Georgia long-arm statute, we reverse.
A defendant moving to dismiss for lack of personal
jurisdiction bears the burden of proving the absence of
jurisdiction. To meet that burden, the defendant may raise
matters not contained in the pleadings. However, when the
outcome of the motion depends on unstipulated facts, it
must be accompanied by supporting affidavits or citations
to evidentiary material in the record. Further, to the extent
that defendant’s evidence controverts the allegations of the
complaint, plaintiff may not rely on mere allegations, but
must also submit supporting affidavits or documentary
evidence. When examining and deciding jurisdictional
issues on a motion to dismiss, a trial court has discretion to
hear oral testimony or to decide the motion on the basis of
affidavits and documentary evidence alone pursuant to
OCGA § 9-11-43(b). If the trial court conducts an
evidentiary hearing, it may resolve disputed factual issues,
and we will show deference to those findings. On the other
hand, where, as here, a motion is resolved based solely
upon written submissions,1 the reviewing court is in an
1
In this case, the court permitted the parties to engage in limited discovery on
the jurisdictional issue. That discovery included a deposition given by an executive
from Intercontinental, who also provided an affidavit regarding Intercontinental’s
2
equal position with the trial court to determine the facts
and therefore examines the facts under a non-deferential
standard, and we resolve all disputed issues of fact in favor
of the party asserting the existence of personal jurisdiction.
Hyperdynamics Corp., v. Southridge Capital Mgmt., LLC, 305 Ga. App. 283, 283-84
(I) (699 SE2d 456) (2010) (citations, footnote, and punctuation omitted).
The underlying lawsuit was brought by Leanne Kent. The record before us
(including the allegations stated in her complaint) shows that her husband, Cleston
Kent, was working for a company that had been hired to unload a shipment of borax
from a railcar that had stopped in Sandersville, Georgia. The borax on board the train
had been sold by Etimine U.S.A., Inc. (“Etimine”), a company that had contracted
with Norfolk Southern Railway Company (“Norfolk Southern”) to ship the borax to
Georgia from Delaware. The railcar, which was owned by Norfolk Southern, was
loaded by Intercontinental at a warehouse in Delaware. After the borax was loaded
onto the railcar, Norfolk Southern transported the railcar to Sandersville, Georgia. In
Sandersville, while the railcar was still partially loaded with borax, it derailed and
overturned, pinning Cleston Kent underneath. Cleston Kent was killed as a result.
business activities. The trial court did not conduct an evidentiary hearing on this
matter.
3
Leanne Kent filed a wrongful death action against Intercontinental and several
other parties. Intercontinental answered the complaint, and moved to dismiss the
claims against it, arguing that there was no basis for Georgia courts to exercise
personal jurisdiction over it. Intercontinental specifically argued that personal
jurisdiction in Georgia was improper because (1) it is a Delaware business that does
not own any property or have offices in Georgia, (2) its business operations take place
entirely in facilities located in Wilmington, Delaware, and (3) it neither owned or
transported the borax that was in the railcar.
The parties engaged in limited discovery in regard to Intercontinental’s
business activities and the scope of its operations. Testimony and other evidence
brought forward in discovery reflects that Intercontinental is a Delaware limited
liability company and that its place of business is in two facilities at and adjacent to
the Port of Wilmington in Delaware. It has no property or employees in Georgia, it
is not registered to do business in Georgia, and it does not have an agent for service
of process in Georgia. Intercontinental’s business consists entirely of unloading cargo
from ships that arrive in the Port of Wilmington, storing the cargo in facilities close
to the port, and, at the direction of Intercontinental’s customers, loading the cargo
onto outbound forms of transportation, including trucks and railcars owned by its
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customer or third parties. It neither manufactures nor sells any goods, nor does it own
trucks or transport any products to any location outside the immediate vicinity of the
Port of Wilmington. Throughout the provision of its services, Intercontinental never
takes title to any of the cargo in its possession, nor does it arrange or pay for
shipments of any products. All shipments are arranged and paid for by
Intercontinental’s customers. The entire process of unloading the cargo from a ship,
storing it on-site, and reloading it onto outbound transportation takes place entirely
at the Port of Wilmington in Delaware or at a storage facility located approximately
one-half mile away.
The record also shows that Intercontinental does not provide its services in any
other physical location. Specifically, the record shows that it provides no services
from any location in Georgia. Although Intercontinental provides its loading and
storage services to one customer headquartered in Georgia, it does so exclusively
from its headquarters at the Port of Wilmington. With regard to its customer in
Georgia, Intercontinental’s work on behalf of that customer consisted of handling,
storing, and loading cargo onto trains at the Port of Wilmington that were destined
for locations in the northeast United States.
5
Intercontinental advertises its services through an online website. However, the
website does not permit a potential customer to place an order through it.
Intercontinental does not maintain sales agents or make any active solicitations of
customers in Georgia whether by placing advertisements, making calls, sending
emails, or otherwise. A representative of Intercontinental stated that it typically
obtains new customers by word of mouth.
With regard to the specific cargo and shipment at issue in this case, the record
shows that, pursuant to a contract with Etimine, Intercontinental unloaded a shipment
of borax owned by Etimine after it arrived in the Port of Wilmington. That borax was
moved to a storage location adjacent to the port, and periodically, Etimine directed
Intercontinental to load some portion of that borax for shipment.
For the specific shipment involved in this case, Etimine contracted with
Norfolk Southern to pick up a load of the borax from Intercontinental.
Intercontinental generated the bill of lading for the load through Norfolk Southern’s
website as part of its services to Etimine. That bill of lading listed Intercontinental as
the “shipper.” However, a second bill of lading, referred to as a “straight bill of
lading,” listed Etimine as the “shipper.” A representative of Intercontinental stated
that the first bill of lading identified Intercontinental as the shipper because the
6
shipment was set to originate from Intercontinental’s facility. The bills of lading
completed by Intercontinental listed Georgia as the ultimate destination for the cargo.
Following a motion hearing, the trial court determined that Georgia courts
could exercise personal jurisdiction over Intercontinental pursuant to the Georgia
long-arm statute. The trial court specifically found that personal jurisdiction over
Intercontinental was proper because it found that Intercontinental had transacted
business in Georgia by loading the railcars in Delaware and that it regularly does or
solicits business or engages in other persistent conduct in Georgia, due to its history
of loading railcars destined for Georgia, soliciting business through its website, and
its business relationship with a client headquartered in Georgia. Following this order,
the trial court filed a certificate of immediate review, and this Court granted
Intercontinental’s application for interlocutory appeal. This appeal followed.
1. Intercontinental first argues that the trial court erred when it determined that
personal jurisdiction over it was proper under OCGA § 9-10-91 (1) . We agree.
OCGA § 9-10-91 (1) provides that
[a] court of this state may exercise personal jurisdiction over any
nonresident . . . as to a cause of action arising from any of the acts,
omissions, ownership, use, or possession enumerated in this Code
section, in the same manner as if he or she were a resident of this state,
7
if in person or through an agent, he or she . . . [t]ransacts any business
within this state[.]
Prior decisions of this Court and the Georgia Supreme Court have given broad reach
to this provision, holding that it extends the jurisdiction of Georgia courts to “the
maximum limits permitted by due process.” Vibratech, Inc. v. Frost, 291 Ga. App.
133, 135 (1) (a) (661 SE2d 185) (2008) (citing Innovative Clinical & Consulting
Svcs. v. First Nat. Bank of Ames, 279 Ga. 672, 675 (620 SE2d 352 (2005)). However,
such limits do exist, and this Court is compelled to recognize and enforce them. As
the Supreme Court discussed in Innovative Clinical, because a literal reading of
OCGA § 9-10-91 (1) would grant Georgia courts “the unlimited authority to exercise
personal jurisdiction over any non-resident who transacts any business in this State,”
such a limitless reading would “expand the personal jurisdiction of Georgia courts
beyond that permitted by constitutional due process[.]” Innovative Clinical, 279 Ga.
at 675.
Accordingly, when determining the limits of procedural due process, we apply
the following three-part test:
Jurisdiction exists on the basis of transacting business in this State if (1)
the nonresident defendant has purposefully done some act or
consummated some transaction in this State, (2) if the cause of action
8
arises from or is connected with such act or transaction, and (3) if the
exercise of jurisdiction by the courts of this State does not offend
traditional notions of fairness and substantial justice.
Sullivan v. Bunnell, 340 Ga. App. 283, 286 (797 SE2d 499) (2017) (footnote
omitted). As this Court recently explained in Sullivan, the first two prongs of this test
are analyzed to determine whether “a defendant has established the minimum contacts
with the forum state necessary for the exercise of jurisdiction.” Id. (footnote omitted).
If such minimum contacts exist, we then consider the third prong to consider whether
“the exercise of jurisdiction is reasonable—that is, to ensure that it does not result
solely from random, fortuitous or attenuated contacts.” Id. (footnote and punctuation
omitted).
In this case, we disagree with the trial court’s characterization of
Intercontinental’s business activities. In its order denying Intercontinental’s motion
to dismiss, the trial court concluded that “[Intercontinental] performed the purposeful
act of sending a chemical product into the stream of commerce with express
knowledge that the product would end up in Georgia to be sold or used there.” While
Intercontinental was indisputably involved in the process by which Etimine’s product
9
made its way to Georgia, we do not agree that it was Intercontinental that placed that
product into the stream of interstate commerce.
We note that this body of law continues to evolve in light of the growth of the
service sector in the United States and the advent of advanced communication and
information technologies. However, for purposes of personal jurisdiction analysis,
this Court’s prior decisions have drawn a critical distinction between manufacturers
and sellers of a physical product and persons or entities that provide a site-specific
service, even if such service involves or relates to products that will travel to Georgia.
For instance, in McDonnell v. Roy E. Beatty & Assoc., Inc.,2 this Court upheld
the trial court’s dismissal of a wrongful death complaint for lack of personal
jurisdiction where the decedents were killed when an airplane crashed soon after
takeoff from an airport in Georgia. The plaintiffs brought suit against a Florida
corporation who owned the plane and leased it to another Florida corporation that was
owned and operated by the decedents. Id. at 808 (1). Under the terms of the lease, the
defendant was required to provide service and maintenance for the plane. Id. at 809
(1). The defendant’s only place of business was in Florida, and it never operated in
Georgia. Id. at 808 (1). Although the record made clear that the defendant in
2
203 Ga. App. 807, 807-11 (1) (418 SE2d 95) (1992).
10
McDonnell knew the plane would go to Georgia and be used in Georgia, this Court
nonetheless found that the exercise of personal jurisdiction over the defendant would
be improper. Id. at 809-10 (1).
In so doing, this Court emphasized that the defendant in McDonnell “conducted
no business and engaged in no activity in Georgia” that could justify the exercise of
jurisdiction. Id. at 808.3 The Court also expressly contrasted McDonnell with other
cases in which the defendant introduced or carried a product into the stream of
commerce and therefore availed itself of the market for its product in Georgia. Id. at
810-11 (comparing facts in McDonnell to those in Showa Denko K.K. v. Pangle, 202
Ga. App. 245 (414 SE2d 658) (1991) and Value Engineering Co. v. Gisell, 140 Ga.
App. 44 (230 SE2d 29) (1976)). This aligned with other decisions of this Court which
have emphasized that mere knowledge on the part of the defendant that certain items
or materials will find their way to Georgia is an insufficient basis for exercising
personal jurisdiction over that defendant. See Sky Shots Aerial Photography, Inc. v.
Franks, 250 Ga. App. 411, 412 (551 SE2d 805) (2001).
3
See also Gee v. Reingold, 259 Ga. App. 894, 896 (1) (578 SE2d 575) (2003)
(no personal jurisdiction over defendant who performed legal services for plaintiff in
Tennessee on non-Georgia matters).
11
In this case, the record established that Intercontinental provides no services
in Georgia or, in fact, anywhere outside the Port of Wilmington and its immediate
vicinity in Delaware. Intercontinental neither manufactures nor sells any product, and
its services are provided by personnel located exclusively in Delaware. It never takes
title to any of the products it handles, and it provides its services at the direction of
its customers. Even though Intercontinental completes a variety of ministerial tasks,
including filling out bills of lading for shipments it loads on behalf of customers,
Intercontinental does not arrange or pay for such shipments–that is entirely the
responsibility of Intercontinental’s customers. In the course of providing its services,
Intercontinental does not contract with third-party transportation companies or with
any end-user of its customer’s products. Although shipments loaded by
Intercontinental make their way to Georgia, these activities by Intercontinental cannot
be reasonably characterized as creating purposeful contact with Georgia.
Intercontinental’s more general contacts with Georgia and residents thereof are
also limited. The record established that Intercontinental has one customer that is
headquartered in Georgia. However, in keeping with its regular practice, its services
for that customer are limited to unloading, storage, and reloading services at the Port
of Wilmington. McDonnell suggests that this minimal connection with Georgia is not
12
a purposeful act that would allow Georgia courts to exercise personal jurisdiction
over Intercontinental.
The record also established that Intercontinental maintains a website on which
it advertises its services. However, its website is not “interactive,” in that it does not
permit a potential customer to place an order with Intercontinental directly through
the website. As this Court noted in American College Connection, Inc. v. Berkowitz,4
“[a] passive Web site that does little more than make information available to those
who are interested in it is not grounds for the exercise of personal jurisdiction.” This
is in contrast with “situations where a defendant clearly does business over the
Internet . . . enters into contracts with residents of a foreign jurisdiction that involve
the knowing and repeated transmission of computer files over the Internet” or
operates “interactive Web sites where a user can exchange information with the host
computer.” Id. at 871-72.
There was also no evidence in the record that Intercontinental advertises
directly in Georgia, that it maintains any sales force or agency in Georgia, or that it
places sales calls or sends marketing messages by the postal service or through email
to potential customers in Georgia. Cf. Lima Delta Co. v. Global Aerospace, Inc., 325
4
332 Ga. App. 867, 871 (775 SE2d 226) (2015) (footnote omitted).
13
Ga. App. 76, 80-82 (1) (752 SE2d 135) (2013) (“Georgia now allows the assertion of
long-arm jurisdiction over nonresident defendants, based on business conducted by
the defendant or its agent through postal, telephonic, and Internet contacts.”); ATCO
Sign & Lighting Co., LLC v. Stamm Mfg., Inc., 298 Ga. App. 528, 535 (1) (680 SE2d
571) (2009) (personal jurisdiction proper where defendant “intentionally sought
business in [Georgia] and placed . . . its agent” in a position to deal with the potential
Georgia customer).
With regard to the specific occurrence giving rise to this suit, Intercontinental’s
only relevant agreement was with Etimine, and that agreement was limited to the
services it provided for Etimine in regard to the borax that arrived at the Port of
Wilmington. The record does not reflect any relevant agreement between
Intercontinental and Norfolk Southern or any other carrier or with the company in
Georgia that purchased the borax from Etimine.
On these facts, we cannot say that Intercontinental transacted any business in
Georgia by conducting the activities described above. Moreover, we cannot say that
Intercontinental has availed itself of the privilege of doing business in Georgia
through the general conduct of its operations and its marketing activities. Such
activities have not created the substantial connection with Georgia that is required
14
before the exercise of personal jurisdiction by Georgia courts is proper. See Asahi
Metal Indus. Co., Ltd. v. Superior Court of Cal., 480 U.S. 102, 109 (II) (A) (107 SCt.
1026, 94 LE2d 92) (1987). Therefore, because Georgia courts cannot exercise
personal jurisdiction over Intercontinental under OCGA § 9-10-91 (1), we agree with
Intercontinental that the trial court erred.
2. Intercontinental also argues that the trial court erred when it determined that
personal jurisdiction over it was proper under OCGA § 9-10-91 (3). We agree.
OCGA § 9-10-91 (3) provides that
[a] court of this state may exercise personal jurisdiction over any
nonresident . . . as to a cause of action arising from any of the acts,
omissions, ownership, use, or possession enumerated in this Code
section, in the same manner as if he or she were a resident of this state,
if in person or through an agent, he or she . . . [c]ommits a tortious injury
in this state caused by an act or omission outside this state if the
tort-feasor 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 state[.]
As we noted in Division 1, supra, with regard to the trial court’s analysis under
OCGA § 9-10-91 (1), the trial court mischaracterized the nature of Intercontinental’s
business. As a result, the cases it cites are inapposite to the issues before us.
15
Relying heavily on this Court’s decision in University of Iowa Press v. Urrea,5
the trial court concluded that Intercontinental had done business and maintained a
persistent course of conduct in Georgia because it placed products into the stream of
commerce. In Urrea, the defendant, a publisher, sold copies of a book written by the
plaintiff to customers in Georgia. Id. at 565. It also “sold other works published by
it to bookstores in Georgia.” Id. at 565 (1). This Court found that those activities
subjected the defendant to personal jurisdiction in Georgia. Id.
Urrea is clearly distinguishable from this case because Intercontinental does
not sell physical products. Moreover, the product at issue in this case, the shipment
of borax, was sold through a contract between Etimine and its
customer–Intercontinental had no relationship with Etimine’s Georgia customer.
Additionally, even though the record indicates that Intercontinental maintains
a customer relationship with a company headquartered in Georgia, that alone is not
enough to establish that it maintains a “persistent course of conduct” in Georgia. See
Gee, 259 Ga. App. at 897 (2) (b). Its services for that customer, like those it
performed for Etimine, take place entirely in Delaware. There is no evidence in the
record that Intercontinental has ever provided services of any kind to that customer
5
211 Ga. App. 564, 565 (1) (440 SE2d 203) (1993).
16
(or any other customer) from a location within Georgia. See McDonnell, 203 Ga. App.
at 807-11 (1).
Moreover, Intercontinental is a Delaware limited liability company, and it is
not registered to do business in Georgia. It maintains no property or employees in
Georgia. Thus, even though the record establishes that it has derived revenue from
the relationship with its Georgia customer, because that revenue is not the fruit of
services performed in Georgia, that alone cannot satisfy the requirements of OCGA
§ 9-10-91 (3). McDonnell, 203 Ga. App. at 810 (1). Additionally, because of the
passive nature of Intercontinental’s website and the absence of other marketing
activities directed at Georgia, the record does not support the trial court’s finding that
Intercontinental regularly solicits business in Georgia. Cf. Barton Southern Co., Inc.
v. Manhole Barrier Systems, Inc., 318 FSupp2d 1174, 1177-78 (1) (N.D. Ga. 2004)
with Aero Toy Store, LLC v. Grieves, 279 Ga. App. 515, 517-24 (1) (631 SE2d 734)
(2006).
Therefore, because there is no basis for the exercise of personal jurisdiction
over Intercontinental under OCGA § 9-10-91 (3), we agree with Intercontinental that
the trial court erred. As Georgia courts cannot exercise personal jurisdiction over
Intercontinental under either subsection (1) or (3) of OCGA § 9-10-91, we reverse the
17
order of the trial court denying Intercontinental’s motion to dismiss for lack of
personal jurisdiction.
Judgment reversed. McFadden, P. J., and Branch, J., concur.
18