GEORGE Z. SINGAL, District Judge.
Before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint (Docket # 7). As explained herein, the Court GRANTS the Motion.
Defendant seeks dismissal of this case pursuant to Fed.R.Civ.P. 12(b)(2), (3), and (6). A motion to dismiss under Rule 12(b)(2) seeks dismissal based on lack of personal jurisdiction. The personal jurisdiction of a federal court sitting in diversity is equivalent to that of a state court sitting within the forum. Tice v. Taiwan Shin Yeh Enterprise Co., Ltd., 608 F.Supp.2d 119, 121 (D.Me.2009) (citing Nowak v. Tak How Invs., Ltd., 94 F.3d 708, 712 (1st Cir.1996)). Thus, to establish personal jurisdiction over a defendant, the plaintiff must demonstrate both that Maine's long-arm statute grants jurisdiction and that exercise of jurisdiction under the statute is consistent with the Due Process Clause of the United States Constitution. Id. (citing Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 52 (1st Cir.2002)). Because Maine's long-arm statute is coextensive with the permissible exercise of personal jurisdiction under the Constitution, the due process inquiry controls the instant case. See 14 M.R.S.A. § 704-A; Murphy v. Keenan, 667 A.2d 591, 593 (Me.1995).
Plaintiff has the burden to persuade the Court that it has personal jurisdiction over Defendant. See Mass. Sch. of Law v. Am. Bar Ass'n, 142 F.3d 26, 34 (1st Cir.1998). To assess whether Plaintiff has met its burden, the Court applies the prima facie standard, and accepts Plaintiff's proffered facts construing them in the light most favorable to Plaintiff. See id. Additionally, the Court considers any uncontradicted
The filing of a Rule 12(b)(3) motion likewise places the burden on the plaintiff to demonstrate the propriety of venue. See McGinley v. Wahoo Funding, Inc., 2007 WL 1810712, at *1 (D.Me. June 21, 2007) (citing 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1352 at 321-22 (3d ed. 2004)). The procedural analysis applied in determining a challenge of venue follows the procedure for analysis employed in a motion under Rule 12(b)(2).
Finally, a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6)
Of course, the Court must accept as true all well-pleaded factual allegations in a complaint and draw all reasonable inferences in a plaintiff's favor. See id. at 1949-50; Rivera v. Centro Médico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir.2009). In distinguishing sufficient from insufficient pleadings, "a context-specific task," the Court must "draw on its judicial experience and common sense." Ashcroft, 129 S.Ct. at 1950.
Defendant Matrix Construction Company ("Matrix" or "Defendant") is a South Carolina corporation with a principal place of business in Anderson, South Carolina. Matrix has never had an office in Maine, has never bid on a construction project in Maine, has never worked on a construction project in Maine, and has never purchased construction supplies from suppliers located in Maine.
In 2010, Matrix was retained as the general contractor for construction projects at three schools in South Carolina. In accordance with its role as general contractor, Matrix solicited bids from subcontractors and building materials suppliers. Matrix accepted a bid from Contract Supply LLC ("Contract Supply") to provide wood doors and hollow metal frames for the projects. Contract Supply is a South Carolina company with a principal place of business in Mauldin, South Carolina. After
Shortly thereafter, on May 24, 2010, Matrix received a fax from BlueTarp Financial, Inc. ("BlueTarp" or "Plaintiff") thanking Matrix for applying for credit with BlueTarp but informing Matrix that its application could not be processed because Matrix had failed to fill out the "Requested Credit Line" and had failed to have the application signed by a corporate officer. On June 2, 2010, Matrix faxed an updated application to BlueTarp in Portland, Maine. The updated application had been signed by Matrix President H.M. King, Jr. in South Carolina and listed $5,000 in the "Requested Credit Line."
Matrix submitted three purchase orders to Contract Supply dated June 11, 2010, January 14, 2011, and May 5, 2011, respectively. (See Docket # 7-19, PageID 133-35.) These purchase orders totaled more than $167,000. Contract Supply invoiced Matrix directly for the purchase orders Matrix placed with Contract Supply. These invoices spanned from September 2010 to May 2011. (See Docket # 7-20, PageID 136-61.) From September 2010 to March 2011, Matrix paid Contract Supply directly by check.
In June 2011, Matrix learned that Contract Supply had not paid its suppliers for the materials purchased by Matrix. Soon thereafter, Matrix suspended payments to Contract Supply. On June 15, BlueTarp collections manager Theresa Gouzie sent Matrix office manager Cyndi Durham an email demanding payment of $118,201.50 for "purchases outstanding against your BlueTarp Account." (See Docket # 7-24, PageID 211.) On August 31, 2011, Matrix received a letter from Contract Supply demanding payment for building materials orders.
Matrix contends that it never placed purchase orders with Contract Supply through BlueTarp, never made any payments to BlueTarp for the building materials Matrix purchased from Contract Supply, nor communicated with BlueTarp concerning the purchase orders. Matrix asserts that it made all of its purchase orders from Contract Supply directly and that it paid Contract Supply directly by check. Meanwhile, BlueTarp asserts that between July 1, 2010 and May 11, 2011, it approved $169,217.58 in charges made on Matrix's BlueTarp credit account at Contract Supply.
On July 28, 2011, BlueTarp filed the present action in this Court seeking to recover those amounts under the terms of the credit line that had been established for Matrix. On August 11, 2011, Matrix filed a suit against BlueTarp, Contract Supply and one other defendant in state court in South Carolina.
At this early stage of this case, the parties appear to agree that they have a dispute requiring judicial intervention. They disagree on the proper forum. Plaintiff's filing of the pending complaint evinces a clear desire to have their dispute heard by this Court. However, the pending Motion to Dismiss asserts that this Court lacks personal jurisdiction over Defendant under both the forum selection clause and under recognized limits of personal jurisdiction. In Defendant's view, this case is "a dispute between a Delaware corporation (BlueTarp) and a South Carolina corporation (Matrix) over a contract executed in South Carolina for the purchase of supplies from another South Carolina company (Contract Supply) for construction projects in South Carolina allegedly to be paid in Georgia" and cannot be heard by a federal court sitting in Maine. (Def. Reply (Docket # 13) at 6.)
The credit agreement that serves as the source of the parties' relationship and dispute contains the following language:
(Agreement (Docket # 1-1) at PageID 5.)
Defendant asserts that this forum selection clause in the parties' contract is nothing more than a consent to personal jurisdiction in Maine's state courts and, therefore, that the forum selection clause prohibits this federal Court from exercising
It is well-settled that contractual forum selection clauses are prima facie valid.
The key question in interpreting the forum selection clause is whether the clause is permissive or mandatory. "Permissive forum selection clauses, often described as consent to jurisdiction' clauses, authorize jurisdiction and venue in a designated forum, but do not prohibit litigation elsewhere." Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 17 (1st Cir.2009) (quoting 14D Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 3803.1 (3d ed. 1998)). "In contrast, mandatory forum selection clauses contain clear language indicating that jurisdiction and venue are appropriate exclusively in the designated forum." Id. Defendant argues that the forum selection clause is mandatory — that it was intended to affirmatively confer jurisdiction upon Maine's state courts and limit the jurisdiction of the federal district court in Maine. Plaintiff, on the other hand, does not argue that the forum selection clause is permissive in the classic sense; rather, Plaintiff makes the novel argument that regardless of whether Defendant has established sufficient minimum contacts in Maine, by consenting to suit in Maine state court Defendant consented to suit in federal district court in Maine. Both arguments miss the mark.
The First Circuit instructs that "there is no general rule" for interpreting whether
In contrast, First Circuit cases holding forum selection clauses to be mandatory note the clauses' stricter language. See, e.g., Rivera, 575 F.3d at 17-18. In Rivera, for example, the First Circuit held that the forum selection clause was mandatory because it required the hospital patient to assert any cause of action he might have against the hospital in the Commonwealth courts of Puerto Rico. Rivera, 575 F.3d at 18. The relevant language stated: "In the event that by act or omission I consider that physical emotional or economic damages have been caused to me, I expressly agree to submit to [Puerto Rico's Commonwealth courts] for any possible claim." Id. at 14. The Court of Appeals in Rivera specifically contrasted the "I expressly agree to submit" language with the lack of such language in the forum selection clause at issue in Ericsson. Rivera, 575 F.3d at 17-18. In Silva v. Encyclopedia Britannica Inc., the Court of Appeals held that the forum selection clause was mandatory because the clause contained language stating that "all actions involving this agreement must be brought in the State of Illinois." 239 F.3d 385, 386, 389 (1st Cir. 2001). The Court of Appeals ruled that inclusion of the word "must" in the forum selection clause "expresses the intention of the parties to make the courts of Illinois the exclusive forum for disputes arising under the contract." Id. at 389; see also LFC Lessors, Inc. v. Pacific Sewer Maint. Corp., 739 F.2d 4, 5-7 (1st Cir.1984).
Here, the language of the forum selection clause is similar to the language at issue in Ericsson. The relevant language in this case provides that Matrix "agree[s] that in the event of default in payment, BlueTarp Financial may institute suit against you in the courts of the State of Maine...." (Agreement at PageID 5 (emphasis added).) This language stands in contrast to the language in Rivera ("I expressly agree") and Silva ("all actions... must be brought"). Like the language in Ericsson, and perhaps even more so because of the word "may," the forum selection clause in this case indicates an intention of the parties to permit, but not require, jurisdiction in Maine state courts. Accordingly, the Court holds that based on the language of the parties' forum selection clause, BlueTarp is not limited to bringing its action in Maine state court. However, because the parties are not in state court, BlueTarp must show that federal jurisdiction is proper in this case. The Court, therefore, turns to the question of personal jurisdiction.
There are two means of establishing personal jurisdiction over a defendant
To satisfy the requirements of due process for specific jurisdiction over the defendant, the Court must consider "three distinct components."
To satisfy "relatedness," BlueTarp's claims must "arise out of" or "relate to" Matrix's purposeful contacts with Maine. In contracts cases, the existence of a contract is not enough. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). "The relatedness requirement is not satisfied merely because a claim arose out of the parties' general relationship. The action must arise out of the specific contacts between the forum and the defendant." See Reed & Reed, 519 F.Supp.2d at 154 (citing Phillips Exeter Academy v. Howard Phillips Fund, Inc., 196 F.3d 284, 289-90 (1st Cir.1999)). The Court considers any nexus — between the forum state and the formation, performance or breach of the contract — that would give the forum state a legitimate interest in litigation arising out of the alleged breach of contract. See Phillips Exeter Academy, 196 F.3d at 289-90. A prima facie showing of such a nexus requires more than "the mere existence of a contractual relationship between an out-of-state defendant and an in-state plaintiff." See id. at 290 (discussing and citing Burger King Corp., 471 U.S. at 478-79, 105 S.Ct. 2174). The action must arise out of the specific contacts between the forum and Defendant. Therefore, the Court must "evaluate the parties' prior negotiations and contemplated future consequences, along with ... [their] actual course of dealing" and consider whether "defendant's contacts with the forum were instrumental either in the formation of the
With regard to formation, BlueTarp asserts that Matrix reached into Maine to obtain a contract for the issuance of credit. On the other hand, the uncontradicted facts submitted by Matrix demonstrate that the relevant contract was formed when Matrix signed the commercial credit application in South Carolina in order to facilitate its relationship with Contract Supply, a South Carolina building supply provider. The contract at issue facilitated Matrix's purchase of supplies from the South Carolina supplier for Matrix's construction projects in South Carolina. Defendant's only contact with Maine concerning contract formation occurred when BlueTarp notified Matrix of its incomplete credit application and Matrix returned a completed application to BlueTarp in Maine. Prior to that contact, Matrix and BlueTarp had never communicated. Matrix and BlueTarp engaged in no prior negotiations and discussed no future consequences of the credit agreement.
With regard to the breach of contract, the alleged breach arises from Matrix's failure to pay the balance due on the credit agreement. BlueTarp asserts that this breach occurred in Maine to the extent that amounts due have not been sent to BlueTarp's office in Portland, Maine. Matrix has shown, however, that the BlueTarp invoices sent to Matrix provided that payment should be made to an address in Atlanta, Georgia, not Maine. Accordingly, the location of any alleged breach was Georgia — not Maine. Regardless, "the location where payments are due under a contract ... alone does not possess decretory significance." Phillips Exeter Academy, 196 F.3d at 291. Moreover, while the record reflects that there were several communications between Matrix and BlueTarp during the course of their contractual relationship, the record shows that almost all of those communications were initiated by BlueTarp and focused almost exclusively on collections. There is no evidence to suggest that Matrix purposefully directed communications toward the State of Maine.
Therefore, the Court is left to consider any nexus between the contract and the State of Maine based on Defendant faxing the credit application to Maine, Defendant's alleged failure to deliver payment to an address in Georgia, and communications between Defendant in South Carolina and Plaintiff in Maine. The contacts relating to the execution of the contract and the communications between Matrix and BlueTarp simply do not constitute purposeful acts directed by Matrix to the State of Maine sufficient to establish personal jurisdiction over Matrix. The Court concludes first that these contacts do not create a nexus between Defendant and the forum and second that BlueTarp's cause of action does not arise out of or relate to Matrix's activities in Maine.
Next, the Court considers whether Matrix's contacts with Maine, described above, constitute purposeful availment of the benefits and protections of Maine law such that Matrix, by its conduct, reasonably could have anticipated litigation in Maine. Nowak v. Tak How Investments, Ltd., 94 F.3d 708, 716 (1st Cir.1996). This prong of the analysis requires attention to whether Matrix's connection with Maine was voluntary — not that of a third party — and whether Maine-based litigation was foreseeable. Reed & Reed, 519 F.Supp.2d at 154. The purposeful availment requirement protects defendants from jurisdiction based solely on "random, fortuitous, or attenuated contacts" or the "unilateral activity of another party." See Telford Aviation,
Thus, the Court must consider whether Matrix's communications with BlueTarp, and the fact that Matrix faxed the corrected commercial credit application to BlueTarp in Maine, constitute purposeful availment. The fact that Matrix's contacts took the form of mail, fax, or email communications rather than physical presence is not determinative. See id. (citing Burger King, 471 U.S. at 476, 105 S.Ct. 2174).
Initially, the Court notes that the vast majority of the relevant actions took place in South Carolina. Defendant's construction projects were based in South Carolina and the relevant supplier for this case, Contract Supply, was based in South Carolina. As for the credit agreement, Matrix received the BlueTarp commercial credit application from Contract Supply in South Carolina, and Matrix returned the application to Contract Supply in South Carolina. BlueTarp did not solicit Matrix's business, and the parties did not engage in any negotiations concerning the credit agreement. Matrix only sent the credit application to BlueTarp in Maine because it was required to do so in order to maintain its relationship with Contract Supply. Faxing the credit application to BlueTarp was Matrix's first contact with Maine. The fact that Contract Supply provided Defendant with a credit application from a company in Maine — rather than a company in any other state — was fortuitous. See Telford, 122 F.Supp.2d at 47 (citing Burger King, 471 U.S. at 475, 105 S.Ct. 2174).
The current record further reflects that Matrix and BlueTarp engaged in approximately a dozen communications during an eleven-month period. The majority of those communications, however, were initiated by BlueTarp and concerned collections; less than a handful of the communications were initiated by Matrix. This record of communications does not amount to the kind of unilateral action that makes Matrix's forum-state contacts voluntary. See Reed & Reed, 519 F.Supp.2d at 155 (finding communications sufficient to constitute purposeful availment because communications were designed to generate a contractual relationship); see also Autoscribe Corp. v. Goldman and Steinberg, 47 F.3d 1164, 1995 WL 56662, at *6 (4th Cir.1995) ("Plaintiff, by its agents' telephone calls, cannot lure the defendants into contact with the forum state for the purpose of establishing personal jurisdiction over them.") (citing Burger King, 471 U.S. at 475, 105 S.Ct. 2174). Indeed, Matrix made no voluntary decision to inject itself into the local economy as a market participant. See Microfibres, Inc. v. McDevitt-Askew, 20 F.Supp.2d 316, 321 (D.R.I.1998) (citing Bond Leather Co., Inc. v. Q.T. Shoe Mfg. Co., Inc., 764 F.2d 928, 933 (1st Cir.1985)).
Finally, Plaintiff contends that Matrix purposefully availed itself of the benefits and protections of Maine law by entering into a contract that is expressly governed by Maine law. Matrix does not dispute that Maine law applies to this case and concedes that a Maine state court could hear this dispute. As Matrix correctly states, however, a choice of law provision "standing alone, would be insufficient to confer [personal] jurisdiction." See Burger King, 471 U.S. at 482, 105 S.Ct. 2174 (stating that a choice of law provision "standing alone would be insufficient to confer jurisdiction," but "when combined with the 20-year interdependent relationship" between defendant and plaintiff the forum selection clause "reinforced ... the reasonable possibility of litigation in the forum state"); Calphalon Corp. v. Rowlette, 228 F.3d 718, 723 (6th Cir.2000) ("The district court also did not err in determining that the choice-of-law provision
If the contacts question is close, the reasonableness factors "may tip the constitutional balance."
For the foregoing reasons, the Court ORDERS that Defendant's Motion to Dismiss
SO ORDERED.