DAVID C. KEESLER, Magistrate Judge.
Plaintiff Axxon International, LLC ("Plaintiff" or "Axxon") initiated this action with the filing of its Complaint (Document No. 1) against Defendant GC Equipment, LLC, doing business as Globecore GmbH, on July 20, 2017. GC Equipment, LLC ("GC Equipment") originally argued for dismissal based on insufficient process and insufficient service of process pursuant to Fed.R.Civ.P 12(b)(4) and 12(b)(5) in a "Motion To Dismiss" filed on September 5, 2017. (Document No. 12). GC Equipment later withdrew its original motion to dismiss. (Document No. 20).
On November 20, 2017, GC Equipment filed a "Motion to Dismiss, Answer, And Affirmative Defenses." (Document No. 21). GC Equipment's Answer asserted for the first time that there is a lack of personal jurisdiction. (Document No. 21, p. 1). The Answer also asserted that GC Equipment should be dismissed pursuant to Fed.R.Civ.P. 12(b)(6). (Document No. 21, p. 2).
The parties consented to Magistrate Judge jurisdiction on December 8, 2017, and this case was reassigned to the undersigned. (Document Nos. 22 and 23). On January 31, 2018, the Court issued a "Pretrial Order And Case Management Plan" (Document No. 26). The "... Case Management Plan" included the following deadlines: discovery — September 24, 2018; mediation — October 15, 2018; and dispositive motions — October 22, 2018.
On March 20, 2018, Plaintiff filed an "Amended Complaint" naming both GC Equipment and Globecore GmbH ("Globecore") as Defendants. (Document No. 28).
The Amended Complaint states that Plaintiff is a limited liability company, organized and existing under the laws of the State of North Carolina, with its principal place of business in Rock Hill, South Carolina. (Document No. 28, p. 1). Plaintiff is "a wholesale supplier of medical equipment and industrial machinery and fabrication," providing "complete project management support for local, state, and federal agencies." (Document No. 28, p. 4). Plaintiff's members are Randy Lenz ("Lenz"), Art Ward ("Ward"), and Equity Investment Partners, LLC ("EIP").
The Amended Complaint describes GC Equipment as "a limited liability company, organized and existing under the laws of the State of California, with its principal place of business in Los Angeles, California." (Document 28, p. 2). GC Equipment's members are Dylan Baum ("Baum") and Richard Messina ("Messina"), both citizens of California.
Defendant Globecore "is a foreign corporation organized and existing under the laws of Germany, with its principal place of business in Oldenburg Eversten, Germany."
Plaintiff entered into a contract (the "USACE Contract") with the U.S. Army Corp. of Engineers (the "USACE") on September 30, 2016, that was later modified on October 17, 2017.
According to the Amended Complaint, this Court has in personam jurisdiction over GC Equipment and Globecore because of their "substantial and continuous contacts with the State of North Carolina, including entering into a subcontractor agreement with AXXON in North Carolina." (Document No. 28, p. 2). Additionally, Plaintiff asserts that the Globecore Contract "has a mandatory venue provision, which requires that venue for any dispute shall be in North Carolina."
The Amended Complaint asserts claims for: (1) breach of contract against Globecore; and (2) intentional interference with contract against both GC Equipment and Globecore. (Document No. 28, pp. 7-10). Plaintiff contends that GC Equipment and Globecore "knowingly and willfully interfered with Axxon's contractual relationship with USACE." (Document No. 28, p.9).
The "Amended Complaint" notes that it was filed with opposing counsel's written consent. (Document No. 28, p. 1, n. 1). Moreover, on April 3, `, "Defendant GC Equipment LLC's Written Consent To Amend Complaint" was filed with the Court confirming that GC Equipment consented to allowing Plaintiff to amend its Complaint, naming GC Equipment as a Defendant, on March 20, 2018. (Document No. 29). Neither the "Amended Complaint," nor "Defendant GC Equipment LLC's Written Consent To Amend Complaint" suggest that GC Equipment disputed the Court's jurisdiction in this matter. (Document Nos. 28 and 29).
"Defendant GC Equipment LLC's Motion To Dismiss, Answer, And Affirmative Defenses In Response To Plaintiff's Amended Complaint" (Document No. 30) was also filed on April 3, 2018, and in that pleading GC Equipment again asserted motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) and 12(b)(6). GC Equipment's Answer acknowledges that "during the time described in Axxon's Amended Complaint, GC Equipment acted as a manufacturer's representative and agent for GlobeCore." (Document No. 30, pp. 4, 12). GC Equipment goes on to assert that it was Axxon and GlobeCore that entered into the "Purchase Order." (Document No. 30, pp. 6, 9-10) (citing Document No. 28-3).
"Defendant GC Equipment LLC's Motion to Dismiss for Lack of Personal Jurisdiction" (Document No. 32) was filed on April 17, 2018. GC Equipment sought dismissal of this action pursuant to Fed.R.Civ.P. 12(b)(2), for lack of personal jurisdiction. (Document No. 32). GC Equipment contended that it is not subject to personal jurisdiction in North Carolina because it lacks the requisite contacts with the forum state. (Document No. 33, p. 7). The undersigned issued an "Order" on July 6, 2018, denying without prejudice "Defendant GC Equipment, LLC's Motion to Dismiss for Lack of Personal Jurisdiction" (Document No. 32). (Document No. 39)
The undersigned issued an "Order" (Document No. 43) on August 17, 2018, granting "Defendant GC Equipment LLC's Motion To Vacate or Modify Pretrial Order And Case Management Plan And To Stay Or Suspend Discovery Pending Service And Appearance By Defendant Globecore GMBH" (Document No. 40). The Court stayed this matter "until Defendant Globecore GmbH is served, or
On September 7, 2018, this Court received a letter from Dr. Julia Bessonova, Director of Globecore GmbH, indicating that Globecore received a copy of the Complaint on August 27, 2018, and stating that it "has no financial connection with GC Equipment regarding this or any other contract." (Document No. 44). Plaintiff then filed a "... Motion To Strike Defendant Globecore GMBH's Response," because it was not filed by licensed counsel. (Document No. 45). The undersigned denied the motion to strike without prejudice. (Document No. 46).
On October 2, 2018, Plaintiff filed a "Notice Of Filing Of Return Of Service Certificate" (Document No. 47) confirming that the Amended Complaint was served on Defendant Globecore GmbH on August 27, 2018. "Plaintiff's Motion For Entry Of Clerk's Default Against Defendant Globecore GMBH" (Document No. 48) was also filed on October 2, 2018.
On October 9, 2018, notices of appearance of Defendant Globecore's counsel, Nancy Black Norelli, Donna P. Savage, and Keith A. Gross were filed with the Court. (Document Nos. 48-51). The next day, Globecore's "... Answer And Motion To Dismiss For Lack Of Personal Jurisdiction" (Document No. 53) was filed.
On October 12, 2018, the undersigned denied "Plaintiff's Motion For Entry Of Clerk's Default..." and directed the parties to file proposed revisions to case deadlines. (Document No. 54). Based on a proposal by counsel for each party, the undersigned re-set case deadlines on October 29, 2018, including the following: Discovery Completion — June 24, 2019; Mediation Report-July 10, 2019; Motions — July 19, 2019; and Trial — October 28, 2019. (Document No. 56).
On January 10, 2019, counsel for GC Equipment filed a "Motion To Withdraw As Counsel" (Document No. 57). The motion states in part that "GC Equipment does not want the undersigned counsel to pursue any further defense on its behalf, with the understanding that the Court may enter an adverse judgment against GC Equipment if Plaintiff proves its claims against GC Equipment." (Document No. 57, p. 2). The "Motion To Withdraw..." includes an "Affidavit In Support..." (Document No. 57-1) executed by Dylan Baum, Member/Manager GC Equipment, LLC. Baum's Affidavit provides:
(Document No. 57-1, pp. 1-2) (emphasis added).
The undersigned granted GC Equipment, LLC's counsel's "Motion To Withdraw As Counsel" (Document No. 57) on January 10, 2019, and further ordered GC Equipment to retain new counsel by January 24, 2019, or face possible sanctions, including default judgment. (Document No. 58).
"Plaintiff's Motion To Strike Pleadings And For Entry Of A Default Against Defendant GC Equipment, LLC" (Document No. 59) was filed on February 4, 2019. GC Equipment has failed to file any response and the time to do so has lapsed.
"Defendant Globecore GmbH's Motion To Dismiss" (Document No. 61) was filed on February 6, 2019. Globecore seeks dismissal of the Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(2). (Document No. 61). On February 20, 2019, "Plaintiff's Brief In Opposition To Defendant..." (Document No. 62) was filed. Defendant "Globecore GmbH's Objections And Reply Brief To Axxon's Response To Globecore, GmbH's Motion To Dismiss" (Document No. 63) was filed February 27, 2019.
The pending motions are ripe for review and disposition.
A party invoking federal court jurisdiction has the burden of establishing that personal jurisdiction exists over the defendant.
A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests the "legal sufficiency of the complaint" but "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses."
The Supreme Court has also opined that
"Although for the purposes of this motion to dismiss we must take all the factual allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation."
"Plaintiff's Motion To Strike Pleadings And For Entry Of A Default Against Defendant GC Equipment, LLC" was filed pursuant to Fed.R.Civ.P. 12(f), 16, and 55. (Document No. 59, p. 1). In support of its motion, Plaintiff notes that the Court allowed GC Equipment's counsel's "Motion To Withdraw..." (Document No. 57) on January 10, 2019, and ordered that GC Equipment retain new counsel by January 24, 2019, or risk sanctions including default judgment. (Document No. 60, p. 1) (citing Document No. 58). Plaintiff further notes that new counsel has not appeared for GC Equipment.
In support of its motion, Plaintiff contends that it is well-established that corporate entities appearing in federal court, including limited liability companies, must be represented by counsel. (Document No. 60, p. 2) (citing
The undersigned also finds a more recent decision by this Court to be instructive.
GC Equipment has failed to file a response to Plaintiff's motion and the time to do so has lapsed.
Baum's "Affidavit..." indicates that GC Equipment has made a deliberate decision not to retain new counsel or otherwise defend this lawsuit and accepts that it may be liable for damages to Plaintiff.
Based on the foregoing, the undersigned will direct the Clerk of Court to issue an entry of default as to GC Equipment. The undersigned will decline to strike GC Equipment's pleadings at this time but may reconsider that request with an appropriate motion for default judgment at a later date.
"Globecore GmbH's Motion To Dismiss" was filed pursuant to Fed.R.Civ.P. 12(b)2). (Document No. 61, p. 1). In addition, Globecore seems to suggest that the Amended Complaint should be dismissed pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim.
By its motion, Globecore contends that it is a separate entity than GC Equipment, organized and existing under the laws of Germany, and that it is not referenced in the Purchase Order underlying this lawsuit. (Document No. 61, p. 2). Globecore asserts that if Plaintiff is pursuing claims against it based on an agency relationship between GC Equipment and Globecore, then Plaintiff must show:
(Document No. 61, p. 4). Globecore concludes that Plaintiff has not alleged sufficient facts to support an agency relationship. (Document No. 61, p. 5).
Globecore argues that there is a "corporate separateness" between itself and GC Equipment that precludes a finding of jurisdiction over Globecore based on GC Equipment's contacts with North Carolina or execution of the Purchase Order. (Document No. 61, pp. 5-6) (citations omitted). However, Globecore also acknowledges that personal jurisdiction may arise out of an agency relationship "when parties manifest consent that one shall act on behalf of the other party and subject to his control." (Document No. 61, p. 6) (citing
Defendant Globecore further argues that the Amended Complaint is "void of allegations of control" and that "[l]egal conclusions regarding the existence of an agency relationship without supporting facts are insufficient to state a claim."
In response, Plaintiff first contends that Globecore has waived its objections to personal jurisdiction because the underlying contract contains a valid forum selection clause that applies to Globecore. (Document No. 62, pp. 6-10, 19-23). In support of its position, Plaintiff quotes several cases from this Court:
Plaintiff argues that Globecore is attempting to avoid the mandatory forum selection clause by alleging that the contract was actually entered into with GC Equipment, but that Globecore has failed to provide any supporting affidavits or declarations. (Document No. 62, p. 8). Moreover, Plaintiff reminds the Court that in reviewing a motion to dismiss the Court must accept the uncontroverted allegations of Plaintiff and resolve any factual conflicts in its favor. (Document No. 62, p. 9). Among those factual allegations, Plaintiff notes that: GC Equipment was and is Globecore's authorized agent; Globecore entered into the subcontractor agreement at issue; GC Equipment acted as Globecore's authorized agent pertaining to the subcontractor agreement; Axxon entered into an Agreement with Globecore; and Baum signed the Globecore contract as Globecore's authorized agent. (Document No. 62, pp. 9-10) (quoting Document No. 28).
Plaintiff further argues that Globecore's arguments about "corporate separateness" are irrelevant. (Document No. 62, p. 10) (citations omitted). Plaintiff insists GC Equipment had authority to enter into the contract on behalf of Globecore.
Globecore's "... Reply Brief ..." largely re-asserts the arguments in its initial brief. (Document No. 63). The crux of the reply seems to be that the Amended Complaint does not sufficiently allege the nature and extent of the purported agency relationship, including evidence of the day-to-day control.
Contrary to Defendant Globecore's arguments, the undersigned finds that the Amended Complaint provides sufficient allegations to support plausible claims as to Globecore. Moreover, the undersigned finds Plaintiff's arguments and authority in support of this Court's jurisdiction to be persuasive. In short, the undersigned is satisfied that Plaintiff's claims should survive at this stage of the litigation and that the motion to dismiss should be denied, without prejudice to Defendant re-asserting some of its arguments at a later date.
The undersigned observes that legitimate questions have been raised about the nature and extent of the relationship between Globecore and GC Equipment; however, Plaintiff is not required to explain the details of that arrangement in its Amended Complaint. Plaintiff has sufficiently alleged that GC Equipment engaged in substantial activity in North Carolina and that GC Equipment acted as the agent for Globecore.
Among the arguments and documents that suggest dismissal would be premature is a "Manufacturer's Authorization" dated November 14, 2016, on Globecore GmbH letterhead, and apparently signed by Dr. Julia Bessonova as Director of Globecore GmbH. (Document No. 62-10). The authorization states in pertinent part:
(Document No. 62-10).
The undersigned notes that Dr. Bessonova's "Manufacturer's Authorization" appears to conflict with the letter she submitted to the Court on or about September 5, 2018, wherein she states that GC Equipment has "
The Texas address in the "Manufacturer's Authorization" for the "exclusive and official service center for Globecore GmbH" is the same as the address listed for "Vendor Globecore" on the underlying "Purchase Order," and apparently, is within about four (4) miles of the office of Globecore's counsel in this matter. (Document No. 28-3). It appears to be undisputed that GC Equipment is organized under the laws of California, with a principal place of business in Los Angeles, California.
These documents and the parties' briefs suggest to the undersigned that there are factual issues that merit further development through discovery, if that has not already occurred, and/or review by a finder of fact.
Finally, the undersigned observes that all the extended deadlines in this case, except the trial deadline, have passed.