Opinion
Case No. 2:10-cv-735-MEF.
December 7, 2010.
Clyde Ellis Brazeal, III, Edward J. Ashton, Jones Walker Waechter Poitevent Carrere Denegre, LLP, Birmingham, AL, for Plaintiff.
Alfred Wilson Webb, Webb Law Firm, Rainbow City, AL, for Defendant.
MEMORANDUM OPINION AND ORDER
This is an action to collect on a loan from the borrower's guarantor. This cause is presently before the Court on a Motion to Dismiss (Doc. # 4) filed on October 4, 2010 by that guarantor, Gordhanbai Patel ("Patel"). Patel contend that this action is due to be dismissed or transferred to his home state because this Court lacks personal jurisdiction over him. The Court has carefully considered the submissions in support of and in opposition to the motion. For the reasons set forth below, the Court find that the motion is due to be DENIED.
FACTUAL AND PROCEDURAL BACKGROUND
Montgomery Hospitality, L.L.C. ("Montgomery Hospitality"), is a limited liability company which owns and operates a hotel property located in Montgomery, Alabama. According to the Articles of Organization for Montgomery Hospitality, Patel is a Member and the Acting Manager of Montgomery Hospitality. Montgomery Hospitality borrowed $3,780,000 from Plaintiff in 2006. Patel executed an irrevocable and unconditional Guaranty of the payment of the obligation as primary obligor of the debt. Montgomery Hospitality agreed to make monthly payments of $25,453.80. From 2006 until February of 2010, Montgomery Hospitality made the payments. Neither Montgomery Hospitality, nor Patel made the payments due on the loan after February of 2010. On August 11, 2010, Montgomery Hospitality filed its petition for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Alabama. Patel signed the petition on behalf of Montgomery Hospitality. On August 30, 2010, Plaintiff filed this action against Patel seeking the amount due under the agreements relating to the loan and the Guaranty.
Patel filed a Motion to Dismiss. He asks this Court to find that it lacks personal jurisdiction over him and to dismiss or transfer the action. Patel admits being a member of Montgomery Hospitality and being designated as its "general manager." He admits that he regularly communicated with an on-site manager of the hotel property Montgomery Hospitality owned and operated via various means and traveled to Alabama no more than twice a year for business purposes relating to Montgomery Hospitality. He also admits executing the Guaranty of the Montgomery Hospitality secured obligation at issue in this action. Nevertheless, he argues these contacts with Alabama are insufficient to support either general or specific personal jurisdiction.
Patel did not submit an affidavit or any other evidence in support of his motion. He relies solely on the allegations of the Complaint and "admission" made by his counsel through statements made in Defendant's Brief Supporting Dismissal (Doc. # 14).
Plaintiff opposes this motion. In addition to the jurisdictional facts Patel admitted, Plaintiff offers evidence that Patel owns membership interests in as many as six Alabama entities, including Montgomery Hospitality and that he signed Montgomery Hospitality's petition for bankruptcy protection in an Alabama bankruptcy court.
STANDARD FOR DISMISSAL FOR LACK OF PERSONAL JURISDICTION
In the context of a motion to dismiss for lack of personal jurisdiction in which no evidentiary hearing is held, the plaintiff bears the burden of establishing a prima facie case of jurisdiction over the movant, non-resident defendant. Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988) (citations omitted). A prima facie case is established if the plaintiff presents sufficient evidence to defeat a motion for a directed verdict. Morris, 843 F.2d at 492. The court must construe the allegations in the complaint as true, to the extent they are uncontroverted by defendant's affidavits or deposition testimony. Id. (citations omitted). Moreover, where the evidence presented by the parties' affidavits and deposition testimony conflicts, the court must construe all reasonable inferences in favor of the non-movant plaintiff. Delong Equip. Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir. 1988).
DISCUSSION
Patel has moved to dismiss the complaint for lack of personal jurisdiction. Determining personal jurisdiction requires two inquiries. The first step involves determining whether the forum state's long-arm statute provides a basis for jurisdiction. See Cable/Home Commc'n Corp. v. Network Prods., Inc., 902 F.2d 829, 855 (11th Cir. 1990). If it does, then the court must determine whether the exercise of personal jurisdiction over the defendants would offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
Alabama's long-arm statute provides for the exercise of personal jurisdiction over the defendant for (A) transacting any business in the state, (B) contracting to supply goods or services in the state, (C) causing tortious injury or damage by an act or omission in the state; (D) causing tortious injury by an act or omission outside the state while doing regular business in the state, (E) causing injury or damage in this state to any person by breach of warranty expressly or impliedly made in the sale of goods outside this state when the person might reasonably have expected such other person to use, consume, or be affected by the goods in this state, provided that the person also regularly does business in the state (F) having an interest in real property in the state, (G) contracting to insure any person, property, or risk located within this state at the time of contracting, (H) living in the marital relationship within this state notwithstanding subsequent departure from this state, as to particular obligations, if the other party to the marital relationship continues to reside in the state, or (I) otherwise having sufficient minimum contacts such that it is fair and reasonable to require defense of suit in the state. Ala. R. Civ. P. 4.2(a)(2).
Plaintiff argues that factors (A), (D) and (I) of the Alabama statute are met. Jurisdiction of Alabama courts reaches the full extent permissible under the due process clause of the Fourteenth Amendment. See Alabama Waterproofing Co., Inc. v. Hanby, 431 So. 2d 141, 145 (Ala. 1983); see also Olivier v. Merritt Dredging Co., Inc., 979 F.2d 827, 830 (11th Cir. 1992). The court will, therefore, turn to factor (I) to determine whether the exercise of in personam jurisdiction in this case satisfies due process. In personam jurisdiction complies with due process when (1) the nonresident defendant has purposefully established minimum contacts with the forum state, and (2) the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice. Olivier, 979 F.2d at 830-31.
There are two types of personal jurisdiction: specific and general. Specific personal jurisdiction is founded on a party's contacts with the forum state that are related to the cause of action. Helicopteros Nacionales de Colombia, N.A. v. Hall, 466 U.S. 408, 414 n. 8 9 (1984). General personal jurisdiction arises from a party's contacts with the forum state that are unrelated to the litigation. Id.
Plaintiff has shown that Patel has extensive interest in various entities operating businesses around Alabama. Moreover, Patel and others invoked the benefits and protections of Alabama law by forming Montgomery Hospitality under the Alabama Limited Liability Act. Since the formation of Montgomery Hospitality Patel has regularly maintained a variety of contacts with Alabama relating to managing Montgomery Hospitality's operation of a hotel in Montgomery, Alabama. Patel regularly communicated with the on-site manager in Montgomery via telephone, facsimile, and other electronic communications. He regularly traveled to Alabama on business relating to Montgomery Hospitality's affairs over a period of several years. Patel was no incidental guarantor of Montgomery Hospitality's debts to a
third party, rather he was an active manager who personally engaged in ongoing business transactions relating to Montgomery Hospitality's business affairs. Moreover, the Guaranty Patel signed relating to the loan to Montgomery Hospitality contained a choice of law provision which specified that the Guaranty would be governed by Alabama law. Such a clause makes it evident that Patel should have foreseen that he could have been hailed into court in Alabama relating to his obligations under that Guaranty
To constitute minimum contacts for purposes of specific jurisdiction, a defendant's contacts with the applicable forum must satisfy three criteria: first, the contacts must be related to the plaintiff's cause of action or have given rise to it; second, the contacts must involve some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum, thus invoking the benefits and protections of its laws; and third, the contacts must be such that the defendant should reasonably anticipate being haled into court in the forum. See Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1546 (11th Cir. 1993), cert. denied, 508 U.S. 907 (1993). Based on the record before the Court, it is compelled to find that Patel engaged in sufficient acts to constitute minimum contacts with the State of Alabama for purposes of specific jurisdiction. Indeed, the Court also suspects that Patel is subject to general jurisdiction in Alabama given the extent of his business activities here.
Having found the existence of such minimum contacts, the Court also must determine whether exercise of jurisdiction over Patel complies with traditional notions of fair play and substantial justice, the second aspect of jurisdictional due process. The factors entering into an analysis of the fairness of jurisdiction over a given defendant include, among others, the burdens imposed on that defendant, the interests of the forum state in the ability of the plaintiffs to maintain suit therein, and the plaintiff's interest in obtaining relief. Asahi Metal Indus. Co., Ltd. v. Superior Ct. of Cal., Solano County, 480 U.S. 102, 113 (1987). However, "[w]hen minimum contacts have been established, often the interests of the plaintiff and the forum will justify even the serious burdens placed on the alien defendant." Id. While the Court is cognizant that litigation in Alabama would be less convenient for Patel, than litigation elsewhere, the Court cannot say that exercise of jurisdiction over Patel in this case would fail to comply with traditional notions of fair play and substantial justice.
CONCLUSION
For the foregoing reasons, the Motion to Dismiss is DENIED.
A copy of this checklist is available at the website for the USCA, 11th Circuit at www.ca11.uscourts.gov Effective on April 9, 2006, the new fee to file an appeal will increase from $255.00 to $455.00. CIVIL APPEALS JURISDICTION CHECKLIST1. Appealable Orders : Appeals from final orders pursuant to 28 U.S.C. § 1291: 28 U.S.C. § 158Pitney Bowes, Inc. v. Mestre 701 F.2d 1365 1368 28 U.S.C. § 636 In cases involving multiple parties or multiple claims, 54Williams v. Bishop 732 F.2d 885 885-86 Budinich v. Becton Dickinson Co. 108 S.Ct. 1717 1721-22 100 L.Ed.2d 178LaChance v. Duffy's Draft House, Inc. 146 F.3d 832 837 Appeals pursuant to 28 U.S.C. § 1292(a): Appeals pursuant to 28 U.S.C. § 1292(b) and Fed.R.App.P. 5 28 U.S.C. § 1292 Appeals pursuant to judicially created exceptions to the finality rule: Cohen v. Beneficial Indus. Loan Corp. 337 U.S. 541 546 69 S.Ct. 1221 1225-26 93 L.Ed. 1528Atlantic Fed. Sav. Loan Ass'n v. Blythe Eastman Paine Webber, Inc. Gillespie v. United States Steel Corp. 379 U.S. 148 157 85 S.Ct. 308 312 13 L.Ed.2d 199 2. Time for Filing Rinaldo v. Corbett 256 F.3d 1276 1278 4 Fed.R.App.P. 4(a)(1): 3 THE NOTICE MUST BE RECEIVED AND FILED IN THE DISTRICT COURT NO LATER THAN THE LAST DAY OF THE APPEAL PERIOD — no additional days are provided for mailing. Fed.R.App.P. 4(a)(3): Fed.R.App.P. 4(a)(4): Fed.R.App.P. 4(a)(5) and 4(a)(6): Fed.R.App.P. 4(c): 28 U.S.C. § 1746 3. Format of the notice of appeal : See also 3pro se 4. Effect of a notice of appeal : 4
Courts of Appeals have jurisdiction conferred and strictly limited by statute: (a) Only final orders and judgments of district courts, or final orders of bankruptcy courts which have been appealed to and fully resolved by a district court under , generally are appealable. A final decision is one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." , , (11th Cir. 1983). A magistrate judge's report and recommendation is not final and appealable until judgment thereon is entered by a district court judge. (c). (b) a judgment as to fewer than all parties or all claims is not a final, appealable decision unless the district court has certified the judgment for immediate review under Fed.R.Civ.P. (b). , , (11th Cir. 1984). A judgment which resolves all issues except matters, such as attorneys' fees and costs, that are collateral to the merits, is immediately appealable. , 486 U.S. 196, 201, , , (1988); , , (11th Cir. 1998). (c) Appeals are permitted from orders "granting, continuing, modifying, refusing or dissolving injunctions or refusing to dissolve or modify injunctions . . ." and from "[i]nterlocutory decrees . . . determining the rights and liabilities of parties to admiralty cases in which appeals from final decrees are allowed." Interlocutory appeals from orders denying temporary restraining orders are not permitted. (d) : The certification specified in (b) must be obtained before a petition for permission to appeal is filed in the Court of Appeals. The district court's denial of a motion for certification is not itself appealable. (e) Limited exceptions are discussed in cases including, but not limited to: , , , , , (1949); , 890 F.2d 371, 376 (11th Cir. 1989); , , , , , (1964). Rev.: 4/04 : The timely filing of a notice of appeal is mandatory and jurisdictional. , , (11th Cir. 2001). In civil cases, Fed.R.App.P. (a) and (c) set the following time limits: (a) A notice of appeal in compliance with the requirements set forth in Fed.R.App.P. must be filed in the district court within 30 days after the entry of the order or judgment appealed from. However, if the United States or an officer or agency thereof is a party, the notice of appeal must be filed in the district court within 60 days after such entry. Special filing provisions for inmates are discussed below. (b) "If one party timely files a notice of appeal, any other party may file a notice of appeal within 14 days after the date when the first notice was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period ends later." (c) If any party makes a timely motion in the district court under the Federal Rules of Civil Procedure of a type specified in this rule, the time for appeal for all parties runs from the date of entry of the order disposing of the last such timely filed motion. (d) Under certain limited circumstances, the district court may extend the time to file a notice of appeal. Under Rule 4(a)(5), the time may be extended if a motion for an extension is filed within 30 days after expiration of the time otherwise provided to file a notice of appeal, upon a showing of excusable neglect or good cause. Under Rule 4(a)(6), the time may be extended if the district court finds upon motion that a party did not timely receive notice of the entry of the judgment or order, and that no party would be prejudiced by an extension. (e) If an inmate confined to an institution files a notice of appeal in either a civil case or a criminal case, the notice of appeal is timely if it is deposited in the institution's internal mail system on or before the last day for filing. Timely filing may be shown by a declaration in compliance with or a notarized statement, either of which must set forth the date of deposit and state that first-class postage has been prepaid. Form 1, Appendix of Forms to the Federal Rules of Appellate Procedure, is a suitable format. Fed.R.App.P. (c). A notice of appeal must be signed by the appellant. A district court loses jurisdiction (authority) to act after the filing of a timely notice of appeal, except for actions in aid of appellate jurisdiction or to rule on a timely motion of the type specified in Fed.R.App.P. (a)(4).