Opinion
Civ. A. No: 00-541-GMS
January 10, 2001
MEMORANDUM AND ORDER
On May 31, 2000, two defendants in this action, Helen Herman Co. Inc ("HHCI") and Ed Finkelstein (the "Delaware Plaintiffs"), filed a "Counterclaim, Inverse, Condemnation and Removal" with this court (D.I. 1). The subject of this action arises out of legal proceedings currently underway in the Arizona state courts. In the "counterclaim" before the court, the Delaware Plaintiffs allege constitutional violations of their rights by the City of Tuscon, Arizona ("the City"). Baker and BPBA filed a motion to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) (D.I. 10). Since the court can neither exercise personal jurisdiction over Baker nor BPBA, it will grant the motion. Moreover, since the court finds that it lacks personal jurisdiction over the City, it will dismiss the case with prejudice.
It is unclear whether Finkelstein is a defendant in this action. Not all of the papers submitted by the parties include him in the case caption. Since both the initial filing with the court by the Delaware Plaintiffs and the docket sheet state that Finkelstein is a defendant in this action, the court will regard him as such. Further, it appears that Finkelstein is the president of HHCI and is appearing pro se on his own behalf and on behalf of the corporation.
The Delaware Plaintiffs filed an "Amendment to Counterclaim" which relates to alleged damages suffered by Finkelstein (D.I. 4).
According to the submissions of the parties, the action in Arizona is a condemnation proceeding regarding land in Arizona owned by HHCI.
Thomas Baker and Baker, Peterson Baker (actually Baker, Peterson, Baker Associates) ("BPBA") are listed as defendants in the case caption. Nevertheless, the Delaware Plaintiffs are seeking to assert counterclaims against them in the Arizona proceeding. Normally the court would not examine Baker and BPBA's relationship to the forum given their apparent status as a joint counterclaimant in this action. Given the unique way this action arose and the procedural posture of this case, however, the court will also examine their relationship to the forum.
Although all parties have filed additional motions with the court, questions of personal jurisdiction are threshold issues; the court must first determine if it has power over the parties before proceeding further. Since the court finds that it cannot exercise personal jurisdiction over the City, Baker, and BPBA in the first instance, it will deny as moot all other pending motions.
The court has the obligation to review issues of personal jurisdiction independently and can dismiss cases sua sponte where it finds jurisdiction lacking. See, e.g., Meritcare, Inc. v. St. Paul Mercury Ins. Co., 106 F.3d 214, 217 (3d Cir. 1999) (citing cases). Therefore, the court will include the City in its analysis of the instant motion.
Under Fed.R.Civ.P. 12(b)(2), the court may grant a motion to dismiss when there is a lack of personal jurisdiction over a party. In determining the presence of personal jurisdiction, courts engage in a two step analysis. First, whether the long arm statute of the state in which the court sits authorizes jurisdiction. Second, whether exercising jurisdiction comports with the requirements of the Due Process Clause of the Fourteenth Amendment. See, e.g., Compaq Computer Corp. v. Packard Bell Elec., Inc., 948 F. Supp. 338, 342 (D. Del. 1996) (citation omitted). For the Delaware Plaintiffs to satisfy the second prong of this analysis, the court must find the existence of "minimum contacts" by the City, Baker, and BPBA. Specifically, the Delaware Plaintiffs must show that they all "purposefully avail[ed] . . . [themselves] of the privileges of conducting activities within [the state]." See Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 108-09 (1987); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985). Unless the contacts are continuous, systematic, and substantial, they must be related to the Delaware Plaintiff's cause of action. See Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 4111 (1984).
The Delaware long arm statute has been interpreted to be co-extensive with the Due Process Clause. See, e.g., Transportes Aeros de Angola v. Ronair, Inc, 544 F. Supp. 868, 864-65 (stating that "[f]ederal courts in this district . . . have given an expansive interpretation to the long arm statute, ruling that [the Delaware statute] must be construed as conferring jurisdiction to the maximum perimeters of the due process clause.") (citing cases). Therefore, any finding that there is no personal jurisdiction from a constitutional perspective obviates the need for the court to consider whether there is personal jurisdiction under the statute.
Once a defendant raises the question of personal jurisdiction, the plaintiff must demonstrate its existence by a preponderance of the evidence. See Carteret Savings Bank FA v. Shushan, 954 F.2d 141, 146 (3d Cir. 1991) (citing cases) (stating that plaintiff has burden to prove personal jurisdiction by preponderance of the evidence through affidavits or other competent evidence once defendant raises the issue); Siemens Aktiengesellschaft v. LG Semicon Co., Ltd, 69 F. Supp.2d 622, 624 (D. Del. 1999) (same). In this case, since the Delaware Plaintiffs are asserting a counterclaim and are seeking relief from the court, they have the burden of proof of personal jurisdiction.
Upon reviewing the record, the court finds that the Delaware Plaintiffs have failed to demonstrate that relationship between the City, Baker, and BPBA with the state of Delaware is sufficient to establish constitutionally permissible personal jurisdiction. There is no evidence in the record that the City — or any of its agents — conducts any business in or with individuals or entities in Delaware or has any other relationship to the forum. Moreover, the City is a municipal corporation in Pima County, Arizona. The record shows that Thomas Baker is a citizen of Arizona, that he has not been in Delaware in 30 years, that he does not own any property in Delaware and that he does not conduct any business in Delaware. According to the record, BPBA is incorporated in Arizona, its principal place of business is in Arizona, and it does not conduct any business or own any property in Delaware. Finally, the record demonstrates — and the Delaware Plaintiffs admit — that all the events which are the subject of allegations in this matter occurred in Arizona.
The Delaware Plaintiffs' arguments concerning jurisdiction are spurious, legally inaccurate, and inapposite. First, the existence of a federal question or diversity jurisdiction — which raises the issue of whether a court has jurisdiction over the subject mailer of a lawsuit — is separate from the issue of whether the court can exercise power over the persons named in the action. Second, a court cannot assume personal jurisdiction simply because a party seeks to remove an action to it. Third, 28 U.S.C. § 1391 (c) does not require the court to exercise personal jurisdiction merely because the City's alleged taking "prevented . . . [HHCI] from having any contacts in Arizona" (emphasis in original). The fact that the alleged wrong occurred in Arizona may well be enough to establish personal jurisdiction over HHCI in Arizona. Finally, although the federal courts, as a whole, have jurisdiction over proceedings affecting commerce between the states, the ability of each district court to hear such a proceeding is limited by the existence of personal jurisdiction.
Even if the court were to overlook the personal jurisdiction defects, the Delaware Plaintiffs' action fails on diversity grounds. The "counterclaim" asserts diversity jurisdiction as the basis of the court's power. The language of the "counterclaim" belies this, however, because it asserts that Finkelstein is a citizen of Arizona. Since the partes are not completely diverse, the action cannot be based on diversity jurisdiction. See, e.g., Owen Equipment Erection Co. v. Kroger, 437 U.S. 365, n. 13 and accompanying text (1978) (citing cases).
The Delaware Plaintiffs' interpretation of 28 U.S.C. § 1441 (b) is incorrect. Rather than requiring district courts to exercise jurisdiction over a federal question case regardless of personal jurisdiction, § 1441(b) merely requires a district court to hear all federal question cases in which it can exercise personal jurisdiction over the parties.
The court expresses no opinion as to whether the Delaware Plaintiffs could properly remove the state court action to the District of Arizona or have brought the action there as an original matter.
Based on the record, there is no conceivable way for the court to exercise personal jurisdiction over the City, Baker, or BPBA. Clearly, the Delaware Plaintiffs have not met their required burden of proof. Since the court has no power to hear this case, it will grant Baker and BPBA's motion to dismiss and sua sponte dismiss the action against the City. For the aforementioned reasons, IT IS HEREBY ORDERED THAT:
1. Baker and BPBA's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) (D.I. 10) is GRANTED.
2. The Delaware Plaintiffs' "Counterclaim, Inverse Condemnation and Removal" against the City (D.I. 1, 4) is DISMISSED for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).
3. The Delaware Plaintiffs' motion for default judgment against the City (D.I. 6) is DENIED as moot.
4. Baker and BPBA's motion to dismiss for insufficiency of service (D.I.13) is DENIED as moot.
5. The Delaware Plaintiffs' motion to strike unauthorized reply briefs and for sanctions (D.I. 21) is DENIED as moot.
6. The Delaware Plaintiffs' motion to enjoin the Arizona Superior Court from further proceedings (D.I. 23) is DENIED as moot.
7. The Delaware Plaintiffs' motion to expedite (D.I. 24) is DENIED as moot.
8. The Delaware Plaintiffs' motion to strike letter from BPBA (D.I. 25) is DENIED as moot.