Opinion
Case No. 02-2380-JAR.
July 17, 2003.
MEMORANDUM AND ORDER GRANTING MOTION TO DISMISS
This is an action filed by the plaintiff Hittle Technologies, Inc. against the defendants STEAG Power LLC and NRG Energy, Inc. for breach of contract or alternatively unjust enrichment, both claims under state law. Plaintiff alleges damages of six-hundred thousand dollars due to failure of payment as required by a memorandum of understanding between the plaintiff and the defendant corporations. The case is in federal court under 28 U.S.C. § 1332 diversity jurisdiction with the amount in controversy exceeding $75,000 and the parties to the action satisfying the diversity requirement.
Although this Order refers to both defendants, NRG Energy is no longer a party to this action. Plaintiff's Notice and Stipulation of Dismissal of Defendant NRG Energy, Inc. Pursuant to Rule 41(a)(1) (Doc. 69) was filed on July 10, 2003.
Defendants STEAG Power LLC and NRG Energy, Inc. move to dismiss the action for lack of personal jurisdiction under Rule 12(b)(2), contending that they do not meet the due process requirements for either specific or general personal jurisdiction. Alternatively, the defendants seek dismissal or transfer of the action for improper venue under Rule 12(b)(3) and 28 U.S.C. § 1406(a) or transfer of venue from the District of Kansas to the Southern District of Texas under 28 U.S.C. § 1404(a). The Court finds that it does lack personal jurisdiction over the defendants in this matter and will dismiss the action under Fed.R.Civ.P. 12(b)(2).
Burden of Proof
At trial the plaintiff has the burden of proving by a preponderance of the evidence that the court has personal jurisdiction over the defendants. However, if a motion to dismiss for lack of jurisdiction is submitted prior to trial on the basis of affidavits and other written materials, the plaintiff need only make a prima facie showing to avoid dismissal for lack of personal jurisdiction. The "well pled facts" of the complaint must be accepted as true if uncontroverted by the defendant's affidavits, and factual disputes at this pre-trial stage must be resolved in the plaintiff's favor if there are conflicting affidavits.
F.D.I.C. v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir. 1992) (citation omitted).
Kuensle v. HTM Sport-Und Friezeitgerate AG, 102 F.3d 453, 456 (10th Cir. 1996).
Oaklawn Apartments, 959 F.2d at 174 (citation omitted).
Factual Background
The plaintiff Hittle Technologies, Inc. ("HTI") is a Kansas corporation with its principal place of business in Overland Park, Kansas. The defendants are Delaware corporations with NRG's ("NRG") principal place of business in Minneapolis, Minnesota and STEAG's ("STEAG") principal place of business is in Houston, Texas. STEAG is successor in interest in all respects relevant to this case of the A vista Corporation and the Court will refer to both as STEAG in this matter.STEAG began developing a power generating project near Houston, Texas, called the Brazos Valley Project. Jim Hittle ("Hittle"), President of Hittle Technologies, learned of the project in early March of 2000 through Paul Gross ("Gross") of Liquid Process Technologies. Gross, in turn, learned about the project through one of his company's clients, Delta Hudson Engineering ("DHE"), who was under contract to design the project for STEAG.
Gross informed Hittle that the project needed a certain model of gas generating turbines and inquired if he knew of any companies that had the necessary model. Hittle believed he did and Gross requested that he call DHE to discuss the issue. Hittle called DHE who directed him to talk directly with Milt Howard ("Howard") of STEAG about the matter. Hittle called Howard about a potential joint venture partner agreement and Howard expressed interest in the idea. Hittle next emailed Frank Giacalone ("Giacalone") of NRG regarding the joint venture partnership possibility. Giacalone responded by email stating that he would be interested and requested Hittle to set up a meeting.
In late March or early April 2000, Hittle called Giacalone regarding payment of a fee for introducing NRG to STEAG as a potential joint venture partner. Giacalone stated that Hittle should request language in the agreement between HTI and STEAG that stated NRG would pay half of the six-hundred thousand dollar fee. In mid April STEAG sent HTI a memorandum of understanding ("MOU") which Hittle signed and returned. Subsequent phone conversations between Howard and Hittle prompted Howard to send another MOU to HTI, which Hittle signed. Both MOUs contained Texas choice of law provisions. Prior to the signing, Hittle made several telephone calls from his Kansas office to set up a meeting between NRG and STEAG. On April 28, 2000, a meeting between NRG, STEAG, and Hittle took place in Houston, Texas.
After the meeting, Hittle contacted both NRG and STEAG several times regarding the equipment for the Brazos Valley Project. On July 12, 2000, Giacalone called Hittle. On July 17, 2000, Hittle sent invoices regarding the payment of the MOU to both Giacalone and Howard, which stated that payment should be made to First Kansas Bank and Trust Co. That same day Giacalone called Hittle and stated that NRG wanted to pay its share of the fee through STEAG and requested issuance of one invoice to STEAG. Pursuant to Giacalone's instructions, on July 18, 2000, Hittle sent STEAG an invoice for the total amount. On December 13, 2000, Hittle sent a second invoice to STEAG. On April 3, 2001, Hittle faxed an invoice to NRG and STEAG requesting payment. On June 6, 2001, STEAG sent Hittle a letter denying liability for the MOU.
Analysis
In a diversity action against a non-resident defendant, personal jurisdiction is governed by the law of the forum state. Thus, Kansas law governs the determination and the Court starts its analysis with the Kansas long arm statute. The Kansas long arm statute is liberally construed by Kansas courts to extend to the limits of due process and courts can proceed directly to the due process analysis.
Wenz v. Memery Crystal, 55 F.3d 1503, 1506 (10th Cir. 1995) (citation omitted).
K.S.A. 60-308.
OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1090 (10th Cir. 1998) (citing Federated Rural Elec. Ins. Corp. v. Kootenai Elec. Coop., 17 F.3d 1302, 1305 (10th Cir. 1994)).
The Due Process Clause of the Fourteenth Amendment allows the court to exercise personal jurisdiction over a non-resident defendant if there are "minimum contacts" between the defendant and the forum state. There are two ways to satisfy this requirement: specific or general personal jurisdiction. The plaintiff rightly concedes that general jurisdiction is not available in this case, so the Court need only focus on specific jurisdiction. Specific jurisdiction exists if the non-resident defendant has "`purposefully directed' his activities at residents of the forum and the litigation results from alleged injuries that `arise out of or relate to' those activities."
Intercon, Inc. v. Bell Atlantic Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir. 2000) (citing World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980)).
SF Hotel Co., L.P. v. Energy Investments, Inc., 985 F. Supp. 1032, 1033 (D. Kan. 1997) (citing Trierweiler v. Croxton and Trench Holding Corp., 90 F.3d 1523, 1532-33 (10th Cir. 1996) (stating that general personal jurisdiction exists when the defendant's contacts with the forum state are "so continuous and systematic that the state may exercise personal jurisdiction even when the claims are unrelated to the defendant's contacts with the forum state")); Soma Medical Intern. v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir. 1999) (citation omitted) (stating that for general jurisdiction to exist, the defendant must be conducting "substantial and continuous local activity in the forum state").
Soma Medical Intern., 196 F.3d at 1298 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).
The Supreme Court has rejected the idea that an individual's contract with an out-of-state party alone automatically establishes sufficient minimum contacts in the other party's home forum. Instead, the Court ruled that it is a matter of determining "prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing" in deciding if the parties to a contract have sufficient minimum contacts with the forum. The court must focus on whether these contacts constitute an effort by the defendant to "purposefully avail itself of the privilege of conducting activities within the forum State."
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985).
Id. at 479.
Rambo v. American Southern Ins. Co., 839 F.2d 1415, 1419 (1988) (citation omitted).
Defendants' limited contacts with the plaintiff do not reflect an effort to purposefully direct their activities toward the state of Kansas. Although the negotiations for the MOUs took place over the phone between the defendants and Hittle, Kansas had no specific relationship to the agreement beyond Hittle's presence in Kansas. Similarly, though part of HTI's obligations under the MOU were performed by Hittle in Kansas, actual performance is not relevant. The key determination is what the parties contemplated at the time of contracting. The plaintiff asserts that the invoices sent to NRG and STEAG requesting payment in a Kansas bank account demonstrate the parties' intent; but, these invoices were sent by the plaintiff well after the time of contracting and were not included in the MOU or its negotiations. There were also several phone calls and emails exchanged between the defendants and Hittle in his Kansas office, but the nature of these few contacts does not reflect an effort by the defendants to purposefully direct their activities toward Kansas.
Custom Energy, LLC v. Conservation Group, 93 F. Supp.2d 1145, 1148 (D. Kan. 2000).
On the contrary, the evidence demonstrates limited contact with the state of Kansas and little evidence of purposeful availment. Hittle made the initial contact and solicitation between himself and Howard at STEAG and Giacalone at NRG. The MOU contained an express Texas choice of law provision. The actual meeting of the parties, a key step toward ultimate performance of the MOU, occurred in Texas. Express methods of payment to HTI in Kansas were not contemplated in the MOU, but determined well after the signing of the MOU. The evidence shows that the parties did not contemplate future consequences in Kansas. The actual terms of the contract do not contemplate any Kansas performance, and Hittle's initial solicitation of the defendants shows that the defendants do not satisfy the purposeful availment requirement of minimum contacts. Thus, the contacts do not satisfy the due process requirements and the Court cannot exercise personal jurisdiction over the defendants in this case.
The defendants liken this case to a recent 10th Circuit decision, National Business Brokers, Ltd. v. Jim Williamson Productions, Inc., and the Court agrees with their analysis. In that case, the plaintiff was a Colorado business broker who, pursuant to a contract agreement, was handling a business transaction between Louisiana residents. The plaintiff was not paid for his services as a broker and filed suit for breach of contract in Colorado. The court found that the Colorado long arm statute extended to the limits of due process and that sixty emails, letters, and phone calls from defendant to plaintiff in Colorado were insufficient to show defendants specifically or intentionally attempted to conduct business in Colorado. Similarly, in the present case, there is little evidence to show purposeful availment by the defendants in Kansas and there are even less contacts than those present in National Business Brokers. In that case the 10th Circuit determined that personal jurisdiction was lacking.
National Business Brokers, Ltd. v. Jim Williamson Productions, Inc. 16 Fed.Appx. 959 (10th Cir. 2001).
Id. at 961.
Id.
Id. at 962-63.
This Court must also find that personal jurisdiction is lacking in the present case. Because the Court finds that the minimum contacts required to satisfy due process are lacking in this case, it is unnecessary for the Court to determine if the exercise of personal jurisdiction over the defendants "offend[s] traditional notions of fair play and substantial justice."
See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984).
The Court finds that there is a lack of jurisdiction, and in the interest of justice this case should be transferred to the United States District Court for the Southern District of Texas pursuant to 28 U.S.C. § 1631. Section 1631 provides in pertinent part that:
Whenever a civil action is filed in a court . . . and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action . . . to any other such court in which the action . . . could have been brought at the time it was filed . . ., and the action . . . shall proceed as if it had been filed in . . . the court to which it is transferred on the date upon which it was actually filed in . . . the court from which it is transferred.IT IS THEREFORE ORDERED BY THE COURT that defendants' motions for dismissal (Docs. 17, 19, 32 and 33) are GRANTED IN PART, and the case is TRANSFERRED to the United States District Court for the Southern District of Texas pursuant to 28 U.S.C. § 1631.
IT IS SO ORDERED.