Opinion
CIVIL ACTION FILE NO. 1:20-CV-4270-MHC
2022-03-29
IOU CENTRAL, INC., d/b/a IOU Financial, Inc., Plaintiff, v. PREMIER METALS RECOVERY LLC, David Ray Pace and Lynn Rawl Pace, Defendants.
Paul Gerard Wersant, Paul G. Wersant Attorney at Law, Suwanee, GA, for Plaintiff. Andrew J. Becker, Merbaum & Becker, P.C., Alpharetta, GA, for Defendants.
Paul Gerard Wersant, Paul G. Wersant Attorney at Law, Suwanee, GA, for Plaintiff.
Andrew J. Becker, Merbaum & Becker, P.C., Alpharetta, GA, for Defendants.
ORDER ON LIMITED REMAND
MARK H. COHEN, United States District Judge I. APPELLATE PROCEDURAL HISTORY
On June 8, 2021, this Court granted Defendants’ Second Motion to Dismiss for Lack of Personal Jurisdiction. June 8, 2021, Order [Doc. 37]. Judgment was entered that same day dismissing the action. J. [Doc. 38]. On July 7, 2021, Plaintiff filed a "Motion to Reconsider, Alter, or Amend the June 8, 2021, Order." Pl.’s Mot. to Recons. [Doc. 39]. Plaintiff's motion was based on Rule 59 "and/or" Rule 60 of the Federal Rules of Civil Procedure. Id. at 7-9. The next day, July 8, 2021, Plaintiff filed a Notice of Appeal from the June 8, 2021, Order and Judgment. Notice of Appeal [Doc. 40].
On November 9, 2021, this Court granted in part and denied in part Plaintiff's Motion to Reconsider, Alter or Amend. Nov. 9, 2021, Order [Doc. 45]. The Order was issued in error because this Court lacked jurisdiction to enter it under Rule 4 of the Federal Rules of Appellate Procedure, the pertinent portions of which state as follows:
(a) APPEAL IN A CIVIL CASE.
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(4) Effect of a Motion on a Notice of Appeal.
(A) If a party files in the district court any of the following motions under the Federal Rules of Civil Procedure—and does so within the time allowed by those rules —the time to file an appeal runs for all parties from the entry of the order disposing of the last such remaining motion:
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(iv) to alter or amend the judgment under Rule 59; [or]
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(vi) for relief under Rule 60 if the motion is filed no later than 28 days after the judgment is entered.
(B) (i) If a party files a notice of appeal after the court announces or enters a judgment—but before it disposes of any motion listed in Rule 4(a)(4)(A) —the notice becomes effective to appeal a judgment or order, in whole or in part, when the order disposing of the last such remaining motion is entered.
FED. R. APP. P. 4(a)(4) (emphasis added). As Plaintiff's Rule 59/60 motion was filed more than 28 days after the June 8, 2021 judgment, this Court lacked jurisdiction to consider it. See FED. R. CIV. P. 59(e) ("A motion to alter or amend a judgment must be filed no later than 28 days after the entry of a judgment); FED. R. APP. P. 4(a)(4)(A)(vi) (stating that a Rule 60 motion tolls the time for filing a notice of appeal only if filed no later than 28 days after the judgment is entered).
Moreover, under Eleventh Circuit Rule 12.1-1(c), "[a] party who files a motion in the district court that the district court lacks authority to grant because an appeal is pending must, within 14 days after filing the motion, serve and file a motion in [the Eleventh Circuit] to stay the appeal until the district court rules on the motion before it." 11th Cir. R. 12.1-1 (c). Plaintiff never moved to stay its appeal in accordance with Rule 12.1-1 (c). Therefore, this Court should have denied Plaintiff's motion for reconsideration for lack of jurisdiction.
On December 22, 2021, the Eleventh Circuit entered an order in the case on appeal which, in pertinent part, stated as follows:
Within 21 days after the date of this order, the parties are DIRECTED to provide their positions on whether Appellant's motion for reconsideration (Doc. 39) filed in the district court was a
timely tolling motion under Fed. R. App. P. 4(a)(4)(A) and whether the district court had jurisdiction to enter the order on the motion for reconsideration (Doc. 45) given that the motion for reconsideration was filed more than 28 days after the June 8, 2021 judgment. See Fed. R. App. P. 4(a)(4)(A). If the motion for reconsideration was not a timely tolling motion, the parties also should provide their positions on whether the Court should treat the district court's order on the motion for reconsideration as an indicative ruling. See 11th Cir. R. 12.1-1.
IOU Central, Inc. v. Premier Metals Recovery, LLC, No. 21-12405-CC (11th Cir. Dec. 22, 2021). The parties failed to respond to the direction of the Eleventh Circuit. On January 31, 2022, the Eleventh Circuit directed the parties to show cause as to why they failed to timely respond to the December 22, 2021, Order, and if Appellant filed no response, the Clerk was directed to dismiss the appeal for want of prosecution. Id. (Jan. 31, 2022).
On February 14, 2022, Appellant filed a response providing a mea culpa for both parties, requesting that the appeal be permitted to continue, and seeking an extension of time to file its response, in which the parties agreed that (1) Plaintiff's July 7, 2021, motion for reconsideration was not a timely tolling motion, (2) this Court did not retain jurisdiction to alter or amend its judgment given that the motion was filed beyond the 28-day deadline for relief, and (3) this Court's order on November 9, 2021, was not an indicative ruling and the appeal should continue as to Defendant Lynn Pace. Appellant's Unoppo[s]ed Time-Sensitive Mot. for Leave to Respond to Orders Dated December 22, 2021 and Resp. to Order to Show Cause Dated January 31, 2022 and Extension to File Reply, IOU Central, Inc. v. Premier Metals Recovery, LLC, No. 21-12405-CC (Feb. 14, 2022).
On March 7, 2022, the Eleventh Circuit entered an Order stating, in pertinent part:
Because Appellant's motion for reconsideration sought substantive relief from the order on appeal, the district court lacked jurisdiction to grant the motion. See 11th Cir. R. 12-1 -1(c). Accordingly, this Court considers the district court's November 9, 2021 order to be an indicative ruling and REMANDS this appeal on a limited basis for the district court to rule as indicated.
IOU Central, Inc. v. Premier Metals Recovery, LLC, No. 21-12405-CC, 2022 WL 3723127 (11th Cir. Mar. 7, 2022) [Doc. 47].
Federal Rule of Appellate Procedure 12.1 "permits a district court to issue an indicative ruling on a motion that seeks relief the district court otherwise would lack authority to grant because an appeal is pending." United States v. Bolden, 850 F. App'x 734, 737 (11th Cir. 2021) (citing 11th Cir. R. 12.1-1(c) ). "It is well settled in this Circuit that, when a district court indicates its intention to grant relief that the court lacks authority to grant because an appeal is pending, the appropriate procedure is to remand the matter in full." Int'l Schs. Servs., Inc. v. AAUG Ins. Co., Ltd., Nos. 10-15846-GG, 11-10595-GG, 2012 WL 5199262, at *1 (11th Cir. Jan. 6, 2021) (citing 11th Cir. R. 12.1-1 (c)(2)(i) through (iv) ). Of course, this Court's November 9, 2021 Order was not issued as an indicative ruling but now has been treated by the Eleventh Circuit as an indicative ruling; accordingly, the Eleventh Circuit has issued a limited remand and otherwise retains jurisdiction over the appeal. The only purpose of the limited remand is for this Court to "rule as indicated" by issuing an order that comprises what was contained in its November 9, 2021 decision. That order now follows. II. RELEVANT BACKGROUND
On July 16, 2020, Defendant David Pace ("D. Pace"), a citizen of North Carolina, on behalf of Defendant Premier Metals Recovery ("Premier") a citizen of North Carolina, submitted a loan application to Plaintiff IOU Central, Inc., d/b/a IOU Financial, Inc. ("IOU")’s Georgia office via IOU's online application process. Am. Compl. [Doc. 17] ¶¶ 2-3, 7; Decl. of David Ray Pace ("D. Pace Decl.") [Doc. 13-2] ¶¶ 5, 7, 9, 18. On July 21, 2020, D. Pace executed a Promissory Note for a principal sum of $84,800.00 (the "Loan") via IOU's website, in exchange for the funds. Am. Compl. ¶¶ 8, 12; Promissory Note for Commercial Loan ("Promissory Note") [Doc. 29-1]. The Promissory Note stated that each party to the Note consented to the application of Georgia law and personal jurisdiction in Georgia over any suit arising from the Note. Am. Compl. ¶¶ 8, 12; Promissory Note § 24. D. Pace also executed a Personal Guaranty Agreement ("Guaranty") on the same day via IOU's website. Am. Compl. ¶ 13; Guaranty [Doc. 29-2]. The Guaranty provided that the signatory consented to Georgia law and jurisdiction with respect to the Guaranty. Am. Compl. ¶¶ 14, 17; Guaranty § 1. The funds from the Loan were received by D. Pace via wire transfer on the closing date. Am. Compl. ¶ 20. IOU, Defendant Lynn Rawl Pace ("L. Pace"), D. Pace, and Premier agree that all actions and communications with IOU regarding the Loan, loan application, Promissory Note, and Guaranty occurred solely by internet communications between IOU and D. Pace on behalf of Premier. Id. ¶¶ 7-8, 13, 18-20; D. Pace Decl. ¶ 18; see also Defs.’ Mem. in Supp. of Mot to Dismiss ("Defs.’ Mem.") [Doc 13-1] at 3-5.
Defendants initially filed a Motion to Dismiss for Lack of Personal Jurisdiction [Doc. 13] in response to the original Complaint, but Defendants’ motion was denied as moot because IOU subsequently filed an Amended Complaint [Doc. 17]. See Jan. 5, 2021, Order [Doc. 23]. Because Defendants contend that the Amended Complaint does not address or resolve any of the issues raised in Defendants’ motion to dismiss the original Complaint, Defendants’ Memorandum in Support of their Second Motion to Dismiss for Lack of Personal Jurisdiction [Doc. 22-1] incorporates by reference the arguments made in the first motion to dismiss. The Court will refer to the memorandum in support of the original motion to dismiss [Doc. 13-1] as "Defendants’ Mem."
According to the Amended Complaint, L. Pace, D. Pace, and Premier (collectively, "Defendants") made misrepresentations to IOU about their intent or their ability to repay the Loan and breached the agreements in the Promissory Note and Guaranty shortly after receipt of the funds. Am. Compl. ¶¶ 22-23, 26. The Amended Complaint also alleges that Defendants are jointly and severally liable for the Loan and that the Promissory Note and Guaranty are attached to all of Defendants’ property as collateral for the Loan. Id. ¶¶ 25, 32-33.
Defendants moved to dismiss IOU's Amended Complaint for lack of personal jurisdiction. Defs.’ Second Mot. to Dismiss for Lack of Personal Jurisdiction [Doc. 22]. In support of their motion, Defendants contend that "Defendants lack any of the connections with the State of Georgia necessary to subject them to [personal] jurisdiction by this Court." Defs.’ Mem. at 2. Defendants specifically assert that "[Premier] and D. Pace's execution of the Loan [Note] and Guaranty provide[s] no basis to support a claim of personal jurisdiction over the Defendants." Id. at 11.
On June 8, 2021, this Court granted Defendants’ Second Motion to Dismiss for Lack of Personal Jurisdiction. June 8, 2021, Order [Doc. 37]. This Court held, in pertinent part, that the conferral of jurisdiction language in the Promissory Note and Guaranty, alone, was "insufficient alone to confer personal jurisdiction over D. Pace and Premier under the transacts-business subsection of the Georgia long-arm statute." Id. at 15. The Court also found that IOU had not shown that this Court's personal jurisdiction over Defendants would comport with Due Process. Id. at 18-21. The Court stated:
Beyond the bare facts that D. Pace accessed IOU's website to execute loan agreements and the existence of conferral [of] jurisdiction clauses contained in the loan documents, IOU has failed to make any showing that Defendants had meaningful contacts with Georgia that arise out of or relate to its claims such that Defendants purposefully availed themselves of the privilege of doing business in Georgia and should reasonably anticipate being haled into court here.
Id. at 21 (citing Diamond Crystal Brands, Inc. v. Food Movers Int'l, Inc., 593 F.3d 1249, 1268 (11th Cir. 2010) ).
III. LEGAL STANDARD
"A plaintiff seeking the exercise of personal jurisdiction over a nonresident defendant bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie case of jurisdiction." Diamond Crystal Brands, Inc. v. Food Movers Int'l, Inc., 593 F.3d 1249, 1257 (11th Cir. 2010) (quotation and citation omitted); see also Posner v. Essex Ins. Co., Ltd., 178 F.3d 1209, 1214 (11th Cir. 1999). When no evidentiary hearing is held on a motion to dismiss for lack of personal jurisdiction, a prima facie case exists where the plaintiff presents enough evidence to survive a motion for a directed verdict. Consol. Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1291 (11th Cir. 2000). A plaintiff presents enough evidence to withstand a motion for a directed verdict by putting forth evidence of such quality and weight that "reasonable and fair-minded persons in the exercise of impartial judgment might reach different conclusions." Miller v. Roche Sur. & Cas. Co., 502 F. App'x 891, 893 (11th Cir. 2012).
"The court construes the allegations in the complaint as true to the extent that they are uncontroverted by defendant's evidence." Paul, Hastings, Janofsky & Walker, LLP v. City of Tulsa, 245 F. Supp. 2d 1248, 1253 (N.D. Ga. 2002) (citing Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988) ). If the nonresident defendant challenges jurisdiction and supports the challenge with affidavit evidence, the burden shifts back to the plaintiff to produce evidence supporting jurisdiction. Diamond Crystal, 593 F.3d at 1257. "Where the plaintiff's complaint and supporting evidence conflict with the defendant's affidavits, the court must construe all reasonable inferences in favor of the plaintiff." Id. (citation and quotation omitted).
General jurisdiction exists where a nonresident defendant's connections with the forum state are "continuous and systematic" so as to render the nonresident defendant "at home in the forum State." Daimler AG v. Bauman, 571 U.S. 117, 134 S. Ct. 746, 754, 187 L.Ed.2d 624 (2014) (quotation and citation omitted). On the other hand, specific jurisdiction must arise out of the events or transactions underlying the claim that forms the basis of the lawsuit. Walden v. Fiore, 571 U.S. 277, 283-84, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014). To determine whether specific personal jurisdiction exists, a federal court sitting in diversity undertakes a two-step inquiry: "the exercise of jurisdiction must (1) be appropriate under the state long-arm statute and (2) not violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution." Diamond Crystal, 593 F.3d at 1257-58 (citation and quotations omitted). Federal district courts in Georgia should take care not to conflate these two inquires because Georgia's long-arm statute does not provide jurisdiction that is coextensive with due process. Id. at 1259. Instead, Georgia's long-arm statute "imposes independent obligations that a plaintiff must establish for the exercise of personal jurisdiction that are distinct from the demands of procedural due process." Id. (footnote omitted). This Court must interpret and apply Georgia's long-arm statute literally. Id.
IOU does not allege that this Court has general personal jurisdiction over Defendants and the Amended Complaint does not include allegations that would support general personal jurisdiction. See Am. Compl.
IV. DISCUSSION
After a thorough review of the record, the Court finds that its conclusion that it lacked jurisdiction over D. Pace and Premier was a clear error of law and that it can properly exercise personal jurisdiction over D. Pace and Premier.
Under Georgia law, the defense of lack of personal jurisdiction may be waived. Citizens & S. Cap. Corp. v. Sweetwater Homes, Inc., 191 Ga. App. 571, 571, 382 S.E.2d 399 (1989) (citing O.C.G.A. §§ 15-1-2, 9-11-12(h)(1) ). In addition, "[t]he United States Supreme Court has recognized a variety of legal arrangements as representative of consent to personal jurisdiction. Advance consent to the jurisdiction of a particular court in a contract is one such arrangement." Regency Mall Assocs. v. G.W.’s Rest., Inc., 213 Ga. App. 225, 225, 444 S.E.2d 572 (1994) (quoting Harbin Enters., Inc. v. Sysco Corp., 195 Ga. App. 694, 695, 394 S.E.2d 618 (1990) ) (punctuation omitted).
The Court finds the opinion in Apparel Res. Int'l Ltd. v. Amersig Se., Inc., 215 Ga. App 483, 451 S.E.2d 113 (1994), to be instructive. In Apparel, the Georgia Court of Appeals reviewed a trial court's finding that it could exercise personal jurisdiction over an out-of-state defendant that signed a contract which included a forum selection clause. Id. at 483-84, 451 S.E.2d 113. The Apparel court held that the forum selection clause was binding on the defendant who signed the contract and that the trial court correctly found the defendant had submitted to and waived any defense regarding personal jurisdiction. Id. at 484-85, 451 S.E.2d 113. Specifically, the court stated:
[W]e find the forum selection clause unambiguous and susceptible to but one interpretation. Apparel Resources, by executing the printing contract, consented to being subject to the jurisdiction of a court where the printing plant was located in the event a dispute arose concerning the contract. This court in Regency Mall recognized the validity of such advance consent and we see no reason why a different rule should apply here. Because the uncontroverted testimony at trial established that the printing plant was located in DeKalb County, Georgia, Apparel Resources waived the defense of lack of personal jurisdiction in a court located there. Accordingly, we find the trial court did have personal jurisdiction over Apparel Resources and the judgment as against that party is not void.
Id. (citing Regency Mall, 213 Ga. App. 225, 444 S.E.2d 572 ); see also Gill v. Nicol, No. 4:11-CV-168 CDL, 2012 WL 1358490, at *4 (M.D. Ga. Apr. 19, 2012) (citations omitted) ("A nonresident can consent to personal jurisdiction in Georgia if the nonresident enters into a contract that contains a Georgia forum selection clause, so long as the forum selection clause is enforceable."); Panhandle Fire Prot., Inc. v. Batson Cook Co., 288 Ga. App. 194, 196, 653 S.E.2d 802 (2007) (citation omitted) ("Under Georgia law, personal jurisdiction is conferred over a nonresident if the nonresident enters into a contract containing a Georgia choice of forum and arbitration clause."); OFC Cap. v. Colonial Distribs., Inc., 285 Ga. App. 815, 816, 818-19, 648 S.E.2d 140 (2007) (citation omitted) ("[W]aivers of personal jurisdiction are expressly permitted in this State and thus cannot be said to contravene our public policy.").
Here, it is undisputed that D. Pace, the sole member of Premier, executed the Promissory Note on Premier's behalf. D. Pace Decl. ¶¶ 7, 9, 16-20; see also Promissory Note. In addition, D. Pace signed the Guaranty in his personal capacity. D. Pace Decl. ¶¶ 7, 9, 16-20; Guaranty. Defendants also admit that Premier received funds through the execution of those documents and used the funds for business purposes. See D. Pace Decl. ¶¶ 7, 9, 16-20. IOU argues that D. Pace and Premier's execution of the Promissory Note and Guaranty subjects them to personal jurisdiction in Georgia. Am. Compl. ¶¶ 12-13; Mot. for Recons. at 9-12. The Promissory Note states, in pertinent part, that "[e]ach Party knowingly, intentionally, voluntarily and irrevocably, with and upon the advice of counsel, [ ] submits to personal jurisdiction in the State of Georgia over any suit, action or proceeding by any person arising from or relating to this Note ...." Promissory Note § 24. Based upon the consent and express waivers in the Promissory Note and Guaranty, the Court finds that it may exercise personal jurisdiction over D. Pace and Premier.
In addition, the Court finds that exercise of personal jurisdiction over D. Pace and Premier comports with Due Process. The Eleventh Circuit has held that Due Process is not offended by a consensual, contractual waiver of personal jurisdiction:
Because the nonresident defendant in the present case contractually agreed to personal jurisdiction in Florida, the usual due process analysis need not be done. As the Supreme Court noted in Burger King [Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ], the due process analysis is unnecessary where a nonresident defendant has consented to suit in a forum. Quite simply, parties to a contract may agree in advance to submit to the jurisdiction of a given court. The enforcement of an agreement conferring jurisdiction does not offend due process where the provision is freely negotiated and not unreasonable or unjust. Thayer has not presented any evidence that the agreement was signed under duress or is unreasonable. Accordingly, having contractually waived his due process right not to be subjected to suit in a forum without sufficient contacts, Thayer cannot now assert that personal jurisdiction in Florida violates his due process rights.
Alexander Proudfoot Co. World Headquarters v. Thayer, 877 F.2d 912, 921 (11th Cir. 1989). The United States Supreme Court also has found that such waivers of personal jurisdiction comport with Due Process:
The requirement that a court have personal jurisdiction flows not from Art. III [of the Constitution ], but from the Due Process Clause. The personal jurisdiction requirement recognizes and protects an individual liberty interest. It represents a restriction on judicial power not as a matter of sovereignty, but as a matter of individual liberty.
...
Because the requirement of personal jurisdiction represents first of all an individual right, it can, like other such rights, be waived.... In National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 316 [84 S.Ct. 411, 11 L.Ed.2d 354] (1964), we stated that "parties to a contract may agree in advance to submit to the jurisdiction of a given court," and
in Petrowski v. Hawkeye-Security Co., 350 U.S. 495 [76 S.Ct. 490, 100 L.Ed. 639] (1956), the Court upheld the personal jurisdiction of a District Court on the basis of a stipulation entered into by the defendant.
...
In sum, the requirement of personal jurisdiction may be intentionally waived, or for various reasons a defendant may be estopped from raising the issue.
Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702-04, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). Accordingly, the Court finds that D. Pace and Premier, through the execution of the Promissory Note and Guaranty, waived the defense of personal jurisdiction and are subject to the personal jurisdiction of this Court.
V. CONCLUSION
For the foregoing reasons, the Court determines that it has personal jurisdiction with respect to Defendants Premier Metals Recovery LLC and David Ray Pace, so that the pending appeal as it relates to the prior finding of the Court that it did not have personal jurisdiction over these parties is likely moot.
The Clerk is DIRECTED to notify the Clerk of the United States Court of Appeals for the Eleventh Circuit of the issuance of this Order on Limited Remand.
IT IS SO ORDERED this 29th day of March, 2022.