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Stillman v. Camden Marine Corp.

United States District Court, D. Maryland
Feb 2, 2004
Civil Action No. CCB-02-2474 (D. Md. Feb. 2, 2004)

Opinion

Civil Action No. CCB-02-2474

February 2, 2004


MEMORANDUM


Defendant First Choice Marine ("First Choice") filed a motion to dismiss for lack of personal jurisdiction, which the court granted. The plaintiffs, Irwin Stillman and two companies named Gentle Winds, have filed a motion to alter or amend judgment to have the court reconsider the grant of First Choice's motion to dismiss. The issues have been fully briefed and no hearing is necessary. See Local Rule 105.6. For the reasons stated below, the motion will be denied.

The court fully described the facts underlying First Choice's motion to dismiss for lack of personal jurisdiction in the opinion granting the motion on June 24, 2003. Familiarity with the facts as stated in that opinion is assumed. The plaintiffs' theory in response to First Choice's motion to dismiss was that First Choice is the parent company of Stardust Yacht Charters, S.A.S., which, in turn, is the parent of defendant Camden Marine Corp. ("Camden Marine"). Camden Marine is subject to personal jurisdiction in Maryland. The plaintiffs argued that First Choice dominates and controls Camden Marine to such an extent that the plaintiffs should be able to pierce the corporate veil of Camden Marine, and exercise personal jurisdiction over First Choice. The court rejected this argument, and determined that personal jurisdiction was not proper over First Choice in this district.

The plaintiffs now have asked the court to reconsider the prior opinion granting First Choice's motion for three reasons. First, the plaintiffs argue that the court applied the wrong legal standard for piercing the corporate veil for jurisdictional purposes. Second, the plaintiffs argue that the court failed to make all reasonable inferences in their favor and applied too high a burden of proof in ruling on their motion to dismiss for lack of personal jurisdiction without a hearing. Third, the plaintiffs argue that the court should have granted jurisdictional discovery. The court rejects each argument.

The plaintiffs' motion is filed under Rule 59(e). "There are three circumstances in which the district court can grant a Rule 59(e) motion: `(1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available at trial; or (3) to correct a clear error of law or prevent manifest injustice.'" United States ex rel. Becker v. Westinghouse Savannah River Co., 305 F.3d 284, 290 (4th Cir. 2002) (quoting Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998)). There has been no intervening change in controlling law, nor is there any new evidence presented which the plaintiffs argue justifies changing the prior ruling. Therefore, relief, if available, must be to correct a clear error of law or to prevent manifest injustice.

First, the plaintiffs argue that the court misinterpreted the standard articulated by the Fourth Circuit in Mylan Laboratories, Inc. v. Azko. N.V., 2 F.3d 56, 61-62 (4th Cir. 1993) for piercing the corporate veil for jurisdictional purposes. See also Newman v. Motorola, Inc., 125 F. Supp.2d 717, 723 (D. Md. 2000). The prior opinion in this case, however, explicitly adopts and applies theMylan test, quoting at length from the Mylan decision. Op. at 3-4. Contrary to the plaintiffs' characterization, the court's prior opinion did not interpret Mylan as requiring that "the two companies operate as one." Id. Moreover, the quoted phrase fromNewman is not inconsistent with either Mylan or the other district court opinion cited by the plaintiffs that followsMylan. This presents no clear error of law, nor a manifest injustice, as required under Rule 59(e). Therefore, the motion will be denied on this ground.

Though it does not affect the court's analysis, it is worth noting that the plaintiffs filed an opposition to First Choice's motion, a surreply to First Choice's reply to the opposition, and a response to First Choice's response to the plaintiff's surreply. Nowhere in these three documents did the plaintiffs present the legal arguments which they have elected to make the foundation of their motion under Rule 59(e).

The plaintiffs cite to only one case decided afterMylan in which a court pierced the corporate veil to establish personal jurisdiction, Carey v. Fiberfloat Corp., 849 F. Supp. 423 (D. Md. 1994). The Carey court relied on the fact that the subsidiary "did not maintain a separate payroll, instead listing its employee or employees upon [the parent's] payroll, and at least one [of the parent company's] executive[s], characterized [the subsidiary] as a department of [the parent]." Id. at 426. The court also found that the parent company seemed to have exercised control over the subsidiary's hiring decisions and the subsidiary's assembly of the product at issue in the suit. Id. The plaintiffs have not alleged the same level of interrelation between First Choice and its subsidiary here. The other district court cases cited by the plaintiffs pre-date the Mylan decision, and in any event none of the cases cited by the plaintiffs compel a different result in this case.

The plaintiffs also argue that there is no other forum in the United States in which to bring suit against First Choice. Whether this statement is true is not a question the court can resolve at this time. However, even if it is true that the plaintiffs would be unable to sue in another United States forum, the jurisdictional analysis under Maryland's long-arm statute does not depend on the availability of an alternative forum.

Second, the plaintiffs argue that the court did not resolve all of the factual inferences in their favor and imposed too high a burden of proof on the plaintiffs. Because there was no evidentiary hearing on the motion to dismiss, the plaintiffs are entitled to have all factual inferences resolved in their favor. See Mylan, 2 F.3d at 60. Indeed, the court noted this in the prior opinion. Op. at 5. The plaintiffs list a number of inferences which they assert the court should have made in their favor, namely that First Choice purchases insurance for its subsidiaries, that First Choice manages some financial transactions involving its subsidiaries, that First Choice encourages its subsidiaries to use the First Choice brand, and that Graham Laver, a First Choice employee, manages the selling of yachts by First Choice's subsidiaries. None of these inferences, however, demonstrates that "significant decisions of the subsidiary must be approved by the parent." Mylan, 2 F.3d at 61. The plaintiffs attempt to shift the burden of making this showing to First Choice, by noting that the declarations submitted by First Choice do not rebut the plaintiffs' allegations with respect to theMylan factors. (Pls.' Mot. at 12.) But it is the plaintiffs, not First Choice, who have the burden, however slight, of establishing a prima facie case of personal jurisdiction over First Choice, in this case by applying the Mylan test. See In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997); Mun Mortgage Equity v. Southfork Apartments Ltd. P'ship, 93 F. Supp.2d 622, 627 (D. Md. 2000) (dismissing for lack of personal jurisdiction because the plaintiff had failed to meet its burden of making a prima facie showing of personal jurisdiction). The plaintiffs have shown neither a clear error of law nor a manifest injustice warranting relief under Rule 59(e).

Finally, the plaintiffs contend that the court erred by not granting jurisdictional discovery. To prevail on the Rule 59(e) motion, the plaintiffs must demonstrate either that the denial of the request for jurisdictional discovery was a clear error of law, or that it created a manifest injustice. In order to subject First Choice Marine to personal jurisdiction based on the acts of Camden Marine, the plaintiffs would have to demonstrate that two levels of corporate veil could be pierced.See Op. at 3 n. 3. Given the standard the plaintiffs must reach under Mylan the paucity of evidence the plaintiffs have produced, and the plaintiffs' failure to allege specifically that First Choice has exercised the required dominance over Camden Marine, the denial of jurisdictional discovery was not a clear error of law, nor did it create a manifest injustice. For that reason, the court will not alter its judgment.

The plaintiffs argue that the court's prior opinion misunderstood the status of the present proceedings, by stating that there was no need for "further" discovery. Although Camden Marine and Stardust Yacht Charters S.A.S. did provide limited discovery in the parallel arbitration proceedings, the plaintiffs correctly state that there has not been any formal discovery in the present proceedings. The plaintiffs, however, had obtained various documents, which were attached to their previous filings. This clarification does not affect the court's prior conclusion that jurisdictional discovery was not warranted, because the plaintiffs fell far short of alleging the requisite facts under the Mylan standard.

For the reasons stated above, the plaintiffs' motion is denied.

A separate Order follows.

ORDER

For the reasons stated in the accompanying Memorandum, it is hereby ORDERED that:

(1) the plaintiffs' motion to alter or amend judgment (docket number 65) is DENIED; and
(2) the Clerk shall send copies of this Order and the accompanying Memorandum to counsel of record.


Summaries of

Stillman v. Camden Marine Corp.

United States District Court, D. Maryland
Feb 2, 2004
Civil Action No. CCB-02-2474 (D. Md. Feb. 2, 2004)
Case details for

Stillman v. Camden Marine Corp.

Case Details

Full title:IRWIN STILLMAN, et al., v. CAMDEN MARINE CORP., et al

Court:United States District Court, D. Maryland

Date published: Feb 2, 2004

Citations

Civil Action No. CCB-02-2474 (D. Md. Feb. 2, 2004)