CH Robinson Worldwide, Inc. v. House of Thaller, Inc.

CH ROBINSON WORLDWIDE, INC., Plaintiff, v. HOUSE OF THALLER, INC., JOHN THALLER,WES THALLER, and JORDAN THALLER, Defendants.

Case No. 19-CV-2292 (NEB/TNL)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

March 24, 2020

ORDER ON MOTION TO DISMISS

CH Robinson Worldwide, Inc. ("CHR") has sued House of Thaller, Inc. ("HoT"), as well as John Thaller, Wes Thaller, and Jordan Thaller (collectively, the "Thallers"), asserting various common law claims. The Thallers have moved to dismiss the claims against them. Because the Court lacks personal jurisdiction over the Thallers, the Court grants their motion to dismiss.

BACKGROUND

The Court draws the following background from the affidavits and other evidence adduced by parties in support of their positions, drawing all reasonable inferences in CHR's favor. Creative Calling Solutions, Inc. v. LF Beauty Ltd., 799 F.3d 975, 979 (8th Cir. 2015) ("[W]here . . . the parties submit affidavits to bolster their positions on [a] motion [to dismiss for lack of personal jurisdiction], and the district court relies on the evidence, the motion is in substance one for summary judgment."); accord Pederson v. Frost, -- F.3d --, No. 18-3195, 2020 WL 1144609, at *1 (8th Cir. Mar. 10, 2020).

CHR provides transportation and logistics services to its customers. [ECF No. 18 ("Martland Decl.") ¶ 2.] CHR is headquartered in Minnesota, but also maintains offices throughout the United States, including an office in Tennessee. (See id.) HoT, one of CHR's customers, is a Tennessee corporation that used to manufacture food products. [ECF No. 7 ("John Thaller Decl.") ¶¶ 3, 5.] Since 2014, CHR has arranged for more than 16,500 shipments of HoT's products to be delivered to HoT's customers across the United States. (Martland Decl. ¶ 5.) Nearly 300 of those shipments were delivered to Minnesota. (Id.)

Jordan Thaller. Jordan worked for HoT from 2010 until it ceased operations in May 2019. [ECF No. 9 ("Jordan Thaller Decl.") ¶ 3.] Jordan was CHR's main contact at HoT. [ECF No. 21 ("2d Jordan Thaller Decl.") ¶ 2.] He has never been an owner or shareholder of HoT. (Jordan Thaller Decl. ¶ 5.) Jordan is a Tennessee resident, and when he communicated with CHR, he did so mostly with employees working out of CHR's Tennessee office. (Id. ¶¶ 2, 9.) The Tennessee office handled all issues relating to HoT's account with CHR, including scheduling, damage claims, load planning, payments, and tracking shipments. (2d Jordan Thaller Decl. ¶ 3.) Jordan, as the main contact with CHR, placed orders through CHR's Tennessee office, discussed invoicing issues with CHR's Tennessee office, and submitted damages claims to CHR's Tennessee office. (Id. ¶¶ 4-6.)

John Thaller. John, HoT's President, has been a shareholder and owner of HoT since 1964. (John Thaller Decl. ¶ 4.) John is a Tennessee resident, and has never had any contact with CHR in Minnesota or with its Minnesota-based representatives. (Id. ¶¶ 2, 10). His only contact with CHR has been through CHR's representatives in Tennessee. (Id. ¶ 11.)

Wes Thaller. Wes, HoT's former Vice President, is a Tennessee resident and was a shareholder of HoT from 2010 to 2019. [ECF No. 8 ("Wes Thaller Decl.") ¶¶ 2, 3.] Wes cannot recall having any contacts with CHR's representatives in Minnesota. (Id. ¶¶ 2, 5.) He may have briefly met or communicated with CHR's Tennessee-based representatives when Jordan and John met with them in Tennessee. (Id.)

I. Complaint Allegations

In May 2019, HoT ceased operations, and its assets were acquired by Elevation Foods, LLC. [ECF No. 16 (the "Amended Complaint" or "AC") ¶ 12.] CHR's claims against the Thallers in the Amended Complaint revolve around HoT's past-due account at the time of the acquisition and alleged misrepresentations made by Jordan in the preceding months.

The Amended Complaint alleges that in 2019, HoT's account with CHR was past due, and thus CHR advised Jordan that it would stop providing services to HoT. (Id. ¶ 10.) Jordan then arranged a meeting with CHR's representatives to discuss HoT's account status. (Id.) At that meeting—held in Tennessee in March 2019—Jordan told CHR's representatives that John and Wes were in discussions with an equity investmentfirm that was interested in purchasing HoT's assets. (Id.) In describing those discussions, Jordan told CHR's representatives that the prospective purchaser "was aware of the debt owed to CHR and had agreed that it would assume this liability." (Id.) Jordan then asked CHR to continue providing services to HoT "so as to maintain business operations until the [purchase of HoT] was completed[,] whereupon" the debt owed to CHR would be paid. (Id.) The Amended Complaint claims that Jordan repeatedly assured CHR that "as part of the terms and conditions of [the] contemplated transaction . . . [the purchaser] would pay the debt owed to CHR." (Id. ¶ 11.)

After Elevation Foods purchased HoT's assets on May 29, 2019, CHR learned that Elevation Foods had not in fact assumed the CHR debt. (Id. ¶¶ 12-13.) When CHR's representatives contacted Jordan, Jordan allegedly "promptly apologized for lying and blamed John and Wes." (Id.) The Amended Complaint further alleges that HoT "was insolvent, or on the verge of insolvency, when it ordered [] services from CHR from October of 2018 through May of 2019." (Id. ¶ 15.) It pleads that, as a result of the actions of the Thallers and HoT, CHR suffered damages. (Id. ¶¶ 8, 20.)

II. Procedural History

CHR sued HoT and the Thallers in Minnesota state court. CHR's original complaint alleged that the Thallers "knowingly and intentionally" ordered logistics-related services from CHR when HoT "was insolvent or on the verge of insolvency and was not sufficiently capitalized to undertake these transactions." [ECF No. 1-1 ¶ 3.] CHRclaims damages in excess of $847,588.56. (Id.)

In June 2019, CHR served its complaint on Jordan. (See id.) On July 2, 2019, Jordan served an answer, asserting affirmative defenses, including that the court lacked personal jurisdiction over him. [ECF No. 1-2.] John and Wes accepted service of the complaint on July 29, 2019. [ECF Nos. 1-3, 1-4.]

John and Wes then removed the action to this Court, with Jordan's consent, asserting diversity jurisdiction under 28 U.S.C. § 1332. [ECF No. 1.] HoT has not appeared in the action. In August 2019, the Thallers filed this motion to dismiss the claims against them. [ECF No. 5.] On September 20, 2019, CHR filed the Amended Complaint, naming the Thallers as defendants in three counts: "misrepresentation and fraud," "breach of fiduciary duty to creditor of insolvent corporation," and "veil piercing." (AC ¶¶ 32-47 (Counts 4-6).)

ANALYSIS

I. Personal Jurisdiction

A. Motion to Dismiss/Amended Complaint

As a threshold matter, the Court notes that filing an amended complaint ordinarily moots a defendant's motion to dismiss. Onyiah v. St. Cloud State Univ., 655 F. Supp. 2d 948, 958 (D. Minn. 2009). But "a defendant need not file a new Rule 12 motion merely because the plaintiff amended his pleading while the defendant's motion was pending." DeVary v. Countrywide Home Loans, Inc., 701 F. Supp. 2d 1096, 1100 (D. Minn. 2010). "Ifsome of the defects raised in the original motion remain in the new pleading, the court simply may consider the motion as being addressed to the amended pleading." Bishop v. Abbott Labs., No. 19-CV-420 (NEB/ECW), 2019 WL 6975449, at *3 (D. Minn. Dec. 20, 2019) (quoting 6 Charles Alan Wright, et al., Federal Practice and Procedure § 1476 (3d ed. 2019)).

The circumstances here make ruling on the Thallers' Rule 12 motion appropriate. In their reply, the Thallers make plain that they believe that the allegations in the Amended Complaint remain insufficient to confer personal jurisdiction over them. [ECF No. 20 at 1-2.] As discussed further below, this Court agrees, and therefore will consider the Thallers' motion as being addressed to the Amended Complaint.

The Court also rejects CHR's contention that Jordan's answer in state court renders his Rule 12(b) motion procedurally improper. In state court, Jordan properly preserved lack of personal jurisdiction as an affirmative defense. [ECF No. 1-2 ¶ 36]; see also Minn. R. Civ. P. 12.02; Minn. R. Civ. P. 12.08; Juelich v. Yamazaki Mazak Optonics Corp., 670 N.W.2d 11, 17 (Minn. Ct. App. 2003) (finding no waiver of personal jurisdiction when defense asserted first in answer and again in motion to dismiss filed a year later). It is therefore also properly preserved for purposes of a Rule 12(b) motion filed in federal court after removal. Nationwide Eng'g & Control Sys., Inc. v. Thomas, 837 F.2d 345, 348 (8th Cir. 1988) ("Upon removal, a defendant may assert any defense that would have been available to him in state court and which has not been lost through the operation of either[Rule] 12(g) or 12(h)."). Thus, Jordan's Rule 12(b) motion to dismiss for lack of personal jurisdiction, which this Court construes to address the Amended Complaint, is procedurally proper.

B. Legal Standard

Rule 12(b)(2) of the Federal Rules of Civil Procedure permits a party to move to dismiss a claim asserted against him for lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). The parties have submitted declarations to bolster their positions with respect to personal jurisdiction. [See ECF Nos. 7-9, 18, 19, 21.] The motion is therefore "in substance one for summary judgment" on the narrow issue of the Court's authority to exercise jurisdiction over the Thallers. Creative Calling Solutions, 799 F.3d at 979.

"The plaintiff bears the burden of proof on the issue of personal jurisdiction." Id. "[T]he [claims] should not be dismissed . . . if the evidence, viewed in the light most favorable to [the plaintiff], is sufficient to support" the exercise of jurisdiction over the defendants. Id. "A federal court in a diversity action may assume jurisdiction over nonresident defendants only to the extent permitted by the long-arm statute of the forum state and by the Due Process...