Grammar Indus., Inc. v. Beach Mold & Tool, Inc.

GRAMMAR INDUSTRIES, INC., Plaintiff, v. BEACH MOLD AND TOOL, INC., ET AL., Defendants.

No. 15-12694

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

March 14, 2019

District Judge Paul D. Borman

Magistrate Judge R. Steven Whalen

REPORT AND RECOMMENDATION

Before the Court is a motion for dismissal filed by Defendants/Cross-Defendants Beachmold Mexico, S. de R.L. de C.V. ("Beachmold Mexico"), Plastic Injection Operating Company of Mexico, LLC ("PIO"), and Plastic Injection Holding Company of Mexico, LLC, n/k/a iP3 North America, LLC ("iP3") [Doc. #102], which has been referred for a Report and Recommendation under 28 U.S.C. § 636(b)(1)(B). Because the Court does not have personal jurisdiction over these Defendants, I recommend that the motion be GRANTED.

I. FACTS

Plaintiff Grammer Industries, Inc., ("Plaintiff") is a South Carolina corporation, with its principal place of business in Troy, Michigan, that supplies automotive assemblies to automotive manufacturers. Defendant Beach Mold and Tool, Inc. ("Beach Mold, Inc.") is a corporation located in Indiana that manufactures tooling and parts that are molded from that tooling. In its Third Amended Complaint ("TAC")[Doc. #68], Plaintiff alleges that it contacted Beach Mold, Inc. regarding a quote to build tools, and for future consideration to build parts with those tools, that Plaintiff would use in a potential contract with a Fiat Chrysler, LLC ("FCA") program. TAC, ¶ 17. Plaintiff alleges that Beach Mold, Inc. issued a price quotation to Grammer, providing that the tooling would be built at Beach Mold's Indiana facility, and the parts would be "manufactured at our Queretaro, Mexico Facility." Id. ¶ 18. Plaintiff also contracted with Advance Mold Incorporated to manufacture a fixture that would be used to produce parts at the Mexico facility, and that fixture was delivered to Beach Mold. Id. ¶ 21.¹

Plaintiff alleges that the purchase orders from Beach Mold, Inc. "formed the Contract between Grammer and Beach Mold." Id. ¶ 25.

Plaintiff states that FCA placed the program on hold, and in 2015 requested proof of possession of the tooling; in turn, Plaintiff requested the tooling from Beach Mold, Inc.. Id. ¶ 27. In response, Beach Mold, Inc. informed Plaintiff "that the assets of the Mexico Facility, including the Tooling, had been sold and/or transferred to iP3 Mexico." Id. ¶ 28. Plaintiff claims that because Beach Mold, Inc. did not return the tooling to it, or even provide evidence that it was available for possession, Plaintiff had to reimburse FCA for the tooling. Id. ¶ 29.

Plaintiff alleges that around August of 2012, "owners or controlling interests common to Beach Mold and Beachmold Mexico transferred interest in Beachmold Mexico to PIO and PIH," Id. ¶ 34, and that upon information and belief, "PIH n/k/a iP3 North America is or was an inactive entity, and AIAC is the successor to PIH." Id. ¶ 35. Plaintiff alleges that the assets of Beachmold Mexico (which would include the tooling at issue) were sold, that the proceeds from the sale "are or will be distributed to the ownermembers, PIO and iP3," and that in turn, "such proceeds will or have been distributed to the member of PIO and iP3 North America, who upon information and belief, is AIAC."² Id. ¶ 37.

Plaintiff brings a claim of breach of contract and conversion against Beachmold Mexico, Id., Count III, and a claim of breach of fiduciary duty and the Nevada Limited Liability Companies Act against PIO and iP3, Id., Count IV. In Count IV, Plaintiff more succinctly describes the distribution of assets, including the tooling, as follows: The assets of Beachmold Mexico were sold in 2016; Beachmold Mexico, which no longer conducts business, distributed the proceeds of the sale to PIO and iP3;, PIO and iP3 in turn distributed the proceeds to AIAC. Id. ¶ ¶ 66-69.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(2) provides for dismissal of a complaint for lack of personal jurisdiction over a party, and the party asserting the existence of personal jurisdiction bears the burden of showing making at least a prima facie showing of its existence. CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1261-1262 (6th Cir.1996); Gould v. P.T. Krakatau Steel, 957 F.2d 573, 575 (8th Cir.1992); Kerry Steel, Inc. v. Paragon Indust., Inc., 106 F.3d 147, 149 (6th Cir.1997). "Without personal jurisdiction over an individual ... a court lacks all jurisdiction to adjudicate that party's right, whether or not the court has valid subject matter jurisdiction." Friedman v. Estate of Presser, 929 F.2d 1151, 1156 (6th Cir.1991).

III. DISCUSSION

To be subject to the jurisdiction of a court in the forum state, the defendant must have sufficient minimum contacts with that state that the action there "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). See also Asahi Metal Industry Co., Ltd. v. Superior Court of California, Solano County, 480 U.S. 102, 108-09 (1987)("The Due Process Clause of the Fourteenth Amendment limits the power of a state court to exert personal jurisdiction over a nonresident defendant"); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985)("'[T]he constitutional touchstone' of the determination whether an exercise of personal jurisdiction comports with due process 'remains whether the defendant purposefully established 'minimum contacts' in the forum State'")(quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

In Kerry Steel, Inc., 106 F.3d at149, the Court described the two methods by which a federal court could acquire personal jurisdiction over a defendant:

"Personal jurisdiction comes in two flavors: 'general' jurisdiction, which depends on a showing that the defendant has continuous and systematic contacts with the forum state sufficient to justify the state's exercise of judicial power with respect to any and all claims the plaintiff may have against the defendant, and 'specific' jurisdiction, which exposes the defendant to suit in the forum state only on claims that 'arise out of or relate to' a defendant's contacts with the forum. Helicopteros Nacionales de Colombia S.A., v. Hall, 466 U.S. 408, 414-415 & nn. 8-10, 104 S.Ct. 1868, 1872 & nn. 8-10, 80 L.Ed.2d 404 (1984); Third Nat'l Bank in Nashville v. WEDGE Group, Inc., 882 F.2d 1087, 1089 (6th Cir.1989), cert. denied, 493 U.S. 1058, 110 S.Ct. 870, 107 L.Ed.2d 953 (1990)."

A. General Jurisdiction

M.C.L. § 600.711 sets forth three bases upon which a Court can establish general personal jurisdiction over a corporation:

"The existence of any of the following relationships between a corporation and the state shall constitute a sufficient basis of jurisdiction to enable thecourts of record of this state to exercise general personal jurisdiction over the corporation and to enable such courts to render personal judgments against the corporation.

(1) Incorporation under the laws of this state.

(2) Consent, to the extent authorized by the consent and subject to the limitations provided in section 745.1

(3) The carrying on of a continuous and systematic part of its general business within the state.

Neither Beachmold Mexico, PIO, nor iP3 are incorporated in Michigan. Nor have these Defendants consented to Michigan's jurisdiction. This leaves the question of whether the Defendants have "continuous and systematic" business contacts with Michigan.

General jurisdiction is "exercisable when a foreign corporation's 'continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.'" Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (quoting Int'l Shoe Co. v. State of Wash., 326 U.S. at 318); Helicopteros Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408 (1984). More specifically, general jurisdiction applies when "a foreign corporation's '[contacts] with the State are so 'continuous and systematic' as to render [it] essentially at home in the forum State.''" Bauman, 571 U.S. at 122 (citing Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)) (emphasis added).

In Jones v. Blige, 2006 WL 1329247, at *2 (E.D. Mich. 2006), the Court reviewed case law establishing the high bar that plaintiffs face in establishing general jurisdiction based on systematic contacts with the forum state:

"A review of case law demonstrates that continuous and systematic contacts is a fairly high standard. See, e.g., Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984) (no jurisdiction over a foreign corporation that sent officer to forum for one negotiating session, acceptedchecks drawn on a forum bank, purchased equipment from the forum, and sent personnel to the forum to be trained); Cubbage v. Merchent, 744 F.2d 665, 667-68 (9th Cir.1984) (finding no jurisdiction over defendant doctors despite a significant numbers of patients in the forum, use of the forum's state medical insurance system, and a telephone directory listing including the defendants that reached the forum), cert. denied, 470 U.S. 1005 (1985). Notably, the Sixth Circuit Court of Appeals rejected a claim that general jurisdiction existed based upon the following contacts between the defendant and the forum state, Ohio: 1) the existence of a prior reinsurance agreement between the defendant and an Ohio company; 2) a prior reinsurance agreement between the parties; and 3) the defendant's participation in a property pool. Nationwide Mut. Ins. Co. v. Tryg Intern. Ins. Co., Ltd., 91 F.3d 790, 793-94 (6th Cir.1996). The appellate court concluded that such contacts failed to establish the kind of 'continuous and systematic' conduct required to support general personal jurisdiction over the defendant. Id. (citing Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 918 F.2d 1039, 1045-46 (2d Cir.1991) (holding that thirteen business

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