Hutton v. Hydra-Tech, Inc.

213 F.Supp.3d 746

Dana Leah Puckett HUTTON, as Executrix of the Estate of Robert James Hutton, Jr., Plaintiff,

v.HYDRA-TECH, INC., Jerry L. Hudson, American Assurance Corporation, Altec, Inc., Altec LLC, Altec Industries, Inc., Altec Nueco, LLC, Hyco International Inc. n/k/a Weber-Hydraulik, Inc., Hyco Canada, ULC, n/k/a Weber Hydraulic Hyco Canada, Hyco Alabama, LLC and Superior Aerial and Equipment Repair, Inc., Defendants.

1:14-cv-888

United States District Court, M.D. North Carolina.

Signed September 30, 2016

Amiel J. Rossabi, Elizabeth M. Klein, Rossabi Reardon Klein Spivey PLLC, Jennifer L. Reutter, Black Slaughter & Black, P.A., Greensboro, NC, for Plaintiff.

George Washington Miller, III, Haywood Denny & Miller, L.L.P., Durham, NC, Robert H. Hood, Jr., Hood Law Firm, Charleston, SC, Andrew S. Chamberlin, Christopher W. Jackson, Ellis & Winters, LLP, Corinne Berry Jones, David Erik Albright, William Craig Turner, Jr., Smith Moore Leatherwood, LLP, Greensboro, NC, Mary Margaret Dillon, Ellis & Winters, LLP, David S. Coats, Daniel McPherson Nunn, Bailey & Dixon, LLP, Raleigh, NC, for Defendants.

MEMORANDUM OPINION AND ORDER

LORETTA C. BIGGS, District Judge.

Dana Leah Hutton ("Ms. Hutton"), as the executrix of the estate of Robert James Hutton, Jr. ("Mr. Hutton"), brought this action for wrongful death against several defendants, including Jerry L. Hudson and Hydra-Tech, Inc. (collectively as "Hydra-Tech Defendants"). Hydra-Tech Defendants previously filed a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) and for failure to state a claim under Rule 12(b)(6), (ECF No. 54 at 1–2), and this Court authorized limited discovery and deferred consideration of that motion. (ECF No. 89 at 9–10.) The parties have completed limited discovery, and before the Court is Hydra-Tech Defendants' Renewed Motion to Dismiss pursuant to Rules 12(b)(2) and 12(b)(6). (ECF No. 120.) For the reasons that follow, the Court grants Hydra-Tech Defendants' motion to the extent it seeks dismissal for lack of personal jurisdiction.¹

I. STANDARD OF REVIEW

When a nonresident defendant challenges personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure, the jurisdictional issue is for the judge to resolve with the plaintiff eventually having to bear the ultimate burden of proving jurisdiction by a preponderance of the evidence. See Grayson v. Anderson , 816 F.3d 262, 268 (4th Cir. 2016) ; Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc. , 334 F.3d 390, 396 (4th Cir. 2003). The Fourth Circuit has observed that the plaintiff's burden of proof "varies according to the [procedural] posture of [the] case and the evidence that has been presented to the court." Grayson , 816 F.3d at 268. Ordinarily, where the court decides a pretrial personal jurisdiction motion without conducting an evidentiary hearing—relying instead on motion papers, supporting legal memoranda, and allegations in the complaint—the plaintiff only has to make a prima facie showing of personal jurisdiction. Consulting Eng'rs Corp. v. Geometric Ltd. , 561 F.3d 273, 276 (4th Cir. 2009).

However, an " ‘evidentiary hearing’ does not automatically involve or require live testimony" but "requires only that the district court afford the parties a fair opportunity to present both the relevant jurisdictional evidence and their legal arguments." Grayson , 816 F.3d at 268. Where the parties have engaged in discovery on the issue of personal jurisdiction and have submitted evidence beyond the pleadings, as in this case, the court "must hold the plaintiff to its burden of proving facts, by a preponderance of the evidence, that demonstrate the court's personal jurisdiction over the defendant." Id. ; see also Hamburg Sudamerikanische Dampfschiffahrts – Gesellschaft , KG v. Texport, Inc. , 954 F.Supp.2d 415, 419–20 (D.S.C. 2013) (holding the plaintiff to a preponderance of the evidence standard because the parties had engaged in jurisdictional discovery); AARP v. Am. Family Prepaid Legal Corp. , 604 F.Supp.2d 785, 797 (M.D.N.C. 2009) (same). "[O]nly when a material jurisdictional fact is disputed and that fact overlaps with a fact that needs to be resolved on the merits by a jury might a court defer its legal ruling on personal jurisdiction to let the jury find the overlapping fact." Grayson , 816 F.3d at 267.

II. BACKGROUND

Hydra-Tech, Inc. ("Hydra-Tech") was an Indiana company that was formed in 1981. (ECF No. 122-1 ¶ 2.) It was in the business of building and selling aerial lift trucks. (Id. ¶ 4.) Jerry L. Hudson ("Mr. Hudson") served as Hydra-Tech's president and was a shareholder until its dissolution in 2009. (Id. ¶¶ 2–3.) Throughout its existence, Hydra-Tech was located in Fort Wayne, Indiana, along with its operations, property, employees, and bank accounts. (Id. ¶ 6.)

Over the years, Hydra-Tech produced over 9500 units, selling them throughout the United States, primarily to utilities and tree-trimming companies. (ECF No. 122-2 at 116:12–17; ECF No. 122-1 ¶ 7.) Hydra-Tech referred potential customers to one of its distributors if one was in the area of the potential customer. (See ECF No. 127-2 at 46:16–47:6.) If not, Hydra-Tech would take the order. (See id. ) Customers could go to Hydra-Tech's website for information on its products and for Hydra-Tech's phone number; however, no orders could be placed from the website. (ECF No. 122-1 ¶ 12; ECF No. 127-2 at 44:11–12, 45:7–12.) All of Hydra-Tech's units were sold "F.O.B. Fort Wayne, Indiana, which meant that the customer took title to and risk of loss of the goods at Hydra-Tech's Fort Wayne facility." (ECF No. 122-1 ¶ 8.)

From 1982 to 1987, MAP Enterprises ("MAP"), a North Carolina company, was Hydra-Tech's distributor in North Carolina and six other states. (ECF No. 122-3 at 10:10–11, 20:19–25; ECF No. 122-1 ¶ 10; ECF No. 127-3 at 21:10–15.) A total of four Hydra-Tech units were sold to MAP, and MAP sold at least one of the four units to an end customer located in North Carolina. (ECF No. 127-3 at 16:17–19, 17:2–7; ECF No. 122-3 at 23:12–24:4.) MAP and Hydra-Tech's relationship ended in 1987, but MAP placed an order with Hydra-Tech for a repair part in 1990. (See ECF No. 122-3 at 10:10–11; 127-2 at 126:16–21, 128:4–8.)

At some point in the late 1990s or early 2000s, Morse Manufacturing ("Morse"), a company located in Massachusetts, asked Hydra-Tech for the right to sell Hydra-Tech units in North Carolina as well as other states. (ECF No. 122-2 at 37:8–11; ECF No. 122-4 Resp. No. 5.) Hydra-Tech agreed to Morse's request. (ECF No. 122-4 Resp. No. 5.) It is unclear when Morse and Hydra-Tech terminated their relationship. (ECF No. 122-2 at 37:12–38:4.) However, in 2001, Hydra-Tech sold a unit directly to Surry-Yadkin, EMC, located in North Carolina because Hydra-Tech did not have a North Carolina distributor at that time. (ECF No. 127-2 at 195:14–196:10.) In addition, Hydra-Tech provided quotes to two North Carolina cities in 2002 and 2003. (ECF No. 122-4 Resp. 10.)

In March 2007, Hydra-Tech sold the unit at issue in this case to Davey Tree Expert Company ("Davey Tree"), which was headquartered in Ohio. (ECF No. 122-1 ¶¶ 13–14.) Davey Tree arranged for a common carrier to pick the unit up at Hydra-Tech's facility in Fort Wayne and deliver it to Greensboro, North Carolina. (Id. ¶¶ 15–16.) Hydra-Tech then completed a bill of lading to that effect, and the unit was sold F.O.B. Fort Wayne. (Id. ¶¶ 16–17.) About a year and a half after the sale to Davey Tree, Mr. Hudson approached Altec, LLC about selling Hydra-Tech. (ECF No. 127-2 at 71:20–72:1.) Mr. Hudson sold all of Hydra-Tech's assets to Altec, LLC and dissolved the company in 2009. (ECF No. 122-1 ¶ 18.)

Around four years later, the incident giving rise to this action occurred. Mr. Hutton, a tree trimmer and Davey Tree employee, was operating an aerial device when it allegedly malfunctioned, causing Mr. Hutton to fall thirty-five feet to his death. (ECF No. ¶¶ 14, 25, 28.) Ms. Hutton's Amended Complaint alleges, among other things, that "Hydra-Tech was responsible for installing, designing, manufacturing and/or constructing" the aerial device and that "Mr. Hudson was the principal owner, sole shareholder and officer of Hydra-Tech." (Id. ¶¶ 16, 37.) Ms. Hutton asserts claims of negligence, unfair and deceptive trade practices, and concealment of insurance against Hydra-Tech and, against Mr. Hudson, she asserts claims for piercing the corporate veil, concealment of insurance, and unfair and deceptive trade practices. (Id. at 7, 9, 15, 17.)

Hydra-Tech Defendants moved to dismiss the action against them under Rule 12(b)(2), contending that this Court lacked personal jurisdiction over them. (ECF No. 54 at 2.) They further moved to dismiss all claims, except for the negligence claim against Hydra-Tech, under Rule 12(b)(6) for failure to state a claim. (See id. ) In response, Ms. Hutton requested limited discovery and urged the Court to defer ruling on the motion to dismiss. (ECF No. 66 at 3–4.) The Court held a hearing, and subsequently granted Ms. Hutton's request for limited discovery and dismissed Hydra-Tech's motion to dismiss without prejudice to it being refiled and supplemented following the completion of discovery.² Hydra-Tech Defendants now renew their challenge to this Court's exercise of personal jurisdiction over them.

III. PERSONAL JURISDICTION

"The Due Process Clause of the Fourteenth Amendment constrains a State's authority to bind a nonresident defendant to a judgment of its courts." Walden v. Fiore , ––– U.S. ––––, ––––, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014). A federal district court can exercise personal jurisdiction over a nonresident defendant only if "(1) such jurisdiction is authorized by the long-arm statute of the state in which the district court sits; and (2) application of the relevant long-arm statute is consistent with the Due Process Clause of the Fourteenth Amendment." Universal Leather, LLC v. Koro AR, S.A. , 773 F.3d...