J.H. Berra Paving Co. v. Legendary Motorcar Co.

J.H. BERRA PAVING CO. INC., Plaintiff, v. LEGENDARY MOTORCAR COMPANY LTD and SCOTT SINCLAIR, Defendants.

Case No. 4:18-CV-02148-NCC

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

June 3, 2019

MEMORANDUM AND ORDER

This case is before the Court on Defendants Legendary Motorcar Company Ltd. and Scott Sinclair's (collectively "Defendants") Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 11). The motion has been fully briefed. The parties have consented to the jurisdiction of the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c) (Doc. 14). For the reasons stated herein, the Defendants' Motion to Dismiss is GRANTED and this action is DISMISSED, without prejudice.

I. Legal Standard for Review

Rule 12(b)(2) of the Federal Rules of Civil Procedure provides that a party may move to dismiss claims for lack of personal jurisdiction. To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving party is required to make a prima facie showing of jurisdiction based on the pleadings, affidavits, and exhibits. Miller v. Nippon Carbon Co., Ltd., 528 F.3d 1087, 1090 (8th Cir. 2008); Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2001). It is the plaintiff who bears the ultimate burden of establishing the existence of personal jurisdiction by a preponderance of the evidence. Creative Calling Solutions, Inc. v. LF Beauty Ltd., 799 F.3d 975, 979 (8th Cir. 2015). At the motion stage, an action should not be dismissed for lack of jurisdiction if the evidence, viewed in a light most favorable to the plaintiff, is sufficient to support a conclusion that the exercise of personal jurisdiction over the defendant is proper. Id.

II. Background

This case arises out of a contractual dispute between Plaintiff J.H. Berra Paving Co. Inc. ("Plaintiff"), a Missouri corporation located in St. Louis, Missouri and purchaser of a classic automobile, and Defendant Legendary Motorcar Company Ltd. ("LMC"), the Canadian seller of the automobile. At all relevant times, Plaintiff acted through its president, John Berra ("Berra"). LMC is a company with its principal place of business in Ontario, Canada. Defendant Scott Sinclair ("Sinclair") is an individual resident of Canada who at all relevant times remained in Canada. Plaintiff filed this action on December 27, 2018 in the Circuit Court of the County of St. Louis, Missouri for violation of the Missouri Merchandising Practices Act (MMPA), Mo. Rev. Stat. §§ 407.010 et seq. (Count I), fraud (Count II), and negligence per se (Count VI) against both Defendants, and breach of contract (Count III), unjust enrichment (Count IV), conversion (Count V), and negligence (Count VII)¹ against Defendant LMC only (Doc. 4). Defendants removed that action to this Court on January 2, 2019 on the basis of diversity jurisdiction (Doc. 8). The gravamen of Plaintiff's petition is that Plaintiff purchased from LMC for $280,000 an authentic, 1967 Corvette Stingray Roadster ("Corvette") that had all original"born with"² parts, but that upon getting the Corvette inspected in the United States, Plaintiff learned that the Corvette had forged, non-original parts that rendered the vehicle disqualified from national Corvette judging events.

The specific facts, in the light most favorable to Plaintiff, are as follows. In September 2016, Berra telephoned LMC regarding the particulars of a vehicle LMC advertised for sale on its company website, "legendarymotorcar.com." When Berra emphasized that he was only interested in purchasing an original and authentic Corvette, LMC informed Berra that the vehicle listed "for sale" was not entirely original. LMC then informed Berra that there was another vehicle, the Corvette at issue here, in its inventory that was entirely original, but that the vehicle was currently listed on the website as "not for sale." The sales person at LMC would check to see if the vehicle could be purchased. Approximately ten days later, Berra contacted LMC again to ask whether the Corvette previously listed as "not for sale" could be purchased.

LMC later contacted Berra over the phone and stated that the Corvette listed as "not for sale" was now available for $285,000. Plaintiff asserts that throughout various telephone conversations and email contacts over the following days, LMC ensured the authenticity of the vehicle. Berra then called Sinclair, a well-known expert on Corvette restoration who resided in Canada, to perform an inspection of the Corvette at LMC's premises (Doc. 12-2). Sinclair confirmed the authenticity of the vehicle. Berra then purchased the Corvette for $280,000 and signed a bill of sale evidencing the same, and he paid for the Corvette's shipment from Canada to Missouri (Doc. 4-1).

Plaintiff asserts that upon having the Corvette inspected in Missouri for Corvette judging events, Corvette inspectors in Missouri refused to certify the vehicle as original because the engine stamp was forged. Plaintiff also sent photos to a National Corvette Restorers Society Judge in New York who refused to certify the engine as original to the car. Plaintiff contacted LMC about the engine stamp. Plaintiff alleges LMC called Plaintiff on at least five occasions to campaign for the authenticity of the Corvette. LMC refused to rescind the sale.

On January 16, 2019, Defendants filed a Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 11). Specifically, Defendants contend that Plaintiff's petition fails to satisfy Missouri's Long-Arm Statute and that the petition fails to establish specific jurisdiction.

III. Discussion

To exercise personal jurisdiction over a non-resident defendant, the court in a diversity action must determine (1) whether the defendant is subject to the forum state's long-arm statute and (2) whether the exercise of personal jurisdiction is in accordance with the Due Process Clause. See Dever, 380 F.3d at 1073. "Personal jurisdiction can be specific or general." Viasystems, Inc. v. EBM-Pabst St. Georgen GmbH & Co., KG, 646 F.3d 589, 593 (8th Cir. 2011). The parties agree that this case concerns the Court's specific jurisdiction over Defendants (Doc. 17 at 10; Doc. 18 at 4). "Specific personal jurisdiction can be exercised by a federal court in a diversity suit only if authorized by the forum state's long-arm statute and permitted by the Due Process Clause of the Fourteenth Amendment." Viasystems, 646 F.3d at 593 (emphasis added).

As a preliminary matter, the Court finds that Plaintiff has failed to establish by a preponderance of the evidence that the Court has personal jurisdiction over Defendant Sinclair. Berra initiated all contacts with Sinclair, and at Berra's request, Sinclair conducted an inspectionof the disputed Corvette in Canada (See Doc. 4 and Doc. 12-2). Further, while Plaintiff purports to address the Court's jurisdiction as to Sinclair in its motion, Plaintiff fails to address the applicability of Missouri's Long-Arm Statute and the Due Process Clause to Sinclair (See Doc. 17). Therefore, the Court will dismiss the claims as to Sinclair for lack of personal jurisdiction and only address the issue of personal jurisdiction over Defendant LMC.

A. Missouri's Long-Arm Statute

While Missouri's "long-arm statute extends to the limits of the Due Process Clause, it does so only for acts within its enumerated categories." Dairy Farmers of America, Inc., v. Bassett & Walker Int'l, Inc., 702 F.3d 472, 475 (8th Cir. 2012). The Missouri Long-Arm Statute provides jurisdiction over the following relevant act: (3) The commission of a tortious act within this state. Mo. Rev. Stat. § 506.500. "A party relying on a defendant's commission of a tort within [Missouri] to invoke long arm jurisdiction must make a prima facie showing of the validity of [its] claim." State ex rel. William Ranni Assoc., Inc. v. Hartenbach, 742 S.W.2d 134, 139 (Mo. 1987). Although the long-arm statute nominally contemplates tortious acts occurring within the State, Missouri courts have interpreted the tortious acts prong to cover "extraterritorial acts of negligence producing actionable consequences in Missouri." Id. In order to produce "actionable consequences" for an intentional tort, such as the case here, a strict deliberate design standard applies. See Capitol Idem. Corp. v. Citizens Nat. Bank, 8 S.W.3d 893, 903 (Mo. App. W.D. 2000) (holding that "[t]he defendant must have set in motion a course of action which was deliberately designed to move into Missouri and injure the plaintiff"). See also Myers v. Casino Queen, Inc., 689 F.3d 904, 911 (8th Cir. 2012) (applying a foreseeability standard to tortious acts occurring in another state with actionable consequences in Missouri).

Here, Plaintiff alleges that LMC committed tortious acts having an effect in Missouri, namely fraud and conversion (Doc. 4). Even assuming that Plaintiff sufficiently alleges fraud and conversion, Plaintiff has failed to show that LMC set in motion a course of action which was deliberately designed to enter into Missouri and injure Plaintiff. See Capitol Indem. Corp., 8 S.W.3d at 903. It was not foreseeable to LMC, a Canadian company, for a federal district court in Missouri to exercise personal jurisdiction limited to its website or advertising presence here. LMC's contacts with Berra via telephone and email to confirm the authenticity of the vehicle and negotiate the contract to purchase the Corvette do not overcome this threshold. Further, assuming that LMC's tortious conduct resulted in actionable consequences in Missouri, the Court cannot exercise personal jurisdiction over LMC because such exercise would not comport with the Due Process Clause of the Fourteenth Amendment. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980).

B. Due Process Requires Minimum Contacts

The Due Process Clause requires "minimum contacts" between the nonresident defendant and the forum state such that "maintenance of the suit does not offend traditional notions...