Mayfran Int'l, Inc. v. Eco-Modity, L.L.C.

135 N.E.3d 792

2019 Ohio 4350

MAYFRAN INTERNATIONAL, INCORPORATED, Plaintiff-Appellant,

v.ECO-MODITY, L.L.C., Defendant-Appellee.

No. 107959

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: October 24, 2019

JOURNAL ENTRY AND OPINION

MICHELLE J. SHEEHAN, J.:

{¶ 1} Mayfran International Incorporated ("Mayfran" hereafter) appeals from the trial court's judgment granting the motion to dismiss for lack of personal jurisdiction filed by Eco-Modity, L.L.C., d.b.a. Blue Marble Material, ("Blue Marble" hereafter). Mayfran raises the following assignment of error for our review:

1. The trial court erred in dismissing this case for lack of personal jurisdiction holding that exercising jurisdiction over defendant Eco-Modity L.L.C. would violate defendant's due process rights.

{¶ 2} After a de novo review, we find merit to the appeal and reverse the trial court's judgment granting Blue Marble's motion to dismiss for lack of personal jurisdiction. As we explain in the following, Mayfran established a prima facie showing that Ohio's long-arm statute confers upon the trial court personal jurisdiction over Blue Marble and its exercise of jurisdiction does not offend traditional notions of fair play and substantial justice.

Substantive Facts and Procedural History

{¶ 3} The facts in this case are largely undisputed. Blue Marble is a California business operating several mattress recycling facilities in that state. Mayfran is a process engineering company in Ohio. It designs, manufactures, and sells a variety of industrial products, including recycling equipment.

{¶ 4} In June, 2015, Tchad Robinson, the president of Blue Marble, travelled to Las Vegas to attend Waste Expo, a trade show. While there, he met Kim Jaker, president of H. West Equipment, a company selling recycling equipment and a distributor of Mayfran equipment. Robinson talked to Jaker about Blue Marble's plan to automate its recycling facilities.

{¶ 5} Several weeks after the trade show, Jaker told Robinson about Mayfran and suggested Mayfran may be able to help Blue Marble with automating its recycling process. In August 2015, Jaker and a team of Mayfran representatives went to Blue Marble's headquarter in Commerce, California. They presented a proposal for Mayfran to design and install a significant part of the recycling process at Blue Marble's facilities.

{¶ 6} From October 2015 to May 2017, the two companies engaged in contract negotiations, negotiated primarily by way of email communications and telephone calls. Robinson visited Mayfran once, in 2017. As a result of the extensive negotiations over the course of 19 months, Blue Marble and Mayfran executed a total of ten contracts totaling $8 million. Under the contracts, Mayfran would design and manufacture for Blue Marble an automated recycling system, consisting of 50 pieces of equipment, to be installed at Blue Marble's recycling facilities in California. Among the 50 pieces of equipment, many were custom-designed for Blue Marble and manufactured in Ohio. In addition to the design, manufacturing, and installation of the equipment, Mayfran was involved in the concrete and electrical work at one of Blue Marble's facilities.

{¶ 7} Subsequently, disputes arose regarding the performance of the automated system and Blue Marble's failure to pay under the contracts. In April 2018, Mayfran filed a complaint against Blue Marble in the Cuyahoga County Court of Common Pleas, raising claims of breach of contract and unjust enrichment and seeking more than $6 million in unpaid contract price.¹ Blue Marble filed a motion to dismiss for lack of personal jurisdiction. Without a hearing, the trial court granted the motion, holding that although Ohio's long-arm statute confers personal jurisdiction over Blue Marble, exercising jurisdiction in this case would offend the notions of fair play and substantial justice in violation of the nonresident defendant's due process rights.

Standard of Review

{¶ 8} We review de novo the trial court's decision granting a Civ.R. 12(B)(2) motion to dismiss for lack of personal jurisdiction. Alpha Telecommunications, Inc. v. ANS Connect , 8th Dist. Cuyahoga, 2008-Ohio-3069, ––– N.E.3d ––––, ¶ 9.

{¶ 9} It is rudimentary that in order to enter a valid judgment a court must have personal jurisdiction over the defendant. Maryhew v. Yova , 11 Ohio St.3d 154, 156, 464 N.E.2d 538 (1984). It is the plaintiff who has the burden to establish the court's personal jurisdiction over the defendant by a preponderance of evidence. Giachetti v. Holmes , 14 Ohio App.3d 306, 307, 471 N.E.2d 165 (8th Dist.1984). However, when the trial court decides the issue of personal jurisdiction without a hearing, as here, the plaintiff need only make a prima facie showing of personal jurisdiction to withstand a motion to dismiss, Giachetti at 307, 471 N.E.2d 165, although the burden remains on the plaintiff to establish personal jurisdiction by a preponderance of evidence. State ex rel. DeWine v. 950 Group L.P. , 2012-Ohio-3339, 977 N.E.2d 112, ¶ 15 (9th Dist.) ("[W]here the trial court decides personal jurisdiction absent an evidentiary hearing, the plaintiff continues to bear the burden of proving, in its case-in-chief at trial, existence of facts upon which jurisdiction is based by a preponderance of evidence.").

{¶ 10} Moreover, we note that when the court resolves the issue of personal jurisdiction without a hearing, the factual allegations relevant to personal jurisdiction must be construed in a light most favorable to the plaintiff and the court should resolve all reasonable competing inferences in their favor. Goldstein v. Christiansen , 70 Ohio St.3d 232, 236, 638 N.E.2d 541 (1994). In this case, Blue Marble requested an evidentiary hearing. However, the trial court resolved the motion to dismiss without a hearing. Therefore, Mayfran is only required to make a prima facie showing of personal jurisdiction at this stage of the proceedings and the factual allegations must be construed in a light most favorable to Mayfran.

Two-Prong Test for Personal Jurisdiction: (1) Long-Arm Statute and (2) "Minimum Contacts"

{¶ 11} The court applies a two-prong test to determine whether it has personal jurisdiction over a defendant. "First, the court must determine whether the state's ‘long-arm’ statute and applicable civil rules confer personal jurisdiction, and, if so, whether granting jurisdiction under the statute and the rule would deprive the defendant of the right to due process of law pursuant to the Fourteenth Amendment to the United States Constitution." United States Sprint Communications Co. v. K's Foods , 68 Ohio St.3d 181, 183-184, 624 N.E.2d 1048 (1994).

A. First Prong: Long-Arm Statute

{¶ 12} Ohio's long-arm statute, R.C. 2307.382(A)(1), and Civ.R. 4.3(A)(1) permit a court to exercise personal jurisdiction over a nonresident defendant and provide for service of process to effectuate that jurisdiction when the cause of action arises from the nonresident defendant's "transacting any business in [the] state." Goldstein at 235-236, 638 N.E.2d 541.

{¶ 13} As the Supreme Court of Ohio emphasized, both the statute and the rule are broadly worded and permit jurisdiction over any defendant who is "transacting any business" in Ohio. Kentucky Oaks Mall Co. v. Mitchell's Formal Wear Inc. , 53 Ohio St.3d 73, 75, 559 N.E.2d 477 (1990). Quoting Black's Law Dictionary (5th Ed.1979), the court in Kentucky Oaks stated the term "transact" " ‘means to prosecute negotiations ; to carry on business; to have dealings ,’ " " ‘but it is a broader term than the word "contract" and may involve business negotiations which have been either wholly or partly brought to a conclusion.’ " (Emphasis sic.) Id. Whether a defendant has transacted any business in Ohio is determined on the particular facts of the case. United States Sprint Communications Co. at 185, 624 N.E.2d 1048.

{¶ 14} In Pharmed Corp. v. Biologics, Inc. , 97 Ohio App.3d 477, 483, 646 N.E.2d 1167 (8th Dist.1994), a Florida company negotiated with an Ohio company to sell medical beds to the Ohio company. This court, noting the Florida defendant engaged in negotiations with the Ohio company by mail, telephone, and facsimile, held that the defendant's conduct in negotiating and entering into a contract for the sale of the beds amounts to transacting business within the state of Ohio.

{¶ 15} Similarly here, Blue Marble engaged in negotiations with Mayfran, in Ohio, by telephone and email communication. Construing the notion of "transacting any businesses" broadly, Kentucky Oaks , we conclude, as the trial court did, that Blue Marble's contractual dealing with Mayfran in Ohio constituted "transacting any business" in Ohio within the meaning of R.C. 2307.382(A)(1) and Civ.R. 4.3. The trial court is authorized to exercise personal jurisdiction over Blue Marble under the first prong of the personal jurisdiction analysis.²

B. Second Prong: "Minimum Contacts"

{¶ 16} Even when a state's long-arm statute authorizes personal jurisdiction over a nonresident defendant, personal jurisdiction of state courts is limited by the Due Process clause of the Fourteenth Amendment. Bristol-Myers Squibb Co. v. Superior Court , 582 U.S. ––––, 137 S.Ct. 1773, 1779, 198 L.Ed.2d 395 (2017). Under due process, a court may assert personal jurisdiction over a nonresident defendant only if the defendant has certain "minimum contacts" with the forum state such that maintenance of the suit "does not offend traditional notions of fair play and substantial justice." Internatl. Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

{¶ 17} When considering the "minimum contacts" test, we first note that personal jurisdiction can be either general or specific, depending on the nature of the contacts the defendant has with the forum state. General jurisdiction is proper where a defendant's contacts with the forum state are of a continuous and systematic nature as to permit the...