Pats Aircraft, LLC v. Vedder Munich GmbH, C.A. No. 15-1182-RGA

197 F.Supp.3d 663

PATS AIRCRAFT, LLC, Plaintiff,

v.VEDDER MUNICH GMBH, Defendant.

C.A. No. 15-1182-RGA

United States District Court, D. Delaware.

Signed July 14, 2016

Daniel Bartley Rath, Esq., and James S. Green, Jr., Esq., Wilmington, Delaware; Polina Polansky, Esq., and Stephen A. Silverman, Esq., Los Angeles, California, Attorneys for the Plaintiff.

Andrew Dieter Cordo, Esq., and Frederick Troupe Mickler, IV, Esq., Wilmington, Delaware, Attorneys for the Defendant.

MEMORANDUM OPINION

ANDREWS, U.S. DISTRICT JUDGE:

Before the Court is Defendant's Motion to Dismiss or, in the alternative, to stay proceedings based on Fed. R. Civ. P. 12(b)(2), 12(b)(5), international comity and forum non conveniens. (D.I. 3). The motion has been fully briefed. (D.I. 4, 7, 11). Defendant's motion will be denied in part and stayed in part.

I. BACKGROUND

A. The Parties

Plaintiff PATS Aircraft LLC is a Delaware limited liability company headquartered in Georgetown, Delaware. (D.I. 9 at ¶ 3). PATS specializes in providing aircraft maintenance, modification, and luxury interior completion services to customers. (Id. at ¶ 4). To provide these services to clients, PATS designs the interior and then oversees the manufacture and integration of components into the aircraft. (Id. ).

Defendant Vedder Munich GmbH is a German corporation with its principal office in Wallersdorf, Germany. (D.I. 4, Ex. 1, ¶ 3). Vedder Munich is an affiliate of Vedder GmbH and was formed in 2013 for the purpose of acquiring most of the assets of the insolvent German company, Loher Raumexklusiv GmbH. (Id. ). Prior to filing for insolvency, "Loher's business included providing interior outfitting for personal residences, yachts and private aircraft." (Id. ).

Vedder Munich has no employees, offices, business facilities or telephone numbers in the United States. (Id. at ¶ 4). It does not maintain any bank accounts or own or lease any real estate in the United States. (Id. ). Vedder Munich does not advertise in Delaware and it does not operate a website. (Id. at ¶ 7).

B. The Transaction

In November 2011, PATS entered into an Aircraft Modification Agreement with White Springs Holdings Ltd., for the modification of a Boeing Business Jet 737 aircraft. (D.I. 9 at ¶ 5). The aircraft is registered with the FAA and must comply with all FAA rules and regulations, including those relating to flammability. (Id. at ¶ 6). White Springs requested that PATS hire Loher to complete the interior cabinetry work for the aircraft. (Id. at ¶ 7). However, Loher filed for insolvency before it was able to perform the cabinetry manufacture under the Aircraft Modification Agreement. (Id. at ¶ 7). Prior to the purchase of Loher's assets, Loher's insolvency administrator informed Vedder Munich that the owner of the aircraft wanted to discuss the possibility of Vedder Munich taking on the PATS project. (D.I. 4, Ex 1, ¶ 13).

On May 29, 2013, representatives of PATS and Vedder Munich held a preliminary meeting at the Munich Airport in Germany in order to discuss the possibility of Vedder taking on the PATS project. (Id. at ¶ 14; D.I. 9 at ¶ 9). The parties agreed that, if Vedder Munich completed its acquisition of Loher, it would complete a review of the project and submit estimates as to costs and timing for completion. (D.I. 4, Ex. 1, ¶ 15). On June 1, Nicholas Held, managing director of Vedder Munich, informed PATS that the company had completed its acquisition of Loher and was willing to pursue the manufacturing project. (Id. at ¶ 17).

The parties held another meeting on June 12-13, 2013. (Id. at ¶¶ 15, 18; D.I. 9 at ¶ 10). At PATS' invitation, Director Held travelled to Georgetown, Delaware to discuss terms and to view PATS' facilities. (D.I. 4, Ex. 1, ¶¶ 16, 18). At the time, PATS states that it was entertaining other bids to complete the project and that this Delaware meeting with Vedder Munich formed the basis of PATS' decision ultimately to hire Vedder Munich. (D.I. 9 at ¶ 10). The parties continued to discuss the terms of the contract through email and phone following the Delaware meeting. (D.I. 4, Ex. 1, ¶ 20; D.I. 9 at ¶ 12). When an agreement was reached, each party executed the subcontract in its respective country on July 25, 2013. (D.I. 4, Ex. 1, ¶ 21; D.I. 9 at ¶ 13).

During the manufacturing process, members of PATS' staff flew to Germany to review the manufacturing process. (D.I. 4, Ex. 1, ¶ 22). Title to the completed cabinets was passed in Germany and the cabinets were then shipped to Philadelphia, Pennsylvania. (Id. at ¶ 23). As the project progressed, Vedder Munich began to fall behind the agreed upon delivery schedule. (D.I. 9 at ¶¶ 13, 15). As a result, Vedder Munich agreed to perform some work in Delaware. (Id. at ¶¶ 15-16). PATS also notes that Vedder Munich began shipping unfinished cabinetry to Delaware for completion at the PATS Georgetown facility in order to compensate for lost time. (Id. at ¶15). Between December 2013 and March 2015, PATS asserts that Vedder Munich made fifty shipments to Delaware of product in various stages of completion. (Id. ). Vedder also sent personnel to oversee the necessary work, as well as additional parts and materials. (Id. at ¶¶ 16-17). The parties agree that Vedder Munich employees remained in Delaware for extended periods of time to assist on the project. (D.I. 4, Ex. 1, ¶ 25; D.I. 9 at ¶¶ 16-18). Director Held also made a second visit to Delaware to assess progress on the project in December 2014. (D.I. 9 at ¶ 20).

Under the July 25th subcontract, Vedder Munich was obligated to provide "burn test coupons" for testing to ensure compliance with the FAA's flammability requirements. (Id. at ¶ 21). These burn test coupons were essentially representative samples of the cabinetry that Vedder Munich was manufacturing for PATS. (Id. ). Vedder delivered the official set of burn test coupons to PATS in early 2015. (Id. at ¶ 23). The coupons failed the FAA-mandated flammability tests, rendering the aircraft unairworthy. (Id. ). Following the failure, Director Held made a third visit to Delaware on June 16, 2015 in an attempt to negotiate issues relating to the failure. (Id. at ¶ 24). The parties were ultimately unable to reach a resolution regarding who should bear the costs associated with correcting the flammability problem, and continue to disagree over who bears the burden of ensuring FAA compliance under the subcontract. (Id. at ¶¶ 25-26).

II. PROCEDURAL HISTORY

A. German Declaratory Action

On September 28, 2015, Vedder Munich filed a declaratory judgment action against PATS in the Regional Court Landshut, Commercial Cases Division in Landshut, Germany. (D.I. 11, Ex. A at ¶ 4). Specifically, Vedder Munich is asking the Regional Court for a determination of the parties' obligations under the contract. (D.I. 4, Ex. 1 at 30-32). Service of that lawsuit was effectuated on PATS in Delaware on December 18, 2015. (D.I. 11, Ex. A at ¶ 4). PATS subsequently filed notice with the Regional Court of its intent to defend the lawsuit and the Regional Court set a deadline for PATS' reply. (Id. at ¶ 5).

B. Delaware Action

PATS filed this action on November 6, 2015, in Delaware Superior Court, seeking affirmative relief for breach of contract and warranty. (D.I. 9 ¶ 26; D.I. 1, Ex. A, 2-15). The case was subsequently removed to this court. (D.I. 1). PATS sent notice of this action to Vedder Munich by registered mail and also served a copy of the complaint upon the Delaware Secretary of State. (D.I. 7, Ex. A). Notice by mail was received by Vedder Munich in Germany on November 30, 2015. (D.I. 4, Ex. 1, ¶ 33). PATS then served Vedder Munich through the German Central authority, purportedly in compliance with the Hague Convention, on February 22, 2016. (D.I. 16-1).

III. DISCUSSION

A. 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction

When reviewing a motion to dismiss pursuant to Rule 12(b)(2), a court must accept as true all allegations of jurisdictional fact made by the plaintiff and resolve all factual disputes in the plaintiff's favor. Traynor v. Liu , 495 F.Supp.2d 444, 448 (D.Del.2007). Once a jurisdictional defense has been raised, the plaintiff bears the burden of establishing, with reasonable particularity, that such minimum contacts have occurred between the defendant and the forum sufficient to support jurisdiction. See Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n , 819 F.2d 434, 437 (3d Cir.1987). To meet this burden, the plaintiff must produce "sworn affidavits or other competent evidence," since a Rule 12(b)(2) motion "requires resolution of factual issues outside the pleadings." Time Share Vacation Club v. Atlantic Resorts, Ltd. , 735 F.2d 61, 67 n. 9 (3d Cir.1984).

The personal jurisdiction analysis involves both a statutory and constitutional inquiry. Shoemaker v. McConnell , 556 F.Supp.2d 351, 354 (D.Del.2008). First, the court must consider whether a defendant's actions come within any of the provisions of the state long-arm statute. See Intel v. Broadcom , 167 F.Supp.2d 692, 700 (D.Del.2001). Second, the Court must determine whether exercising jurisdiction over the defendant in the forum comports with the Due Process Clause of the Constitution. Id. Due process is satisfied if the court finds the existence of "minimum contacts" between the non-resident defendant and the forum state, "such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ " International Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

1. This Court may exercise specific personal jurisdiction over Vedder Munich under the Delaware long-arm statute.

With regard to the first part of the personal jurisdiction analysis, the court applies the law of the state in which the district court is located. See Intel , 167 F.Supp.2d at 700. Pursuant to the relevant portions of the Delaware long-arm statute, this court may exercise personal jurisdiction over Vedder Munich when the company or its agent:

(1)

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