Union Home Mortgage Corp. v. Everett Financial Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

UNION HOME MORTGAGE CORP., □ ) CASE NO. 1:23 CV 00996

Plaintiff,

v. ) JUDGE DONALD C. NUGENT

EVERETT FINANCIAL, INC., )

dba SUPREME LENDING, et al., )

) MEMORANDUM OF OPINION

Defendants. ) AND ORDER

This matter is before the Court on defendant Everett Financial Inc., dba Supreme

Lending’s (“Supreme Lending”) Motion to Dismiss for Lack of Personal Jurisdiction (ECF #12),

filed on June 15, 2023. Plaintiff Union Home Mortgage (“Union Home Mortgage”) filed an

opposition to the motion on July 17, 2023 (ECF #24). Supreme Lending filed a reply on July 31,

2023 (ECF #27).

For the reasons stated below, Defendant Everett Financial Inc., dba Supreme Lending’s

Motion to Dismiss for Lack of Personal Jurisdiction (ECF #12) is GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND

On May 16, 2023, plaintiff Union Home Mortgage filed a Verified Complaint (ECF #1)

against individual defendants Andrew Kyle Tuttle, James M. Fisher, Kathryn Henry, and Ryan

Larson, as well as corporate defendant Supreme Lending, related to an employment dispute

between these two competitors in the mortgage lending industry, and specifically about four

former employees (Tuttle, Fisher, Henry, and Larson) who moved from one of the competitors

(Union Home Mortgage) to the other (Supreme Lending) over the first four months of 2023. At

its essence, this is a case alleging “wrongful recruitment” by Supreme Lending of individual

defendants Tuttle, Fisher, Henry, and Larson.

Taking the allegations and record as asserted by the plaintiff as true and in the light most

favorable to the plaintiff, the pertinent facts are as follows.

Plaintiff Union Home Mortgage is in the business of providing homeowners and

prospective home buyers with mortgage and refinance loan products. (ECF #1, Verified

Complaint, □ 3). Union Home Mortgage is an Ohio corporation with its principal place of

business in Strongsville, Ohio. (ECF #1, 4 12).

Each of the individual defendants is a former employee of Union Home Mortgage.

Andrew Kyle Tuttle was previously employed by Union Home Mortgage as a District Manager,

at its office located in Spring Hill, Florida. (ECF #1, 9 4). James M. Fisher was previously

employed by Union Home Mortgage as an Area Sales Manager in one of Union Home

Mortgage’s Florida offices. (ECF #1, 5). Kathryn Henry was previously employed by Union

Home Mortgage as a Branch Manager in one of Union Home Mortgage’s Florida offices. (ECF

#1, 6). Ryan Larson was previously employed by Union Home Mortgage as a Branch Manager

in one of Union Home Mortgage’s Florida offices. (ECF #1, J 7). All of the individual

defendants are residents and citizens of Florida. (ECF #1, J 14).

Defendant Supreme Lending is a market competitor to Union Home Mortgage in the

home mortgage lending and refinancing industry, which advertises having 31 offices in Florida.

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(ECF #1, § 8). Supreme Lending is a corporation headquartered in Dallas, Texas. (ECF #1,

{ 13). While Supreme Lending operates “approximately 275 branch offices in approximately 30

states,” (ECF #14, Declaration of Noah Zimmerman, attached as an exhibit to Supreme

Lending’s motion to dismiss, J 4), its only Ohio connections are maintaining a corporate agent in

Ohio, and operating a single branch office in the State of Ohio, which employs only eight persons

— three of whom work at the branch to originate loans, and five who perform corporate work

remotely. (ECF #14, 95). Supreme Lending’s single Ohio branch accounted for approximately

0.75% of its 2022 annual revenues. (ECF #14, 7 5). Plaintiff Union Home Mortgage’s Verified

Complaint identifies no greater Ohio presence than this single office, (ECF #1, { 13). There is no

assertion that any of the facts related to this case have a connection to Supreme Lending’s single

Ohio office or its employees.

The facts of this case begin with Amerifirst Financial Corporation (“Amerifirst’’).

Amerifirst was a competitor of both Union Home Mortgage and Supreme Lending for years.

(ECF #1, 927). Amerifirst employed individual defendants Tuttle, Fisher, Henry, and Larson in

various offices in Florida. (ECF #1, J] 4-7 & 28). In November 2022, Union Home Mortgage

agreed to purchase some of the assets and liabilities of Amerifirst, with the purchase to be

effective on December 31, 2022. (ECF #1, 9 33). Following the purchase of Amerifirst by

Union Home Mortgage, each of the individual defendants signed new employment agreements

with Union Home Mortgage in December 2022. (ECF #1, 7 49). Under the new employment

agreements, the individual defendants agreed that, until December 2026 — two years after the end

of a defined restricted period — they would not “directly or indirectly, on behalf of themselves or

a Competitive Entity, employ or seek to employ any person who is employed by [Union Home

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Mortgage] or otherwise induce such person to leave his/her employment with [Union Home

Mortgage].’” (ECF #1, 9 50, quoting ECF #1-1, Conditional Retention Bonus and Employmee

[sic] Agreement, at J 7).! Under the new employment agreements, each of the individual

defendants was also paid a conditional retention bonus of varying amounts. (ECF #1, □□□ ECF

#1-1,93).2 The employee agreements further provided that if the individual defendant’s

“employment with [Union Home Mortgage] ends for any reason prior to the second anniversary

of the Effective Date [in December 2024], Employee agrees to repay the entire bonus to [Union

Home Mortgage].” (ECF #1, 958, ECF #1-1, 4(a)).

On April 28, 2023, all of the individual defendants resigned from Union Home Mortgage,

and sometime later became employed by Supreme Lending, joining approximately 50 other

former Union Home Mortgage employees who changed employment from Union Home

Mortgage to Supreme Lending over the prior four months. (ECF #1, 759). It is also alleged in

the Verified Complaint that “Tuttle took a group of his Union Home subordinates to visit

Supreme [Lending’s] headquarters in Dallas, Texas on or about April 12, 2023, before every

single one of them departed for Supreme [Lending] on or about April 28, 2023.” (ECF #1, J 69).

The Verified Complaint continues, “[i]n fact, Tuttle is believed to have taken his Union Home

issued laptop with him to Supreme and logged on to Union Home system from Dallas.” (ECF

The quoted text, identified in the Verified Complaint as appearing within paragraph 6 of

the employment agreements, actually appears in paragraph 7.

Exhibit A to the Verified Complaint (ECF #1-1) contains the essentially identical

employment agreements of each of the four individual defendants, with the only differences

being the amounts of the conditional retention bonuses paid to each. The remaining text of each

is identical.

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#1, 7 69).

No fact alleged in the Verified Complaint related to the recruitment or employment of the

four individual defendants appears to have any connection to Ohio. None of the individual

defendants resides in Ohio. None of the individual defendants is identified as ever working in

Ohio or doing any business there. None of the communications or other recruitment efforts

identified in the Verified Complaint took place in, or was even directed toward, Ohio. The only

connection to Ohio asserted in the Verified Complaint, or in Union Home Mortgage’s motion

papers, is that each of the individual employee defendant’s employment agreements contained a

“Choice of Law and Venue” clause agreeing to have Ohio law govern any disputes, and that the

individual employees and Union Home Mortgage agree to an Ohio venue:

Choice of Law and Venue. The laws of the State of Ohio shall govern all aspects

of this Agreement. Employee and the Company [Union Home Mortgage] agree

that any claim arising out of or related in any way to the Employee’s employment

or termination of that employment, including claims arising under this Agreement,

shall be filed in a state or federal court in Ohio. Employee and the Company

consent to personal jurisdiction in such a court and waive any right to seek a

transfer of venue or to assert forum non-conveniens. Further, the parties expressly

waive trial by jury for all such claims.

(ECF #1-1, Conditional Retention Bonus and Employmee [sic] Agreement, at J 16).

Notably, Superior Lending is not a party to this agreement.

II. LEGAL ANALYSIS

A. Union Home Mortgage’s Claims

Defendant Supreme Lending moves for dismissal of the single count of the Verified

Complaint (ECF #1) asserted against it, pursuant to Federal Rule of Civil Procedure 12(b)(2) for

lack of personal jurisdiction. (ECF #12). The only count of the five-count Verified Complaint

naming Supreme Lending as a Defendant is Count V, alleging tortious interference with contract

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under Ohio law (ECF #1, {J 101-112), along with its general inclusion in a non-enumerated

prayer for preliminary and permanent injunctive relief, asserted against all Defendants (ECF #1,

{J 113-120). Each of the other counts of the Verified Complaint is asserted against one or more

of the individual defendants only, and are not a subject of Supreme Lending’s motion.’

B. Legal Standards

When a defendant moves to dismiss a complaint for lack of personal jurisdiction under

Federal Rule of Civil Procedure 12(b)(2), the plaintiff has the burden of demonstrating that

personal jurisdiction over the defendant exists. Schneider v. Hardesty, 669 F.3d 693, 697 (6"

Cir. 2012); Bird v. Parsons, 289 F.3d 865, 871 (6" Cir, 2002). In response to the motion, a

plaintiff may not simply rest on the pleadings, but must, by affidavit or otherwise, set forth

specific evidence supporting jurisdiction. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6" Cir.

1991).

In analyzing the motion, a district court may rely on affidavits alone in reaching a

decision, it may allow some discovery to assist with its decision, or it may conduct an evidentiary

hearing to resolve any apparent factual disputes. J4 Promotions, Inc. v. Splash Dogs, LLC, Case

No. 08-CV-977 2009 U.S. Dist LEXIS 11023, at *13 (N.D. Ohio Feb. 13, 2009) (citing

Cleveland Browns Football Co., LLC v. Hawaii-Pacific Apparel, 90 F. App’x 868, 869 (6" Cir.

2004)). “The method selected is left to the discretion of the district court.” Jd (quoting Faurecia

Exhaust Sys., Inc. v. Walker, 464 F. Supp. 2d 700, 704 (N.D. Ohio 2006)).

See Verified Complaint (ECF #1), at J 80-86 (Count I, alleging breach of contract

against all of the individual defendants), {J 87-90 (Count II, alleging breach of non-solicitation

covenant against Defendant Tuttle), 91-95 (Count III, alleging breach of contractual duty of

loyalty against Defendant Tuttle) & 4] 96-100 (Count IV, alleging breach of common law duty

of loyalty against Defendant Tuttle).

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When a court considers a motion to dismiss based on affidavits alone, the pleadings and

affidavits must be construed in a light most favorable to the plaintiff, and the plaintiff need only

advance a prima facie showing of personal jurisdiction to overcome the defendant’s motion. In

order to determine whether personal jurisdiction over a defendant exists, a district court must

apply the law of the forum state, subject to the limits of the Due Process Clause of the Fourteenth

Amendment. Theunissen v. Matthews, 935 F.2d 1454, 1459 (6" Cir. 2006).'

Personal jurisdiction falls into two categories, general and specific. Malone v. Stanley

Black & Decker, Inc., 965 F.3d 499, 501 (6" Cir. 2020) (citing Goodyear Dunlop Tires Opers.,

S.A. v. Brown, 564 U.S. 915, 919 (2011)). General jurisdiction exists over a defendant when its

“contacts with the forum state are of such a ‘continuous and systematic’ nature that the state may

exercise personal jurisdiction over the defendant even if the action is unrelated to the defendant’s

contacts with the state.” Third Nat’l Bank v. Wedge Group, Inc.,882 F.2d 1087, 1089 (6" Cir.

1989). Specific jurisdiction exists when a plaintiff's claims arise out of or relate to a defendant’s

contacts with the forum state. Kerry Steel, Inc. v. Paragon Indus., 106 F.3d 147, 149 (6" Cir.

1997); Conti v. Pneumatic Prods. Corp., 977 F.2d 978, 981 (6" Cir. 1992).

1. General Jurisdiction

While one of the paragraphs of the Verified Complaint seems to imply an assertion of

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In April 2021, the Ohio General Assembly extended the State’s long-arm statute to the

limits of the U.S. Constitution. See Ohio Rev. Code § 2307.382(C) (“[A] court may exercise

personal jurisdiction over a person on any basis consistent with . . . the United States

Constitution”); see also Aerodyne Envtl. v. Kierton, Inc., 628 F. Supp. 3d 744, 750 (N.D. Ohio

2022).

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general jurisdiction over Supreme Lending, (ECF #1, PageID # 4, § 21),* Union Home Mortgage

has not produced evidence of the type of “continuous and systematic” contacts with Ohio

necessary to establish general jurisdiction over Supreme Lending. Nor does the record support

the exercise of general jurisdiction over Supreme Lending.° In its opposition brief, Union Home

“Furthermore, this Court has personal jurisdiction over Supreme pursuant to R.C.

§§ 2307.381, 2307.382 because Supreme transacts business and contracts to supply services in

the state of Ohio through — at a minimum — its Hilliard, Ohio branch office.” (ECF #1, PafeID

#4, 4 21).

The Court is aware of the Supreme Court’s recent plurality decision in Mallory v.

Norfolk Southern Ry, Case No. 21-1168, 143 S. Ct. 2028 (2023); 2023 U.S. LEXIS 2786

(Decided June 27, 2023), issued by the Supreme Court ten days after the filing of Union Home

Mortgage’s opposition brief (ECF #24, filed June 17, 2023), in which general jurisdiction over

Defendant Norfolk Southern Railway in Pennsylvania was upheld based on Norfolk Southern’s

registration to do business in Pennsylvania, despite the fact that none of the operative facts

occurred in the State.

In Mallory, there was no question that Norfolk Southern had extensive and ongoing

operations in Pennsylvania well beyond anything that Supreme Lending has in Ohio — though

that fact alone is not enough to create general jurisdiction, see, e.g., BNSF Ry. v. Tyrrell, 581

U.S. 402, 414 (holding that although BNSF operated a facility in Montana, had more than 2,000

employees in Montana, and more than 2,000 miles of Montana railroad tracks, BNSF was not

subject to general jurisdiction in Montana); Daimler AG v. Bauman, 571 U.S. 117, 136-39

(2014) (holding that California lacked general jurisdiction over defendant even though it

operated multiple California-based facilities, it was the largest supplier of luxury vehicles in

Caliofornia, and its in-State sales accounted for 2.4% of its total sales).

The key operative fact of the Mallory decision was that the Pennsylvania statute at issue

acted as an explicit consent to general jurisdiction as part of the “registration to do business”

process, whereas the corollary Ohio statutes contain no such consent provision. Compare 42 PA.

CONS. STAT. § 5301(a)(2)(i) (“The existence of any of the following relationships between a

person and this Commonwealth shall constitute a sufficient basis of jurisdiction to enable the

tribunals of this Commonwealth to exercise general jurisdiction over such person, . . .

[i]ncorporation under or qualification as a foreign corporation under the laws of this

Commonwealth”) with OHIO REV. CODE § 1703.03 (no right to transact business without a

license, with exceptions not pertinent here) and § 1703.04 (containing no reference to general

personal jurisdiction). See also Pittock v. Otis Elevator Co., 8 F.3d 325, 329 (6" Cir. 1993) (“As

we read Bendix [Autolite Corp. v. Midwesco Enters., Inc., 486 U.S. 888, 892-93 (1988)], a case

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Mortgage does not meaningfully contest this point. Accordingly, to the extent the Verified

Complaint seeks to assert general jurisdiction over Supreme Lending, it fails to do so.

2. Specific Jurisdiction

To establish specific personal jurisdiction over a defendant under Ohio law, the Court

must find that: (1) the defendant is subject to long-arm jurisdiction under one of the enumerated

bases of jurisdiction in Ohio’s long-arm statute; and (2) jurisdiction must accord with the Due

Process Clause of the U.S. Constitution. Conn v. Zacharov, 667 F.3d 705, 711 (6" Cir. 2012).

“Even if a defendant’s contact with the State of Ohio satisfies Ohio’s long-arm statute, personal

jurisdiction fails unless exercising jurisdiction over the defendant comports with traditional

notions of fair play and substantial justice.” Aerodyne Envil. v. Keirton, 628F. Supp. 3d 744, 749

(N.D. Ohio 2022) (quoting JM Smucker Co. v. Hormel Food Corp., 526 F. Supp. 3d 294, 300

(N.D. Ohio 2021)); see also International Shoe Co. v. State of Wash, 326 U.S. 310, 316 (1945)

(“[I]n order to subject a defendant to a judgment in personam, if he be not present within the

territory of the forum, he [must] have certain minimum contacts with it such that the maintenance

of the suit does not offend ‘traditional notions of fair play and substantial justice.’”) (inserts

supplied).

a. Ohio’s Long Arm Statute

Ohio’s long-arm statute confers specific personal jurisdiction over a defendant who

engages in any of nine enumerated activities that occur “in this state.” OHIO REV. CODE

from our Circuit, the Supreme Court was saying that the mere designation of an agent in

compliance with the service-of-process statute does not automatically eliminate the requirement

of minimum contacts to establish personal jurisdiction. ... In addition, the Ohio Supreme Court

has already rejected the proposition that service of process may be equated with personal

jurisdiction.”).

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§ 2307.382(A)(1)-(9). Union Home Mortgage cites two of the nine provisions, specifically

subsections (4) and (6):

§ 2307.382 Personal Jurisdiction

(A) A court may exercise personal jurisdiction over a person who acts

directly or by an agent, as to a cause of action arising from the person’s:

kk OK OK OX

(4) Causing tortious injury in this state by an act or omission outside

this state if the person regularly does or solicits business, or engages

in any other persistent course of conduct, or derives substantial

revenue from goods used or consumed or services rendered in this

state;

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(6) Causing tortious injury in this state to any person by an act

outside this state committed with the purpose of injuring persons,

when the person might reasonably have expected that some person

would be injured thereby in this state[.]

(See ECF #24, Union Home Mortgage Corp’s Memorandum in Opposition to Defendant Everett

Financial Inc., D/B/A Supreme Lending’s Motion to Dismiss for Lack of Personal Jurisdiction,

PageID #268 [p.5 of brief]).

Union Home Mortgage’s theory of long-arm jurisdiction, as to both subparts (A)(4) and

(A)(6), rests on the assertion that because Union Home Mortgage’s principal place of business is

in Ohio, any economic injury resulting from Supreme Lending’s recruitment “necessarily

occurred in Ohio.” (ECF #24, Union Home Mortgage 's Memorandum in Opposition to Supreme

Lending’s Motion to Dismiss, PageID #269). Union Home Mortgage then argues that “Supreme

[Lending’s] regular and persistent business conduct in Ohio satisfies the second requirement of

Section (A)(4),” (ECF #24, PageID #269). As to subpart (A)(6), Union Home Mortgage asserts

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that Supreme Lending also “knew or should have reasonably expected” that its Texas and Florida

recruitment efforts toward Florida-based Union Home Mortgage employees to migrate to Florida-

based Superior Lending facilities “would injure Union Home [Mortgage] in Ohio,” (ECF #24,

PagelD #270).

Taking the allegations of the Verified Complaint in a light most favorable to the Plaintiff,

as this Court is required to do at this stage of the case, and reading Ohio’s long-arm statute “to the

limits of the U.S. Constitution” under OHIO REV. CODE § 2307.382(C), Union Home Mortgage

has arguably satisfied the requirements of Ohio’s long-arm statute, despite what appears to be

rather minimal “regular and persistent business conduct” in Ohio conducted by Supreme Lending,

and taking as true the assertion that Supreme Lending was at least aware of Union Home

Mortgage’s state of incorporation and principal place of business.

But the analysis does not end there. Calphalon Corp. v. Rowlette, 228 F.3d 718, 721 (6"

Cir. 2000) (“The exercise of personal jurisdiction is valid only if it meets both the state long-arm

statute and constitutional due process requirements”). To establish personal jurisdiction over

Supreme Lending, Union Home Mortgage must also show that asserting jurisdiction over

Supreme Lending accords with the Due Process Clause of the U.S. Constitution, and comports

with traditional notions of fair play and substantial justice. Conn v. Zacharov, 667 F.3d 705, 711

(6" Cir. 2012); Aerodyne Envil. v. Keirton, 628 F. Supp. 3d 744, 749 (N.D. Ohio 2022); JM.

Smucker Co. v. Hormel Food Corp., 526 F. Supp. 3d 294, 300 (N.D. Ohio 2021).

b. Due Process

Specific personal jurisdiction comports with due process under the Constitution where

“the defendant has sufficient minimal contacts such that traditional notions of fair play and

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substantial justice are not offended” by the exercise of personal jurisdiction over a party.

Aerodyne, 628 F. Supp. 3d at 751 (citing Intera Corp. v. Henderson, 428 F.3d 605, 615 (6" Cir.

2005), and International Shoe Co. v. State of Wash., 326 U.S. 310, 316 (1945)). To make this

determination, a court examines whether: (1) the defendant purposefully avails itself of the

privilege of acting or causing a consequence in the forum state; (2) the cause of action arises from

the defendant’s activities in the forum state; and (3) the defendant’s acts or the consequences of

those acts have a substantial enough connection with the forum to make the exercise of

jurisdiction over the defendant reasonable. Bird v. Parsons, 289 F.3d 865, 874 (6" Cir. 2002)

(quoting Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6" Cir. 1968); LAK,

Inc. v. Deer Creek Enters., 885 F.2d 1293, 1299 (6" Cir. 1989)).

“(T]he question of whether a defendant has purposefully availed itself of the privilege of

doing business in the forum state is the ‘sine qua non for in personam jurisdiction.”

CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6" Cir. 1996) (quoting Southern Machine,

401 F.2d at 381-82); Aerodyne Envil., 628 F. Supp. 3d at 752. There must be a substantial

connection between a defendant’s conduct and the forum state such that a defendant would

“reasonably anticipate being haled into court there.” Burger King Corp. v. Rudzawicz, 471 U.S.

462, 474-75 (1985) (quoting World-Wide Volkwagen Corp. v. Woodson, 444 U.S. 286, 297

(1980)). This standard protects defendants against being haled into court in the forum by virtue

of random, fortuitous, or attenuated contacts. Aerodyne Envil., 628 F. Supp. 3d at 752 (citing

Intera Corp. v. Henderson, 428 F.3d 605, 616 (6" Cir. 2005), in turn citing Calphalon Corp. v.

Rowlette, 228 F.3d 718, 722 (6" Cir. 2000)).

To be jurisdictionally significant, a defendant’s contacts with the forum “must arise out of

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contacts that the “defendant himself creates with the forum state.” Walden v. Fiore, 571 U.S.

277, 284 (2014) (emphasis in original) (stated in the context of determining whether a federal

security agent in Georgia, who seized property in Georgia, could be haled into a federal court in

Nevada because the agent knew that the “harmful effects” of the seizure would be felt by plaintiff

in Nevada; the Court, in a unanimous decision, overturned a Ninth Circuit finding of specific

personal jurisdiction). Minimum contacts analysis looks to the defendant’s contacts with the

forum state, not the defendant’s contacts with persons who reside in the state or have contacts

there. Id. “Due process requires that a defendant be haled into court in a forum based on his own

affiliation with the State, not based on the .. . contacts he makes by interacting with other persons

affiliated with the State.” Jd. at 286. Here, none of Supreme Lending’s alleged actions in

connection with any of the individual defendants had any connection with Ohio, nor do any of the

activities at issue show a “purposeful availment” of the benefits of Ohio law by Supreme

Lending. Every activity, contact, or event identified in the Verified Complaint occurred in either

Florida or Texas. Even Supreme Lending’s alleged “knowledge” that Union Home is based in

Ohio or its “knowledge” that one or more of the individual defendants’ contracts with Union

Home Mortgage contained an Ohio choice of law provision or Ohio venue provision were, or

would have been, based on Supreme Lending’s interactions with the individual defendants

outside of Ohio, in either Florida or Texas. These are not actions directed by Supreme Lending

toward Ohio.

Nor is this analysis any different by virtue of Union Home Mortgage’s allegations

asserting an intentional tort, such as “tortious interference with contract” — which is the only

claim asserted against Supreme Lending. (ECF #1, ff 101-112). As stated by the Supreme Court

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in Walden v. Fiore, 571 U.S. 277, at 286, “These same principles apply when intentional torts are

involved. In that context, it is likewise insufficient to rely on a defendant’s ‘random, fortuitous,

or attenuated contacts’ or on the ‘unilateral activity’ of a plaintiff. A forum State’s exercise of

jurisdiction over an out-of-state intentional tortfeasor must be based on intentional conduct by the

defendant that creates the necessary contacts with the forum.” Jd. (quoting Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 475 (1985)). Here, Union Home Mortgage alleges that Supreme

Lending induced Florida employees to breach non-recruitment and non-competition covenants

outside of Ohio. This does not allege any activity by Supreme Lending directed toward Ohio.

Union Home Mortgage offers four cases to support its proposition that asserting personal

jurisdiction over Supreme Lending would comport with due process. But each of these cases

involved out-of state defendants who themselves took direct actions to purposefully avail

themselves of the protections of Ohio law, and the claims of those cases arose from the

defendants’ own connections to the forum. See American Sec. & Audio Video Sys. v. Prep TMT,

LLC, Case No. 5:22-CV-0558, 2023 U.S. Dist. LEXIS 66201 (N.D. Ohio Apr. 14, 2023) (Ohio

plaintiff brought breach of contract claims against Missouri defendant who had entered into

contracts with the Ohio-based plaintiff which designated Ohio law as controlling; defendant had

dealt with plaintiff's employees in Ohio to obtain trade secret information; and defendant had

used plaintiff's trade secrets to undermine plaintiff's relationship with a customer for whom

plaintiff performed work in Ohio); Air Prods. & Controls, Inc. v. Safetech Int’l, Inc., 503 F.3d

544 (6" Cir. 2007) (Michigan plaintiff brought fraudulent transfer claims against Kansas

defendant who had conducted business with the Michigan-based plaintiff for over nine years;

defendant had sent purchase orders to Michigan on which the later breach of contract claims were

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based; defendant had incurred debt to Ohio plaintiff based on those dealings, which debt was

reduced to a judgment [in Kansas]); EHPLabs Rsch., LLC v. Smith, Case No. 5:22-CV-0653,

2022 U.S. Dist. LEXIS 140040 (N.D. Ohio Aug. 5, 2022) (Delaware plaintiff brought breach of

sponsorship contract claims against Ohio defendant and two out-of-state defendants, including

the out-of-state defendants’ individual owner, based on the out-of-state defendants’ alleged

tortious inducement of the Ohio defendant to enter into contracts with them in competition with

plaintiff; although individual owner defendant had only traveled to Ohio one time, court found

personal jurisdiction because individual owner had “purposefully availed” himself of Ohio law by

causing his companies to enter into contracts with the Ohio defendant, which actions were the

direct subject of plaintiffs claims); J4 Promotions, Inc. v. Splash Dogs, LLC, Case No. 08-CV-

0977 (N.D. Ohio Feb. 13, 2009) (Ohio plaintiff dog-event promoter brought action in Ohio

against California-based copycat competitor and several of its non-Ohio-resident agents based on

copyright infringement, defamation, deceptive practice, and unfair competition; court found

specific personal jurisdiction because defendants had maintained website promoting defendants’

dog show in Ohio, because plaintiff's claims were partially based on that Ohio event, and because

defendant’s misconduct allegedly arose from the Ohio-based plaintiff's former employment of

two of defendant’s agents).’

The court in J4 Promotions also found specific jurisdiction over plaintiff's tortious

interference claims, even though all of the defendants’ alleged conduct related to those claims

occurred outside of Ohio, because defendants allegedly knew that their conduct would have

effects in Ohio. J4 Promotions, 2009 U.S. Dist. LEXIS 11023, at *58-*59. This case predates

the Supreme Court’s decision in Walden v. Fiore, 571 U.S. 277 (2014), in which the Court

rejected the theory that a defendant’s acts conducted wholly outside the forum could support

specific jurisdiction based solely on the fact that defendant “knew” that the plaintiff had

connections with the forum state. Walden, 571 U.S. at 288-89 & 290 (“’[MJere injury to a forum

resident is not a sufficient connection to the forum. Regardless of where a plaintiff lives or

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The Court finds that Total Quality Logistics, LLC v. Tarpon Transp. Servs., Case No.

1:18-CV-0353, 2019 U.S. Dist. LEXIS 157672 (S.D. Ohio Sept. 16, 2019), is a more applicable

case. In TOL, a Florida resident (Minnis) had signed an employment agreement containing a

“Confidentiality Agreement and Restrictive Covenant” with an Ohio-based freight broker (TQL).

He was later terminated by TQL. Approximately 18 months later, Minnis went to work for a

Florida-based competitor (Tarpon), in alleged violation of his earlier employment agreement.

TQL then sued Tarpon in an Ohio court, alleging that Tarpon had tortiously interfered with the

employment agreement between TQL and Minnis. Tarpon moved to dismiss for lack of personal

jurisdiction. The court concluded that it lacked specific jurisdiction over Tarpon because Tarpon

had not taken any actions that created a substantial connection with Ohio, and that merely hiring a

Florida employee who had a still-operative employment agreement with an Ohio company was

not enough to confer specific personal jurisdiction. Total Quality Logistics, 2019 US. Dist.

LEXIS at *10 (citing Walden, 571 U.S. at 290)).

The fact that the individual defendant former Union Home Mortgage employees may have

had an Ohio law forum selection clause in their employment agreements does not change the

analysis under the facts of this case. While a third party may be bound by a forum selection

clause in a contract that it did not sign if the non-signatory is sufficiently “closely related “ to the

dispute that it is foreseeable that the non-signatory would be bound, Baker v. LeBoeuf, Lamb,

Leiby & Macrae, 105 F.3d 1102, 1105-06 (6" Cir. 1997), the facts identified here do not support

a finding of a requisite “sufficiently close relationship” of Supreme Lending to the Union Home

works, an injury is jurisdictionally relevant only insofar as it shows that the defendant has formed

a contact with the forum State.”). Thus, this part of the J4 Promotions decision is not reflective

of the current law.

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Mortgage employment contracts to find that Supreme Lending should be bound by them.?

In “determining whether a non-signatory is closely related to a forum selection clause ‘a

common sense, totality of the circumstances approach’ is utilized.” Firexo, Inc. v. Firexo Grp.,

Ltd., Case No. 3:21-CV-2336, 2023 U.S. Dist. LEXIS 60525, at *3 (N.D. Ohio Jan. 26, 2023)

(citing Reagan v. Maquet Cardiovascular U.S. Sales LLC, Case No. 1:14-CV-0548, 2015 WL

521049, at *3 (N.D. Ohio Feb. 9, 2015) and quoting Hitachi Med. Sys. Am., Inc., Case No. 5:09-

CV-2613, 2011 WL 711568, at *9 (N.D. Ohio Feb. 22, 2011)). Under this approach, a court

must determine “whether, in light of [the] circumstances, it is fair and reasonable to bind a non-

party to the forum selection clause.” Firexo, 2023 U.S. Dist. LEXIS 60525, at *3.

To determine whether a non-signatory to a contract is sufficiently closely related to a

dispute to hold it bound by the contract, courts in the Sixth Circuit generally look to whether the

signatory owns or controls the non-signatory, whether the non-signatory is the signatory’s agent,

or whether the non-signatory would directly or indirectly benefit from the contract. See, e.g.,

There is no question that Supreme Lending was not a direct party to any of the

employment contracts between Union Home Mortgage and the individual defendants, or that

Supreme Lending agreed to the Ohio law and forum selection provisions contained within them.

At most, Union Home Mortgage identifies a possibility that Supreme Lending was aware of the

fact that Union Home Mortgage was an Ohio corporation, and that the standard Union Home

Mortgage employment contract contained an Ohio law and forum selection clause. (See, e.g.,

ECF #26, Affidavit of Douglas Long, PageID #306, J 7): “There can be almost no doubt that

when Supreme hired Tuttle and when it caused Tuttle to breach his employment agreement with

Union Home, Supreme knew that Union Home was an Ohio corporation and knew that Tuttle’s

Union Home employment agreement, like all standard Union Home employment agreements,

contained non-solicitation provisions and contained a provision designating Ohio as the exclusive

law and forum for any litigation arising out of those agreements. Indeed, Supreme’s Chief

Operating Officer, Kevin Pezzani, was a Senior Vice President in Union Home’s Ohio

headquarters for more than 5 years before he joined Supreme in 2021. By virtue of his position,

Pezzani was familiar with, and had first-hand knowledge of, the terms in Union Home’s

employment contracts.”).

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Firexo, Inc. v. Firexo Grp., Ltd., Case No. 3:21-CV-2336, 2023 U.S. Dist. LEXIS 60525, at *3-

*4 (N.D. Ohio Jan. 26, 2023) (joint venture was sufficiently related to dispute arising under the

joint venture agreement that created it to be bound by the agreement’s forum selection clause,

even though the joint venture itself did not sign the joint venture agreement); see also Petti v.

Fraker, Case No. 1:19-CV-0087, 2020 U.S. District LEXIS 265117, at *31-*32 & nn. 118-123

(N.D. Ohio Aug. 19, 2020) (citing cases recognizing the following types of relationships as

“closely related”: “shareholders, officers, and directors of a corporation with regard to a

corporate contract”; “[c]orporations wholly owned and controlled by a signatory to a contract

containing a forum-selection clause”; “a non-signatory who is in an agency relationship with one

of the parties to a contract containing a forum-selection clause”; “a non-signatory who is a third-

party beneficiary of the contract that contains a forum-selection clause”; and “an assignee to [a]

contract that contains a forum-selection clause”) (internal quotation omitted). While this list may

not be exclusive, Superior Lending’s relationship to the Union Home Mortgage employment

contracts is not even close to any of these relationships.’

Union Home Mortgage cites three cases from other circuits where a district court held

that, when a former employer sues a former employee to enforce a restrictive covenant in an

employment agreement, the new employer should be bound by the forum selection clause in the

agreement. (See ECF #24, PageID #272-273 [pp. 9-10 of brief], at n.3, citing Medtronic, Inc. v.

Endologix, Inc., 530 F. Supp. 2d 1054, 1056 (D. Minn. 2008); Mechanix Wear, Inc. v.

Performance Fabrics, Inc., Case No. 2:16-CV-9152, 2017 U.S. Dist. LEXIS 13357, at *23-*24

(C.D. Cal. Jan. 31, 2017); Radian Guar., Inc. v. Bolen, 18 F. Supp. 3d 635, 647 (E.D. Pa. 2014)

(acknowledging proposition but not finding jurisdiction based on lack of close business

relationship and knowledge of non-competition agreement). The Court has considered these

cases, but finds that they are not representative of the standard of “closely related” recognized

under Sixth Circuit law. Moreover, under a “common sense, totality of the circumstances

approach,” in light of the lack of any Ohio connection to the facts of this case, binding Superior

lending to the Union Home Mortgage “standard” choice of law and forum selection clauses

seems neither fair nor reasonable.

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Put simply, Plaintiff Union Home Mortgage has not met its burden of demonstrating

sufficient minimum contacts with Ohio by Supreme Lending to establish that specific personal

jurisdiction over Supreme Lending would “comport with traditional notions of fair play and

substantial justice” under the standards of the Due Process Clause of the U.S. Constitution.

International Shoe Co. v. State of Wash., 326 U.S. 310, 316 (1945).

IW. CONCLUSION

Accordingly, for the foregoing reasons, Defendant Everett Financial Inc., dba Supreme

Lending’s Motion to Dismiss for Lack of Personal Jurisdiction (ECF #12) is GRANTED.

Plaintiff Union Home Mortgage’s claims against individual defendants Andrew Kyle Tuttle,

James M. Fisher, Kathryn Henry, and Ryan Larson remain before the Court.

IT IS SO ORDERED.

United States District Judg

DATED: Oct the 1023

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