The Auto Place, LLC v. Cargill

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

THE AUTO PLACE, LLC,

Plaintiff,

Case No. 1:19-cv-130

v. JUDGE DOUGLAS R. COLE

JOHN D. CARGILL,

Defendant.

OPINION & ORDER

This cause comes before the Court on Defendant John D. Cargill’s Motion to

Dismiss or, Alternatively, to Transfer Venue. (Doc. 4). For the reasons below, the

Court GRANTS IN PART and DENIES IN PART AS MOOT Cargill’s Motion to

Dismiss (Doc. 4) and DISMISSES WITHOUT PREJUDICE Plaintiff The Auto

Place, LLC’s (“AP”) Complaint (Doc. 2).

FACTUAL ALLEGATIONS

AP is an Ohio corporation with its principal place of business in Cincinnati,

Ohio. (Pl.’s Compl. at ¶ 1, Doc. 2, #23). Cargill is an individual who lives in Grayslake,

Illinois, and owns an automobile frame built by Greenwood Corvettes, as well as

related documents regarding the frame’s ownership and history (collectively the

“Greenwood Frame”). (Id. at ¶¶ 2, 3).

In March 2017, AP and Cargill allegedly reached an agreement regarding the

sale of the Greenwood Frame (the “Greenwood Agreement”) under which “Cargill

promised to sell the Greenwood Frame to [AP] for $100,000.” (Id. at ¶ 4, #23–24).

Cargill and AP agreed to use Rick Mancuso of Lake Forest Sports Cars (“LFS Cars”)

in Lake Bluff, Illinois, as an intermediary to facilitate the transfer of the Greenwood

Frame, due to LFS Cars’ proximity to Cargill, as well as AP and Cargill’s familiarity

with Mancuso. (Id. at ¶ 6, #24). AP sent a Contract and Bill of Sale to Cargill. (Id. at

¶ 5; see id., Exs. 1, 2, #28–29 (undated)).

AP alleges that, in late-August or early-September 2017, AP sent a check for

$100,000 to Mancuso in Lake Bluff, Illinois. (Id. at ¶ 6, #24). Around that same time,

on September 1, 2017, Chuck Thornton, on behalf of AP, informed Cargill that he had

sent a check for $100,000 to Mancuso and explained that Mancuso would handle the

transaction. (Id. at ¶ 7; see id., Ex. 3, #30).

More than five months later, in February 2018, Cargill told AP that he had

never received the Contract or Bill of Sale that AP purportedly had sent via email in

2017. (Id. at ¶ 8, #24). Later that month, on February 26, 2018, Stacy Fussner, acting

on behalf of AP, called Cargill and left a voicemail indicating that she would send him

the contract and bill of sale with revised dates. (Id. at ¶ 9). In a follow-up email,

Fussner sent those documents to Cargill and urged him to execute them at Mancuso’s

office at LFS Cars. (Id., Ex. 4, #31). That same day, Cargill responded to AP’s

representatives with an email that stated, in full, “Chuck, Stacey, thank you for your

prompt and professional response … John Cargill.” (Id., Ex. 5, #32). On March 15,

2018, Cargill then responded with another email, stating:

Chuck, Stacey,

No I have not left the country, changed email address or ???????.

Waiting to get on Rick[ Mancuso]’s schedule in the near future.

Congrats to Mr. Yeaggy on his Amelia Island award … truly

deserved.

Thanks for your continued patience.

John Cargill.

(Id., Ex. 6, #33).

In its Complaint, AP alleges that Cargill has refused to complete the sale of

the Greenwood Frame per the terms of the Greenwood Agreement. (Id. at ¶ 12, #25).

Based on these allegations, AP asserts a single cause of action against Cargill for

breach of contract. (See id. at ¶¶ 13–17, #26).

PENDING MOTION

After removing this case from the Hamilton County Court of Common Pleas to

this Court, Cargill now moves to dismiss AP’s Complaint on the grounds that this

Court lacks personal jurisdiction over him and AP fails to state a claim. (Def.’s Mot.

to Dismiss at 1, Doc. 4-1, # 41). In the alternative, Cargill moves the Court to transfer

venue to the Northern District of Illinois because the Southern District of Ohio is the

improper venue for this action. (Id.). The Court finds Cargill’s personal jurisdiction

argument meritorious and thus limits its analysis to that issue.

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(2) provides for dismissal when a court

lacks personal jurisdiction over a defendant. The plaintiff bears the burden of

establishing by a preponderance of the evidence that the court may properly exercise

personal jurisdiction over the defendant. Conn v. Zakharov, 667 F.3d 705, 711 (6th

Cir. 2012); Estate of Thomson v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 360

(6th Cir. 2008) (citing Brunner v. Hampson, 441 F.3d 457, 462 (6th Cir. 2006)).

In considering whether personal jurisdiction exists, district courts have

discretion to either decide the motion on the pleadings alone, permit discovery in aid

of deciding the motion, or conduct an evidentiary hearing to resolve any apparent

factual questions. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir.

1991) (citing Serras v. First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212, 1214 (6th Cir.

1989)). Here, the Court can decide Cargill’s Motion to Dismiss without a hearing.

Where a Rule 12(b)(2) motion is decided solely on written submissions, the

plaintiff’s burden is “relatively slight.” Am. Greetings Corp. v. Cohn, 839 F.2d 1164,

1169 (6th Cir. 1988) (citation omitted). The court must view all of the pleadings and

any affidavits in a light most favorable to the plaintiff, and to defeat dismissal, the

plaintiff need only make a prima facie showing that personal jurisdiction exists.

Id.; Conn, 667 F.3d at 711. And a court analyzing a 12(b)(2) motion “does not weigh

the controverting assertions of the party seeking dismissal.” Theunissen, 935 F.2d at

1459. The Sixth Circuit has adopted this approach “to prevent non-resident

defendants from regularly avoiding personal jurisdiction simply by filing an affidavit

denying all jurisdictional facts.” Id. Yet, when the defendant contests jurisdiction by

setting forth facts, the plaintiff cannot merely rest on the allegations in the complaint,

but must put forth specific facts, by affidavit or otherwise, that if believed would

establish the necessary prima facie showing of jurisdiction. Id. at 1458 (citation

omitted).

When determining whether personal jurisdiction exists over a defendant,

federal courts sitting in diversity apply the long-arm statute of the forum

state. CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996). Separately,

any exercise of personal jurisdiction over an out-of-state party under such a statute

also must comply with the Constitution’s due process requirements. Int’l Techs.

Consultants v. Euroglas S.A., 107 F.3d 386, 391 (6th Cir. 1997). “Deciding whether

jurisdiction exists is not an idle or perfunctory inquiry; due process demands that

parties have sufficient contacts with the forum state so that it is fair to subject them

to jurisdiction.” Conn, 667 F.3d at 711. “The court’s jurisdiction accordingly extends

only to those parties who have in some fashion placed themselves in the hands of the

tribunal.” Id.

LAW & ANALYSIS

Assessing whether the Court has jurisdiction over Cargill is a two-step process.

First, the Court must determine whether Cargill is subject to suit under Ohio’s long-

arm statute. Ohio Rev. Code § 2307.382. Then, the Court must separately ascertain

whether exercising jurisdiction over Cargill comports with the due process

requirements of the United States Constitution. CompuServe, 89 F.3d at 1262.

Jurisdiction arises only if the answer at each step is “yes.” Accordingly, if jurisdiction

is not proper under the Due Process Clause, the Court need not analyze jurisdiction

under Ohio’s long-arm statute, and vice-versa. Conn, 667 F.3d at 711–12. And the

Court is free to address the issues in either order. See Calphalon Corp. v. Rowlette,

228 F.3d 721, 724 (6th Cir. 2000). Here, the Court starts with the latter, and finds

that exercising jurisdiction over Cargill would not comport with due process. Hence,

the Court need not, and thus does not, analyze personal jurisdiction under Ohio’s

long-arm statute.

A. AP Fails To Allege Facts Necessary To Show Sufficient Contacts To

Support Either General Or Specific Jurisdiction Over Cargill Under

the Constitution.

The Court begins by noting that Cargill’s choice to remove this matter from an

Ohio state court to this Court (see Doc. 1) does not waive his challenge to personal

jurisdiction, nor change the jurisdictional analysis. See Morris & Co. v. Skandinavia

Ins. Co., 279 U.S. 405, 409 (1929) (“Petitioner suggests that, by removal of the case

to the federal court, objection to jurisdiction over the person of respondent was

waived. Our decisions are to the contrary.” (citing cases)). Accordingly, as with any

matter in this Court, the federal Due Process Clause requires that, before the Court

exercises jurisdiction over an out-of-state party, the Court must determine that the

party had sufficient contacts with the forum state that asserting jurisdiction over the

party would not offend “traditional notions of fair play and substantial justice.” Int’l

Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Under the Constitution, personal

jurisdiction comes in two flavors: (1) general, which allows for jurisdiction over the

out-of-state defendant for all causes of action, whether they arose out of the

defendant’s contacts with the forum state or not, and (2) specific, which allows for

jurisdiction only as to those causes of action that arise out of a defendant’s contacts

with the forum state. Id. Both are absent here.

1. AP Cannot Establish General Personal Jurisdiction Over Cargill

Because He Is Not “At Home” In Ohio.

The general personal jurisdiction analysis is straightforward. As to

individuals, the Due Process Clause provides for general personal jurisdiction only in

the state in which the individual is domiciled. Goodyear Dunlop Tires Operations,

S.A. v. Brown, 564 U.S. 915, 924 (2011). Here AP alleges that Cargill resides in

Grayslake, Illinois, (AP Compl. at ¶ 2, #23), and does not suggest that his domicile is

elsewhere. Cargill’s affidavit likewise states that he resides in Illinois and has never

resided in Ohio. Thus, Cargill is not domiciled in Ohio, and so general personal

jurisdiction does not exist here.

2. AP Cannot Establish Specific Personal Jurisdiction Over Cargill

Because He Has Not Purposefully Availed Himself Of The

Privilege Of Acting In Ohio And Exercising Jurisdiction Over

Cargill Here Would Be Unreasonable.

The question of specific personal jurisdiction still remains. It requires a lesser

showing of contacts than general jurisdiction, as the Court’s power over the out-of-

state defendant in the specific-jurisdiction setting is limited to the causes of action

that arise out of those contacts. Goodyear, 564 U.S. at 919. Thus, for the Court to

exercise specific jurisdiction over a claim there must be an “affiliation between the

forum and the underlying controversy, principally, [an] activity or an occurrence that

takes place in the forum State.” Id.

The Sixth Circuit has adopted a three-part test for determining whether the

exercise of specific personal jurisdiction over a defendant comports with due process:

(1) the defendant must have purposefully availed himself of the privilege of acting in

the forum state or purposefully caused a consequence in the forum state; (2) the cause

of action must arise from the defendant’s activities there; and (3) the defendant’s acts

or consequences must have a substantial enough connection with the forum state to

make the exercise of jurisdiction over the defendant reasonable. Nationwide Mut. Ins.

Co. v. Tryg Int’l Co., Ltd., 91 F.3d 790, 794 (6th Cir. 1996) (citing Southern Mach. Co.

v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968)). A party seeking to hale an

out-of-state defendant into court must establish each of these three elements. Here,

AP fails to show at least the first and third requirements.

a. Cargill Has Not Purposefully Availed Himself Of The

Privilege Of Acting In Ohio.

Purposeful availment requires a showing that the defendant’s contacts with

the forum state “proximately result[ed] from actions by the defendant himself that

create a ‘substantial connection’ with the forum State.” Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 463, 475 (1985) (emphasis in original) (citation omitted).

This requirement ensures that a defendant will not be “haled into a jurisdiction solely

as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts,” or based on “unilateral

activity of another party or a third person.” Id. Where a defendant chooses to

deliberately engage in significant activities within a state or create continuing

obligations between himself and residents of the forum state, however, “he manifestly

has availed himself of the privilege of conducting business there.” Id. at 475–76.

Accordingly, if a defendant’s efforts are “purposefully directed” toward a given state,

then the absence of physical contacts between the defendant and that state would not

immunize the defendant from the exercise of personal jurisdiction there. Id. at 476.

There are two reasons the Constitution’s Due Process Clause requires such

contacts as a prerequisite to a court exercising power over an out-of-state defendant.

First, “[i]t protects the defendant against the burdens of litigating in a distant or

inconvenient forum.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292

(1980). Second, it protects the defendant against attempts by states to “reach out

beyond the limits imposed on them by their status as coequal sovereigns in a federal

system.” Id. Plus, practically speaking, if a defendant has purposefully availed itself

of the protection of the forum state, it “has clear notice that it is subject to suit there,

and can act to alleviate the risk of burdensome litigation by procuring insurance,

passing the expected costs on to consumers, or, if the risks are too great, severing its

connection with the State.” Id. at 297.

Here, AP argues that Cargill purposefully availed himself of the forum state

(i.e., Ohio) by directing his activities at a resident of that forum. (Memo. in Opp’n at

8, #64). For the following reasons, though, AP’s argument fails as a matter of law.

It is well settled that the mere existence of a contract between an out-of-state

defendant and a domiciliary of the forum state is not enough to show purposeful

availment. Burger King, 471 U.S. at 478 (“If the question is whether an individual’s

contract with an out-of-state party alone can automatically establish sufficient

minimum contacts in the other party’s home forum, we believe the answer clearly is

that it cannot.”). AP (an Ohio domiciliary) does not argue otherwise here. Rather, AP

points to alleged contacts with Ohio resulting from Cargill’s acts surrounding the

Greenwood Agreement, such as communications undertaken in negotiating the

agreement, communications with AP in Ohio via email about his plans to execute the

contract, and directing his lawyer to notify AP (again in Ohio) that Cargill had

concluded that the two had never entered an agreement.

To be sure, under Sixth Circuit precedent, discussion of these types of acts

relating to contract formation, and where those acts occurred, certainly serves as an

appropriate starting point for the jurisdictional analysis. Bridgeport Music, Inc. v.

Still N The Water Pub., 327 F.3d 472, 482 (6th Cir. 2003) (citing Tryg Int’l, 91 F.3d at

795). But that being said, the Sixth Circuit has also held that the mere fact that an

out-of-state party had contacts with an in-state party as part of negotiating an

agreement with that party “is not of controlling significance.” LAK, Inc. v. Deer Creek

Enters., 885 F.2d 1293, 1300 (6th Cir. 1989). Rather, such contacts often amount to

“precisely the sort of ‘random,’ ‘fortuitous’ and ‘attenuated’ contacts that the Burger

King Court rejected as a basis for haling non-resident defendants into foreign

jurisdictions.” Id. at 1300–01. Determining whether these sorts of pre-contractual or

contractual communications suffice to give rise to jurisdiction requires the Court to

undertake a holistic analysis of the totality of the circumstances surrounding the

contract negotiations, the contemplated future consequences under the contract, the

contract’s terms, and the parties’ actual course of dealing, and then to determine

whether these circumstances, as a whole, show that the defendant purposefully

undertook sufficient contacts to show a “substantial relationship” with the forum

state. Tryg Int’l, 91 F.3d at 795 (quoting Burger King, 417 U.S. at 479).

With that in mind, consider AP’s argument for purposeful availment: it claims

that Cargill can be properly haled into court here because he “knowingly negotiated

with and entered into an agreement with [AP], an Ohio corporation … .” (Id.). But

that misses the point. “[T]o create personal jurisdiction, out-of-state defendants must

purposefully avail themselves of—that is, they must choose to direct their activities

toward—the forum state.” Baker v. Bensalz Prods., Inc., No. 1:18-cv-757, 2020 WL

1083606, *9 (S.D. Ohio March 6, 2020) (Cole, J.). Simply put, then, the question is

whether the defendant intended to purposefully avail himself of the privilege of acting

in the forum state. If, on the other hand, a defendant chooses to direct his activities

toward a particular person, who merely happens to reside in the forum state, that is

not enough. Id.

Admittedly, this can sometimes be a close call. But the question amounts to

this: did the defendant intend to negotiate with an Ohio resident, or did the defendant

intend to negotiate with a given person who, it turns out, happened to reside in Ohio?

For example, if a party determines that it wants to contract with an Ohio resident

because that would make it easier to capitalize on a market in Ohio, or that it wants

to contract with an Ohio resident to take advantage of the favorable tax treatment

that Ohio would then afford to the transaction at issue, such a party would be

intending to avail itself of Ohio as a forum. But, if a party instead seeks to enter a

contract with a Corvette aficionado, and that aficionado just happens to live in Ohio,

that would not be enough. See LAK, 885 F.2d at 1300. Yet the latter is all that AP

alleges as to Cargill here. There is nothing in the Complaint, or the opposition to the

motion to dismiss and its attached declaration (see Thorton Decl,, Doc. 5-1, #68–70),

that in any way suggests that AP being a resident of Ohio was in any way material

to, or even a consideration in, the alleged Greenwood Agreement. Thus, Cargill’s

contacts with AP, even as characterized by AP itself, constitute exactly the sort of

random, fortuitous, and attenuated contacts that do not suffice to show purposeful

availment. Id.

b. Based On AP’s Allegations Here, Exercising Jurisdiction

Over Cargill Would Be Unreasonable.

The third element that Sixth Circuit precedent requires a party to show to

satisfy the Due Process Clause inquiry is that exercising personal jurisdiction over

Cargill would be “reasonable.” See Southern Mach., 401 F.2d at 381. While that term

is admittedly amorphous, it is well-established that an individual’s contract with an

out-of-state party alone cannot automatically establish sufficient minimum contacts

in the other party’s home forum. Burger King, 471 U.S. at 478. And, more specifically

in the context of reasonableness, the Sixth Circuit has found that subjecting an out-

of-state defendant to suit in Ohio simply because the defendant contracted with an

Ohio resident “would be far from reasonable.” Kerry Steel, Inc. v. Paragon Indus., Inc.,

106 F.3d 147, 152 (6th Cir. 1997).

In an effort to address the inherent vagueness of “reasonable,” the Supreme

Court has instructed that the inquiry into this prong should consider the following

factors: (1) the burden on the defendant; (2) the forum state’s interest in adjudicating

the dispute; (3) the plaintiff’s interest in obtaining convenient and effective relief;

(4) the interstate judicial system’s interest in obtaining the most efficient resolution

of controversies; and (5) the shared interest of the States in furthering fundamental

substantive social policies. Burger King, 471 U.S. at 477 (citing World-Wide

Volkswagen, 44 U.S. at 292).

Here, considered as a whole, these five factors suggest that the exercise of

personal jurisdiction over Cargill would be unreasonable. While AP admittedly has

an interest in obtaining relief by litigating in Ohio (element three), the burden on

Cargill to litigate here is high (element one). Plus, Ohio has no particular cognizable

interest in adjudicating the dispute (element two). Although Ohio certainly has

interest in protecting its residents from harm (such as AP alleges here), that interest

is present in any case involving an Ohio plaintiff. But, beyond that generalized

interest, this case does not present any novel questions of Ohio law or important

recurring issues within the state. Moreover, the interstate judicial system’s interest

in efficiency does not counsel strongly in favor of adjudicating this case in Ohio more

than anywhere else (element four), and the parties have not presented, or frankly

even suggested, any “shared interest of the States” as to “fundamental substantive

social policy” with regard to the dispute at issue in this case (element five). Therefore,

based on AP’s single breach of contract claim and the paucity of Cargill’s alleged

contacts here, it would not be reasonable for this Court to exercise jurisdiction over

him.

CONCLUSION

For the reasons above, the Court holds that it lacks personal jurisdiction over

Cargill; the Court therefore also finds his Motion to Dismiss regarding the failure to

state a claim and transfer of venue is moot. Accordingly, the Court GRANTS IN

PART and DENIES IN PART AS MOOT Cargill’s Motion to Dismiss (Doc. 4) and

DISMISSES WITHOUT PREJUDICE AP’s Complaint (Doc. 2).

SO ORDERED.

April 7, 2020 :

DATE DOUGLAS R. COLE

UNITED STATES DISTRICT JUDGE

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