The opinion of the court was delivered by: David M. Lawson United States District Judge
Honorable David M. Lawson
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
This lawsuit arises from the plaintiffs' disappointment in the defendants' failure to furnish proper materials for the construction of a manufactured log home. Defendant Nevilog Inc. (Nevilog) is located in Montana and manufactures home construction kits for log homes to be constructed on its customers' properties. In 2007, the plaintiffs entered into an agreement to purchase from the defendant a home construction package consisting of plans and materials with the intention of building a home in Macomb County, Michigan. They paid a deposit of $100,000. The agreement promises a full refund if requested by the customer "for any reason." The plaintiffs allege that they encountered difficulty with the log construction plans furnished by the defendants and requested return of their deposit, which the defendants have not paid. The defendants do not contest their obligation to refund the deposit, but they maintain that they cannot be sued in Michigan because they have insufficient contacts with this forum. They filed a motion to dismiss for want of personal jurisdiction, which was argued in open court on November 4, 2009. The Court gave the parties time to file supplemental affidavits, which have been received. The Court now finds that the corporate defendant has sufficient contacts to permit the exercise of limited personal jurisdiction over it, but there is no evidence that the individual defendant had any contacts with Michigan. Therefore, the Court will grant the motion to dismiss as to defendant Mark Neville and deny it as to the corporate defendant. The defendants also have requested that venue be transferred for the convenience of the parties. The Court finds no merit in that request and will deny it.
Plaintiffs Kurt and Ruth Heidenbreicht reside in Macomb County, Michigan. Defendant Nevilog, Inc., d/b/a/ Neville Log Homes, Inc. is incorporated under the laws of Montana and has its principal place of business in Victor, Montana. The individual defendant, Mark S. Neville, is the General Manager of Nevilog and resides in Montana. This much is undisputed.
Nevilog manufactures products for the construction of rustic-looking log homes. It does not engage in the construction of homes as such; rather it designs and prepares the blueprints and materials for construction of the log homes. Mark Neville filed an affidavit describing his company's customary practice is to receive an order for a standard- or custom-designed home, after which he finds the timber within Montana and processes it at his facility in Victor, Montana. When the logs are finished, Neville says he delivers them F.O.B. his factory in Montana, although none of the agreements filed in this case say as much. Neville avers that his company provides no on-site supervision or construction services. His company does, however, furnish the building plans and specifications.
The plaintiffs entered into the contract involved in this case on January 31, 2007. They allege that they learned about the company through an "advertisement found within the State of Michigan," but provide no other information about this advertisement, and they do not say when they saw it. Pl.'s Ans. to Mot. to Dismiss at 2. The defendants speculate that the plaintiffs viewed the defendant's passive website and subsequently contacted Nevilog to order a log home.
As it turns out, this was not the first time the plaintiffs dealt with Nevilog. Apparently, the plaintiffs contracted for a different log home package sometime before August 2005. As the plaintiffs describe it, the January 2009 agreement "arose out of a previous contract" with the defendant, Aff. of Ruth Heidenbreicht [dkt #25] ¶ 6, for a home to be constructed in Michigan. During the construction of the first home, the plaintiffs encountered problems that required the advice of a structural engineer. The engineer, Jeffrey Sharpe, traveled from Montana to Michigan and performed a site inspection. The plaintiffs believe Sharpe was the defendants' agent, and the defendants insist that he was an independent contractor, although the defendants state that they likely provided Sharpe's name to the plaintiffs.
Sharpe visited the construction site on August 12, 2005 and prepared a lengthy report to both Neville Log Homes and the Heidenbreichts containing his recommendations for "remedial measures." Aff. of Kurt Heidenbreicht [dkt #24] ¶ 11 & Ex. D. At some point, the plaintiffs finalized the plans for the first house and presented them to the local building authorities. They contacted the defendants when they learned that an architectural seal was required, and defendant Nevilog charged them $7,000 for the documentation. Sharpe was the architect who signed off on the plans and furnished his professional seal. The plaintiffs never paid anything to Sharpe directly, either for the plans or for the site visit and consultation. It is unclear from the present record whether the first home was finished or abandoned. What is apparent, however, is that defendant Nevilog continued to do business with the plaintiffs.
On January 31, 2007, the plaintiffs entered into a Customer Deposit Agreement (the "Agreement") with Nevilog "for the manufacture of a log package." Aff. of Kurt Heidenbreicht [dkt #24], Ex. B. The agreement was sent by Nevilog's employee Terry Trobinson to Kurt Heidenbreicht in Michigan via telefax on January 30, 2007. The message on the fax cover sheet makes reference to the attached deposit agreement, specifically calls attention to the refund provision, and assures that "I will not let you down." Aff. of Kurt Heidenbreicht [dkt #24], Ex. A. The Agreement itself contains the handwritten legend "Engineering and Plan Design included in log package." Aff. of Kurt Heidenbreicht [dkt #24], Ex. B. The plaintiffs state that they signed the Agreement and faxed it to the defendants on February 3, 2007. Mr. Neville signed this agreement on February 5, 2007 in Montana. The Agreement states that it was "preliminary" and "[t]he parties anticipate that a final agreement will be made upon the approval of final plans by Customer." Ibid. The plaintiffs mailed their deposit check to the defendants in Montana.
Nevilog began the process of fabricating the logs for the plaintiffs' home. The defendants admit that they crafted logs for the plaintiffs in compliance with Michigan laws and ordinances. The plaintiffs allege that they were never presented with, nor accepted, final design plans. Instead, "the [d]efendant provided plans which did not meet with the specification and size proportions of the [p]laintiffs and the plans called for proportions in square footage beyond the limits of [p]laintiffs requests and anticipated financial obligations." Compl. at 4. Therefore, on January 18, 2008, the plaintiffs sent a notice of termination to the defendants and requested a refund of their $100,000 deposit, which they claim the defendants were holding "under the laws of the State of Michigan." Compl. at 3. The defendants assert that "[t]he funds, if any, paid by [p]laintiffs were transferred to [d]efendants' bank account(s) within the State of Montana." Br. in Support of Mot. to Dismiss at 2. The defendants do not contest that they owe the plaintiffs a refund, stating that they "have every intention of refunding [the plaintiffs'] deposit as requested," but state that they need additional time due to slow business. Compl., Ex. 2, Letter.
When no refund was forthcoming, the plaintiffs commenced this action on June 1, 2009, and the defendants responded with a motion to dismiss for lack of personal jurisdiction, or alternatively to transfer venue to Montana.
I. "The question of personal jurisdiction, which goes to the court's power to exercise control over the parties, is typically decided in advance of venue, which is primarily a matter of choosing a convenient forum." Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979). In a motion to dismiss for want of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the plaintiff has the burden of proving the court's jurisdiction over the defendant. Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002). "[I]n the face of a properly supported motion for dismissal, the plaintiff may not stand on his pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction." Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). However, [w]here, as here, the district court relies solely on written submissions and affidavits to resolve a Rule 12(b)(2) motion, rather than resolving the motion after either an evidentiary hearing or limited discovery, the burden on the plaintiff is "relatively slight," Am. Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988), and "the plaintiff must make only a prima facie showing that personal jurisdiction exists in order to defeat dismissal," Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). In that instance, the pleadings and affidavits submitted must be viewed in a light most favorable to the plaintiff, and the district court should not weigh "the controverting assertions of the party seeking dismissal." Id. at 1459.
Air Prods. & Controls, Inc. v. Safetech Int'l., Inc., 503 F.3d 544, 549 (6th Cir. 2007). A plaintiff "can meet this burden by 'establishing with reasonable particularity sufficient contacts between [the defendant] and the forum state to support jurisdiction.'" Neogen Corp., 282 F.3d at 887 (internal citation omitted).
"In a diversity case, personal jurisdiction must be appropriate both under the law of the state in which the district court sits and the Due Process Clause of the Fourteenth Amendment." Bagsby v. Gehres, 195 F. Supp. 2d 957, 961 (E.D. Mich. 2002) (citing Neogen Corp., 282 F.3d at 887-88). The Sixth Circuit has explained that "[w]here the state long-arm statute extends to the limits of the due process clause, the two inquiries are merged and the court need only determine whether exercising personal jurisdiction violates constitutional due process." Bridgeport Music, Inc. v. Still N The Water Publ'g, 327 F.3d 472, 477 (6th Cir. 2003) (per curiam) (internal citation omitted). In Michigan, jurisdiction may be asserted over an individual on the basis of general personal jurisdiction, see Mich. Comp. Laws § 600.701, or limited personal jurisdiction, see Mich. Comp. Laws § 600.705. General personal jurisdiction invests the Court with the authority to pass judgment on a defendant regardless of where the facts giving rise to the cause of action occurred. General personal jurisdiction exists over any individual on the basis of his "(1) [p]resence in the state at the time when process is served; (2) [d]omicile in the state at the time when process is served; [or] (3) [c]onsent, to the extent authorized by the consent and subject to the limitations provided in section 745." Mich. Comp. Laws § 600.701. The plaintiffs do not argue that the defendants' contacts with Michigan are sufficient to establish general personal jurisdiction over them.
Limited personal jurisdiction may be exercised over a defendant who has certain minimum contacts with the forum, but only over claims that arise from or relate to those contacts. Theunissen, 935 F.2d at 1459-61. Limited personal jurisdiction may be exercised over an individual if he has one of the following relationships with the state:
(1) The transaction of any business within the state.
(2) The doing or causing an act to be done, or consequences to occur, in the state ...