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Valicor Separation Technologies, LLC v. Three Rivers Energy, LLC

United States District Court, E.D. Michigan, Southern Division

July 23, 2015

VALICOR SEPARATION TECHNOLOGIES, LLC, a Michigan Limited Liability Company, Plaintiff,
THREE RIVERS ENERGY, LLC, an Ohio Limited Liability Company, Defendant.


VICTORIA A. ROBERTS, District Judge.


Plaintiff Valicor Separation Technologies, LLC ("Valicor"), sued Defendant Three River Energy, LLC ("TRE"), to enforce a contract for industrial equipment. TRE moves to dismiss the complaint under Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure, for lack of personal jurisdiction and improper venue. In the alternative, TRE asks the Court to transfer the action to the United States District Court for the Southern District of Ohio under 28 U.S.C. §§ 1404(a) or 1406(a).

The matter is fully briefed, although Valicor only responded to issues raised by TRE under Rule 12(b)(2) and §§ 1404 and 1406. Oral argument was heard on July 23, 2015.

For the following reasons, the motion is DENIED.


Valicor is a Michigan limited liability company which designs and sells industrial systems to recover corn oil from a fuel ethanol distilling process. TRE is a limited liability company organized under the laws of Delaware; it operates a bio-refinery plant in Ohio.

This is an action for declaratory relief pursuant to 28 U.S.C. § 2201 and Rule 57 of the Federal Rules of Civil Procedure, to determine questions regarding TRE's purchase of Valicor's industrial equipment.

On November 18, 2013, TRE entered into a Purchase Agreement ("Agreement") for Valicor's corn oil extraction technology and industrial equipment ("VFRAC"). Under the terms of the Agreement, Valicor was responsible for delivering Valicor's VFRAC system to TRE's bio-refinery plant in Ohio.

During Valicor's installation of the VFRAC system, significant changes to the system were made, resulting in cost overruns for $2.7 million. Valicor says "any purported cost overruns were TRE's responsibility under the [Agreement]." TRE says Valicor is obligated to reimburse it for overruns.

A. Disputed Facts

The parties dispute the extent to which TRE transacted business in Michigan. Valicor says TRE transacted business in Michigan by: (1) having a continuous business relationship with Valicor; (2) seeking out Valicor in Michigan to purchase fluid separation equipment; (3) ordering the VFRAC system, which was manufactured in Michigan; (4) leasing a Corn Oil Separation System ("COSS") from Valicor, which was manufactured in Michigan; (5) making weekly payments (at least sixty-nine) to Valicor's Michigan-based bank; (6) seeking service and support from Valicor's Michigan-based employees regarding the COSS system; (7) contracting for long-term technical support once the VFRAC system was installed; and (8) sending multiple representatives to Michigan (at least twice) to meet with Valicor officials.

TRE says it did not transact business in Michigan because: (1) it did not have a continuous business relationship with Valicor; (2) its representatives only visited Michigan once to resolve an issue regarding the Agreement; (3) Valicor promised to deliver the VFRAC equipment, manuals, drawing, and semantics to TRE in Ohio; (4) Valicor installed the VFRAC system on site at TRE's facility in Ohio; and (5) changes to the VFRAC system were performed in Ohio. TRE also refutes Valicor's assertion that it sought out Valicor in Michigan. TRE's, Chief Operating Officer, Eamonn Byre, says that Valicor initially approached TRE to "pitch the... VFRAC system" at a workshop in Missouri.

B. Procedural History

On April 2, 2015, Valicor filed a Complaint against TRE in this Court for declaratory relief. On April 6, 2015, TRE filed a Complaint in the Court of Common Pleas, Coshocton County, Ohio ("Ohio Action"), asserting breach of contract, unjust enrichment, and a declaration that Valicor is responsible for cost overruns. On April 27, 2015, Valicor filed an Amended Complaint in this Court, adding a cause of action for breach of contract. On May 1, 2015, Valicor removed the Ohio Action to the Southern District of Ohio. The parties stipulated to stay the Ohio Action until this Court decides the current motion. The parties agreed that if this Court lacks personal jurisdiction over TRE, the Southern District of Ohio would have diversity jurisdiction over the dispute, and would be the appropriate venue.


A. Defendant's Motion to Dismiss For Lack of Personal Jurisdiction

TRE says that this Court lacks personal jurisdiction over it, and moves that this action be dismissed pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. This Court has addressed this issue in its entirety in A & D Tech., Inc. v. C.E.E., LLC, No. 09-11662, 2009 WL 2448551, (E.D. Mich. Aug. 10, 2009). "In the context of a Rule 12(b)(2) motion, a plaintiff bears the burden of establishing the existence of jurisdiction." Air Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir. 2007) ( citing Serras v. First Tennessee Bank N.A., 875 F.2d 1212, 1214 (6th Cir. 1989)). Thus, a "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) ( citing Weller v. Crowmwell Oil Co., 504 F.2d 927, 929-30 (6th Cir. 1974)). A court reviewing such a motion may, in its discretion, decide the motion solely upon written submissions and affidavits, allow limited discovery to aid in its decision, or hold an evidentiary hearing to resolve any disputed facts. Id. ( citing Serras, 875 F.2d at 1214).

In the absence of an evidentiary hearing, the plaintiff bears only a relatively slight burden to make a prima facie showing of jurisdiction. Air Prods., 503 F.3d at 549 ( quoting Am. Greetings Corps. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988)). Since there has been no evidentiary hearing, the Court must view the pleadings and affidavits in the light most favorable to Valicor, and may not rely on contradicting assertions filed by TRE. Bird v. Parsons, 289 F.3d 865, 872 (6th Cir. 2002) ( citing CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996)); Theunissen, 935 F.2d at 1459. A Rule 12(b)(2) motion may be granted only if "all the specific facts which the plaintiff alleges collectively fail to state a prima facia case for jurisdiction." CompuServe, 89 F.3d at 1262 ( citing Theunissen, 935 F.2d at 1459).

1. Jurisdictional Standard

"A federal court sitting in diversity may assert personal jurisdiction over a nonresident defendant only to the extent permitted under the law of the forum state." A & D Tech., Inc. 2009 WL 2448551, at * 3 ( citing Calphalon Corp. v. Rowlette, 228 F.3d 718, 721 (6th Cir. 2000). "In Michigan, the exercise of personal jurisdiction over a nonresident defendant is proper if (1) the defendant's actions place it within reach of Michigan's long-arm statute, and (2) the exercise of personal jurisdiction comports with the Due Process Clause of the United States Constitution." Id. ( citing Green v. Wilson, 455 Mich. 342, 347, 565 N.W.2d 813 (1997)). TRE says its activities do not fall within the reach of Michigan's long-arm statute, and that the Due Process Clause is not satisfied.

"While many courts interpret Michigan's long-arm statutes to extend jurisdiction as far as due process permits, it is... necessary for this Court to first determine whether the long-arm statute permits jurisdiction to be asserted over [TRE]." Terry Barr Sales, L.L.C. v. Amtek Metal Indus., Inc., No. 08-10749, 2008 WL 4449633, at *3 (E.D. Mich. Oct. 2, 2008). See Green, 455 Mich. At 350-51, 565 N.W.2d 813 ("The coextensive nature of Michigan's long-arm jurisdiction becomes pertinent only if the particular acts or status of a defendant first fit within a long-arm statute provision"). In a specific jurisdiction case, "a State exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum." Terry Barr Sales, L.L.C., 2008 WL 4449633 at *4. ( quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)).

a. Transaction of Business Within the State

Valicor says TRE's activities are sufficient for the Court to find jurisdiction under Michigan's limited personal jurisdiction provision of Michigan Compiled Laws ("M.C.L.") ...

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