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Apollo Petroleum Solutions, LLC v. Flowback Solutionz Canada

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

January 6, 2017

APOLLO PETROLEUM SOLUTIONS, LLC, and CLIFTON ROE, Plaintiffs,
v.
FLOWBACK SOLUTIONZ CANADA, Defendant.

          OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION (DKT. 6)

          HON. TERRENCE G. BERG, Judge

         This case arises from a dispute about the rightful possession of a “gaseous infusion machine.” This machine, allegedly invented by Plaintiff Clifton Roe, is used in the oil and gas industry to dissolve gasses into liquids. Roe is currently an employee of Plaintiff Apollo Petroleum Solutions, LLC, but over the past few years he has also been associated with two other companies, Nano Gas Technologies, Inc. (“Nano Gas”) and OilTrap Environmental Products, Inc. (“OilTrap”). According to the Complaint, Defendant Flowback Solutionz Canada (“Flowback-Canada or Defendant”) has Plaintiff's proto-type machine in its possession. Plaintiff wants the machine back.

         Defendant filed a motion to dismiss for lack of personal jurisdiction (Dkt. 6). Plaintiff filed a response brief (Dkt. 8) and Defendant filed a reply (Dkt. 11). The Court heard oral argument on Defendant's motion on November 2, 2016. Upon review of the entire record and the legal arguments of the parties, the Court finds that Plaintiffs have not established that Defendant has had contacts with Michigan sufficient to subject Defendant to the jurisdiction of this Court. Therefore, for the reasons set forth below, Defendant's motion to dismiss (Dkt. 6) is GRANTED, and Plaintiff's Complaint is DISMISSED WITHOUT PREJUDICE.

         I. BACKGROUND

         Plaintiff Apollo Petroleum Solutions, LLC is a Louisiana corporation, organized under the laws of Louisiana, with a principal place of business in Lafayette, Louisiana. All of Apollo's members are citizens of Louisiana, thus it is a citizen of Louisiana (Dkt. 3, First Amended Complaint, ¶ 1). Plaintiff Clifton Roe is an individual who resides in Harrison Township, Macomb County, Michigan, and is a citizen of Michigan. Id.¶ 2. Defendant Flowback Solutionz Canada (0984767 BC Ltd)(Flowback-Canada) is a Canadian corporation, organized and existing under the laws of Canada, and having its principal place of business in Vancouver, British Columbia, Canada. Id. ¶ 3. There is another “Flowback” entity, not a party to this lawsuit, which claims to be a separate company but shares several key personnel with Flowback-Canada. That company is called Flowback Solutionz, LLC, a limited liability company, organized under the laws of the State of Washington (hereafter, “Flowback-USA”).[1] The record does not reflect the citizenship of Flowback-USA's members, but that information is not required to resolve the motion before the Court.

         On or about March 21, 2013 Plaintiff Roe and non-party Nano Gas Technologies, Inc.[2] (“Nano Gas”) signed a joint venture agreement for the development and commercialization of gas infusion machines (Dkt. 8, Ex. D, Pg ID 111-114). Nano Gas is a Delaware corporation with offices in Deerfield, Illinois. Plaintiff Roe and Nano Gas established a joint laboratory in Clinton Township, Michigan in June 2013.

         Plaintiff Roe states in his response to Defendant's motion to dismiss that, during this time-frame, he and Nano Gas were introduced to non-party OilTrap Environmental Products, Inc. and “Flowback”[3] (Dkt. 8, Pg ID 56). Plaintiff avers that, beginning on or about June 26, 2014, James Warren, James Ward (employees and agents of Flowback - again, Plaintiff does not state which Flowback, USA or Canada) and Di Gao (consultant for Flowback) had telephone conferences and exchanged multiple emails with Plaintiff Roe, Len Bland and Jeff Hardin of Nano Gas regarding the gas infusion process. Plaintiff attaches these emails to his response to Defendant's motion to dismiss (Dkt. 8, Ex. E). It is clear from these emails that Flowback-USA, Nano Gas, and OilTrap were discussing the possible use of Roe's gas infusion machine as part of a large project that Flowback-USA was undertaking with Apache Oil Corporation in Canada. Plaintiff Roe is “cc'ed” on two of the emails (with an email address of croe@nanogastechnologies.com); he is not the primary sender or recipient on any of the attached emails. The bulk of the emails consist of correspondence between Mike Davis (OilTrap), Len Bland (Nano Gas), and James (Jim) Warren (Flowback-USA).[4] Included in these emails in the signature page from what Plaintiff contends is a non-disclosure agreement (Pg ID 140). The signature page is signed by a Ty Hanna on behalf of Apache Oil Corporation (not a party to this lawsuit). It has a signature block for James Warren on behalf of Flowback Solutionz, LLC (a/k/a Flowback-USA), but the copy provided to the Court by Plaintiffs has not been signed by Mr. Warren.

         Plaintiffs provided two additional non-disclosure agreements (Pg IDs 148-153). The first, between Nano Gas and Flowback-USA (identified as “Flowback Solutionz, LLC”) is dated August 29, 2014. The copy provided to the Court does not list an address for Flowback Solutionz, LLC, but that is the company name of Flowback-USA (not Flowback-Canada). This non-disclosure agreement was not executed by Nano Gas; Mr. Di Gao (“Chair of Scientific Advisory Board”) Dated: behalf of Flowback-USA. Plaintiff Roe states in an affidavit that this non-disclosure agreement arose in conjunction with an in-person meeting at Plaintiff Roe's lab in Michigan attended by James Warren (Flowback-USA), Chris Witworth (Flowback- USA), Plaintiff Roe and Mike Davis (OilTrap) (Pg ID 69 ¶ 4). At this meeting, Plaintiff Roe claims that he demonstrated the gas infusion process to OilTrap and Flowback. Plaintiff Roe states that OilTrap and Flowback expressed interest in using his technology in the oil fields in Canada. Id. ¶ 5. For his part, Mr. Warren states that he never travelled to Michigan on behalf of Flowback-USA (Pg ID 169 ¶ 4). Mr. Warren admits, however, that Mr. Witworth (an employee of Flowback-USA, not Flowback-Canada) and Mr. Di Gao (an “advisor” for Flowback-USA) travelled to Michigan to meet with Nano Gas and Plaintiff Roe.

         The second agreement was entered into about a week later, on September 8, 2014. This agreement is between Nano Gas, and Flowback Solutionz, LLC (that is, Flowback-USA). In this agreement, Flowback is explicitly listed as a “Washington” LLC (Pg ID 152). Unlike the other two agreements, this agreement was fully executed - Thomas DeDonato signed for Flowback-USA, and Len Bland signed for Nano Gas.

         Plaintiff Roe states that he terminated the joint-venture with Nano Gas on September 15, 2014 (Pg ID 69 ¶ 6). Plaintiff Roe claims that he then began working directly with OilTrap in September 2014 to develop gas infusion machines, and he shipped his existing gas infusion machine to OilTrap in Olympia, Washington for research and development (Pg ID 70 ¶ 8). Around this time, Plaintiff claims that he received oil and water samples from Flowback for treatment and analysis. Mr. Warren states that Flowback sent these oil and water samples to OilTrap (in Washington), and then OilTrap then forwarded them to Plaintiff in Michigan (Pg ID 170 ¶ 5). Plaintiff claims to have analyzed these samples, and then shipped them “back to Flowback Canada.” Id. ¶ 8. Plaintiff provided the Court with a “Water Sample Log” (Pg ID 154) that lists two samples for client “Flowback Solutionz” dated September 22, 2014. The chart contains a column labeled “testing completed.” The first sample's “testing completed” column is left blank. The second sample's “testing completed” column reads “testing completed by OilTrap.” Id. Nearly a year then passes. Plaintiff Roe does not explain what happened during the intervening year, but instead picks up his narrative of events on or about September 2, 2015 when, unbeknownst to him, OilTrap and Flowback-Canada entered into an agreement whereby OilTrap would sell and deliver to Flowback-Canada a gaseous infusion machine (Pg ID 155). Under the purchase order between OilTrap and Flowback-Canada (explicitly identified in the purchase order as “Flowback Canada”), OilTrap was required to ship a gaseous infusion system from OilTrap in Tumwater, Washington to Flowback-Canada in Vancouver, British Columbia on November 3, 2015 (Pg ID 70 ¶ 9). Plaintiff believes that OilTrap missed the November 3, 2015 deadline to deliver the agreed gaseous infusion system, and Flowback-Canada demanded to receive the agreed gaseous infusion system or a full refund. Id. ¶ 10. Plaintiff believes that, in order to try to meet its commitment to deliver a machine to Flowback-Canada, OilTrap then “loaned” Plaintiff's machine to Defendant, shipping it to at a facility in Grand Prairie, Alberta, Canada. Id. ¶ 10-11.

         To summarize, Plaintiff sent his machine to OilTrap, a company he was working with located in the State of Washington. OilTrap, without Plaintiff's knowledge or consent, shipped Plaintiff's machine to Flowback-Canada. Plaintiff is now suing Flowback-Canada to get his machine back. The question before the Court is whether this Canadian Defendant had sufficient contacts with Michigan to permit this Court to exercise jurisdiction over it.

         According to Flowback-Canada, its only contact with Plaintiff relating to the gas infusion machine occurred in November 2015, when Plaintiff Roe participated in a conference call between James Ward, CEO of Defendant, and Dale Nelson, CEO of OilTrap. Defendant contends that Plaintiff Roe was presented as an employee of OilTrap during this call and Plaintiff Roe agreed in that telephone conversation to spare no effort in helping Flowback-Canada to get the machine working that Flowback-Canada had purchased from OilTrap.

         II. ANALYSIS

         A. Motion to Dismiss for Lack of ...


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