United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO
DISMISS (DOC. #3) AND DISMISSING CASE WITHOUT
CARAM STEEH UNITED STATES DISTRICT JUDGE
a breach of contract case in which defendant Vac Pac, Inc.
(“Vac Pac”) contracted with plaintiff Converting
Alternatives International, LLC (“CAI”) to design
and build an upgrade to one of Vac Pac's machines. Vac
Pac is a Maryland corporation and CAI is a Michigan company.
CAI filed its action invoking this court's diversity
jurisdiction pursuant to 28 U.S.C. § 1332. The matter is
before the court on Vac Pac's motion to dismiss for lack
of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).
The motion has been fully briefed and a hearing was held on
March 13, 2017. Because exercising personal jurisdiction over
Vac Pac would offend traditional notions of fair play and
substantial justice, Vac Pac's motion is GRANTED as set
Michigan company located in Lake Orion, Michigan, is in the
business of facilitating the design and fabrication to
convert industrial machinery. Vac Pac, a Maryland corporation
headquartered in Baltimore, is in the business of producing
packaging for the food industry, particularly cooking bags.
Vac Pac does not own property in Michigan, is not licensed to
do business in Michigan, does not conduct any business
activities in Michigan, and does have a registered agent for
the service of process in Michigan. Vac Pac has no employees
in Michigan and has never advertised in Michigan.
to CAI, in July 2014, Matt Tary, the President of Vac Pac,
made an unsolicited telephone call to Tom Williams, President
of CAI. Williams' Decl. ¶¶ 4-6, 35-36. Mr.
Williams asserts that during this phone call, Mr. Tary
inquired whether CAI would be interested in quoting the
design and build of a machine to make cooking bags.
Id. Mr. Tary contacted CAI on the recommendation of
Ken Deneka of Deneka Printing Systems, Inc. Id. Mr.
Deneka even called Mr. Williams in advance to let him know
that Mr. Tary would be calling to see if CAI was interested
in doing business with Vac Pac. Id.
motion to dismiss, Vac Pac tells a contrasting version of the
first contact between the parties. On July 19, 2014, Mr.
Deneka emailed Mr. Williams with the details of the project
at issue and Mr. Tary's contact information. Deneka
Affidavit, ¶ 8. On July 21, 2014, Mr. Deneka suggested
that Mr. Williams contact Mr. Tary, provided his phone number
and stated, “this is the easiest way to reach
him.” Deneka Affidavit, Exh. 1-A. Mr. Williams
responded, “Ken, I'm in Florida on a sales call. I
will not be back until Tuesday night. . . I will call that
gentleman on Wednesday.” Id. Mr. Deneka
emailed Mr. Tary on July 21, 2014 to inform him that Mr.
Williams would be calling him. On Wednesday, July 23, 2014,
Mr. Williams did call Mr. Tary. Tary Suppl. Affidavit, ¶
4. Mr. Williams offered to fly to Maryland to meet Mr. Tary
in person, and actually did so on the following Monday.
Id., ¶ 6, Exh. B.
each side in this litigation accuses the other side of
providing a false account regarding the first contact that
took place, Vac Pac's account is supported by the
affidavit of non-party Mr. Deneka and emails between the
undisputed that CAI personnel visited Vac Pac's facility
in Maryland in July, August and September of 2014 to observe
Vac Pac's production lines and prepare a quote. On
December 9, 2014, CAI delivered Quote #1658 to Vac Pac to
design and build a bag delivery section and a printing
section to modify existing equipment. The printing section
upgrades required the use of existing Vac Pac equipment,
which was in use at Vac Pac's Maryland location. Once CAI
indicated the bag making section was complete, it would be
shipped from Michigan to Maryland to be joined to the donor
printing section, at which time the printing section upgrades
could be performed.
total cost quoted by CAI was $818, 655. The terms of payment
in the Quote were “30% upon receipt of order, 30% prior
to shipment, 40% upon completion of start-up and customer
acceptance.” Vac Pac financed the work and services to
be performed under Quote #1658 through FSG Capital, Inc.
(“FSG”), a lender based in Maryland. CAI entered
into a Vendor Indemnification Agreement, where it agreed to
indemnify, defend and hold FSG harmless against any losses,
liabilities, damages, costs and expenses arising directly or
indirectly out of any claim by CAI, Vac Pac or any other
party for the cost of the equipment or the funds advanced by
FSG. Vendor Indemnification Agreement, ¶ 3. The Vendor
Indemnification Agreement provides that it was executed in
Maryland, shall be governed by Maryland law, and shall be
construed and enforced in accordance with Maryland law.
Vendor Indemnification Agreement ¶ 6.
January 2, 2015, the first 30% payment in the amount of $245,
596.50 was delivered to CAI in Michigan. The structure of the
press was built in Romeo, Michigan at the facilities of a CAI
subcontractor. It was then moved to another CAI subcontractor
in Oxford, Michigan on February 28, 2015. Representatives
from Vac Pac travelled to Michigan on March 17, 2015 to
inspect the press. They requested that several changes be
made during this inspection, as well as requesting the
addition of a stacker which was not part of the original
quote. A second was done by Vac Pac representatives in
Michigan on July 20, 2015. At that time, the Vac Pac
representatives accepted the machine and instructed CAI to
deliver it to Vac Pac's facilities in Maryland.
30, 2015 the second 30% payment in the amount of $245, 596.50
was delivered to CAI in Michigan. On September 10, 2015, the
press was shipped from Michigan to Vac Pac's facility in
Maryland. CAI installed the press and made various
adjustments to optimize the operation of the press. This
included providing additional components for the press after
it was installed.
January 2016, the press had yet to produce any acceptable
product at any reasonable speed, so Vac Pac instructed CAI to
stop work on the press and denied CAI further access to the
press. CAI brought this lawsuit seeking to recover the
remaining balance due under the quote, plus $20, 000 for the
stacker, asserting claims for breach of contract, quantum
meruit and unjust enrichment.
contends that in its efforts to work on the press in
Maryland, CAI caused further harm and delay, breaking two
critical bearing blocks in the sealing unit which required
custom manufacture and reinstallation. Vac Pac claims to have
suffered a loss of business due to the inability to produce
products from the affected manufacturing line. In addition,
Vac Pac has spent money and 1, 500 man hours of labor trying
to put the machine into production. It has engaged multiple
third party contractors, many located in Maryland, to
diagnose and repair issues left unaddressed by CAI.
Vac Pac filed a lawsuit against CAI in Maryland on December
21, 2016. In that suit, Vac Pac alleges claims for breach of
contract, breach of warranty, misrepresentation and
fraudulent inducement. FSG alleges a breach of the Vendor
Indemnification Agreement. CAI did not object to personal
jurisdiction over it in Maryland, but filed a motion ...