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ABC Debt Collection, LLC v. Gleason Corp.

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

May 23, 2017




         Plaintiff ABC Debt Collections, LLC sued Gleason Corporation and Gleason Gear Technology (Suzhou) Co. Ltd., hereafter referred to as GGTS, arising out of a failure to complete payments under a sales contract. Plaintiff brings three claims, Breach of Contract against GGTS (Count 1); Open Account under Mich. Comp. Laws § 600.2145 against GGTS (Count II); and Unjust Enrichment against both defendants (Count III). Plaintiff also seeks to pierce the corporate veil and hold Gleason Corporation liable for Counts I and II. The matter is presently before the Court on defendant Gleason Corporation's motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2) for lack of personal jurisdiction, and 12(b)(6) for failure to state a claim. (Doc. 5). The Court heard oral argument on May 11, 2017. For the reasons stated below, Gleason Corporation's motion to dismiss will be GRANTED pursuant to Rule 12(b)(2). The Court, therefore, does not address the arguments based upon Rule 12(b)(6).

         I. Background

         In June 2012, GGTS contracted to purchase eleven machines from Moore Controls, LLC. (Doc. 1 at PageID 7). GGTS is a Chinese corporation with its principal place of business in China. (Doc. 10 at PageID 197). GGTS is owned by Gleason (Mauritius) Holdings Ltd., which is incorporated in and has its principal place of business in Mauritius. (Doc. 10 at PageID 197). Gleason Holdings Ltd. is held by The Gleason Works, a New York corporation with its principal place of business in New York. (Doc. 10 at PageID 197-98). The Gleason Works is held by Gleason Corporation. (Doc. 10 at PageID 198). Gleason Corporation is incorporated in Delaware and has its principal place of business in New York. (Doc. 10 at PageID 196).

         GGTS made several progress payments, but allegedly failed to make the final payment amounting to 10% of the purchase price. (Doc. 1 at PageID 8). Moore Controls, LLC assigned this account to plaintiff, a Michigan limited liability company, on May 20, 2016. (Doc. 1 at PageID 8). Plaintiff sued GGTS and Gleason Corporation in Washtenaw County Circuit Court in an attempt to receive this final payment. (Doc. 1 at PageID 6). Gleason Corporation was served on November 22, 2016. (Doc. 1 at PageID 2). Gleason Corporation removed the case to federal court on December 2, 2016. (Doc. 1 at PageID 1-3). GGTS has not yet been served, and did not join in the removal. (Doc. 1 at PageID 1-3).

         II. Legal Standard

         Plaintiff bears the burden of establishing the Court's personal jurisdiction over Gleason Corporation. Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002). Where, as here, the court does not conduct an evidentiary hearing regarding personal jurisdiction, the plaintiff “need only make a prima facie showing of jurisdiction.” Id. at 887. “Nevertheless, the plaintiff may not simply reassert the allegations contained in its pleadings, but instead must ‘set forth specific facts showing that the court had jurisdiction.'” GKN Driveline v. Stahl Specialty Company, No. 15-cv-14427, 2016 WL 1746012, at *3 (E.D. Mich. May 3, 2016) (quoting Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)). The Court must view the pleadings and affidavits in the light most favorable to plaintiff, Third Nat. Bank in Nashville v. WEDGE Group Inc., 882 F.2d 1087, 1089 (6th Cir. 1989), and will not consider contrary assertions made by defendant. Neogen, 282 F.3d at 887 (citing Serras v. First Tenn. Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989)).

         III. Analysis

         “A federal court's exercise of personal jurisdiction in a diversity of citizenship case must be both (1) authorized by the law of the state in which it sits, and (2) in accordance with the Due Process Clause of the Fourteenth Amendment.” Neogen, 282 F.3d at 888 (quoting Reynolds v. Int'l Amateur Athletic Fed'n, 23 F.3d 1110, 1115 (6th Cir. 1994)).

         Michigan's long-arm statute extends general jurisdiction pursuant to Mich. Comp. Laws § 600.711 and limited jurisdiction pursuant to Mich. Comp. Laws § 600.715. General jurisdiction enables a court to exercise jurisdiction over a corporation “regardless of whether the claim at issue is related to its activities in the state or has an in-state effect.” Neogen, 282 F.3d at 888. Limited jurisdiction, in contrast, “extends only to claims arising from the defendant's activities that were either within Michigan or had an instate effect.” Id. at 888.

         A. General Jurisdiction over Defendant Gleason Corporation

         “In order to be subject to general jurisdiction in Michigan, a nonconsenting, nonresident corporation. . . must have carried on a ‘continuous and systematic part of its general business' within Michigan.” Id. at 889 (citing Mich. Comp. Laws § 600.711(3)). The Supreme Court stated that the appropriate inquiry is whether a foreign corporation's “affiliations with the State are so ‘continuous and systematic' as to render [it] essentially at home in the forum state.” Daimler AG v. Bauman, 134 S.Ct. 746, 749 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2853 (2011)). Michigan courts require foreign corporations to “actually be present within the forum state on a regular basis, either personally or through an independent agent.” Glenn v. TPI Petroleum, Inc., 305 Mich.App. 698, 707 (2014). In making this determination, Michigan courts consider “whether the particular corporate entity has a physical location, officers, employees, or bank accounts in Michigan, ” and the corporation's “conduct in soliciting and procuring sales and purchases within Michigan.” Id. at 707. The “mere suggestion” that a defendant corporation “is, in some manner, conjoined with various subsidiaries that operate in Michigan is not sufficient to establish general personal jurisdiction.” Id. at 710 (citing Avery v. American Honda Motor Car Co., 120 Mich.App. 222, 225 (1982). Plaintiff must instead “plead or demonstrate an adequate ‘alter ego' relationship between” a defendant corporation “and its subsidiaries or that” a defendant corporation had control over the subsidiaries. Id. at 711.

         Gleason Corporation states that it does not have a physical location, officers, employees, or bank accounts in Michigan. (Doc. 5-2 at PageID 69). Plaintiff alleges that Gleason Corporation conducts business in Michigan and, by way of William J. Simpson's involvement in negotiating with Christopher Mackey of Moore, solicited and procured a sale within Michigan. (Doc. 1 at PageID 7; Doc. 12-1 at PageID 205). These contacts are not of a “continuous and systematic” nature to render Gleason Corporation “at home in [Michigan], ” Daimler, 134 S.Ct. at 754, or establish that Gleason Corporation is “actually present within [Michigan] on a regular basis.” Glenn, 305 Mich.App. at 707. The Court, therefore, does not have general jurisdiction over Gleason Corporation.

         B. Limited Jurisdiction over Defendant ...

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