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Devnani v. DMK Solutions, Inc.

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

October 18, 2017

RAVI DEVNANI, an individual residing in Beverly Hills, Michigan d/b/a Viatechno, Plaintiff,
DKM SOLUTIONS, INC., a Texas Corporation, JEFF GRAZIOPLENE, an individual residing in Texas, SAMUEL EVANS, an individual residing in Texas, Defendants.


          Paul D. Borman United States District Judge.

         In 2015, Defendant DKM Solutions, Inc. (“DKM”) hired the Plaintiff to create a website for DKM. In this breach of contract and copyright infringement action, Plaintiff claims that Defendants have (1) failed to pay him for his web design services in breach of a verbal agreement and (2) wrongfully utilized technology that Plaintiff created and copyrighted, which allows individuals to use and rate businesses on the Internet, and wrongfully used Plaintiff's source code, software, graphic designs and other copyrighted material, without Plaintiff's permission and in breach of a verbal agreement between Plaintiff and Defendants.

         Defendants contend that Plaintiff never performed per the parties' agreement, never created the website, and “swindled” DKM, a Texas corporation, out of tens of thousands of dollars but move to dismiss this action, in lieu of an answer, for lack of personal jurisdiction over any of the three Defendants and improper venue, and alternatively move to transfer venue to the Western District of Texas, Austin Division. Plaintiff has responded to Defendants' motion (ECF No. 16) and Defendants have replied (ECF No. 18).

         The Court held a hearing on October 13, 2017, and GRANTED Defendants' motion on the record. This Opinion and Order now follows and the Court DISMISSES the action for lack of personal jurisdiction over the Defendants.

         I. BACKGROUND[1]

         Plaintiff has been an independent contractor in the field of computer programming, web design, and graphic design since 1999. In 2003, Plaintiff began doing business as the entity “ViaTechno.” Plaintiff never incorporated ViaTechno, but asserts that he does business under this name in Michigan. (ECF No. 16, Pl.'s Resp. Ex. A, June 20, 2017 Declaration of Ravi Devnani ¶ 10.) In 2003, Plaintiff began building a web-based System that can be used by various businesses to interface with their clients, customers, and the public. (The “System”) (Devnani Decl. ¶ 11.) Plaintiff has licensed this System to dozens of small businesses in Michigan and elsewhere in the country and a large portion of Plaintiff's income comes from fees paid by these licensees. (Id.) Plaintiff represents that the System is “registered” to him and was “substantially if not entirely created and developed in the State of Michigan.” (Id. ¶ 12.) On or about March 10, 2017, at approximately the same time that Plaintiff filed this lawsuit against DKM, Plaintiff applied for a copyright registration to protect his System. (Id. Ex. E, March 10, 2017 Certificate of Registration.)

         In February, 2015, Plaintiff was introduced to Mr. Grazioplene and Mr. Evans through a mutual friend, and began working with their corporation DKM to build a web page for a business concept that Mr. Grazioplene and Mr. Evans had regarding a ratings business for car salesmen in the automobile industry. Both Mr. Grazioplene and Mr. Evans are employed by a car dealership in Georgetown, Texas, as a finance director and sales person respectively. (Devnani Decl. ¶ 16; Def.'s Mot. Ex. A, April 19, 2017 Declaration of Jeff Grazioplene ¶ 29; Def.'s Mot. Ex. B, April 19, 2017 Declaration of Samuel Evans ¶ 25.) Plaintiff and Messrs. Grazioplene and Evans discussed, but never executed, a license agreement and contract for Plaintiff's services. There is no dispute, however, that the parties did begin to perform under the terms of this “verbal agreement” as discussed, with Plaintiff beginning work on the website and Defendants remitting $5, 000 every other month to Plaintiff for his services. (Devnani Decl. ¶¶ 19-20; Evans Decl. ¶ 11.) The relationship began in approximately April, 2015, and ended in November, 2016, when DKM terminated the verbal agreement. (Grazioplene Decl. ¶ 12; Evans Decl. ¶ 10; Devnani Decl. ¶ 37.)

         Plaintiff avers that he is a Michigan resident and has lived in Michigan his entire life. He alleges that he currently resides and works at 15558 Buckingham Avenue in Beverly Hills, Michigan, where he has lived since 2014. (Devnani Decl. ¶¶ 2, 7.) Prior to 2014 Plaintiff resided at 516 Bennaville, Birmingham, Michigan, his childhood home, for 5 years. Prior to 2009 Plaintiff was a student at the University of Michigan. Throughout his years as a Michigan resident, he has paid taxes as an individual in Michigan, maintained bank accounts with local Michigan banks, maintained a Michigan Drivers License, voted as a Michigan resident and availed himself of Michigan health care benefits through past and present state health care plans. (Id. ¶ 5, Exs. A-D.) All of Plaintiff's business and personal banking is done through Charter One Bank in Birmingham, Michigan, which is now called Citizens Bank. This bank has no branches in Oregon. (Id. ¶ 6.)

         Plaintiff states that his job as an independent contractor enables him to travel and spend stretches of time in other cities, but he claims that he returns home to Michigan, “after some time away, ” to have face-to-face meetings with clients. (Devnani Decl. ¶ 13.) Plaintiff does not claim to have ever had a meeting with anyone from DKM in Michigan and the individual Defendants deny that either of them has ever been in the State of Michigan. (Grazioplene Decl. ¶¶ 27; Evans Decl. ¶ 23.) Plaintiff does claim that Mr. Grazioplene and Mr. Evans once called Plaintiff at his Michigan home on his Michigan telephone number. (Devnani Decl. ¶ 17.) Both Mr. Grazioplene and Mr. Evans testify that all of their dealings with Plaintiff, except for a few phone calls from Plaintiff to DKM in response to DKM's request for updates while Plaintiff was purportedly visiting his grandmother in Michigan, were with Plaintiff in Oregon. (Grazioplene Decl. ¶¶ 15, 18; Evans Decl. ¶¶ 12-15.)

         Since January, 2014, Plaintiff has traveled back-and-forth frequently to Portland, Oregon, sometimes spending several weeks at a time staying with his mother who relocated to Portland, Oregon in 2014, to live near Plaintiff's brother. (Id. ¶¶ 14, 15.) Although Plaintiff avers that he does business under the d/b/a of ViaTechno in Michigan, it is clear (and Plaintiff does not dispute) that he does business under the ViaTechno name in the State of Oregon as well. According to Defendants, and not disputed by the Plaintiff, at the time that DKM negotiated the verbal agreement with Plaintiff, and during the entire time that DKM worked with Plaintiff, DKM understood that Plaintiff lived at 6935 N. Michigan, Portland, Oregon 97217. (Def.'s Mot. Ex. A, April 19, 2017 Declaration of Jeff Grazioplene ¶¶ 14-15.) During their working relationship with Plaintiff, DKM sent all payments to Plaintiff at Plaintiff's Oregon address, pursuant to the parties' verbal agreement. DKM purchased a plane ticket for Plaintiff to fly from Portland, Oregon to Austin, Texas to meet with DKM and once sent a gift of Texas Barbeque to Plaintiff at his Portland, Oregon address. (Id. ¶¶ 15-16, PgID #s 90-95, 119-24.) Plaintiff offers no assertions to contradict these factual representations by the Defendants. Plaintiff offers no evidence, emails or other forms of correspondence, that would permit even an inference that Defendants should have believed that Plaintiff was running ViaTechno out of the State of Michigan. Indeed, as discussed further infra, all evidence in the record is to the contrary.

         Beginning in March, 2016, Plaintiff had DKM set up an account with RackSpace, a Texas-based cloud hosting service that could perform geo-tracking services for DKM's web-based system. (Devnani Decl. ¶ 28.) Plaintiff was the administrator on the account and RackSpace utilized Plaintiff's Portland, Oregon address for purposes of RackSpace billings consistently from April, 2016 through the termination of the relationship with DKM. (Devnani Decl. ¶ 28; Grazioplene Decl. at PgID #s 96-118.) Although DKM paid the RackSpace bills, RackSpace sent the bills to Plaintiff at his Portland, Oregon address. (Id.)

         Plaintiff's social media presence clearly indicates that both he and his d/b/a are based in Portland, Oregon. Plaintiff's LinkedIn Account indicates that he does motion graphics at ViaTechno in the “Portland, Oregon Area.” (Grazioplene Decl. at PgID # 125.) Plaintiff's Facebook Account represents that Plaintiff is “from” Birmingham, Michigan and “lives” in Portland, Oregon. (Grazioplene Decl. at PgID # 126.) And Plaintiff's Twitter Account, RaviDevnani@ViaTechno, lists Portland, Oregon as the operating location of the business. (Grazioplene Decl. at PgID # 127.) None of Plaintiff's social media accounts indicates any business presence in the State of Michigan. Plaintiff provides no controverting evidence regarding his social media and LinkedIN accounts.

         According to Defendants, and not disputed by Plaintiff, Plaintiff represented to DKM at all times that he was present and operating his business out of Portland, Oregon. Plaintiff does aver, and DKM does not dispute, that he tendered to DKM early in the business relationship a copy of his Michigan Driver's License. (Devnani Decl. ¶ 21.) On two occasions, Plaintiff informed Mr. Grazioplene that he was visiting his grandmother in Michigan, and sleeping on her futon, and was unable to do much work from Michigan due to the lack of internet access. (Grazioplene Decl. ¶ 18.) Plaintiff did instruct DKM to send tax paperwork to what DKM believed was Plaintiff's grandmother's address in Michigan, so that Plaintiff could continue to claim Michigan residence, thereby receiving health insurance and/or medical treatments provided by the State of Michigan. (Grazioplene Decl. ¶ 18.) Plaintiff does not deny that he represented to DKM that he visited and stayed with his grandmother when he was in Michigan.


         Plaintiff bears the burden of establishing, in response to Defendants' motion, that personal jurisdiction exists. Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002). The Court has discretion to make a determination as to the existence of personal jurisdiction without an evidentiary hearing but plaintiff must, by affidavit, set forth specific facts demonstrating that the court has jurisdiction. Theunissen v. Matthews, 935 F.2d 1454, 1458-59 (6th Cir. 1991).

         A court must consider the pleadings and affidavits submitted by the parties in the light most favorable to the plaintiff and cannot credit “controverting assertions of the party seeking dismissal.” Id. at 1459. “[A] defendant who alleges facts that would defeat the court's personal jurisdiction can invoke the court's discretion to order a pretrial evidentiary hearing on those facts.” Serras v. First Tenn. Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989). “If the written submissions raise disputed issues of fact or seem to require determinations of credibility, the court retains the power to order an evidentiary hearing, and to order discovery of a scope broad enough to prepare the parties for that hearing.” Id. (internal citation omitted). Where there has been no evidentiary hearing, the plaintiff need only present a prima facie case in support of jurisdiction to defeat dismissal. Id. at 1458. See also Miller v. AXA Winterthur Ins. Co., 694 F.3d 675, 678 (6th Cir. 2012) (observing that in order to defeat a motion to dismiss for lack of personal jurisdiction, the plaintiff's affidavits must only make out a prima facie showing and the pleadings and affidavits are viewed in the light most favorable to the plaintiff). Here neither party has requested an evidentiary hearing and the Court therefore considers the facts presented here by competing affidavits under the prima facie standard of proof. Plaintiff bears a “‘relatively slight' burden at this stage of the proceedings.” MAG IAS Holdings, Inc. v. Schmuckle, 854 F.3d 894, 901 (6th Cir. 2017) (quoting Air Prods & Controls, Inc. v. Safetech, 503 F.3d 544, 549 (6th Cir. 2007)).

         The Court must view the pleadings and affidavits “in a light most favorable to the plaintiff[] and do[es] not weight the controverting assertions of the party seeking dismissal.” MAG IAS, 854 F.3d at 899 (internal quotation marks and citation omitted) (alterations added). If personal jurisdiction is found at the motion to dismiss stage based on the pleadings and affidavits, the party opposing jurisdiction “remain[s] free to further contest the issue by requesting an evidentiary hearing or by moving for summary judgement if [] discovery reveals a material variance from the facts” that were determined based on the pleadings and affidavits.” NeoGen, 282 F.3d at 893; MAG IAS, 854 F.3d at 899.

         III. ANALYSIS

         “A federal court's exercise of personal jurisdiction . . . 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. Thus, jurisdiction over a non-resident defendant is permitted in Michigan if suit can be brought against the defendant under Michigan's long-arm statute without violating the due process requirements of the Constitution:

A federal court sitting in diversity may not exercise jurisdiction over a defendant unless courts of the forum state would be authorized to do so by state law-and any such exercise of jurisdiction must be compatible with the due process requirements of the United States Constitution.” Int'l Techs. Consultants v. Euroglas S.A., 107 F.3d 386, 391 (6th Cir. 1997) (citation omitted). Deciding whether jurisdiction exists is not an idle or perfunctory inquiry; due process demands that parties have sufficient contacts with the forum state so that it is fair to subject them to jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (“[T]he Due Process Clause gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not ...

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