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xLM Solutions, LLC v. Mecanica Solutions, Inc.

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

June 13, 2018

xLM Solutions, LLC, Plaintiff,
v.
Mecanica Solutions, Inc., Defendant.

         OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR LEAVE TO FILE REPLY BRIEF [17], DENYING PLAINTIFF'S MOTION TO STRIKE DEFENDANT'S REPLY BRIEF IN SUPPORT OF MOTION TO DISMISS [15], AND DENYING DEFENDANT'S MOTION TO DISMISS COMPLAINT FOR LACK OF PERSONAL JURISDICTION [8]

          GERSHWIN A. DRAIN UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Plaintiff xLM Solutions, Inc. (“xLM”) initiated this action in state court on December 12, 2017. Dkt. No. 1, p. 26 (Pg. ID 26). The Defendant, Mecanica Solutions, Inc. (“Mecanica”), removed the case to this Court on February 7, 2018. See Id. In its amended complaint, xLM alleges that Mecanica breached both a 2006 Finder's Fee Agreement (Count I) and a 2014 Finder's Fee Agreement (Count II). Additionally, xLM asserts claims for unjust enrichment (Count III), breach of fiduciary duty (Count IV), fraudulent misrepresentation regarding funds allegedly owed under the 2014 Finder's Fee Agreement (Count V), and fraudulent misrepresentation with respect to the Defendant's intent to perform its obligations under the Second Finder's Fee Agreement (Count VI). See Dkt. No. 5.

         On March 14, 2018, Mecanica moved to dismiss the complaint for lack of personal jurisdiction. Dkt. No. 8. xLM responded to the motion on April 3, 2018. Dkt. No. 12. And on April 17, 2018, the Defendant replied in support of the motion. Dkt. No. 13.

         The parties, however, vigorously dispute whether the Court should consider Mecanica's reply brief. First, on April 18, 2018, xLM requested that the Court strike the Defendant's reply brief, arguing that it was untimely submitted under Eastern District of Michigan Local Rule 7.1(e). Dkt. No. 15. Mecanica responded to the motion to strike on April 19, 2018. Dkt. No. 16. xLM replied in support of its motion to strike on April 24, 2018. Dkt. No. 18.

         Second, Mecanica submitted on April 20, 2018 a motion for leave to file a reply brief. Dkt. No. 17. The Plaintiff responded on April 24, 2018, and Mecanica replied in support on April 26, 2018. See Dkt. Nos. 19, 20.

         Presently before the Court is the Plaintiff's Motion to Strike the Defendant's Reply Brief in Support of the Motion to Dismiss [15], the Defendant's Motion for Leave to File a Reply Brief [17], and the Defendant's Motion to Dismiss the Complaint for Lack of Personal Jurisdiction [8]. The Court held a hearing on these motions on June 11, 2018 at 11:00 a.m. See Dkt. No. 21. At the hearing, the Court ruled on these motions from the bench. The Court DENIED the Plaintiff's Motion to Strike the Defendant's Reply Brief in Support of the Motion to Dismiss [15] and GRANTED the Defendant's Motion for Leave to File a Reply Brief in Support of its Motion to Dismiss the Complaint [17]. The Court also DENIED the Defendant's Motion to Dismiss the Complaint for Lack of Personal Jurisdiction [8]. In this Opinion, the Court will explain its rationale.

         II. Background

         xLM is a limited liability company headquartered in Michigan. Dkt. No. 5, pp. 1-2 (Pg. ID 74-75). It offers technological support and assistance for the implementation of computer programs. Dkt. No. 12-2, p. 3 (Pg. ID 963). Mecanica is a Canadian corporation, headquartered in Quebec, Canada and it does not have a physical presence in Michigan. Dkt. No. 8, p. 8 (Pg. ID 469). It markets software licenses, with 75% of its business occurring outside of the United States and 25% taking place inside the United States. Id. Although Mecanica does not generally advertise in Michigan, it has sent sales emails to Michigan-based customers, including the Plaintiff. Id.; Dkt. No. 12-2, p. 13 (Pg. ID 973); Dkt. No. 12-23. Mecanica has also attended at least two industry conferences in Michigan. Dkt. No. 12, pp. 9, 16-17 (Pg. ID 934, 941-42); see also Dkt. No. 12-2, p. 13 (Pg. ID 973). While attending two such conferences, it allegedly held discussions with xLM about various business dealings. Dkt. No. 12, pp. 9, 16-17 (Pg. ID 934, 941-42); see also Dkt. No. 12-2, p. 13 (Pg. ID 973).

         A. Profit-Sharing Agreements

         The parties executed two profit-sharing contracts. First, around December 2006, the parties entered a finder's fee agreement (the “First Finder's Fee Agreement”). Dkt. No. 5, p. 2 (Pg. ID 75). This agreement provided that xLM would, among other things, refer customers or other business to Mecanica regarding the resale of SmarTeam Annual License Charge and Product License Charge licenses. Id.; see also Dkt. No. 12-2, p. 5 (Pg. ID 965). In return, Mecanica promised to pay 50% of the gross profits from these referrals. Dkt. No. 5, p. 2 (Pg. ID 75). The contract contained a Michigan choice-of-law provision, but no forum-selection clause. Id. at p. 15 (Pg. ID 88).

         Mecanica and xLM negotiated the contract from afar, largely by email and phone. Dkt. No. 12, p. 11 (Pg. ID 936). xLM drafted the contract and signed it in Michigan. Id. Conversely, Mecanica negotiated and executed the contract from Rhode Island. Id. This agreement yielded no Michigan customers. Id. at p. 12 (Pg. ID 937); Dkt. No. 8, p. 12 (Pg. ID 473). Indeed, xLM referred just one company to Mecanica and that company was based in Canada. See Dkt. No. 8, p. 12 (Pg. ID 473); Dkt. No. 12, p. 12 (Pg. ID 937); see also Dkt. No. 12-2, p. 5 (Pg. ID 965). The Plaintiff twice invoiced Mecanica for money obtained from this referral, once on July 12, 2008 and again on January 25, 2010. Dkt. No. 12, p. 12 (Pg. ID 937); see Dkt. No. 12-6.

         Second, the parties executed a profit-sharing agreement (the “Second Finder's Fee Agreement”) in November of 2014. Dkt. No. 5, p. 2 (Pg. ID 75). This agreement involved xLM's referral of customers and business to Mecanica regarding Dassault products. Id. at pp. 2-3 (Pg. ID 75-76). Like the first profit-sharing agreement, this agreement was governed by Michigan law and did not contain a forum-selection clause. Id. at 19 (Pg. ID 92).

         xLM highlights one company it referred under this agreement, Karma Automotive.[1] The Plaintiff contends that Mecanica provided services to Karma Automotive under the Second Finder's Fee Agreement and did so in Michigan. Dkt. No. 12, p. 15 (Pg. ID 940). Specifically, xLM alleges that “Karma Automotive has offices in Michigan and its Michigan employees are and have been utilizing the services and/or products provided by Mecanica Solutions to Fisker/Karma in Michigan.” Dkt. No. 12-2, p. 15 (Pg. ID 975); see also Dkt. No. 12, p. 15 (Pg. ID 940). Based on business garnered from Karma Automotive between March 2015 and November 2016, Mecanica informed xLM that it owed xLM money pursuant to the Second Finder's Fee Agreement. Dkt. No. 12, p. 14 (Pg. ID 939). Mecanica, according to xLM, paid the amount owed for that timeframe. Id.

         But Mecanica has allegedly failed to pay over $650, 000 in fees under this second agreement, including certain fees from business related to Karma Automotive. Dkt. No. 5, p. 4 (Pg. ID 20); see also Dkt. No. 12-2, p. 12 (Pg. ID 972). xLM maintains that Mecanica has made false statements regarding the money generated from xLM's referrals under both profit-sharing agreements. Dkt. No. 5, pp. 4-5 (Pg. ID 20-21). In particular, xLM alleges that Mecanica representatives, while visiting Michigan, falsely represented that Mecanica has not made any post-2016 sales to Karma Automotive. Dkt. No. 12-2, p. 12 (Pg. ID 972). Mecanica also never intended to comply with the Second Finder's Fee Agreement, according to xLM. Dkt. No. 12, pp. 26-27 (Pg. ID 952-53).

         B. Support Agreements

         xLM claims that the parties had several technical support agreements. Id. at pp. 12-13 (Pg. ID 936-37). These agreements, however, are separate from the profit-sharing contracts which underlie the causes of action in this litigation. Id. Yet like the profit-sharing agreements, only xLM was in Michigan during the execution and negotiation of these technical support agreements.

         In November of 2007, the parties purportedly entered an agreement for technical support, whereby Mecanica would give xLM technical support for an agreed upon price. I ...


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