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Altus Brands, LLC v. Tronicbros. & Eclat Createurs Holdings

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

July 3, 2018



          ELLEN S. CARMODY U.S. Magistrate Judge

         This matter is before the Court on Defendant Largay's Motion to Dismiss Count VII of the Second Amended Complaint for Lack of Personal Jurisdiction and Failure to State a Claim. (ECF No. 75). The parties have consented to proceed in this Court for all further proceedings, including trial and an order of final judgment. 28 U.S.C. § 636(c)(1). By Order of Reference, the Honorable Janet T. Neff referred this case to the undersigned. For the reasons discussed herein, Defendant's motion is granted and Count VII of Plaintiff's Second Amended Complaint is dismissed.

         I. BACKGROUND

         The following allegations are contained in Plaintiff's Second Amended Complaint. (ECF No. 66). Prior to 2012, Tronicbros & Eclat Createurs Holdings (Tronicbros) began selling goods to Extreme Dimension Wildlife Calls, LLC (Extreme Dimension). Tronicbros did not retain a security interest in these goods. Extreme Dimension was unable to keep current its account with Tronicbros and accrued an unpaid balance in an unknown amount.

         In June 2012, Altus Brands, LLC (Altus) entered into a purchase agreement with Extreme Dimension pursuant to which Altus would purchase various assets, including assets which Extreme Dimension previously acquired from Tronicbros. As part of this purchase agreement, Extreme Dimension warranted that it possessed “good and marketable title” to the assets it was selling to Altus “free and clear of any Liens or restriction or transfer.” Counsel for Extreme Dimension, Christopher Largay, authored an opinion letter in which he asserted, in part, that Extreme Dimension “has all requisite power and authority, and has taken all necessary action. . .to release and assign ownership of its business and all the assets contemplated by the Asset Purchase Agreement. . .” Among the assets which Altus purchased were certain “fixed assets” located in China (the China Assets) which remain in the possession of Tronicbros which asserts ownership thereto.

         The terms of this purchase agreement did not provide for the assumption by Altus of any of the outstanding debt that Extreme Dimension owed to Tronicbros. However, Altus and Tronicbros separately reached an “informal agreement” whereby Tronicbros would supply goods to Altus for sale. As part of this agreement, Tronicbros added a surcharge to any goods Altus purchased with the surcharge amount being applied to the amount of Extreme Dimension's outstanding debt to Tronicbros. This agreement did not obligate Altus to purchase from Tronicbros any particular quantity or dollar amount of goods. At some point, the amount of goods Altus purchased pursuant to this informal agreement declined at which point Tronicbros began to invoice Altus for the outstanding amounts which Extreme Dimension owed Tronicbros.

         Plaintiff has sued Tronicbros, Extreme Dimension, and Christopher Largay, asserting various causes of action. Defendant Largay now moves the Court to dismiss the claims against him on the grounds that this Court cannot properly exercise personal jurisdiction over him. Largay further argues that Plaintiff's allegations against him do not state a claim on which relief may be granted. The Court is persuaded by both of Plaintiff's arguments.

         II. Personal Jurisdiction

         Defendant Largay argues that because this Court cannot properly exercise personal jurisdiction over him, dismissal of Plaintiff's claim against him is appropriate. Plaintiff bears the burden on this question. See AlixPartners, LLP v. Brewington, 836 F.3d 543, 548 (6th Cir. 2016). Because the Court is resolving Defendant's personal jurisdiction challenge on written submissions, Plaintiff's burden is “relatively slight, ” but Plaintiff nevertheless must set forth “specific facts showing that the court has jurisdiction.” Id. at 548-49. The Court must assess the parties' pleadings and affidavits “in a light most favorable to” Plaintiff. Id. at 549.

         Subject matter jurisdiction in this matter is premised upon diversity of the parties. (ECF No. 66 at PageID.735).[1] Personal jurisdiction takes two forms: general and specific. See Miller v. AXA Winterthur Ins. Co., 694 F.3d 675, 678 (6th Cir. 2012). General jurisdiction requires that Defendant have maintained “continuous and systematic contact with the forum state.” Id. at 678-79. As there is no allegation that Defendant satisfies this standard, Plaintiff must establish the twin requirements of specific jurisdiction: (1) the Michigan long-arm statute, and (2) constitutional due process. Id. at 679. Because Michigan interprets its long-arm statute as “extend[ing] to the limits imposed by federal constitutional due process requirements, ” the analysis merges into a single assessment of whether due process is offended by the exercise of personal jurisdiction over Defendant. AlixPartners, 836 F.3d at 549.

         The Court assesses the personal jurisdiction question by reference to a multi-factor test all three prongs of which must be satisfied before the Court can exercise personal jurisdiction over Defendant: (1) purposeful availment; (2) arising from; and (3) reasonableness. Id. at 549-52. Because Defendant Largay did not purposefully avail himself of Michigan, the Court need not assess the latter two factors.

         Purposeful availment represents “the constitutional touchstone of personal jurisdiction, and it exists where the defendant's contacts with the forum state proximately result from actions by the defendant himself that create a substantial connection with the forum state. . .and where the defendant's conduct and connection with the forum are such that he should reasonably anticipate being haled into court there.” Id. at 550 (emphasis in original). The purposeful availment requirement “ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts or of the unilateral activity of another party or third person.” Air Products and Controls, Inc. v. Safetech International, Inc., 503 F.3d 544, 551 (6th Cir. 2007).

         As the Sixth Circuit has recently observed, “a relationship with the plaintiff or a third party, standing alone, is an insufficient basis for jurisdiction.” MAG IAS Holdings, Inc. v. Schmuckle, 854 F.3d 894, 900 (6th Cir. 2017) (quoting Walden v. Fiore, ___ U.S. ___, 134 S.Ct. 1115, 1123 (2014)). Instead, “the focus is on the defendant's contacts with the forum State itself.” Schmuckle, 854 F.3d at 900 (quoting Fiore, 134 S.Ct. at 1122). In this respect, while physical presence in the forum state is not required, such is relevant to the analysis. Schmuckle, 854 F.3d at 900 (quoting Fiore, 134 S.Ct. at 1122).

         There is no allegation that Defendant acted in Michigan in this or any other matter. Defendant asserts that, other than “transfers between airline flights, ” he has never been in Michigan and has never conducted business in Michigan. Plaintiff does not suggest otherwise. With respect to the specific actions giving rise to the present action, Defendant asserts that his only involvement in this matter was to prepare the Opinion Letter referenced above. Defendant asserts that he did not mail or transmit this letter to ...

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