November 12, 2010
DOYON DRILLING, INC. PLAINTIFF,
LOADMASTER ENGINEERING, INC., LOADMASTER UNIVERSAL RIGS, INC., ROGER M. BARNES, AND ROBERT R. CUDDIE. DEFENDANTS.
The opinion of the court was delivered by: John W. Sedwick United States District Judge
ORDER AND OPINION
[Re: Motion at Docket 27]
I. MOTION PRESENTED
At docket 27, defendants Loadmaster Universal Rigs, Inc. ("Loadmaster Universal"), Roger M. Barnes ("Barnes"), and Robert R. Cuddie ("Cuddie") move to dismiss the case pursuant to Federal Rule 12(b)(2) for lack of personal jurisdiction. Plaintiff Doyon Drilling, Inc. ("Doyon") opposes the motion at docket 33. Defendants' reply is at docket 43. Oral argument was not requested and would not assist the court.
Doyon is an Alaska corporation that performs oil and gas drilling. Loadmaster Universal is a Texas corporation, with offices in Houston and Beijing, that does engineering and design work. In 2008, Loadmaster Engineering, Inc. ("Loadmaster Engineering"), a Texas corporation that shares an address and employees with Loadmaster Universal, entered into a contract ("Technical Services Agreement") with Doyon. Under the contract, Loadmaster Engineering--and allegedly Loadmaster Universal--agreed to provide Doyon with engineering, design, and support services for the construction of an oil rig that was to be operated on Alaska's North Slope. The rig was to be "state of the art" and was known as Rig 25.*fn1
Barnes is the president of Loadmaster Engineering and a shareholder of Loadmaster Universal. Cuddie was formerly the vice president and a shareholder of Loadmaster Engineering, and a former officer and shareholder of Loadmaster Universal. Doyon alleges that the Loadmaster entities were unable to meet the project's aggressive schedule, despite assurances to the contrary, resulting in delays and "massively increased" costs.*fn2 Doyon also contends that the Loadmaster entities misrepresented their progress and that their work product was deficient. Doyon has asserted claims for negligence, fraud in the inducement, fraudulent misrepresentation, violation of the Alaska Consumer Protection Act, and in the alternative, breach of contract and breach of express warranty. Doyon named Loadmaster Engineering, Loadmaster Universal, Cuddie, and Barnes as defendants to all claims, except its breach of contract and warranty claims, which are asserted against Loadmaster Engineering and Loadmaster Universal only.
III. STANDARD OF REVIEW
"Where a defendant moves to dismiss a complaint [pursuant to Federal Rule of Civil Procedure 12(b)(2),] for lack of personal jurisdiction, the plaintiff bears the burden of establishing that a court has personal jurisdiction over a defendant."*fn3 Where the motion is based only upon written materials, rather than an evidentiary hearing, the plaintiff is required only to make a prima facie showing of personal jurisdiction.*fn4
Uncontroverted allegations in the complaint are taken as true, and conflicts between parties over statements contained in affidavits are resolved in favor of the plaintiff.*fn5
"Where, as here, there is no applicable federal statute governing personal jurisdiction, the district court applies the law of the state in which the district court sits."*fn6
Alaska's long-arm statute authorizes the exercise of jurisdiction to the extent permitted by federal due process requirements.*fn7 Due process requires that the defendant "have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice."*fn8
A. Loadmaster Universal is Subject to Specific Jurisdiction
Specific jurisdiction describes personal jurisdiction over a defendant where the plaintiff asserts claims related to the defendant's contacts with the forum. Specific jurisdiction "exists if (1) the defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed himself of the privileges of conducting activities in the forum, (2) the claim arises out of or results from the defendant's forum-related activities, and (3) the exercise of jurisdiction is reasonable."*fn9
1. Loadmaster Universal Has Purposefully Availed Itself of Alaska's Jurisdiction
With respect to the first prong, the Ninth Circuit has "typically treated 'purposeful availment' somewhat differently in tort and contract cases."*fn10 In tort cases, the question is generally "whether a defendant 'purposefully directs his activities' at the forum state" and courts apply "an 'effects' test that focuses on the forum in which the defendant's actions were felt, whether or not the actions themselves occurred within the forum."*fn11
The effects test was first announced by the Supreme Court in Calder v. Jones.*fn12 The Ninth Circuit has construed the Calder test to comprise three prongs: "the defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state."*fn13
Doyon asserts tort claims against Loadmaster Universal based on the alleged submission of negligent work, misrepresentations regarding its ability to perform, and false invoices. By definition, negligent acts cannot satisfy the Calder test. However, it is clear that Loadmaster Universal purposefully availed itself of personal jurisdiction in Alaska through intentional submission of drawings, reports, and confusing invoices.
One such invoice indicated that payment was owed to Loadmaster Engineering.*fn14
The address provided on that invoice was the same address used for Loadmaster Universal in e-mail correspondence during negotiation of the Technical Services Agreement.*fn15 More importantly, the Job Number used on that invoice--"6041"--corresponds to a "Loadmaster Universal Rigs Job #" provided in a separate electronic delivery of.pdf drawings.*fn16 The latter transmittal contained a request that Doyon send confirmation of receipt to Loadmaster Universal. Moreover, a report provided to Doyon was composed on Loadmaster Universal letterhead and listed the same job number (6041), but included "Loadmaster Engineering, Inc." in the footer and signature box.*fn17
Doyon has also alleged that numerous misrepresentations were made on behalf of both Loadmaster entities.*fn18 Doyon maintains that "[a]t no time... did Loadmaster ever represent itself as two entities... [r]ather, it always portrayed itself as one entity--Loadmaster."*fn19 This contention is adequately supported by the record. Therefore, any misrepresentations made on behalf of Loadmaster Engineering would also constitute misrepresentations on behalf of Loadmaster Universal.
Even though it is not uncommon for two separate businesses to share an address, interchangeable use of separate entities' names is rare. Resolving factual conflicts in Doyon's favor, Loadmaster Universal committed intentional acts expressly aimed at Alaska by submitting invoices, reports, and drawings to Doyon and through the misrepresentations of its representatives. If Loadmaster Universal's invoices were false, its reports inaccurate, or its drawings deficient, Loadmaster Universal would have known that Doyon would be likely to suffer injury in Alaska. The Calder effects test is met, and Doyon has established purposeful availment in the context of its tort claims against Loadmaster Universal.
Doyon need not establish personal jurisdiction over Loadmaster Universal for each of its claims. Nonetheless, to satisfy defendants' concern that Doyon's case actually sounds in contract, and because Doyon's breach-of-contract claim was pled in the alternative, the court will examine purposeful availment in the context of Doyon's contract claims. In contract cases, courts in the Ninth Circuit consider "whether a defendant 'purposefully avails itself of the privilege of conducting activities' or 'consummates a transaction' in the forum, focusing on activities such as delivering goods or executing a contract."*fn20
Defendants characterize Doyon's claims as arising out of its contract with Loadmaster Engineering, but Doyon has made persuasive arguments that Loadmaster Engineering and Loadmaster Universal were held out as a single entity and acted in concert. Of particular import are a series of e-mails exchanged prior to the consummation of the Technical Services Agreement.
Correspondence between Barnes, Wilson, and Luis Suarez ("Suarez"), a Loadmaster employee, lends further support to the notion that Loadmaster Engineering and Loadmaster Universal functioned as a single entity and supports the exercise of specific jurisdiction over Loadmaster Universal. Suarez's e-mail address contained a "loadmastereng.com" domain name, but his signature box listed Loadmaster Universal as his employer and displayed the Loadmaster Universal website.*fn21 Several e-mails with those characteristics were sent during negotiation of the Technical Services Agreement.*fn22 Loadmaster Universal's role in negotiating an agreement with Doyon is apparent.
Loadmaster Universal had other contacts with Alaska after performance of the agreement had begun. One report, mentioned above, was written by an Engineering Manager at Loadmaster Engineering. That report was on Loadmaster Universal letterhead.*fn23 The electronic delivery of.pdf drawings also referenced above lists that same Engineering Manager as an employee of Loadmaster Universal.*fn24 The document uses Loadmaster Engineering and Loadmaster Universal interchangeably.*fn25 Even though Doyon's contract was formally with Loadmaster Engineering, it is clear that Loadmaster Universal played a role in performing and administering it. The inclusion of Loadmaster Universal's title in several e-mails, reports, and invoices pertaining to Loadmaster Engineering's contract with Doyon are indicative of Loadmaster Universal's purposeful availment in the performance and maintenance of that contract and, consequently, personal jurisdiction in Alaska.
2. Doyon's Claims Arise out of Loadmaster Universal's Purposeful Availment
The second prong of the specific jurisdiction inquiry requires that a plaintiff's claim arise out of the defendant's purposefully availing contacts. Loadmaster Universal's purposefully availing acts consist of submissions to Doyon, alleged misrepresentations, and voluntary interjection into the negotiation, maintenance, and performance of various aspects of the Technical Services Agreement. Doyon's fraud in the inducement and fraudulent misrepresentation claims arise out of the former availing acts. Doyon's alternatively pled breach-of-contract claim arises out of the latter. Because Doyon's claims arise out of Loadmaster Universal's purposefully availing acts, the second prong of the Bancroft inquiry is met.
3. The Exercise of Jurisdiction Over Loadmaster Universal Is Not Unreasonable
Finally, the exercise of jurisdiction must be reasonable. The only reasonableness argument that defendants make specific to Loadmaster Universal is that "the Complaint does not allege any conduct by [Loadmaster Universal] whatsoever" and "baseless[ly]" alleges that Loadmaster Universal and Loadmaster Engineering are the same company. This argument has been adequately addressed by the discussion above. Loadmaster Universal was involved in the negotiation and maintenance of Loadmaster Engineering's contract with Doyon. The exercise of jurisdiction over Loadmaster Engineering is not unreasonable, nor is the exercise of jurisdiction over Loadmaster Universal.
4. The Court's Conclusions Are Bolstered By Additional Facts and Circumstances
Defendants argue that Loadmaster Universal and Loadmaster Engineering "are separate corporations, with separate owners, separate management, doing different work in different places."*fn26 Barnes states in his affidavit that, in addition to being president of Loadmaster Engineering, he is also a shareholder of Loadmaster Universal.*fn27 Cuddie, the former vice president of Loadmaster Engineering, was also a shareholder and officer of Loadmaster Universal.*fn28 Cuddie's status as a former officer and shareholder of both companies and Barnes' status as a shareholder of both companies are not indicative of the relationship between the two companies. However, Cuddie's and Barnes' declarations suggest that defendants' assertion that Loadmaster Universal and Loadmaster Engineering have always had "separate owners" and "separate management" is disingenuous. Loadmaster Universal and Loadmaster Engineering have the same address and share officers and employees.
Loadmaster Engineering's website currently consists of a page redirecting the visitor to Loadmaster Universal's site, for "additional information about Loadmaster Engineering or... Loadmaster Universal."*fn29 Loadmaster Universal's websitedescribes "Loadmaster['s]" business as "the design and manufacture" of drilling rigs and indicates that it has contributed to operations in "Arctic Alaska."*fn30 The page specifically describes a rig that was "designed and constructed for the environmental extremes of the Alaskan North Slope."*fn31 Other parts of the Loadmaster Universal website refer to Loadmaster Engineeringas if the two entities are one in the same.*fn32 Doyon's position that Loadmaster Engineeringand Loadmaster Universal were "always portrayed... as one entity--Loadmaster" is adequately supported.*fn33
B. Defendants Barnes and Cuddie Are Subject to Personal Jurisdiction in Alaska
As a threshold matter, there is substantial conflict amongst the parties' affidavits and declarations regarding the individual defendants' contacts with Alaska. Although Barnes and Cuddie have both alleged negligible contacts with Alaska, for purposes of determining personal jurisdiction, conflicts in the parties' affidavits must be resolved in Doyon's favor.*fn34 Doyon "will have to establish [jurisdictional facts] by a preponderance of the evidence... at trial."*fn35
1. Cuddie and Barnes Are Not Insulated By Their Status As Corporate Officers
The first question is whether actions taken by Barnes and Cuddie on behalf of Loadmaster are properly considered as individual contacts. This is because--setting aside the individual defendants' ownership interests in Loadmaster--all of their contacts with Alaska appear to have been taken in a corporate capacity. Defendants argue that "the only important question is whether they availed themselves of Alaska's laws or resources personally."*fn36 But defendants are mistaken. In some jurisdictions within the Ninth Circuit, the corporate form "ordinarily will insulate individuals from being subject to the court's personal jurisdiction under the so-called fiduciary shield doctrine."*fn37 In those jurisdictions, only "where [the] corporation is the alter ego of the stockholders so as to justify disregard of the corporate entity [will] jurisdiction over the corporation... support jurisdiction over the stockholders."*fn38 In Alaska, however, the fiduciary shield doctrine does not apply.*fn39 The relevant question is whether a defendant "himself--in whatever capacity he acted--engaged in significant contacts with Alaska."*fn40
Defendants argue that "a corporate officer who has contact with a forum only with regard to the performance of his official duties is not subject to personal jurisdiction in that forum."*fn41 Defendants' position is supported by the case law, but inapplicable here. The Forsythe court, upon which defendants rely, attributes that proposition to another Ninth Circuit decision, Chem Lab Products, Inc. v. Stepanek.*fn42 In that case, the corporate officer's only contact with the forum state was a communication to the company's attorneys conveying board authorization of a company letter directed to the forum state. Defendants' contacts here are not of the same ministerial character.
2. Doyon Has Alleged Contacts Sufficient to Support Specific Jurisdiction
Doyon has alleged several jurisdictional contacts pertaining to Cuddie. Cuddie's earliest alleged contact with Alaska was in 1989, when he performed engineering work on the North Slope. Doyon contends that he lived in Alaska for a period of several months during that time.*fn43 Doyon has alleged that since then, Cuddie undertook continuous and systematic marketing efforts directed at Alaskan companies. Doyon's allegations suggest that Cuddie has been in consistent contact with Doyon and its competitors, and was primarily responsible for soliciting new business for Loadmaster within Alaska.Those contacts are relevant to a general jurisdiction inquiry which is unnecessary to undertake here because Cuddie's contacts support the exercise of specific jurisdiction.
The court agrees with Doyon's characterization that alleged misrepresentations forming the basis of Doyon's fraud claims constitute intentional acts for purposes of the Calder effects test.*fn44 Cuddie purposefully availed himself of jurisdiction in Alaska by making representations to Doyon concerning the Loadmaster entities' capabilities.*fn45
Those representations provide the basis for Doyon's fraud in the inducement and fraudulent misrepresentation claims. Doyon has also alleged that Cuddie was personally responsible for the fraudulent billing that forms the basis of a separate fraudulent misrepresentation claim.*fn46 Doyon has therefore adequately alleged sufficient contacts to support the exercise of specific jurisdiction.
Barnes' alleged contacts with Alaska are less extensive. His most significant contacts are negotiation of the Technical Services Agreement, engineering work on Rig 25, and communications with Doyon during performance of the agreement. Doyon alleges that Barnes "participated in numerous telephone and email communications" once issues arose as to performance of the contract.*fn47 Barnes' negotiation of the Technical Services Agreement and any representations made regarding Loadmaster Engineering's capabilities during those negotiations constituted purposeful availment for purposes of personal jurisdiction in Alaska.*fn48 Doyon's fraud in the inducement and fraudulent misrepresentation claims arise out of those contacts. As with Cuddie, Doyon alleges that Barnes was personally responsible for intentionally fraudulent billing.*fn49
Doyon's separate fraudulent misrepresentation claim arises out of that allegation. Doyon has therefore alleged sufficient contacts to support the exercise of specific jurisdiction over Barnes.
a. The Exercise of Personal Jurisdiction Over Cuddie and Barnes Is Reasonable
The next question is whether exercise of jurisdiction over the individual defendants would be reasonable.*fn50 "Once purposeful availment has been established, the forum's exercise of jurisdiction is presumptively reasonable. To rebut that presumption, a defendant must present a compelling case that the exercise of jurisdiction would, in fact, be unreasonable."*fn51 In determining reasonableness, the court considers a number of factors: (1) the extent of the defendants' purposeful interjection in the forum state; (2) the burden on the defendant of defending in the forum; (3) the extent of the conflict with the sovereignty of defendant's state; (4) the forum state's interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff's interest in convenient and effective relief; and (7) the existence of an alternative forum.*fn52
On these facts, personal jurisdiction over both Cuddie and Barnes is reasonable. As discussed above, both individuals purposefully interjected themselves in Alaska, via contract negotiation, representations to Doyon, and billing practices. Given the magnitude of the project, the extent of that interjection weighs in favor of reasonableness. Defendants argue that the burden of defending a lawsuit in Alaska is "tremendous."*fn53 Given the individual defendants' positions as officers of Loadmaster Engineering, the court disagrees. The burden on Cuddie and Barnes of defending a lawsuit in Alaska against them personally is no greater than the burden imposed on them by defending a lawsuit in Alaska against Loadmaster Engineering. Loadmaster Engineering contracted to perform a multi-million dollar engineering contract with direct ties to Alaska and, as officers and part owners, Cuddie and Barnes should have been aware of the risk of having to defend a lawsuit there.
Defendants argue that Texas' sovereignty would be compromised. At most, this factor and the next are a wash. Texas' interest in adjudicating this dispute is no greater than Alaska's. While defendants emphasize that the "misconduct alleged... all took place in Texas," even if this is so, the alleged injuries were suffered in Alaska.*fn54 As Doyon points out, Alaska's interest is enhanced by the suit's involvement of an Alaska native corporation, its potential bearing on the Alaskan oil industry, and the simple fact that Alaska is the locus of the designed rig.
With respect to judicial efficiency, defendants argue that "[a]lmost without exception, the witnesses having knowledge and control of information relevant to this dispute... will be found in Texas."*fn55 Doyon maintains that "the majority of the witnesses and evidence are in Alaska."*fn56 The only sources of potential witnesses mentioned by either party are the various subcontractors. As correctly noted by Doyon, "the most important subcontractors are either Alaskan entities or are located in the Pacific Northwest, closer to Alaska than to Texas."*fn57 Assuming the number of witnesses from Doyon and Loadmaster will be about the same, the proximity to Alaska of subcontractors that might provide additional witnesses tips this factor in favor of a finding of reasonableness.
The next factor is the importance of the chosen forum to the plaintiff's interest in convenient and effective relief. Doyon argues that the District of Alaska "clearly presents the best option for efficient resolution of this case."*fn58 Defendants argue that, in order for this factor to cut in Doyon's favor, Doyon "must demonstrate that no alternative forum exists."*fn59 Although Doyon's argument is conclusory, defendants' argument would render the seventh factor nugatory. It is apparent that an Alaskan forum would be important to an Alaska corporation's interest in convenient and effective relief. This factor cuts in favor of reasonableness.
Finally, as defendants have rightly maintained, the Southern District of Texas, which encompasses Houston, would provide a suitable alternative forum. The availability of that forum weighs in defendants' favor. In sum, four factors weigh in favor of a finding of reasonableness, two cut in neither direction, and one factor weighs firmly against a finding of reasonableness. Defendants have not made a compelling case that the exercise of personal jurisdiction over Cuddie and Barnes would be unreasonable.
C. Defendants' Reliance on Forum Non Conveniens Is Misplaced
Defendants' final argument is that Doyon's complaint should be dismissed on the basis of forum non conveniens. As Doyon correctly points out, 28 U.S.C. § 1404(a) governs venue transfer in federal court--"[t]he doctrine of forum non conveniens survives in federal court only when the alternative forum is in a foreign country."*fn60 Defendants allege that Texas, not a foreign country, provides a better forum for this action. Although defendants state that their motion is made pursuant to Federal Rules 12(b)(2) and 12(b)(3), they make no mention of § 1404(a) and argue exclusively for dismissal, not venue transfer. The court declines to construe defendants' arguments as a motion for change of venue.
For the foregoing reasons, defendants' motion, pursuant to Federal Rule of Civil Procedure 12(b)(2), to dismiss for lack of personal jurisdiction is DENIED.
Case 3:10-cv-00094-JWS Document 45 Filed 11/12/10 Page 16 of 18
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