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Burns & McDonnell Engineering Company, Inc. v. NDE Global Technical Services GmbH

United States District Court, W.D. Tennessee, Eastern Division

July 18, 2017

BURNS & McDONNELL ENGINEERING COMPANY, INC., Plaintiff,
v.
NDE GLOBAL TECHNICAL SERVICES GmbH and NDE TECHNICAL SERVICES USA, INC., Defendants.

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

          S. THOMAS ANDERSON UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant NDE Global Technical Services GmbH's Motion to Dismiss for Lack of Personal Jurisdiction (ECF No. 20) filed on August 20, 2016. Plaintiff Burns & McDonnell Engineering Company, Inc. has filed a response in opposition, to which Defendant has replied. On March 23, 2017, this case was transferred to the undersigned for all further proceedings. For the reasons set forth below, Defendants' Motion to Dismiss is DENIED.

         BACKGROUND

         This is a breach of contact action in which the Court has subject matter jurisdiction 28 U.S.C. § 1332(a) based on the parties' diversity of citizenship and the amount in controversy. Plaintiff Burns & McDonnell Engineering Company, Inc. (“Burns & McDonnell”) is a Missouri corporation with its principal place of business in Kansas City, Missouri. Defendant NDE Global Technical Services GmbH (“NDE Global”) is a German corporation with its principal place of business in Monchengladbach, Germany. The Complaint alleges Burns & McDonnell entered into a master services agreement with NDE Global on October 7, 2010. As part of the master services agreement, NDE Global and its subsidiaries agreed to provide Burns & McDonnell with certain technical services, including supplier source inspections and supplier audits and surveys. The master services agreement and its exhibits are attached to the Complaint and constitute part of the pleadings for purposes of the Motion to Dismiss.

         According to the Complaint, Burns & McDonnell subsequently entered into an underlying contract with a third party for the fabrication and supply of certain pipe materials. The third party performed the fabrication at a shop in Brownsville, Tennessee, which is located in the Western District of Tennessee. Burns & McDonnell entered into a purchase order with NDE Technical Services USA, Inc. (“NDE USA”) on February 2, 2015, wherein NDE USA agreed to inspect and monitor the work of the third-party for the piping fabrication in accordance with a scope of work Burns & McDonnell had provided to NDE USA in December 2014. The Complaint alleges that the master services agreement and the purchase order collectively constitute the contract between the parties.

         NDE[1] inspected and approved the third-party's pipe fabrication work. But upon delivery of the pipe to the jobsite in Oklahoma, Burns & McDonnell discovered a number of defects in the pipe welding. Pursuant to the indemnity provision of the master services agreement, Burns & McDonnell now seeks indemnification from NDE Global and NDE USA for the delays and remedial costs resulting from the defective pipe. Based on these fact pleadings, the Complaint alleges claims for breach of contract, negligence, and negligent misrepresentation.

         In its Motion to Dismiss, NDE Global argues that the Court lacks personal jurisdiction over it. The Complaint fails to allege that NDE Global purposely availed itself of the benefits of conducting business in Tennessee and targeted Tennessee with its business activities. NDE Global has attached to its Motion a declaration from Angela Jackson, its regional director. According to Jackson's declaration, NDE Global is itself a subsidiary of other subsidiary companies of EDIF Group Limited, a UK company. NDE USA is in turn a subsidiary of NDE Global. NDE Global has no property, no offices, and no contacts with the United States, much less the state of Tennessee. NDE Global has never been a plaintiff or defendant to any litigation in the United States.

         NDE Global acknowledges that it is a party to the master services agreement with Burns & McDonnell. But NDE Global explains that it signed the agreement as the parent company of its various international subsidiaries. The agreement contemplated work in a number of countries including the United States, Ireland, Germany, and Switzerland. The parties to the master services agreement intended for NDE Global's American subsidiary, NDE USA, to perform all contract work in the United States, including the work described in the 2015 purchase order for inspection services. NDE USA retained the services of an inspector from Tennessee to carry out the work. NDE Global had no involvement with the work and no contact with the third-party fabricator or the inspector retained by NDE USA. NDE Global did not control any of the work performed at the third-party fabrication facility in Brownsville, Tennessee, and NDE Global received none of the compensation for the work performed under the contract. Based on these facts, NDE Global argues that personal jurisdiction, either general or specific, is lacking.

         Burns & McDonnell has responded in opposition. As a procedural matter, Burns & McDonnell points out that NDE Global has not requested an evidentiary hearing or the opportunity to conduct jurisdictional discovery. The burden on Burns & McDonnell to establish the Court's personal jurisdiction over NDE Global then is slight. Burns & McDonnell contends it has carried this burden. While acknowledging that general personal jurisdiction is lacking, Burns & McDonnell argues that the Court has specific personal jurisdiction over NDE Global.

         The facts before the Court show that Burns & McDonnell and NDE Global entered into a master services agreement. The master services agreement provided that Burns & McDonnell would issue purchase orders for specific projects throughout the United States and that it would perform under the contracts through its subsidiaries. Where a purchase order incorporated the master services agreement by reference, the master services agreement became the base document for the purchase order. According to Burns & McDonnell, NDE Global and NDE USA contracted through a specific purchase order in February 2015 for the fabrication inspection services to be performed in the Brownsville, Tennessee. While NDE USA is not listed as a subsidiary in the master services agreement itself, Burns & McDonnell understood from NDE USA's representations that NDE USA was NDE Global's agent to perform the February 2015 purchase order in Tennessee. In short, NDE Global availed itself of doing business and performing its contractual obligations in Tennessee. Burns & McDonnell argues then that all of the Southern Machine factors weigh in favor of the Court exercising specific personal jurisdiction over NDE Global.

         NDE Global has filed a reply. NDE Global answers that Plaintiff has offered only conclusory claims about NDE Global's contractual duties and has therefore not carried its burden to establish the Court's personal jurisdiction. NDE Global argues that the master services agreement did not specifically require any further action by the parties. The agreement only says that Burns & McDonnell “could” issue future assignments to certain NDE Global subsidiaries. NDE USA was not one of the subsidiaries listed in the initial master services agreement in 2010 and was added through an amendment to the agreement in 2013 to reflect the fact that NDE Quality Systems, Inc. had changed its name to NDE Technical Services USA, Inc., the party referred to here as NDE USA. NDE USA, and not NDE Global, was a party to the purchase order issued by Burns & McDonnell in 2015 for the pipe fabrication work performed in Tennessee. NDE Global maintains that the master services agreement does not show that it purposely availed itself of the opportunity to conduct business in Tennessee. And it is not enough to show that NDE Global is the parent company of NDE USA. Burns & McDonnell has not shown that NDE Global performed the work in Tennessee through NDE USA or that NDE USA is the alter ego of NDE Global. Therefore, the Court should hold that it does not have specific personal jurisdiction over NDE Global.

         STANDARD OF REVIEW

         When a party challenges personal jurisdiction pursuant to Rule 12(b)(2), the plaintiff bears the burden of establishing the existence of jurisdiction. Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 449 (6th Cir. 2012); Serras v. First Tenn. Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989). A plaintiff may not stand on his pleadings but must, by affidavit or otherwise, set forth specific facts showing that the Court has jurisdiction. Carrier Corp., 673 F.3d at 449 (citing Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)). In considering a properly-supported Rule 12(b)(2) motion, the Court may proceed in three ways: “it may decide the motion upon the affidavits alone; it may permit discovery in aid of deciding the motion; or it may conduct an evidentiary hearing to resolve any apparent factual questions.” Intera Corp. v. Henderson, 428 F.3d 605, 614 n.7 (6th Cir. 2005). In the event the district court reaches the jurisdictional issue on the basis of affidavits alone, the burden on the plaintiff is “relatively slight.” Am. Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988); Data Disc, Inc. v. Sys. Tech. Assoc., Inc., 557 F.2d 1280 (6th Cir. 1977) (“If the court determines that it will receive only affidavits or affidavits plus discovery materials, these very limitations dictate that a plaintiff must make only a prima facie showing of jurisdictional facts through the submitted materials in order to avoid a defendant's motion to dismiss.”).

         “[T]he plaintiff must make only a prima facie showing that personal jurisdiction exists in order to defeat dismissal.” Cohn, 839 F.2d at 1169. This means that the plaintiff must set forth specific facts to support a finding of jurisdiction by a preponderance of the evidence. Conn v. Zakharov, 667 F.3d 705, 711 (6th Cir. 2012) (citing Kroger Co. v. Malease Foods Corp., 437 F.3d 506, 510 & n.3 (6th Cir. 2006)). The pleadings and affidavits submitted must be viewed in a light most favorable to the plaintiff, and the district court should not “consider facts proffered by the defendant that conflict with those offered by the plaintiff.” PT Pukuafu Indah v. U.S. Sec. & Exch. Comm'n, 661 F.3d 914, 920 (6th Cir. 2011). ‚ÄúDismissal is proper only if [the ...


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