United States District Court, E.D. Tennessee, Knoxville
MEMORANDUM AND ORDER
Equity, LLC, has brought this action against Tutor Perini
Building Corp. alleging breach of contract,
misrepresentation, and fraud. Before the court is a motion
filed by Tutor to dismiss or transfer this action [R. 12].
Because the allegations of the complaint contain sufficient
factual matter to establish personal jurisdiction over Tutor
in the Eastern District of Tennessee, defendant's motion
is a Nevada limited liability company with its principal
place of business in Knoxville, Tennessee. Tutor is an
Arizona corporation with its principal place of business in
is a financial services company specializing in lending funds
to construction companies. CapitalPlus entered into a lending
agreement whereby CapitalPlus agreed to lend The Espinosa
Group funds in connection with various construction projects.
Tutor is the general contractor for a project located in
Philadelphia, Pennsylvania. Espinosa had a subcontract with
Tutor for work on the Pennsylvania project.
connection with the project, Tutor required Espinosa to
provide a bond to guarantee the performance and payment of
its obligations under the subcontract. Tutor informed
Espinosa and CapitalPlus that Tutor would not make any
payments to Espinosa for its work until Espinosa provided a
Letter of Credit (LOC) that guaranteed Espinosa's ability
to perform its work. Tutor and CapitalPlus engaged in
extensive discussions and negotiations over a period of
several months with respect to the LOC and associated escrow
agreement. CapitalPlus alleges the discussions and
negotiations, multiple phone calls, and emails were exchanged
between CapitalPlus and Tutor from their offices in Tennessee
and Pennsylvania, respectively. As a result of the
discussions and negotiations, Tutor and CapitalPlus agreed
that CapitalPlus would post $500, 000 collateral to an escrow
account to be established with Zions First National Bank. The
LOC states that any demand must be presented at
CapitalPlus' office in Knoxville, Tennessee, and that the
LOC would be “governed by and construed in accordance
with the laws of the State of Tennessee.”
agreed to provide the LOC only if Tutor certified that
Espinosa was in compliance with the terms of its subcontract.
Tutor provided CapitalPlus with the requested letter of
compliance stating there was no uncured breach of contract
and all completed work and material provided was acceptable
to Tutor. Based on this letter of compliance, CapitalPlus
issued the LOC. CapitalPlus states it would not have issued
the LOC without the letter of compliance from Tutor.
CapitalPlus alleges that Tutor was aware at the time of the
issuance of the LOC that Espinosa was not in compliance with
the terms of the subcontract. Rather, Tutor issued the
certification of compliance in order to receive the LOC from
receiving the LOC, Tutor issued a letter stating that
Espinosa was in material breach of its subcontract. Tutor
also sent a letter to CapitalPlus' office in Knoxville,
demanding disbursement of $500, 000 from the escrow account
because of Espinosa's alleged default on the subcontract.
CapitalPlus states that Tutor misrepresented Espinosa's
compliance with the subcontract to CapitalPlus' detriment
and that CapitalPlus, rather than Tutor, is entitled to the
funds deposited in the escrow account.
moves to dismiss the complaint on the grounds that this court
lacks both general and specific personal jurisdiction over
Tutor; the complaint fails to state a claim for fraudulent
inducement; failure to join indispensable parties; and
alternatively, venue is more proper in the Eastern District
of Pennsylvania on the basis of forum non
argues the complaint should be dismissed because of a lack of
personal jurisdiction. CapitalPlus bears the burden of
demonstrating that personal jurisdiction exists. Youn v.
Track, Inc., 324 F.3d 409, 417 (6th Cir.
2003). A district court may decide to rule on the
jurisdictional issue upon a full trial record, after an
evidentiary hearing, or merely on the basis of a written
record. Welsh v. Gibbs, 631 F.2d 436, 438
(6th Cir. 1980). This matter has been fully
briefed by the parties and affidavits and exhibits have been
filed. There is no need for an evidentiary hearing in this
matter and the motion will be decided on the record.
court decides the issue on the basis of the written record
alone, plaintiff needs only to make a prima facie
case of jurisdiction. To survive a motion to dismiss,
plaintiff needs only to “demonstrate facts which
support a finding of jurisdiction.” Id. The
burden on plaintiff is relatively slight. The court considers
the pleadings and affidavits in the light most favorable to
the plaintiff. Any conflicts between facts contained in the
parties' affidavits must be resolved in the
plaintiff's favor. See Neogen Corp. v. Neo Gen
Screening, Inc., 282 F.3d 883, 887 (6th Cir.
2002) (the court does not consider facts proffered by the
defendant that conflict with those proffered by the
plaintiff); Air Prods. & Controls, Inc. v. Safetech
Int'l, Inc., 503 F.3d 544, 549 (6th Cir.
2007) (a court disposing of a Rule 12(b)(2) motion does not
weigh the controverting assertions of the party seeking
dismissal). Dismissal under Rule 12(b)(2) is proper only if
the specific facts alleged by plaintiff, taken as a whole,
fail to state a prima facie case for personal
jurisdiction. Bridgeport Music, Inc. v. Still N The Water
Pub., 327 F.3d 472, 478 (6th Cir. 2003).
Thus, as long as the plaintiff is able to “demonstrate
facts which support a finding of jurisdiction, ” the
motion to dismiss will be denied, even in the face of
controverting evidence presented by the moving party.
Serras v. First Tenn. Bank Nat'l Ass'n, 875
F.2d 1212, 1214 (6th Cir. 1989).
alleges federal jurisdiction pursuant to 28 U.S.C. §
1332, diversity of citizenship. In diversity cases, federal
courts apply the substantive law of the forum state to
determine whether personal jurisdiction exists over a
defendant, subject to constitutional limitations.
Aristech Chem. Int'l Ltd. V. Acrylic Fabricators
Ltd., 138 F.3d 624, 627 (6thCir. 1998). The
court must determine that a defendant comes within the
boundaries of the state's long-arm statute as well as the
requirements of constitutional due process. Id.
Under the Tennessee long-arm statute, a federal court is
permitted to exercise jurisdiction over a defendant if such
jurisdiction is within the boundaries of constitutional due
process. Chenault v. Walker, 36 S.W.3d 45, 52 (Tenn.
2001). Where a state long-arm statute extends to the limits
of constitutional due process, the court need only determine
whether exercising personal jurisdiction over the defendant
would violate constitutional due process. Artistech,
138 F.3d at 627.
order for a non-resident defendant to be subject to the
jurisdiction of a court, the defendant must have
“certain minimum contacts . . . such that the
maintenance of a suit does not offend traditional notions of
fair play and substantial justice.” Int'l Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945). A
defendant's minimum contacts with the forum state may
create two types of personal jurisdiction, general or
specific. Daimler AG v. Bauman, 134 S.Ct. 746, 748
jurisdiction over a defendant exists where the
defendant's contacts with the forum state are
“continuous and systematic” such that a defendant
should “reasonably anticipate being haled into court
there.” Helicopteros Nacionales de Columbia,
S.A., 466 U.S. 408 U.S. 408, 416 (1984). General
jurisdiction allows a defendant to be sued in the forum state
even where the cause of action has no relation to the
contacts that the defendant has made in that state because
the defendant is essentially “at home” in the
forum state. Id. Here, CapitalPlus does not argue
that Tutor is subject to general personal jurisdiction in the
Eastern District of Tennessee. Therefore, the court will
analyze whether specific jurisdiction exists over Tutor in
jurisdiction allows a defendant to be sued in the forum state
only where the issues of the suit derive from or are
connected to the contacts that establish jurisdiction.
Goodyear Dunlop Tires Operations, S.A. v. Brown, 131
S.Ct. 2846, 2851 (2011). The existence of specific
jurisdiction is determined by looking at the relationship
among the defendant, the forum, and the litigation.
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775
(1984). For a court to exercise specific jurisdiction that is
consistent with constitutional due process, the
defendant's “suit-related conduct must create a
substantial connection with the forum state.”
Walden v. Fiore, 134 S.Ct. 115, 1121 (2014).
Sixth Circuit has established a three-part test to determine
whether the court may exercise specific jurisdiction over a
particular defendant. First, the defendant must purposefully
avail himself of the privilege of acting in the forum state
or causing a consequence in the forum state. Second, the
cause of action must arise from the defendant's
activities there. Finally, the acts of the defendant or
consequences caused by the defendant must have a substantial
enough connection with the forum state to make the exercise
of jurisdiction over defendant reasonable. Southern
Machine Co. v. Mohasco Indus. Inc., 401 F.2d 374, 381
(6th Cir. 1968).