431 F.Supp.3d 839
E.D. La.2020Background
- Conrad Shipyard (Louisiana) contracted to build two tugboats for Franco-owned LLCs (FM1/FM2); contracts contemplated construction and performance in Louisiana and included Louisiana choice-of-law/venue provisions.
- Franco, then HMS’s CEO, formed the Franco LLCs and allegedly negotiated the purchases while directing HMS employees to participate; Conrad sued the Franco LLCs and impleaded HMS for breach of contract and detrimental reliance in Louisiana federal court.
- HMS filed a third-party complaint impleading Harley Franco personally, seeking indemnity for any liability to Conrad based on Franco’s alleged unauthorized, fiduciary-breaching conduct during negotiations.
- Franco moved to dismiss the third-party claim for lack of subject-matter jurisdiction (ripeness), lack of personal jurisdiction, and forum non conveniens; HMS opposed and supplemented briefing.
- The court found HMS’s indemnity claim ripe (under Louisiana and Washington law analogues), concluded Franco’s conduct exceeded corporate authority so contacts could be attributed to him personally, and denied dismissal on personal-jurisdiction and forum non conveniens grounds.
Issues
| Issue | Plaintiff's Argument (HMS) | Defendant's Argument (Franco) | Held |
|---|---|---|---|
| Ripeness / subject-matter jurisdiction of indemnity claim | Claim is tortious (breach of fiduciary duty) and ready for adjudication; impleader before resolution of underlying suit is appropriate; dismissal would force duplicative litigation. | Indemnity is contingent and not ripe until HMS suffers an adverse judgment or pays damages. | Denied. The court held the claim is ripe under Louisiana and Washington frameworks and impleader is consistent with avoiding multiplicity of suits. |
| Personal jurisdiction — attribution of contacts to Franco | Franco personally initiated and orchestrated negotiations, directed HMS employees without board approval, so Louisiana contacts are attributable to him individually. | Actions were corporate (as HMS CEO) and centered in Washington; thus personal jurisdiction in Louisiana is improper. | Denied. Court found allegations (taken prima facie) that Franco exceeded authority and had minimum contacts with Louisiana such that specific jurisdiction is proper and exercise is reasonable. |
| Personal jurisdiction — minimum contacts and relatedness | Franco purposefully directed communications and negotiations toward Louisiana (contract performance and operations there); HMS’s indemnity claim arises from those same contacts. | Contacts are tied to Franco’s Washington-based relationship with HMS and not sufficiently connected to Louisiana. | Denied. Court found purposeful availment (contacts directed to Louisiana, choice-of-law/venue in contract) and that HMS’s claim arises from those contacts. |
| Forum non conveniens (alternative forum = Washington) | Retaining the claim in Louisiana avoids duplication, promotes efficient adjudication of all Vessels-related disputes in one forum, and public/private factors favor denying dismissal. | Washington is an adequate, more convenient forum, and Washington law governs fiduciary aspects; Washington litigation is ongoing. | Denied. Court concluded this is not a "rare" state-forum dismissal case; private factors favor Louisiana and public factors do not outweigh convenience interests. |
Key Cases Cited
- International Shoe Co. v. Washington, 326 U.S. 310 (minimum contacts/due process standard for personal jurisdiction)
- Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (limits of specific and general jurisdiction)
- Luv N'Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465 (prima facie burden and reasonableness in personal-jurisdiction analysis)
- Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865 (purposeful availment and forum nexus analysis)
- Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208 (communications giving rise to intentional torts can establish jurisdiction)
- Pervasive Software Inc. v. Lexware GmbH & Co. KG, 688 F.3d 214 (forum long-arm and due process inquiry)
- Suire v. Lafayette City–Parish Consol. Gov’t, 907 So.2d 37 (distinguishing right to claim indemnity from right to collect under Louisiana law)
- Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (forum-interest analysis in international indemnity context)