Ex parte LED Corporations, Inc., and Anthony Florence
1180629
SUPREME COURT OF ALABAMA
February 28, 2020
OCTOBER TERM, 2019-2020
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0649), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.
PETITION FOR WRIT OF MANDAMUS
(In re: SDM Electric, LLC v. Anthony Florence; Paul Metzler; William Ofshlag; and LED Corporations, Inc.)
(Etowah Circuit Court, CV-18-900987)
STEWART, Justice.
LED Corporations, Inc. (“LED“), and Anthony Florence petition this Court for a writ of mandamus directing the Etowah Circuit Court (“the trial court“) to vacate its ordеr denying their motions to dismiss for lack of personal jurisdiction an action filed against them by SDM Electric, LLC
Facts and Procedural History
SDM is an Alabama corporation that served as an electrical subcontractor for a construction project at a high school in Calhoun County, Alabama. LED is a Florida corporation owned by Florence, its sole shareholder. In 2017, SDM contacted LED to solicit a bid for lighting fixtures for use in the construction project. William Ofshlag, an employee of LED, traveled from Florida to Alabama to meet with SDM and other members of the construction team to discuss a potential bid. After Ofshlag met with SDM, LED submitted to SDM a bid for lighting fixtures. On December 29, 2017, SDM executed and delivered to LED a purchase order for lighting fixtures in the amount of $181,514. Ofshlag sent SDM a letter on February 6, 2018, which acknowledged that LED had received a deposit of $90,757 on December 29, 2017, and stated that the remaining balance would be due “upon shipment.” According to SDM, on a conference call on February 6, 2018, Florencе assured SDM that the fixtures were ready to ship, and SDM paid LED the remaining balance of the purchase order. The fixtures were
On February 14, 2019, LED filed a motion to dismiss pursuant to
“My name is Anthony Florence. I live in Florida and I am above the age of nineteen. I am the owner and sole shareholder of LED Corporations, Inc. (‘LED Corp‘), which is a Florida corporation with its principal place of business located in Florida. LED Corp has never been registered to do business in the State of Alabama. LED Corp has never advertised in Alabama; does not own prоperty in Alabama; does not make important business decisions in Alabama; does not maintain records or accounts in Alabama; and does not have employees in Alabama. However, LED Corp has advertised on the internet in the past.
“In 2017, SDM Electric, LLC contacted LED Corp about purchasing certain fixtures. At that time I had no communication with SDM Electric. My employees were the individuals with whom SDM Electric spoke, and those employees work and live in Florida. Almost all of the communications took place via email and telephone. SDM issued and sent LED Corp the attached purchase order (attached as Exhibit 1) dated December 29, 2017 to LED Corp‘s Florida office. Later, LED Corp employee Bill Ofsh[la]g sent SDM a letter on February 6, 2018 regarding SDM‘s purchase order from LED Corp. That letter is attached here as Exhibit 2. As shown by these documents, any agreement or arrangement that may have been reached had to be between LED Corp and SDM -- not me personally. And again, I had no contact with SDM at this point, and LED Corp had in no way targeted Alabama regarding the services it offered or purposefully directed its business to Alabama.
“As I stated previously, I did not have any communications with SDM at the time the purchase order was submitted or when the subsequent letter
from Mr. Ofsh[la]g was sent. Furthermore, I live and work in Florida and do not own property in Alabama. I do not personally conduct business in Alabama or employ individuals in Alabama. While I‘m a shareholder of LED Corp, I do not personally have connections to the State of Alabama.”
LED and Florenсe also attached the purchase order and Ofshlag‘s letter to their motions. On February 26, 2019, SDM filed a response to Florence‘s motion to dismiss in which it only requested a hearing on the motion and did not include any substantive response.
On April 8, 2019, the trial court held a hearing on both pending motions to dismiss, at which it heard ore tenus testimony from Jenny Pitts, the vice president and chief financial officer of SDM.2
“[Florencе] kept assuring us that they were going to be there. They were going to be there. ‘I‘m working on it personally. I guarantee you those will be there,’ and then finally it got to a point where we said, ‘Look, we‘re going to have to do something because we‘re under contract, and we‘re going to to miss deadlines ourselves.’ And about the money, I wrote a letter to LED to cancel the whole order and refund our money, and I had talked with [Florence] personally, and he said, ‘I realize we owe the money. I‘ll get it back to you.‘”
On April 26, 2019, the trial court entered an order, which did not include any findings of fact, denying Florence‘s and LED‘s motions to dismiss. Florence and LED timely filed their petition for a writ of mandamus to this Court on May 16, 2019.
Standard of Review
“A petition for a writ of mandamus is the proper vehicle by which to challenge the denial of a motion to dismiss for lack of personal jurisdiction. Ex parte Dill, Dill, Carr, Stonbraker & Hutchings, P.C., 866 So. 2d 519, 525 (Ala. 2003). ‘An appellate
“‘A writ of mandamus is an extraordinary remedy, and it will be “issued only when there is: 1) a clear legal right in the petitioner to the order sought; 2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; 3) the lack of another adequate remedy; and 4) properly invoked jurisdiction of the court.” Ex parte United Serv. Stations, Inc., 628 So. 2d 501, 503 (Ala. 1993).’
”Ex parte Empire Fire & Marine Ins. Co., 720 So. 2d 893, 894 (Ala. 1998).”
Ex parte Merches, 151 So. 3d 1075, 1078 (Ala. 2014).
Discussion
LED and Florence argue that they do not have sufficient contacts with Alabama to allow the trial court to exercise personal jurisdiction over them. SDM argues that it presented evidence to the trial court indicating that both LED and Florence purposefully directed actions toward Alabama, related
“‘In considering a
Rule 12(b)(2), Ala. R. Civ. P. , motion to dismiss for want of personal jurisdiction, a court must consider as true the allegations of the plаintiff‘s complaint not controverted by the defendant‘s affidavits, Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253 (11th Cir. 1996), and Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829 (11th Cir. 1990), and “where the plaintiff‘s complaint and the defendant‘s affidavits conflict, the ... court must construe all reasonable inferences in favor of the plaintiff.” Robinson, 74 F.3d at 255 (quoting Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990)).’“’Wenger Tree Serv. v. Royal Truck & Equip., Inc., 853 So. 2d 888, 894 (Ala. 2002) (quoting Ex parte McInnis, 820 So. 2d 795, 798 (Ala. 2001)). ...’
”Ex parte Covington Pike Dodge, Inc., 904 So. 2d 226, 229–30 (Ala. 2004) ....”
Ex Parte Excelsior Fin., Inc., 42 So. 3d 96, 103 (Ala. 2010).
“An appropriate basis exists for service of process outside of this state upon a person or entity in any action in this state when the person or entity has such contacts with this state that the prosecution of the action against the person or entity in this state is not inconsistent with the constitution of this state or the Constitution of the United States ....”
“‘The Due Process Clause of the Fourteenth Amendment permits a forum state to subject a nonresident defendant to its courts only when that defendant has sufficient “minimum contacts” with the forum state. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945). The critical question with regard to the nonresident defendant‘s contacts is whether the contacts are such that the nonresident defendant “‘should reasonably anticipate being haled into court‘” in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985), quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980).‘”
A defendant‘s minimum contacts with the forum state can give rise to either general jurisdiction or personal jurisdiction. General jurisdiction exists when the defendant‘s contacts with the forum state “are so ‘continuous and systematic’ as to render them essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 2851 (2011).
“The ‘paradigm’ forums in which a corporate defendant is ‘at home’ ... are the corporation‘s place of incorporation and its principal place of business. Daimler [AG v. Bauman, 571 U.S. 117, 134 S.Ct. 746, 760 (2014)]; Goodyear, 564 U.S. at 924, 131 S.Ct. 2846. The exercise of general jurisdiction is not limited to these forums; in an ‘exceptional case,’ a corporate defendant‘s operations in another forum ‘may be so substantial and of such a nature as to render the corporation at home in that State.’ Daimler [AG v. Bauman, 571 U.S. at 139, 134 S.Ct. at 761].”
BNSF Ry. v. Tyrrell, 581 U.S. ___, ___, 137 S.Ct. 1549, 1558, 198 L.Ed.2d 36 (2017).
This is not an exceptional case where the evidence establishes that LED‘s contacts with Alabama render it at home in Alabama. To the contrary, it is undisputed that LED is incorporated in Florida; that it has no offices, property, or
Specific jurisdiction over a nonresident “focuses on ‘the relationship among the defendant, the forum, and the litigation.‘” Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775, 104 S.Ct. 1473, 1478 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2579 (1977)). For a court to exercise specific jurisdiction over a nonresident defеndant, “there must be ‘a clear, firm nexus between the acts of the defendant and the consequences complained of,‘” Hiller Investments, 957 So. 2d at 1115 (quoting Duke v. Young, 496 So. 2d 37, 39 (Ala. 1986)), such that the defendant should reasonably anticipate being haled into court in the forum state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473–77, 105 S.Ct. 2174, 2182-84 (1985)(discussing the due process requirements necessary to establish personal jurisdiction over a nonresident). A nonresident defendant‘s physical presence in Alabama is not a prerequisite to personal jurisdiction over that defendant. Sieber v. Campbell, 810 So. 2d 641, 644 (Ala. 2001). Rather, “[t]he critical question with regard to the nоnresident defendant‘s contacts is whether the
In relation to claims based on contract, the Supreme Court in Burger King stated:
“If the question is whether an individual‘s contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party‘s home forum, we believe the answer clearly is that it cannot. The Court long ago rejected the notion that personal jurisdiction might turn оn ‘mechanical’ tests, International Shoe Co. v. Washington, supra, 326 U.S. [310] at 319[, 66 S.Ct. 154 at 159 (1945)], or on ‘conceptualistic ... theories of the place of contracting or of performance,’ Hoopeston Canning Co. v. Cullen, 318 U.S. [313] at 316[, 63 S.Ct. 602 at 604 (1943)]. Instead, we have emphasized the need for a ‘highly realistic’ approach that recognizes that a ‘contract’ is ‘ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction.’ Id., at 316–317, 63 S.Ct., at 604–605. It is these factors -- prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing -- that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.”
Burger King, 471 U.S. at 478-79, 105 S.Ct. at 2185.
In their petition to this Court, LED and Florence argue that SDM failed to sustain its burden of showing in response to their motions to dismiss that LED and Florence have sufficient contacts with Alabama. Relying on this Court‘s decisions in Steel Processors, Inc. v. Sue‘s Pumps, Inc. Rentals, 622 So. 2d 910 (Ala. 1993), and Elliot v. Van Kleef, supra, LED and Florence contend that their suit-related conduct was too attenuated for them to foresee that they would be haled into court in Alabama. In Steel Processors, Sue‘s Pumps, a Florida corporation, accepted a bid from Steеl Processors, an Alabama corporation located in Mobile, for labor and materials needed to repair a barge located in Florida. After Steel Processors began work on the project and after Sue‘s Pumps remitted partial payment, Steel Processors sued Sue‘s Pumps in Alabama for the balance owed. In affirming the trial court‘s judgment granting Sue‘s Pumps’ motion to dismiss, this Court concluded that there was
“no evidence that Sue‘s Pumps had contacts with Alabama other than those it had with Steel Procеssors during the repair work on the barge in Florida. These contacts were limited to a series of telephone calls concerning the repair job in
Florida, and the sending of checks to Steel Processors in Alabama. ... Nothing in the record indicates that Sue‘s Pumps initiated contact with Steel Processors; the repair project in Florida was developed by an Ohio business; the repairs were made in Florida; and no goods or services went out of Florida. Although Sue‘s Pumps did send payments for the repairs to Stеel Processors in Alabama, and although its representatives made several telephone calls to Steel Processors in Alabama, this is insufficient to qualify as ‘conduct and connection with the forum State such that [Sue‘s Pumps] should reasonably anticipate being haled into court there.’ World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 562, 62 L. Ed. 2d 490 (1980).”
Steel Processors, 622 So. 2d at 914. Accordingly, this Court concluded that the Alabama court did not have specific jurisdiction over Sue‘s Pumps.
In Elliot, an Arkansas lawyer and his Arkansas-based law firm had represented a client in a personal-injury action in Arkansas. The cliеnt sued the lawyer and the firm in Alabama under the Alabama Legal Services Liability Act. The only contacts the lawyer and the firm had with Alabama were telephone calls, faxes, and letters sent by the lawyer to the client in Alabama. This Court affirmed the decision of the trial court to dismiss the action for a lack of personal jurisdiction because there was no “evidence indicating that all of the telephone calls or faxes even related to [the
In the present case, neither party disputes that the contract at issue involved the one-time sale of goods between LED and SDM and that there had been no prior dealings between the parties. In addition, LED and Flоrence presented uncontroverted evidence that LED is a Florida corporation that has no employees or agents in the State of Alabama, that it does not directly target Alabama in its advertising, that it has not delivered products into Alabama previously, and that Florence, a Florida resident, has no connections to Alabama. Unlike the circumstances in Steel Processors and Elliot, however, the contract at issue in the present case involved the supply of goods by a Florida corporation to an Alabama corporation to be used in a construction project in Alabama. The defendants in Steel Processors and Elliot performed their
The contract between SDM and LED alone is not sufficient to establish LED‘s and Florence‘s minimum contacts with Alabama. But because the contract involved the purchase of materials that were to be shipped to an Alabama corporation
SDM, on the other hand, has not established a nexus between Florence‘s acts and the consequences complained of in relation to the breach-of-contract claim. Applying the “effects test,” however, we conclude that SDM has established
Florence further argues that, under the fiduciary-shield doctrine, his status as owner of LED operates to prevent the trial court from exercising personal jurisdiction over him. The fiduciary-shield doctrine provides that
“‘an officer‘s or employee‘s mere association with a corporation is an insufficient basis for the Court to assert jurisdiction over them, even though the Court can assert jurisdiction over the corporation. See 4 C. Wright & A. Miller, Federal Practice and Procedure § 1069 at 370 (2nd ed. 1987). Restated, jurisdiction over individual officers and employees of a corporation may not be predicated on the
court‘s jurisdiction over the corporation itself. Id. at 371.‘”
Ex parte Kohlberg Kravis Roberts & Co., L.P., 78 So. 3d 959, 974 (Ala. 2011)(quoting Brink v. First Credit Res., 57 F.Supp.2d 848, 858-59 (D. Ariz. 1999)).
SDM argues that the fiduciary-shield doctrine does not prevent the trial court from exercising jurisdiction over Florence because, it argues, Florence persоnally committed fraud against SDM, in his capacity as owner of LED. In support of its argument, SDM cites Bethel v. Thorn, 757 So. 2d 1154, 1158 (Ala. 1999), in which this Court reasoned that a corporate officer “can be held individually liable for the fraudulent acts or omissions he personally committed in his capacity as a corporate officer.” SDM alleged that Florence, in his capacity as owner of LED, personally induced payment from SDM for lighting fixtures that were never delivered by LED.
“[A]n individual is not shielded from liability simply because his acts were done in furtherance оf his employer‘s interest. In fact, the Court stated [in Calder v. Jones, 465 U.S. 783, 790, 104 S.Ct. 1482 (1984),] that the defendants’ ‘status as employees does not somehow insulate them from jurisdiction.’ Calder, supra, 465 U.S. at 790, 104 S. Ct. at 1487.”
We conclude that the SDM satisfied its burden in opposition to LED‘s and Florence‘s motions to dismiss by showing that LED and Florence has sufficient contacts with Alabama to support the exercise of specific personal jurisdiction and that the exercise of jurisdiction over them “complies with traditional notions of fair play and substantial justice.” Ex parte DBI, Inc., 23 So. 3d 635, 656 (Ala. 2009).
Conclusion
LED and Florence have not shown a clear legal right to the extraordinary remedy of dismissal of SDM‘s claims against them. Therefore, their petition for a writ of mandamus is denied.
PETITION DENIED.
Parker, C.J., and Wise and Mitchell, JJ., concur.
Bolin, Shaw, Bryan, Sellers, and Mendheim, JJ., concur in the result.