Premier Property Sales Ltd v. Gospel Ministries International Inc.Premier Property Sales Ltd v. Gospel Ministries International Inc.
This civil case is before the Court on Defendant Gospel Ministries International, Inc.‘s motion to dismiss for lack of personal jurisdiction. Doc. No. 9. Plaintiff Premier Property Sales LTD filed an opposition memorandum (Doc. No. 10), and Defendant replied (Doc. No. 11). Defendant‘s motion is now ripe for review.
I.
Defendant is a non-profit corporation organized under the laws of Tennessee that performs international ministerial and service work. Doc. No. 9-2 at PageID 109. Defendant‘s principal place of business is in Tennessee. Id. Defendant has never had offices in Ohio, employed Ohio residents, maintained a process agent in Ohio, held an Ohio business license, paid taxes in Ohiо, filed corporate records in Ohio, leased or owned property in Ohio, had an Ohio bank account, or performed ministerial work in Ohio. Id. Yet, Plaintiff sued Defendant in Ohio. Doc. No. 8.
The private airplane in this case is, and for all relevant time periods was, located in New Mexico. Doc. No. 8 at PageID 72. Plaintiff‘s sole member -- Clay Chester, an Ohio resident -- learned about the airрlane from a friend named Dylan Stormont, another Ohio resident. Id.; Doc. No. 9-1 at PageID 105. Stormont had recently leased a Utah-based private airplane from Defendant. Doc. No. 9-1 at PageID 105.
Once Stormont learned that Chester was interested in Defendant‘s New Mexico-based airplane, he contacted Brandtley Greenlaw, Defendаnt‘s chief pilot and an Oregon resident. Id. at PageID 105-06. Greenlaw arranged for Chester and Stormont to travel to New Mexico to inspect the airplane. Doc. No. 10-1 at PageID 127.
Chester and Greenlaw negotiated a 1-page lease-to-own agreement for the airplane while in New Mexico. Doc. No. 9-1 at PageID 106; Doc. No. 10-1 at PаgeID 127. The lease provided that Chester would take possession of the airplane in New Mexico. Doc. No. 8-1 at PageID 82. Chester verbally requested that the airplane‘s home base be changed from Collegeville, Tennessee to Madison County, Ohio, though the contract placed that responsibility on Plaintiff, not Defendant. Doc. No. 8-1 аt PageID 106. Chester provided Greenlaw with a $90,000 deposit before returning to Ohio. Doc No. 10-1 at PageID 127.
Chester traveled back to New Mexico several weeks later to take possession of the plane only to find it was not in flying condition. Id. Greenlaw directed Chester to contact a local Federal Aviation Administration (“FAA“) certified meсhanic to install some parts. Doc. No. 9-1 at PageID
Plaintiff filed suit against Defendant in the Clark County, Ohio Court of Common Pleas. Doc. No. 2. Plaintiff sought a preliminary injunction enjoining the sale of the aircraft, as well as damages for breach of contract, a violation of the Ohio Consumer Sales Practices Aсt, and unjust enrichment. Id. at PageID 14-15. Defendant removed Plaintiff‘s lawsuit on the basis of diversity jurisdiction on January 11, 2021. Doc. No. 1. Defendant promptly filed a motion to dismiss for lack of personal jurisdiction pursuant to
II.
A court has three different paths to resolve a Rule 12(b)(2) motion: (1) “decide the motion upon the affidavits alone“; (2) “permit discovery in aid of deciding the motion“; or (3) “conduct an evidentiary hearing to resolve any аpparent factual questions.” Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). Where the motion will be decided on the affidavits alone -- as the Court will do here -- a plaintiff need only make a prima facie showing of personal jurisdiction. See, e.g., Bridgeport Music, Inc. v. Still N The Water Publ‘g, 327 F.3d 472, 478 (6th Cir. 2003). The Court must also evaluate the complaint and accompanying affidavits in the light most
A court sitting in diversity must respect the contours of the forum state‘s long-arm statute. See, e.g., Calphalon Corp. v. Rowlette, 228 F.3d 718, 721 (6th Cir. 2000). The Sixth Circuit has long understood that Ohio‘s long-arm statute is “not coterminous” with the Federal Due Process Clause. Schneider v. Hardesty, 669 F.3d 693, 699 (6th Cir. 2012) (quoting Estate of Thomson ex rel. Estate of Rakestraw v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 361 (6th Cir. 2008)) (“We have recognized that Ohio‘s long-arm statute is not coterminous with federal cоnstitutional limits“). Courts assess personal jurisdiction with a two-part test that asks “(1) whether the law of the state in which the district court sits authorizes jurisdiction, and (2) whether the exercise of jurisdiction comports with the Due Process Clause.” Brunner v. Hampson, 441 F.3d 457, 463 (6th Cir. 2006).2
Plaintiff argues that the Court has specific jurisdiction over Defendant under both the Ohio long-arm statute and the Federal Due Process Clause. Doc. No. 10 at PageID 116, 119. Both
A. Ohio Long-Arm Statute
Ohio‘s long-arm statute provides that a court can exercise specific personal jurisdiction over a defendant if the claim “ar[ose] from” any one of nine enumerated actions.
(1) Transacting any business in this state;
(2) Contracting to supply services or goods in this state;
...
(5) Causing injury in this state to any person by breach of warranty expressly or impliedly made in the sale of goods outside this state when the person might reasonably have expected such person to use, consume, or be affected by the goods in this state, provided that the person also regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or serviсes rendered in this state; . .
Courts evaluate the “transacting any business” test on a case-by-case basis because its general terms lend to a fact-sensitive analysis. Marrik Dish Co., LLC v. Wilkinson CGR Cahaba Lakes, LLC, 835 F. Supp. 2d 449, 453 (N.D. Ohio 2011). Two factors, however, have emerged as important guideposts when the claim is based in contract: (1) if the defendant reached out to the plaintiff in the forum state to crеate a business relationship; and (2) whether the parties conducted their contract negotiations in the forum state or agreed on terms affecting the forum state. See Ricker v. Fraza/Forklifts of Detroit, 828 N.E.2d 205, 209-10 (Ohio App. Ct. 2005); see also Indus. Fiberglass Specialties, Inc. v. ALSCO Indus. Prods., No. 3:08-cv-0351, 2009 U.S. Dist. LEXIS 35431, at *9-10 (S.D. Ohio Apr. 13, 2009). “[M]erely directing communications to an Ohio resident for the purpose of negotiating an agreement” or fulfilling a contract, “without more, is insufficient to establish that a defendant transacts business in the state.” Indus. Fiberglass Specialties, Inc., 2009 U.S. Dist. LEXIS 35431, at *10. “Rather, there must additionally be some continuing obligation that connects the nonresident defendant to the state or some terms of the agreement that affect the state.” Id. (quoting Shaker Constr. Grp., LLC v. Schilling, No. 1:08-cv-278, 2008 WL 4346777, at *3 (S.D. Ohio Sept. 18, 2008)).
Ohio is implicated in this case only by coincidence, not by intention. Chester learned about airplane from Stormont, whom Plaintiff concedes is not affiliated with Defendant. Doc. No. 10 at PageID 112-13; Doc. No. 10-1 at PageID 126. Defendant did not prompt, or otherwise encourage, Stormont to find a buyer for its airplane. Doc. No. 9-1 at PageID 106. Indeed, Defendant does not and never has advertised its airplanes in Ohio. Doc. No. 9-2 at PageID 110. Stormont facilitated the transaction by sending an unsolicited message to Greenlaw that Chester was interested in the airplane. Doc. No. 9-1 at PageID 105. Plaintiff argues that Greenlaw‘s text messages to Chester, after he returned to Ohio upon signing the contract, constitute “transacting
Plaintiff does not dispute that the entirety of the transaction was negotiated, executed, and allegedly breached in New Mexico. Doc. No. 10 at PageID 113-14. Defendant‘s sole contractual obligation -- to deliver the airplane to Plaintiff -- was to take place in New Mexico. Doc. No. 8-1 at PageID 82. Plaintiff alleges that Defendant breached the contract in New Mexico by failing to deliver the airplane in flying condition. Doc. No. 8 at PageID 75-76. Although Chester intended to bring the airplane to Ohio, its home base at the time of contract was New Mexico, and Defendant was not required to update its registration before relinquishing possession. Doc. No. 8-1 at PageID 82; Doc. No. 9-1 at PageID 106. Plaintiff was obligated to make payments to Defendant -- presumably from Ohio to Tennessee -- but the mere origin of payment is insufficient to meeting the “transacting business” standard. See, e.g., Kroger Co. v. Malease Food Corp., 437 F.3d 506, 512-13 (6th Cir. 2006) (lease payments made from Ohio to an out-of-state lessee did not constitute transacting business).
Plaintiff also argues that Defendant‘s prior dealings with Stormont constitute “transacting business” in Ohio. Doc. Nо. 10 at PageID 117. But Stormont‘s interactions with Defendant have no bearing on whether Plaintiff‘s claims arose from Defendant‘s conduct. Doc. No. 9-1 at PageID 106; Doc. No. 10-2 at PageID 132. Even if it did, the entirety of the Stormont transaction took place in Utah with little-to-no bearing on Ohio. Doc. No. 9-1 at PageID 106. Stormont took possession of the airplane in Utah and transported it to Ohio after the deal was complete. Doc.
Defendant‘s performance under the contract ended when it delivered the airplane to Plaintiff in New Mexico. Doc. No. 8 at PageID 72-76. After that, Defendant was not subject to any continuing obligation to Plaintiff. Id. The absence of ongoing performance owed by the non-resident and directed at the forum state distinguishes it from the main case Plaintiff relies on. Doc. No. 10 at PageID 116 (citing Wright Int‘l Express v. Roger Dean Chevrolet, Inc., 689 F. Supp. 788 (S.D. Ohio 1988)). In Wright International Express, a non-citizen defendant “actively sought” to lease its airplane to an Ohio resident. 689 F. Supp. at 791-92. Contract negotiation took place whilе the plaintiff was in Ohio and included maintenance provisions that created “continuing obligations” for the defendant in Ohio. Id. at 791. The defendant eventually mailed a termination notice to the plaintiff in Ohio, which presumably prompted the lawsuit. Id. at 792. Here, Defendant‘s contacts with Ohio are far more limited because its conduct did not extend beyond New Mеxico. Doc. No. 8 at PageID 72-76. Plaintiff has therefore not shown Defendant transacted any business in Ohio.
Because Defendant was under no obligation to deliver the airplane to Ohio, it did not “supply services or goods” in Ohio.
3. Causes Injury by Breach of Warranty Outside Ohio
Jurisdiction under
Airplane leases and sales amount to a side business for Defendant. Doc. No. 9-2 at PageID 110. Defendant‘s main source of revenue is private donations used to fund its missionary work, though it periodically receives donated aircraft. Id. Defendant only leases or sells 2-to-3 airplanes per year, and its only two Ohio customers were Plaintiff and Stormont. Id. Though Defendant does not put a figure on what percentage of its cash flow came from these two transactions, there is no dispute that the amount is insubstantial. Id.; Doc. No. 10 at PageID 118.
It is also uncontested that Defendant does not maintain an Ohio sales presence. Doc. No. 9-2 at PageID 110. Nor does Defendant advertise its aircrafts in Ohio. Id. Defendant would never have known Plaintiff was interested in its New Mexico airplane absent Stormont‘s unsolicited message to Greenlaw. Doc. No. 10-1 at PageID 127. Jurisdiction over Defendant is therefore not proper under
B. Federal Due Process Clause
Because the Court cannot assert personal jurisdiction over Defendant under Ohio‘s long-arm statute, it is unnecessаry evaluate whether jurisdiction is proper under the Fourteenth Amendment‘s Due Process Clause. See Kroger Co., 437 F.3d at 514-15 (“Because we find that [the defendant] did not establish the minimum contacts necessary for the district court to exercise jurisdiction under the Ohio long-arm statute, it is unnecessary for us to engage in the constitutional due process inquiry“).
For the foregoing reasons, the Court: (1) GRANTS Defendant‘s motion to dismiss for lack of personal jurisdiction (Doc. No. 9); (2) DENIES AS MOOT Plaintiff‘s motion for a preliminary injunction (Doc. No. 4); (3) DISSOLVES the January 27, 2021 stay on a sale of the airplane; (4) DISMISSES WITHOUT PREJUDICE Plaintiff‘s complaint (Doc. No. 8); and (5) TERMINATES this case on the Court‘s docket.
IT IS SO ORDERED.
s/Michael J. Newman
Hon. Michael J. Newman
United States District Judge