Cooper Carry Inc v. Outside The Big Box LLC, No. 3:2008cv05630 - Document 25 (W.D. Wash. 2009)
Court Description: ORDER denying 12 Motion to Dismiss for Lack of Jurisdiction and Forum Non Conveniens, signed by Judge Ronald B. Leighton.(DN)
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Cooper Carry Inc v. Outside The Big Box LLC Doc. 25 1 HONORABLE RONALD B. LEIGHTON 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 8 9 10 COOPER CARRY, INC., Case No. C08-5630 RBL 11 Plaintiff, 12 13 14 v. OUTSIDE THE BIG BOX LLC, UPTOWN CENTER DEVELOPMENT LLC, and AARON LICHTMAN, 15 ORDER DENYING MOTION TO DISMISS FOR LACK OF JURISDICTION AND FORUM NON CONVENIENS Defendants. 16 17 18 19 20 21 THIS MATTER comes before the Court on Defendants’ Motion to Dismiss for Lack of Jurisdiction and Forum Non Conveniens [Dkt. #12]. The Court has reviewed the materials submitted in support of, and in opposition to, the motion. Oral argument is not necessary for the Court to resolve the issues presented. For the following reasons, Defendants’ motion is DENIED. 22 23 24 25 26 27 28 FACTUAL BACKGROUND The allegations of Plaintiff are taken as true for the purposes of this order: Defendant UPTown Center Development LLC (UPTown) was hired by the City of University Place (City) to develop a $250 million Town Center. Defendant Outside the Big Box LLC (OTBB) worked on the project as a developer in conjunction with UPTown. Aaron Lichtman is the owner of UPTown and OTBB. Defendants paid the City approximately $569,000 for the exclusive right to negotiate a Disposition and Development Agreement (DDA) with the City. The DDA bound Defendants ORDER Page - 1 Dockets.Justia.com 1 to resolve disputes with the City in Pierce County, Washington. Defendants also kept registered agents in 2 Tacoma, Washington. 3 In late 2006, Plaintiff Cooper Carry entered into a Base Contract with Defendants UPTown and 4 OTBB. Under that contract, Plaintiff agreed to perform “master plan concept design services” for the 5 Town Center. The Base Contract did not include schematic design services. In furtherance of the Base 6 Contract, Plaintiff’s representatives attended meetings in Washington with City representatives and 7 Defendants. In fact, Defendant Lichtman had an apartment in Washington for purposes of working on the 8 Town Center. Plaintiff performed the work called for and Defendants paid for the work in-full. 9 In July 2007, Defendants and Plaintiff negotiated a second phase (Phase II) of work under which 10 Plaintiff provided schematic design and construction document services. Compensation for these 11 additional services was not subject to any condition precedent other than performance of the work by 12 Plaintiff. Defendants verbally requested that Plaintiff provide services for the Town Center in Phase II and 13 Plaintiff subsequently provided those services. 14 In January 2008, the City and Defendants executed a Termination Agreement. The City paid 15 Defendants $1.75 million and the City received ownership of all Defendants’ work plans, specifications and 16 intellectual property related to the Town Center. This included work product contributed by entities 17 contracting with Defendants. The Termination Agreement designated Pierce County, Washington as the 18 appropriate venue for disputes. 19 20 DISCUSSION A. Personal Jurisdiction 21 The test for personal jurisdiction is two-fold: Washington’s long-arm statute must confer personal 22 jurisdiction over each Defendant and the exercise of that jurisdiction must comport with due process. Rio 23 Props., Inc., v. Rio Int’l Interlink, 284 F.3d 1008, 1019 (9th Cir. 2002). Because Washington’s long-arm 24 statute “authorizes courts to exercise jurisdiction over nonresident defendants to the extent permitted by 25 the due process clause of the United States Constitution,” the sole issue here is determining the limits 26 imposed by the due process clause. MBM Fisheries, Inc. v. Bolinger Mach. Shop and Shipyard, Inc., 60 27 Wn. App. 414, 423 (1991). 28 ORDER Page - 2 1 1. General Jurisdiction 2 General jurisdiction applies when a Defendant’s activities in a state are “substantial” or “continuous 3 and systematic,” even if the cause of action is unrelated to those activities. Data Disc v. Systems Tech. 4 Assoc., 557 F.2d 1280, 1287 (9th Cir. 1977). Defendants were engaged in a continuous, but solitary, 5 activity in Washington. Even Defendants’ one project, the Town Center, was terminated before it was 6 completed. Further, Defendants had no offices or residence in Washington save the personal residence of 7 Lichtman, and do not pay taxes in Washington. They registered with the Secretary of State, but that is not 8 sufficient to justify the exercise of general jurisdiction. Washington Equipment Mfg. v. Concrete Placing 9 Co., Inc., 85 Wn. App. 240, 245 (1997). The burden for the Plaintiff is so high that “[t]he Supreme Court 10 has upheld general jurisdiction only once, in a case involving wide-ranging contacts, and the Ninth Circuit 11 regularly has declined to find jurisdiction even in the presence of extensive contacts.” Amoco Egypt Oil 12 Co. v. Leonis Navigation Co., 1 F.3d 848, 851 n.3 (9th Cir. 1993) (citing Perkins v. Benguet Consol. 13 Mining Co., 342 U.S. 437 (1952)). Plaintiff has failed to allege facts that meet this imposing burden. 14 2. Specific Jurisdiction 15 Specific personal jurisdiction is determined by a three-part test: (1) the non-resident defendant 16 purposefully directed his activities or consummated some transaction with the forum or a resident thereof, 17 or performed some act by which he purposefully availed himself of the privilege of conducting activities in 18 the forum, thereby invoking benefits and protections of its laws; (2) the claim is one which arises out of or 19 relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction is reasonable. 20 Panavision Int’l, LP v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998); Vernon Johnson Family Ltd. 21 P’ship v. Bank One Texas, N.A., 80 F. Supp. 2d 1127, 1133 (W.D. Wa. 2000). 22 A party “purposefully avails” itself of the privilege of conducting activities in a forum state if it 23 directs its activities at the residents of the forum state such that “defendants ‘purposefully derive benefit’ 24 from their interstate activities.” Burger King Corp. v. Rudzeqicz, 471 U.S. 462, 474-75 (1985). Here, 25 Defendants took “deliberate action within the forum state” and “created continuing obligations to forum 26 residents.” Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). Defendants paid a $569,000 fee for 27 exclusive negotiation rights, applied to do business in Washington and kept registered agents in Tacoma, 28 Washington. Defendants also signed a contract with the City that designated Pierce County, Washington ORDER Page - 3 1 as the appropriate forum for dispute resolution. On these facts, it is clear that Defendants availed 2 themselves of the benefits of doing business in Washington. 3 The Ninth Circuit and Washington use a “but for” test to determine whether a claim is “related to” 4 or “arises out” of a defendant’s forum-related activities. Doe v. Am. Nat’l Red Cross, 112 F.3d 1048, 5 1051-52 (9th Cir. 1997); Byron Nelson Co. v. Orchard Mgmt Corp., 95 Wash. App. 462, 468 (1999). The 6 test hinges on whether Plaintiff would not have a cause of action but for Defendants’ contacts with the 7 forum. Defendants solicited Plaintiff for work related to the Town Center, made representations about 8 their relationship with the City and executed a Termination Agreement in Washington that mentioned 9 Plaintiff by name. Defendants contend that the cause of action in this case actually arises from a separate 10 and distinct set of negotiations. For the purposes of this order, the Court will not evaluate the merits of 11 that contention. The cause of action arises directly from and is directly related to Defendants’ forum- 12 related activities. 13 The Ninth Circuit weighs seven factors to determine whether the exercise of personal jurisdiction is 14 reasonable: (1) the extent of defendant’s purposeful contacts with the forum state; (2) the burden on the 15 defendant of litigating in the forum state; (3) the extent of conflict with the sovereignty of the defendant’s 16 state; (4) the forum state’s interest in adjudicating the dispute; (5) the most efficient judicial resolution of 17 the controversy; (6) the importance of the forum to plaintiff’s interest in convenient and effective relief; and 18 (7) the existence of an alternative forum. Ziegler v. Indian River County, 64 F.3d 470, 475 (9th Cir. 19 1995). Defendants solicited a significant contact in Washington and they are capable of litigating in 20 Washington as evidenced by their frequent presence in the forum. There is no alleged conflict with the 21 sovereignty of Defendants’ state. Furthermore, many witnesses that will be called at trial are located in 22 Washington. This fact not only gives Washington an interest in adjudicating the matter, it also makes 23 Washington an efficient and convenient location for adjudication. Although New York is an appropriate 24 alternative forum, no one factor is dispositive. On balance, these factors weigh in favor of Plaintiff. The 25 Court has specific personal jurisdiction over Defendants. 26 B. Improper Venue 27 Defendants correctly assert that venue is improper under 28 U.S.C. §1391(a) because no Defendant 28 resides in Washington. Under 28 U.S.C. §1391(c), however, a defendant corporation is “deemed to reside ORDER Page - 4 1 in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.” 2 Defendants rely on the phrase “at the time this action was commenced” and assert that they had no 3 presence whatsoever in Washington at the time this suit was filed. Id. Even if Defendants did not have a 4 presence in Washington when this action was commenced, they were still subject to personal jurisdiction 5 at that time. For purposes of establishing personal jurisdiction in the Ninth Circuit, the determinative 6 moment is when the claim arose, not when the suit was filed. See Farmers Ins. Exch. v. Portage La 7 Prairie Mut. Ins. Co., 907 F.2d 911, 913 (9th Cir. 1990). The Court has already established specific 8 personal jurisdiction over Defendants; therefore, venue is proper. 9 C. 10 Forum Non Conveniens Forum non conveniens does not apply to this case because it permits dismissal, not transfer, and 11 has been replaced by 28 U.S.C. §1404(a) where the proposed alternative forum is another District Court. 12 See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253-54 (1981). Dismissal for forum non conveniens is 13 only appropriate when the choice is between a forum in the United States and one in a foreign country. 14 See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 722 (1996) (quoting Am. Dredging Co. v. Miller, 510 15 U.S. 443, 449 n.2 (1994)); Cheng v. Boeing Co., 708 F.2d 1406, 1410 (9th Cir. 1983); Paper Operations 16 Consultants Int’l, Ltd. v. SS Hong Kong Amber, 513 F.2d 667, 670 (9th Cir. 1975). 17 D. 18 Venue Transfer This Court has discretion to transfer this case to “any other district or division where it might have 19 been brought.” 28 U.S.C. §1404(a). This discretion is to be executed “according to an individualized, 20 case-by-case consideration of convenience and fairness” that evaluates factors including “(1) the location 21 where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the 22 governing law, (3) the plaintiff’s choice of forum, (4) the respective parties’ contacts with the forum, (5) 23 the contacts relating to the plaintiff’s cause of action in the chosen forum, (6) the differences in the costs of 24 litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling 25 non-party witnesses, and (8) the ease of access to sources of proof.” Jones v. GNC Franchising, Inc., 211 26 F.3d 495, 498-99 (9th Cir. 2000). These factors are substantially similar to those used to evaluate 27 reasonableness in specific jurisdiction analysis. For the same reasons, the Court denies Defendants’ request 28 to transfer venue to New York. ORDER Page - 5 1 2 3 Conclusion For the foregoing reasons, Defendants’ Motion to Dismiss for Lack of Jurisdiction and Forum Non Conveniens [Dkt. #12] is DENIED. 4 5 6 Dated this 14th day of January, 2008. A 7 8 RONALD B. LEIGHTON UNITED STATES DISTRICT JUDGE 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ORDER Page - 6
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