United States District Court, W.D. North Carolina, Statesville Division
STEVEN K. BROWN, Plaintiff,
ADVANCED DIGITAL SOLUTIONS, LLC, TIM LYVERS, and TODD PULVER, Defendants.
RICHARD L. VOORHEES UNITED STATES DISTRICT JUDGE
MATTER IS BEFORE THE COURT on Defendants Advanced
Digital Solutions, LLC's (“ADS”), Tim
Lyvers' (“Lyvers”), and Todd Pulver's
(“Pulver”) Motion to Dismiss pursuant to
Fed.R.Civ.P. 12(b)(2) and 12(b)(3) or, in the alternative, to
Transfer Venue pursuant to 28 U.S.C. § 1404 (Doc. 5) and
on Plaintiff Steven K. Brown's (“Plaintiff”
or “Brown”) Motion for Evidentiary Hearing or
Limited Discovery (Doc. 9) as to the issue of personal
jurisdiction. Plaintiff and Defendants have fully briefed the
Court on both motions. (See Docs. 6-8; 12-15).
Accordingly, the motions are ripe for disposition. For the
reasons discussed below: (1) Plaintiff's Motion for
Evidentiary Hearing or Limited Discovery (Doc. 9) is
DENIED; and (2) Defendants' Motion to
Dismiss pursuant to Fed.R.Civ.P. 12(b)(2) and 12(b)(3) or, in
the alternative, to Transfer Venue pursuant to 28 U.S.C.
§ 1404 (Doc. 5) is GRANTED IN PART and
DENIED IN PART and this case is
TRANSFERRED to the District Court for the
Southern District of Indiana.
a North Carolina citizen and resident, was a member of
Defendant ADS until November 2015. (Doc. 1-2 (Complaint) at
2-3). As of November 2015, Plaintiff owned approximately
fifteen percent of ADS. Defendants Lyvers (the Chief
Executive Officer and Manager of ADS) and Pulver (the Chief
Operations Officer of ADS) collectively owned the remaining
eighty-five percent of ADS. (Doc. 1-2 at 2; see also
Docs. 13 at 1; 14 at 1). Defendant ADS is an Indiana Limited
Liability Company registered with the North Carolina
Secretary of State as a foreign limited liability company.
(Doc. 1-2 at 2). Lyvers is a citizen and resident of Kentucky
and alleges he has not resided in North Carolina since 2011
while Pulver is a citizen and resident of Nevada, having left
North Carolina in October 2016. (Doc. 1-2 at 2; see
Docs. 13 at 5; 14 at 21).
November 2015, due to a dispute among the three owners of
ADS, Plaintiff and Defendants entered into and executed a
confidential settlement and release agreement (“the
Agreement”). (See Docs. 1-2 at 3; 8-1 at
19-24). The Agreement stipulates that Plaintiff will withdraw
as a member of ADS in return for a settlement of $291,
300.00, payable in twenty-four monthly installments, as well
as a payment of a one percent commission for every five
percent mark-up on projects with which Plaintiff was directly
involved during his tenure at ADS. (Doc. 1-2 at 3).
ADS subsequently made only two payments to Plaintiff, but
ceased remittance of further payments in February 2016.
Agreement, which serves as the basis for Plaintiff's
claims, includes a forum selection clause stating that
“the Parties hereby agree that jurisdiction for the
resolution of any disputes related to or arising out of the
breach or alleged breach of any of the provisions contained
in this Agreement shall lie in the state or federal courts in
Marion County, Indiana.” (Doc. 8-1 at 23). Furthermore,
the same paragraph in the Agreement includes a choice-of-law
clause designating Indiana law as the law governing the
Agreement. (Id.). The Agreement also includes an
email or telefax execution clause stating that “this
Agreement shall not be binding on or constitute evidence of a
contract between the Parties until such time as a counterpart
of this Agreement has been executed by each Party and a copy
thereof delivered via facsimile or email to each Party to
this Agreement or its/his counsel.” (Id. at
filed a complaint against Defendants in the General Court of
Justice, Superior Court Division for Lincoln County, North
Carolina. (Docs. 1 at 1; 1-2). In his complaint, Plaintiff
raises claims for Breach of Contract and for Fraudulent
Inducement to Enter the Agreement. (Doc. 1-2). Plaintiff
demands a jury trial and prays that the Court grant him the
following relief: (1) an amount in excess of $25, 000.00 from
Defendants; (2) a court order rescinding the Agreement; (3)
costs including attorney's fees; and (4) any further
relief that the Court deems just and proper. (Id.).
Defendants were all served via certified mail, and timely
removed the action to this Court. (Doc. 1). As Plaintiff is
diverse from all Defendants and as the remaining payments on
the Agreement exceed $75, 000.00, this Court has subject
matter jurisdiction over this action pursuant to 28 U.S.C.
filed a Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(2)
and 12(b)(3) or, in the alternative, to Transfer Venue
pursuant to 28 U.S.C. § 1404. (Docs. 5; 6; 12).
Defendants contend that the Court lacks personal jurisdiction
over Defendants Lyvers and Pulver because the act of entering
into an Agreement with Plaintiff alone is insufficient to
confer personal jurisdiction over either Lyvers or Pulver.
(Docs. 5; 6 at 3-4; 12-14). Defendants Lyvers and Pulver
further argue that, even if personal jurisdiction exists as
to them, the forum selection clause included in the Agreement
is valid, mandatory, and should be enforced so as to dismiss
the action for improper venue or to transfer the action to
the Southern District of Indiana. (Doc. 6 at 4-12). Likewise,
Defendant ADS seeks to enforce the forum selection clause
with an eye toward dismissal or, in the alternative, a
transfer to the Southern District of Indiana. (Id.).
Plaintiff responded (Doc. 7) and provided an affidavit in
support of his response (Doc. 8), arguing that the Court has
both general and specific jurisdiction over Defendants Lyvers
and Pulver because of their contacts with North Carolina in
their capacities as owners of ADS, and also because of
Lyvers' and Pulver's participation in the Agreement.
(Doc. 7 at 6-11). Further, Plaintiff challenges the validity
and applicability of the forum selection clause, arguing that
it does not apply to Plaintiff's tort claim for
fraudulent inducement, is permissive, and is unreasonable.
(Doc. 7 at 11-21).
also filed a Motion for an Evidentiary Hearing or Limited
Discovery as to the issue of personal jurisdiction over
Defendants Lyvers and Pulver. (Doc. 9). In the motion,
Plaintiff restated allegations from his complaint and
informed the Court that it has discretion to permit limited
discovery, but provided no argument as to why the Court
should permit discovery or what specific facts Plaintiff
hopes to discover. (See Doc. 9). Defendants
responded (Doc. 15), asserting previous arguments regarding
the Court's lack of personal jurisdiction.
PLAINTIFF'S MOTION FOR JURISDICTIONAL DISCOVERY
Standard of Review
determining a motion to dismiss for lack of personal
jurisdiction under Fed.R.Civ.P. 12(b)(2), a court may
postpone the decision and permit discovery, determine the
motion on the basis of the pleadings and affidavits, or hold
an evidentiary hearing. Rich v. KIS California,
Inc., 121 F.R.D. 254, 259 (M.D. N.C. 1988). To obtain
jurisdictional discovery a “plaintiff must have at
least a good faith belief that such discovery will enable it
to show that the court has personal jurisdiction over the
defendant” and “[m]ere conjecture or
speculation” is not enough to justify jurisdictional
discovery. Mouzon v. Radiancy, Inc., 85 F.Supp.3d
361, 373 (D.D.C. 2015).
Motion for Evidentiary Hearing or Limited Discovery as to
personal jurisdiction (Doc. 9), Plaintiff provides no
sufficient reason for this Court to grant his request.
Plaintiff merely repeats the allegations listed in his
complaint while providing no indication as to what specific
information or type of information he hopes to find through
jurisdictional discovery. (See Doc. 9). In his
Motion, Plaintiff's only guiding statement is that
“Defendants Lyvers and Pulver . . . each has
substantial contacts with North Carolina[, ] which include
but are not limited to the [Agreement].” (Id.
Court's review of the record does not reveal any disputes
with respect to the facts surrounding the personal
jurisdiction issue. Furthermore, in light of the Court's
resolution of personal jurisdiction below, jurisdictional
discovery is unwarranted. Accordingly, Plaintiff's Motion
for Evidentiary Hearing or Limited Discovery (Doc. 9) is
III. PERSONAL JURISDICTION AS TO LYVERS AND
Standard of Review
motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2),
“[a] plaintiff bears the burden of proving that the
Court has personal jurisdiction over a defendant by a
preponderance of the evidence.” Am. Auto. Ins. Co.
v. Jacobs, 2012 WL 5185617, at *4 (W.D. N.C. Sept. 27,
2012) (M.J.) (citing New Wellington Fin. Corp. v.
Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th
Cir.2005)), report and recommendation adopted, 2012
WL 5185614 (W.D. N.C. Oct. 18, 2012). When, as occurs here, a
court makes a determination about jurisdiction only from
legal memoranda, supporting affidavits and other documents,
and allegations from the relevant complaint, a plaintiff need
only make a prima facie showing of a sufficient
jurisdictional basis to survive a jurisdictional challenge.
Universal Leather, LLC v. Koro AR, S.A., 773 F.3d
553, 558 (4th Cir. 2014). In determining whether a plaintiff
has met this burden, a court “must construe all
relevant pleading allegations in the light most favorable to
the plaintiff, assume credibility, and draw the most
favorable inferences for the existence of
jurisdiction.” Universal Leather, 773 F.3d at
558 (quoting Combs v. Bakker, 886 F.2d 673, 676 (4th
Cir. 1989)); Grayson v. Anderson, 816 F.3d 262, 268
(4th Cir. 2016) (court “must take the allegations and
available evidence relating to personal jurisdiction in the
light most favorable to the plaintiff”).
order for a court to exercise personal jurisdiction over a
defendant who is not a resident of the forum state at the
time of suit, such jurisdiction must be consistent with (1)
the long-arm statute of the state in which the district court
sits; and (2) the Due Process Clause of the Fourteenth
Amendment. Carefirst of Maryland, Inc. v. Carefirst
Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir.
2003). The applicable North Carolina long-arm statute is N.C.
Gen. Stat. § 1-75.4. “Like those of many other
states, North Carolina's long-arm statute is construed to
extend jurisdiction over nonresident defendants to the full
extent permitted by the Due Process Clause. Thus, the dual
jurisdictional requirements collapse into a single inquiry as
to whether the defendant has such ‘minimal
contacts' with the forum state that maintenance of the
suit does not offend traditional notions of fair play and
substantial justice.” Christian Sci. Bd. of
Directors of First Church of Christ, Scientist v. Nolan,
259 F.3d 209, 215 (4th Cir. 2001) (citations and internal
quotation marks omitted). Therefore, the court must analyze
whether jurisdiction over Defendant Lyvers and over Defendant
Pulver is consistent with the Due Process Clause of the
Fourteenth Amendment. See id.
plaintiff can rely on either general or specific jurisdiction
to establish personal jurisdiction over a defendant.
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564
U.S. 915, 919 (2011). Regardless of whether a plaintiff
relies on general or specific jurisdiction to assert personal
jurisdiction over a defendant, “[f]airness is the
touchstone of the jurisdictional inquiry, and the minimum
contacts test is premised on the concept that a [defendant]
that enjoys the privilege of conducting business within a
state bears the reciprocal obligation of answering to legal
proceedings there.” Tire Eng'g &
Distribution, LLC v. Shandong Linglong Rubber Co. Ltd.,
682 F.3d 292, 301 (4th Cir. 2012) (analyzing only specific
jurisdiction, but noting that the Constitution requires
fairness and minimum contacts regardless of whether plaintiff
asserts specific or general jurisdiction).
court may assert general jurisdiction [over a corporate
entity] . . . when [the defendant's] affiliations with
the State are so ‘continuous and systematic' as to
render [the defendant] essentially at home in the forum
State.” Goodyear, 564 U.S. at 919. However,
when the defendant is an individual and not a corporate
entity “the paradigm forum for the exercise of general
jurisdiction is the individual's
domicile.” 564 U.S. at 923-24. Although the United
States Supreme Court has not definitively answered whether
“the ‘continuous and systematic contacts'
analysis can be applied to individual defendants, the Supreme
Court has strongly implied that it cannot and that domicile
is the primary basis for a court's exercise of general
personal jurisdiction over an individual defendant.”
Carnrick v. Riekes Container Corp., 2016 WL 740998,
at *2 (D. Colo. Feb. 24, 2016) (citing Burnham v.
Superior Court of Cal., 495 U.S. 604, 610 n.1 (1990)
(“It may be that whatever special rule exists
permitting continuous and systematic contacts to support
jurisdiction with respect to matters unrelated to activity in
the forum applies only to corporations . . . .”);
see Koch v. Pechota, 2017 WL 3234381, at *3 (D.N.J.
July 31, 2017) (expressing same observations as in
Carnrick and citing Burnham)). It is well
established that an individual, legally, has only one
domicile, and one of the rights determined by one's
domicile is that of being sued under diversity of citizenship
jurisdiction. Eckerberg v Inter-State Studio &
Publishing Co., 860 F.3d 1079, 1086 (8th Cir. 2017)
(“For purposes of federal jurisdiction,
‘domicile' and ‘citizenship' are
synonymous terms.” (citation omitted)); McCann v.
Newman Irrevocable Trust, 458 F.3d 281, 286 (3d Cir.
2006). Therefore, if domicile equates to an individual's
state of citizenship for diversity jurisdiction purposes and
an individual can have only one domicile, it cannot logically
follow that a party can be domiciled in a state different
from his state of citizenship in a diversity action.
Brown asserts, and Defendants agree, that Defendants Lyvers
and Pulver are not domiciled in North Carolina and were not
so domiciled when this action was brought. (Docs. 1-2; 13;
14) (asserting that Lyvers and Pulver are residents and
citizens of Kentucky and Nevada, respectively). Furthermore,
Plaintiff's only argument as to why the Court has general
jurisdiction over Lyvers and Pulver revolves around the
allegation that they have continuous and systematic contacts
with North Carolina, not that North Carolina was either
party's residence or domicile at the time Plaintiff
commenced this action. (Doc. 1-2). Even though Pulver lived
in North Carolina just two months prior to Plaintiff's
complaint being filed, Plaintiff's assertion that Pulver
was a citizen of Nevada at the time Plaintiff commenced this
action in state court (which continued at removal to this
Court based on diversity) does not allow this Court to find
that he is or was domiciled here for purposes of general
jurisdiction. (See id.). Even though Plaintiff does
not allege that Defendant Lyvers lived in North Carolina
during any period relevant to the facts giving rise to this
dispute, this logic clearly extends to Lyvers as well.
(Id.). Therefore, if this Court has personal
jurisdiction over Defendants Lyvers and Pulver it must be the
result of specific jurisdiction, not general jurisdiction.
See Kuhnen v. Remington, 2016 WL 3619657, at *3
(M.D. N.C. June 29, 2016) (“Here, there is no
suggestion that any [individual] defendant is domiciled in
North Carolina. To the contrary, the complaint alleges that
they are ‘citizen(s) and resident(s)' of [other
states]. As a result, the court lacks general personal
jurisdiction over the defendants in this case.”).