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Axxon International, LLC v. GC Equipment, LLC

United States District Court, W.D. North Carolina, Charlotte Division

July 6, 2018



          David C. Keesler, United States Magistrate Judge.

         THIS MATTER IS BEFORE THE COURT on “Defendant GC Equipment, LLC's Motion to Dismiss for Lack of Personal Jurisdiction” (Document No. 32). The parties have consented to Magistrate Judge jurisdiction pursuant to 28 U.S.C. § 636(c), and this motion is now ripe for disposition. Having carefully considered the motion, the record, and applicable authority, the undersigned will deny the motion.

         I. BACKGROUND

         Plaintiff Axxon International, LLC (“Plaintiff” or “Axxon”), initiated this action with the filing of its Complaint (Document No. 1) against Defendant GC Equipment, LLC, doing business as Globecore GmbH, on July 20, 2017. GC Equipment, LLC (“GC Equipment” or “Defendant”) originally argued for dismissal based on insufficient process and insufficient service of process pursuant to Fed.R.Civ.P 12(b)(4) and 12(b)(5) in a “Motion To Dismiss” filed on September 5, 2017. (Document No. 12). GC Equipment later withdrew its original motion to dismiss on September 20, 2017. (Document No. 20).

         On November 20, 2017, GC Equipment filed a “Motion to Dismiss, Answer, And Affirmative Defenses.” (Document No. 21). GC Equipment's Answer asserted for the first time that there is a lack of personal jurisdiction. (Document No. 21, p. 1). The Answer also asserted that GC Equipment should be dismissed pursuant to Fed.R.Civ.P. 12(b)(6). (Document No. 21, p. 2).[1]

         The parties consented to Magistrate Judge jurisdiction on December 8, 2017, and this case was reassigned to the undersigned. (Document Nos. 22 and 23). On January 31, 2018, the Court issued the “Pretrial Order And Case Management Plan” (Document No. 26). The “…Case Management Plan” includes the following deadlines: discovery - September 24, 2018; mediation - October 15, 2018; and dispositive motions - October 22, 2018. Id.

         Plaintiff filed an “Amended Complaint” on March 20, 2018, naming both GC Equipment and Globecore GmbH (“Globecore”) as Defendants. (Document No. 28).

         The Amended Complaint states that Plaintiff is a limited liability company, organized and existing under the laws of the State of North Carolina, with its principal place of business in Rock Hill, South Carolina. (Document No. 28, p. 1). Plaintiff's members are Randy Lenz (“Lenz”), Art Ward (“Ward”), and Equity Investment Partners, LLC (“EIP”). Id. Lenz is a citizen of Florida and Ward is a citizen of South Carolina. Id. EIP's members are The Adler Trust and the KMR Trust. (Document No. 28, pp. 1-2). The Trustees and beneficiaries of the Adler Trust and KMR Trust are not citizens of California. Id. Plaintiff is “a wholesale supplier of medical equipment and industrial machinery and fabrication, ” providing “complete project management support for local, state, and federal agencies.” (Document No. 28, p. 4).

         The Amended Complaint describes GC Equipment as “a limited liability company, organized and existing under the laws of the State of California, with its principal place of business in Los Angeles, California.” (Document 28, p. 2). GC Equipment's members are Dylan Baum (“Baum”) and Richard Messina (“Messina”), both citizens of California. Id.

         Defendant Globecore “is a foreign corporation organized and existing under the laws of Germany, with its principal place of business in Oldenburg Eversten, Germany.” Id. Plaintiff contends that Globecore “is a transformer oil filtration equipment manufacturer that sells and manufactures industrial equipment for the production of bitumen and transformer oil purification and regeneration across the country.” (Document No. 28, p. 4). GC Equipment is Globecore's “factory franchised new equipment/material dealer with full parts, service, and warranty capacity in the United States.” (Document 28, p. 4).

         Plaintiff entered into a contract (the “USACE Contract”) with the U.S. Army Corp. of Engineers (the “USACE”) on September 30, 2016, that was later modified on October 17, 2017. Id. See also (Document No. 28-1 and 28-2).

         Plaintiff contracted with Globecore through a “Purchase Order” in November 2016, to provide an oil filtration system in fulfillment of Plaintiff's USACE contract. (Document No. 28, p. 4). Baum, of GC Equipment, executed the “Purchase Order” agreement (the “Globecore Contract”) as Globecore's authorized agent on November 9, 2016. Id. See also (Document No. 28, p. 3; Document No. 30, p. 6). The Globecore Contract designates Globecore and/or Dylan Baum as “Vendor” and provides an address in Dickinson, Texas. (Document No. 28-3).[2] Plaintiff paid a $20, 000.00 deposit in accordance with the Globecore Contract to GC Equipment as the agent for Globecore. (Document No. 28, p. 5).

         According to the Complaint, this Court has in personam jurisdiction over GC Equipment and Globecore because of their “substantial and continuous contacts with the State of North Carolina, including entering into a subcontractor agreement with North Carolina.” (Document No. 28, p. 2). Additionally, Plaintiff asserts that the Globecore Contract “has a mandatory venue provision, which requires that venue for any dispute shall be in North Carolina.” Id.; see also, (Document No. 23-3). Plaintiff maintains that GC Equipment “was and is Globecore's authorized agent to act on behalf of Globecore, ” and acted as Globecore's authorized agent pertaining to the Globecore Contract. Id. Plaintiff also asserts that GC Equipment had “routine and continuous” contact with Plaintiff in North Carolina regarding execution of the underlying agreement(s). (Document No. 28, pp. 2-3).

         The Amended Complaint asserts claims for: (1) breach of contract against Globecore; and (2) intentional interference with contract against both GC Equipment and Globecore. (Document No. 28, pp. 7-10). Plaintiff contends that GC Equipment and Globecore “knowingly and willfully interfered with Axxon's contractual relationship with USACE.” (Document No. 28, p.9).

         The “Amended Complaint” notes that it was filed with opposing counsel's written consent. (Document No. 28, p. 1, n. 1). Moreover, on April 3, 2018, “Defendant GC Equipment LLC's Written Consent To Amend Complaint” was filed with the Court confirming that GC Equipment consented to allowing Plaintiff to amend its Complaint, naming GC Equipment as a Defendant, on March 20, 2018. (Document No. 29). Neither the “Amended Complaint, ” nor “Defendant GC Equipment LLC's Written Consent To Amend Complaint” suggest that GC Equipment disputed the Court's jurisdiction in this matter. (Document Nos. 28 and 29). However, “Defendant GC Equipment LLC's Motion To Dismiss, Answer, And Affirmative Defenses In Response To Plaintiff's Amended Complaint” (Document No. 30) was also filed on April 3, 2018, and in that pleading again included motions to dismiss pursuant to Fed.R.Civ.P. 12 (b)(2) and 12(b)(6).

         Now pending before the Court is “Defendant GC Equipment LLC's Motion to Dismiss for Lack of Personal Jurisdiction” (Document No. 32) and “Brief in Support . . .” (Document No. 33), filed April 17, 2018. GC Equipment seeks dismissal of this action pursuant to Fed.R.Civ.P. 12(b)(2), for lack of personal jurisdiction. (Document No. 32). GC Equipment contends that it is not subject to personal jurisdiction in North Carolina because it lacks the requisite contacts with the forum state. (Document No. 33, p. 7). “Plaintiff's Brief in Opposition to Defendant's Motion to Dismiss” was filed May 1, 2018; and “Defendant GC Equipment LLC's Reply Brief in Support of . . .” was filed May 8, 2018.

         The pending “…Motion to Dismiss for Lack of Personal Jurisdiction” is now ripe for review and disposition.


         A party invoking federal court jurisdiction has the burden of establishing that personal jurisdiction exists over the defendant. New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir. 2005); Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).

When a court's personal jurisdiction is properly challenged by a Rule 12(b)(2) motion, the jurisdictional question thus raised is one for the judge, with the burden on the plaintiff ultimately to prove the existence of a ground for jurisdiction by a preponderance of evidence . . . . [W]hen, as here, the court addresses the question on the basis only of motion papers, supporting legal memoranda and the relevant allegations of a complaint, the burden on the plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis in order to survive the jurisdictional challenge. In considering a challenge on such a record, the 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.

Combs, 886 F.2d at 676 (internal citations omitted). “Mere allegations of in personam jurisdiction are sufficient for a party to make a prima facie showing.” Barclays Leasing, Inc. v. National Business Systems, Inc., 750 F.Supp. 184, 186 (W.D. N.C. 1990). The plaintiff, however, “may not rest on mere allegations where the defendant has countered those allegations with evidence that the requisite minimum contacts do not exist.” IMO Industries, Inc. v. Seim S.R.L., 3:05-CV-420-MU, 2006 WL 3780422 at *1 (W.D. N.C. December 20, 2006). “Rather, in such a case, the plaintiff must come forward with affidavits or other evidence to counter that of the defendant . . . factual conflicts must be resolved in favor of the party asserting jurisdiction….” Id.

         There are two varieties of personal jurisdiction, general and specific. General jurisdiction requires “substantial” or “continuous and systematic” contacts or activities in the forum state and is not at issue in the instant case. Specific jurisdiction exists when a court exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum. Helicopterous Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984).

         Questions of jurisdiction are answered by a two-step analysis: (1) the court must determine whether the North Carolina long-arm statute confers personal jurisdiction; and (2) the court must determine whether the exercise of that statutory power will violate the due process clause of the U.S. Constitution. Gen Latex & Chem. Corp. v. Phoenix Med. Tech., 765 F.Supp. 1246, 1248-49 (W.D. N.C. 1991). The statutory inquiry merges with the constitutional inquiry, essentially becoming one. See ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 623 (4th Cir. 1997).

         Due process precludes a court from asserting jurisdiction over a defendant unless the defendant has certain minimum contacts with the forum state. The Fourth Circuit has “synthesized the Due Process Clause for asserting specific jurisdiction into a three-part test . . . ‘(1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the State; (2) whether the plaintiff's claims arise out of those activities directed at the State; and (3) whether the exercise of personal ...

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