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Hand v. Wholesale Auto Shop, LLC

United States District Court, N.D. Alabama, Western Division

January 5, 2018

DEREK L. HAND and ASHLEY N. HAND, Plaintiffs,
v.
WHOLESALE AUTO SHOP, LLC, Defendants.

          MEMORANDUM OF OPINION

          L. SCOTT COOGLER UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiffs Derek L. Hand (“Mr. Hand”) and Ashley N. Hand (“Mrs. Hand”) (collectively the “Hands”)'s Motion for Default Judgment as well as their Memorandum Regarding Personal Jurisdiction. (Docs. 17 & 19.) Both issues have been adequately briefed and are ripe for adjudication. For the following reasons, the Hands' Motion for Default Judgment is due to be DENIED for lack of personal jurisdiction.

         I. Facts

         The Hands are Alabama residents. Defendant Wholesale Auto Shop, LLC (“Wholesale Auto”) is a Tennessee corporation whose principal place of business is in Tennessee. In early 2014, Wholesale Auto listed a 2010 Jeep Wrangler Sport SUV 2D (the “Jeep”) with 66, 692 miles on the website www.autotrader.com. Mr. Hand saw the listing and through the website requested Wholesale Auto to call him about the Jeep on his Alabama telephone number. Mr. Hand and Wholesale Auto spoke on the phone three times, and Wholesale Auto dialed Mr. Hand for at least two of those three calls. Additionally, Wholesale Auto faxed basic information about the Jeep to Mr. Hand at his request to his local Brookwood, Alabama fax number so that he could acquire financing for its purchase through Wells Fargo.

         During their interactions, Mr. Hand asked Wholesale Auto if the Jeep's mileage was correct as its price was lower than he expected. Wholesale Auto claimed that the mileage was accurate and that Wholesale Auto was able to provide a low price because it had a good relationship with a local bank who had recently recovered the vehicle. At no point did Wholesale Auto ever communicate to Mr. Hand that there was a discrepancy between the advertised mileage and the Jeep's actual mileage. In one of the three calls, Mr. Hand agreed to pay Wholesale Auto's asking price for the Jeep. The Hands then drove to Chattanooga, Tennessee where they purchased the Jeep and took possession of it.

         When the Hands purchased the Jeep, the odometer read 66, 692 miles, which Wholesale Auto affirmed as accurate. When they sought to register the Jeep in Alabama, however, the Hands learned that the Jeep's true mileage at the time of purchase was 253, 603. They then filed this action on October 20, 2015, alleging violations of the Motor Vehicle Information and Cost Savings Act, 49 U.S.C.A. § 32710(b) (2012), the Alabama Deceptive Trade Practices Act, and state-law claims. On December 9, 2015, the Court received a letter from Melissa Williams, the owner of Wholesale Auto, purportedly on its behalf. The Court did not treat the letter as an answer on behalf of Wholesale Auto, however, because Wholesale Auto is a corporation, and Ms. Williams is not an attorney. (See Doc. 12.) After no appearance or answer on behalf of Wholesale Auto, the Hands filed a motion for default judgment on May 31, 2017. Because the Court doubted the existence of personal jurisdiction over Wholesale Auto in Alabama, it asked the Hands during a July 5, 2017 telephone conference to prepare a supplemental brief addressing that issue, which they submitted on August 3, 2017.

         II. Legal Standard

         Courts may raise the question of personal jurisdiction sua sponte when deciding whether to enter a default judgment when the defendant has failed to appear, provided the Court grants the parties the chance to argue why personal jurisdiction exists. Lipofsky v. N.Y. State Workers Comp. Bd., 861 F.2d 1257, 1258 (11th Cir. 1988) (“In the absence of a waiver, a district court may raise on its own motion an issue of defective venue or lack of personal jurisdiction; but the court may not dismiss without first giving the parties an opportunity to present their views on the issue.”); see also Sys. Pipe & Supply, Inc. v. M/V Viktor Kurnatovskiy, 242 F.3d 322, 324 (5th Cir. 2001) (no error by district court to raise lack of personal jurisdiction sua sponte upon plaintiff's motion for default judgment); Smarter Every Day, LLC v. Nunez, No. 2:15-CV-01358-RDP, 2017 WL 1247500, at *2 (N.D. Ala. Apr. 5, 2017) (raising lack of personal jurisdiction sua sponte upon plaintiff's motion for default judgement); Turi v. Stacey, No. 5:13-CV-248-OC-22PRL, 2015 WL 403228, at *3 (M.D. Fla. Jan. 28, 2015), aff'd, 627 F. App'x 904 (11th Cir. 2015) (same). Because a “defendant may defeat subsequent enforcement of a default judgment in another forum by demonstrating that the judgment issued from a court lacking personal jurisdiction, ” Rash v. Rash, 173 F.3d 1376, 1381 (11th Cir. 1999), raising the issue of personal jurisdiction at the default-judgment stage ultimately conserves judicial resources. The Court has provided the Hands an opportunity to show how personal jurisdiction exists in this case and they have presented their arguments for why this action is properly before the Court. (See Doc. 19.)

         “A federal district court sitting in diversity may exercise personal jurisdiction to the extent authorized by the law of the state in which it sits and to the extent allowed under the Constitution.” Meier ex rel. Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002); see also Daimler AG v. Bauman, 134 S.Ct. 746, 753 (2014) (“Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.”). A district court may exercise personal jurisdiction over a defendant when two conditions are met. First, jurisdiction must be proper under the forum state's long-arm statute. Sloss Indus. Corp. v. Eurisol, 488 F.3d 922, 925 (11th Cir. 2007). Second, exercising jurisdiction must not violate the defendant's rights under the Due Process Clause of the Fourteenth Amendment, which requires that the defendant have sufficient “minimum contacts” with the forum state so as not to offend “traditional notions of fair play and justice.” Id. (citations omitted). In Alabama, “the two inquiries merge, because Alabama's long-arm statute permits the exercise of personal jurisdiction to the fullest extent constitutionally permissible.” Id. Thus, the Court need only consider the limits of the Due Process Clause. Mut. Serv. Ins. Co. v. Frit Indus., Inc., 358 F.3d 1312, 1319 (11th Cir. 2004).

         There are two types of personal jurisdiction, general and specific; the Hands do not argue that general jurisdiction exists over Wholesale Auto. (Doc. 19 at 7 (“[P]laintiffs make no argument here concerning whether the Court can or cannot assert general in personam jurisdiction over the defendant.”).) Instead, the Hands state that specific jurisdiction exists over Wholesale Auto in Alabama.

         “Where a forum seeks to assert specific personal jurisdiction over a nonresident defendant, due process requires the defendant have ‘fair warning' that a particular activity may subject him to the jurisdiction of a foreign sovereign.” Madara v. Hall, 916 F.2d 1510, 1516 (11th Cir. 1990). The inquiry whether a forum State may assert specific jurisdiction over a nonresident defendant focuses on “the relationship among the defendant, the forum, and the litigation.” Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). For a state to exercise jurisdiction consistent with due process, the defendant's suit-related conduct must create a substantial connection with the forum state. Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014). The contacts with the forum state must also be purposeful and created by the “defendant himself.” Id. at 1122 (“We have consistently rejected attempts to satisfy the defendant-focused ‘minimum contacts' inquiry by demonstrating contacts between the plaintiff (or third parties) and the forum State.”). Due process requires that a defendant be subjected to specific jurisdiction of a State “based on his own affiliation with the State, not based on the ‘random, fortuitous, or attenuated' contacts he makes by interacting with other persons affiliated with the State.” Id. at 1123 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)).

         Specific jurisdiction does not require a large volume of contacts with the forum state, as even a single purposeful contact may give rise to personal jurisdiction. See McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223 (1957); see also Licciardello v. Lovelady, 544 F.3d 1280, 1285 (11th Cir. 2008) (“The Court has made clear . . . that ‘[s]o long as it creates a “substantial connection” with the forum, even a single act can support jurisdiction.'” (quoting Burger King, 471 U.S. at 475 n.18 (1985))). When the plaintiff alleges an intentional tort, personal jurisdiction may be proper when the nonresident defendant has no other contacts with the forum. Calder v. Jones, 465 U.S. 783, 789-91 (1984). The Eleventh Circuit follows the Calder “effects” test for personal jurisdiction where the plaintiff alleges an intentional tort, which requires (1) an intentional tort (2) aimed at the forum state that (3) “caused harm that the defendant should have anticipated would be suffered in the forum state.” Licciardello, 544 F.3d at 1286.

         In Licciardello, the Florida plaintiff was an entertainer who had previously employed the Tennessee defendant as his manager. Id. at 1282. Five years after the plaintiff terminated their contract, the defendant posted the plaintiff's trademarked name and picture on his website, implying that the plaintiff endorsed him as a personal manager. Id. Because the defendant's actions were “expressly aimed” at the plaintiff and caused injury to him in the forum state, the court held that personal jurisdiction was proper. Id. at 1288.

         If the Court finds that sufficient contacts exist to subject an out-of-state defendant to the forum state's courts, the Court must also consider whether the exercise of jurisdiction would “offend ‘traditional notions of fair play and substantial justice.'” Asahi Metal Indus. Co. v. Superior Court of California, Solano Cty., 480 U.S. 102, 113 (1987) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). This analysis requires weighing various factors: the burden placed upon the defendant, the interests of the forum state in deciding the dispute, the plaintiff's interest in litigating in that forum, the interests of the interstate judicial system in an efficient resolution of disputes, and the interests ...


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