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Aldridge Industries Inc. v. Precision Technologies Inc

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

February 2, 2018




         This case involves a dispute over payment for mining equipment that the parties installed in a plant in Chatsworth, Georgia. Before the Court is defendant Dan Lee's motion to dismiss this action pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. (Doc. 12). Alternatively, Mr. Lee joins his co-defendant, Precision Technologies, Inc. (PTI), and asks the Court to dismiss this case for improper venue pursuant to Rule 12(b)(3). (Doc. 12, p. 2).[1]Alternatively, both defendants ask the Court to transfer this case to the District Court for the Northern District of Georgia pursuant to 28 U.S.C. § 1404. (Doc. 12, p. 3). Plaintiff Aldridge Industries opposes the defendants' motions. (Doc. 16). The Court considers each motion in turn.

         Personal Jurisdiction over Dan Lee

         Pursuant to Rule 12(b)(2), Mr. Lee asserts that this Court may not exercise jurisdiction over him because he lacks minimum contacts with the Northern District of Alabama. Mr. Lee is domiciled in Tennessee, and he is a corporate officer of PTI, a Tennessee corporation with its principal place of business in Englewood, Tennessee. (Doc. 16, as amended by Doc. 22, p. 1). Mr. Lee argues that his contacts with the Northern District of Alabama exist only by virtue of his work as PTI's representative. He asserts that the Court cannot attribute PTI's contacts to him because he was acting as PTI's agent when he established business contacts in Alabama. (Doc. 12, pp. 2, 6).[2]

         To determine whether it has personal jurisdiction over an out-of-state defendant, a district court applies a two-prong test. First, the court asks whether the state's long-arm statute confers jurisdiction over the defendant. That is a question of law. If the state's long-arm statute confers jurisdiction over the defendant, then the district court asks whether the defendant has sufficient contacts with the forum “to satisfy traditional notions of fair play and substantial justice under the Due Process Clause of the Fourteenth Amendment.” Stubbs v. Wyndham Nassau Resort and Crystal Palace Casino, 447 F.3d 1357, 1360 (11th Cir. 2006) (internal marks omitted); see also Mutual Serv. Ins. Co. v. Frit Indus., Inc., 358 F.3d 1312, 1319 (11th Cir. 2004). That is a question of fact.

         “A plaintiff seeking to establish personal jurisdiction over a nonresident defendant ‘bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie case of jurisdiction.'” Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1350 (11th Cir. 2013) (quoting United Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009)). The district court must accept as true the allegations in the complaint unless a defendant challenges jurisdiction and offers evidence to contradict the plaintiff's allegations. Mosseri, 736 F.3d at 1350; see also Stubbs, 447 F.3d at 1360.

         “When a defendant challenges personal jurisdiction ‘by submitting affidavit evidence in support of its position, the burden traditionally shifts back to the plaintiff to produce evidence supporting jurisdiction.'” Mosseri, 736 F.3d at 1350 (quoting Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990)) (internal quotation marks omitted in Mosseri). The burden does not return to the plaintiff “when ‘the defendant's affidavits contain only conclusory assertions that the defendant is not subject to jurisdiction.'” Mosseri, 736 F.3d at 1350 (quoting Stubbs, 447 F.3d at 1360). If the burden does shift back to the plaintiff, then the plaintiff must provide enough information concerning the nonresident defendant's contacts with the forum to withstand a motion for a directed verdict. Meier ex rel. Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1268-69 (11th Cir. 2002). A district court must view the jurisdictional evidence in the light most favorable to the plaintiff. Meier, 288 F.3d at 1269.

         Accordingly, the Court begins the personal jurisdiction analysis with an examination of Alabama's long-arm statute. That statute permits courts within the state, including federal courts, to exercise jurisdiction to the full extent allowed by the Due Process Clause. Frit Indus. Inc., 358 F.3d at 1319. Consequently, the Court must determine whether Aldridge Industries has established that Mr. Lee has sufficient minimum contacts with the state to satisfy due process. A defendant has sufficient minimum contacts with a forum when the defendant “purposefully avails [him]self of the privilege of conducting activities within the forum, ” and when “the defendant's contacts with the forum . . . relate to the plaintiff's cause of action or have given rise to it.” Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1220 (11th Cir. 2009) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958) and Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).

         The allegations in Aldridge Industries's complaint are of limited use in assessing Mr. Lee's contacts with this forum. Aldridge Industries alleges conclusively that this Court may exercise jurisdiction over PTI and Mr. Lee because “[a]ll of the events or omissions giving rise to Aldridge Industries, Inc.'s claims occurred within the State of Alabama and, more particularly, within this judicial district.” (Doc. 1, p. 2, ¶ 6). Aldridge Industries asserts that it is an Alabama corporation with its primary place of business in Madison County, Alabama. (Doc. 1, p. 2, ¶ 1, as amended by Doc. 22, p. 1, ¶6(a)). Aldridge Industries alleges that in January of 2014, it met with PTI, a Tennessee corporation that operates out of Englewood, Tennessee, “to discuss providing a company, Cimbar Performance Minerals [] with the tools, machinery, equipment and programming necessary to create a ‘classifier disk' for equipment to be used in mining operations.” (Doc. 1, p. 2, ¶ 7; Doc. 1, as amended by Doc. 22, ¶6(b)). Aldridge Industries contends that Dan Lee, a resident of Tennessee, “on behalf of PTI, approached Warren Aldridge and Aldridge Industries to assist in the sale of the equipment and finalizing the deal.” (Doc. 1, p. 2, ¶ 9; Doc. 1, as amended by Doc. 22, ¶6(c)). The complaint does not indicate where these meetings took place.

         According to Aldridge Industries, after the company agreed to collaborate with PTI on the project, PTI contracted with Cimbar for the sale and installation of mining equipment. (Doc. 1, p. 2). The contract price with Cimbar was $928, 777. (Doc. 1, p. 3, ¶11). From that amount, Aldridge Industries was to collect commissions and be paid “for engineering and programming services required per PTI purchase order number: PTI-12-1297.” (Doc. 1, p. 3, ¶11). The complaint does not state where Cimbar is located or the extent to which Mr. Lee was involved in negotiations with Cimbar or the payments to Aldridge Industries.[3]

         In support of his motion to dismiss, Mr. Lee submitted an affidavit in which he challenged Aldridge Industries's assertion that the events and omissions giving rise to the company's claims took place in Alabama. In his affidavit, Mr. Lee states that he is the president of PTI, that he resides in Tennessee, and that he never has resided in Alabama. (Doc. 12, p. 15).[4] Mr. Lee asserts that he has not entered a contract with Aldridge Industries relating to the Cimbar project, and he conducts no personal business in Alabama. (Doc. 12, p. 15). According to Mr. Lee, Mr. Aldridge, acting on behalf of PTI, submitted a quote to Cimbar for a lathe, a bridge mill, the engineering services reflected in purchase order PTI-12-1297, and a MasterCam package for the lathe and the mill. (Doc. 12, pp. 16, 19). Mr. Lee states that PTI placed the equipment order for the Cimbar project from Tennessee, and the equipment was installed in Georgia. (Doc. 12, p. 16). Mr. Lee adds that Mr. Aldridge agreed to perform the engineering work for the project in Georgia and that Mr. Aldridge made multiple trips to Georgia to fulfill the requirements of the Cimbar contract. (Doc. 12, p. 16). In his affidavit, Mr. Lee does not describe the extent of his contact with Alabama either individually or as an agent of PTI.

         Aldridge Industries relies on the affidavit of Warren Aldridge, III to contradict Mr. Lee's assertions. Mr. Aldridge states that Mr. Lee “actually conducted business” in Alabama “on many occasions, specifically with Aldridge Industries, Inc. At one point in time, PTI was doing sufficient business at our location that Dan Lee requested we set aside a small office for his use.” (Doc. 16-1, p. 1). Mr. Aldridge adds that “PTI actually kept a sign inside our building advertising their business, as well as had PTI literature and apparel onsite.” (Doc. 16-1, p. 1). According to Mr. Aldridge, “PTI also conducted meetings, sales conferences and had other dealings with suppliers and potential customers in Alabama at our facility.” (Doc. 16-1, p. 1).

         Mr. Aldridge attributes the conduct that he describes in his affidavit to PTI, not Mr. Lee, but Aldridge Industries alleged in its second amended complaint that Mr. Lee is the alter ego of PTI. (Doc. 26, p. 1). In support of that allegation, Aldridge Industries relies on the affidavit of Rickey Dale Woods, “the Operations Manager for Aldridge Industries, Inc.” Mr. Woods states that Dan Lee invited him to visit PTI's offices on Mr. Lee's farm in the fall of 2014 to train Mr. Lee and his family to use accounting software. (Doc. 16-3, p. 1). Mr. Woods, having seen Mr. Lee's accounts and bookkeeping practices, concluded that Mr. Lee did not observe proper record keeping practices because “there was no separation between PTI accounts, Dan Lee's personal accounts, or [Dan Lee's] farm accounts.” (Doc. 16-3, p. 1). Mr. Woods observed that Mr. Lee comingled personal and business accounts and that Mr. Lee did not treat PTI as a distinct entity for accounting purposes. (Doc. 16-3, p. 1).

         Based on its assertion that PTI is Mr. Lee's alter ego, Aldridge Industries argues that the Court may exercise personal jurisdiction over Mr. Lee by piercing the corporate veil and attributing PTI's contacts with this forum to Mr. Lee. Under Alabama law, courts may pierce the veil separating corporations and shareholders in a limited set of circumstances. Those circumstances exist:

“where a corporation is set up as a subterfuge, where shareholders do not observe the corporate form, where the legal requirements of corporate law are not complied with, where the corporation maintains no corporate records, where the corporation maintains no corporate bank account, where the corporation has no employees, where corporate and personal funds are intermingled and corporate funds are used for personal purposes, or where an individual drains funds from the corporation.”

Claybar v. Huffman, 54 F.Supp.3d 1284, 1289 (S.D. Ala. 2014) (quoting Econ Mktg., Inc. v. Leisure Am. Resorts, Inc., 664 So.2d 869, 870 (Ala. 1994)).

         If a corporation is the alter ego of an individual, then the court may disregard the corporate form and exercise personal jurisdiction over the individual. “[A]ttribution of contacts to the individual defendant merely reflects the reality that, although the contacts were ostensibly those of the corporation, the true actor was the individual.”

Ex Parte Puccio, 923 So.2d 1069, 1076 (Ala. 2005) (quoting Home-Stake Prod. Co. v. Talon Petroleum, C.A., 907 F.2d 1012, 1021 (10th ...

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