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Beltsville Land, LLC v. Conaboy

United States District Court, S.D. Alabama, Southern Division

February 8, 2018

THOMAS R. CONABOY, et al., Defendants.



         This matter comes before the Court on defendants' Motion to Dismiss or, in the Alternative, Motion to Compel Arbitration (doc. 3). The Motion has been briefed and is now ripe for disposition.

         I. Background.

         This action arises out of a construction agreement between plaintiff, Beltsville Land, LLC (“Beltsville”), and defendant Caldwell & Santmyer, Inc. (“Caldwell”), for a project located in Beltsville, Maryland. (Doc. 1-1, ¶ 5.) Caldwell subsequently assigned that agreement to defendant C&S Design & Development Company, LLC (“C&S”), which (along with Caldwell) is principally owned by defendant Thomas R. Conaboy (“Conaboy”). (Id., ¶¶ 8, 11.) According to well-pleaded allegations of the Complaint, Caldwell and C&S “were a mere sham organized and operated as the alter ego of Conaboy for his personal benefit and advantage, ” with Conaboy “exercis[ing] total dominion and control” over those entities and “intermingl[ing] his personal and financial affairs with Caldwell and C&S.” (Id., ¶ 12.)

         Beltsville's claims relate to a series of allegedly false applications submitted by defendants to Beltsville for payment on the Maryland construction project in 2016 and 2017. Each payment application was accompanied by a waiver in which defendants certified and represented that all subcontractors had been paid in full for their work on the project to date, and purported to indemnify Beltsville from any claims resulting from services, labor, material or equipment furnished to or by defendants. (Doc. 1-1, ¶ 18.) Beltsville alleges that defendants falsely represented in those payment applications that all subcontractors and suppliers had been paid in full, and that multiple subcontractors have since pursued legal claims against Beltsville for nonpayment on the project. (Id., ¶¶ 21-26.) On the strength of these allegations, Beltsville asserts causes of action for breach of contract (i.e., defendants failing to pay subcontractors and suppliers as they had promised Beltsville they would), unjust enrichment (i.e., defendants retained funds from Beltsville that were earmarked to pay subcontractors and suppliers), fraud (i.e., defendants misrepresented payment status of suppliers and subcontractors in their payment applications to Beltsville), conversion, negligence and indemnity.[1]

         Defendants now move to dismiss the Complaint for want of personal jurisdiction and to dismiss all claims against defendant Conaboy for failure to state a claim. Alternatively, defendants seek an order compelling arbitration of these proceedings.

         II. Motion to Dismiss.

         A. Personal Jurisdiction.

         As a threshold matter, defendants argue that this Court lacks jurisdiction over them. According to defendants, they are Virginia citizens who lack the sort of continuous and systematic contacts with Alabama to support general personal jurisdiction, and who lack sufficient Alabama contacts related to this dispute to give rise to specific personal jurisdiction. In response, Beltsville contends that sufficient contacts exist to allow courts in Alabama to exercise specific personal jurisdiction over each defendant.

         “A plaintiff seeking the exercise of 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.” United Technologies Corp. v. Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009); see also Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1350 (11th Cir. 2013) (similar). “A prima facie case is established if the plaintiff presents affidavits or deposition testimony sufficient to defeat a motion for judgment as a matter of law.” PVC Windoors, Inc. v. Babbitbay Beach Const., N.V., 598 F.3d 802, 810 (11th Cir. 2010). “Where, as here, the defendant challenges jurisdiction by submitting affidavit evidence in support of its position, the burden traditionally shifts back to the plaintiff to produce evidence supporting jurisdiction.” United Technologies, 556 F.3d at 1274 (citation and internal quotation marks omitted). “The burden, however, does not shift back to the plaintiff when the defendant's affidavits contain only conclusory assertions that the defendant is not subject to jurisdiction.” Louis Vuitton, 736 F.3d at 1350 (citation and internal quotation marks omitted). “Where the plaintiff's complaint and supporting evidence conflict with the defendant's affidavits, the court must construe all reasonable inferences in favor of the plaintiff.” Diamond Crystal Brands, Inc. v. Food Movers Int'l, Inc., 593 F.3d 1249, 1257 (11th Cir. 2010) (citation omitted)

         Defendants are correct that the Complaint articulates precious few facts connecting defendants to the State of Alabama. Indeed, the Complaint reflects that all defendants are domiciled in Virginia and that they contracted with Beltsville to perform a construction project in Maryland. (Doc. 1-1, at ¶¶ 2-5.) The discussion of Alabama in the Complaint is confined to the following allegations: (i) Beltsville is an Alabama limited liability company whose principal place of business is located in Mobile, Alabama; (ii) the allegedly false payment applications “were submitted by Defendants to Plaintiff … at [plaintiff's] office in Mobile County, Alabama” (id., ¶ 15); and (iii) “[a]ll payments to be made to Defendants pursuant to the Agreement have been made by Plaintiff through its bank in Mobile County, Alabama” (id., ¶ 24). In briefing the Motion to Dismiss, Beltsville submits the Declaration of Taylor M. Watson, who declares that (i) defendants submitted each payment application to Beltsville in Alabama, (ii) “Payments were issued from Beltsville Land, LLC's bank in Alabama, ” (iii) defendants' alleged false representations in 2016 and 2017 were “submitted to Beltsville Land” in Alabama, and (iv) “Beltsville Land, LLC has conducted much of its business with the Defendants from its offices in Alabama.” (Doc. 9, Exh. 1, ¶¶ 4-6, 10.) In a nutshell, then, plaintiff's jurisdictional case is predicated on evidence that defendants contracted with an Alabama entity, directed false and fraudulent misrepresentations to that entity in Alabama, and wrongfully induced payments from that entity via an Alabama bank.

         Confronted with these jurisdictional facts, defendants offer the Declaration of Thomas R. Conaboy (doc. 11, Exh. A). For his part, Conaboy indicates that he submitted or caused to be submitted the subject payment applications to Beltsville “via electronic mail to Taylor M. Watson, a representative of Beltsville, ” who is also plaintiff's declarant. (Id., ¶ 5.) Conaboy states that to the best of his knowledge, Watson “lived in New York (not Alabama) and maintained a California phone number” listed in his email correspondence. (Id., ¶ 6.)

         The trouble with defendants' factual submission is that it does nothing more than create a conflict in the evidence, which must be construed in plaintiff's favor on a Rule 12(b)(2) motion. See, e.g., PVC Windoors, 598 F.3d at 810 (“Where the evidence presented by the parties' affidavits and deposition testimony conflicts, the court must construe all reasonable inferences in favor of the non-movant plaintiff.”) (citation omitted); S & Davis Int'l, Inc. v. The Republic of Yemen, 218 F.3d 1292, 1303 (11th Cir. 2000) (“If the parties present conflicting affidavits, all factual disputes are resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party.”) (citation omitted). Accordingly, for purposes of the Motion to Dismiss, the Court resolves all disputes regarding jurisdictional facts in Beltsville's favor. Doing so yields the following facts as the basis for exercising personal jurisdiction over defendants: (1) they entered into an agreement with an Alabama company that conducted business with them from its Alabama offices, (2) they submitted false and fraudulent payment applications to that Alabama company in Alabama, and (3) they induced the Alabama company to issue payment to them from an Alabama bank. The legal question is whether these facts are sufficient to support the exercise of specific personal jurisdiction over Caldwell, Conaboy and C&S in Alabama. The answer is yes.

         When faced with a Rule 12(b)(2) motion, “the plaintiff has the twin burdens of establishing that personal jurisdiction over the defendant comports with (1) the forum state's long-arm provision and (2) the requirements of the due-process clause of the Fourteenth Amendment.” Continental Motors, Inc. v. Jewell Aircraft, Inc., 882 F.Supp.2d 1296, 1306 (S.D. Ala. 2012) (citation omitted); see also Jackson, Key Practice Solutions, L.L.C. v. Sullivan, 2015 WL 9275667, *3 (S.D. Ala. Dec. 18, 2015) (same). “In this case, the two inquiries merge, because Alabama's long-arm statute permits the exercise of personal jurisdiction to the fullest extent constitutionally permissible.” Sloss Industries Corp. v. Eurisol, 488 F.3d 922, 925 (11thCir. 2007). Thus, the operative inquiry is whether the exercise of personal jurisdiction over Caldwell, Conaboy and C&S in Alabama comports with the guarantees of due process.

         As noted, Beltsville has framed this action exclusively in terms of specific jurisdiction, rather than general jurisdiction. “Specific jurisdiction refers to jurisdiction over causes of action arising from or related to a defendant's actions within the forum.” PVC Windoors, 598 F.3d at 808 (citation and internal quotation marks omitted). “In specific personal jurisdiction cases, we apply the three-part due process test, which examines: (1) whether the plaintiff's claims ‘arise out of or relate to' at least one of the defendant's contacts with the forum; (2) whether the nonresident defendant ‘purposefully availed' himself of the privilege of conducting activities within the forum state, thus invoking the benefit of the forum state's laws; and (3) whether the exercise of personal jurisdiction comports with ‘traditional notions of fair play and substantial justice.'” Louis Vuitton, 736 F.3d at 1355 (citations omitted). The plaintiff bears the burden of establishing each of the first two prongs, after which the defendant/movant must make a “compelling case” that exercising jurisdiction would violate traditional notions of fair play and substantial justice. Id.

         Upon careful review of the parties' arguments and the record facts, the Court concludes that Beltsville has met its threshold burden. For the first prong of the due process test, the Court's “inquiry must focus on the direct causal relationship among the defendant, the forum, and the litigation.” Fraser v. Smith, 594 F.3d 842, 850 (11th Cir. 2010) (citation and internal quotation marks omitted). Here, Beltsville's contract and tort claims against defendants arise directly out of those defendants' contacts with Alabama. After all, defendants are connected to Alabama by virtue of having contracted with an Alabama entity and having directed allegedly fraudulent ...

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