United States District Court, M.D. Alabama, Southern Division
MEMORANDUM OPINION AND ORDER
EMILY
C. MARKS CHIEF UNITED STATES DISTRICT JUDGE.
On
January 11, 2019, Trip Whatley, Susan Moore, Tracy Lentz,
Keith Bowers, and Chris Noone (collectively
“Plaintiffs”) initiated this lawsuit against Ohio
National Life Insurance Company, Ohio National Life Assurance
Company, and Ohio National Equities, Inc. (collectively
“Defendants”). (Doc. 1). On April 2, 2019, the
Plaintiffs filed an amended complaint. (Doc. 19). In their
amended complaint, the Plaintiffs bring four causes of action
against the Defendants: (1) breach of contract; (2) unjust
enrichment; (3) promissory estoppel; and (4) tortious
interference with business relations. (Id. at
21-25).
This
matter is now before the Court on the Defendants' Motion
to Dismiss the Plaintiffs' amended complaint. (Doc. 20).
The Court must resolve four primary issues in ruling on the
Defendants' Motion to Dismiss: (1) whether the Court may
exercise personal jurisdiction over the Defendants in
connection with the claims of non-resident Plaintiffs Bowers
and Noone; (2) whether the Plaintiffs have standing to assert
claims based on an alleged breach of contract to which they
are not a party; (3) whether the Plaintiffs' may maintain
their equitable claims; and (4) whether the Defendants
intentionally interfered with the Plaintiffs' business
relations.
For the
following reasons, the Court resolves each of these issues in
favor of the Defendants.[1] Accordingly, the Defendants' Motion
to Dismiss is due to be granted.
I.
BACKGROUND
The
Plaintiffs are licensed sales representatives for the
following broker dealers: LPL Financial, ProEquities, Inc.,
Securities America, and Next Financial Group. These broker
dealers, through their representatives such as the
Plaintiffs, sold certain variable annuities issued by the
Defendants pursuant to Selling Agreements between the
Defendants and individual broker dealers. The Plaintiffs are
not parties to these Selling Agreements, but they assert that
they are intended third-party beneficiaries of the Selling
Agreements.
The
Plaintiffs allege that the Defendants breached the Selling
Agreements by ceasing payment of trail commissions on
previously sold variable annuity contracts after the
Defendants terminated the Selling Agreements without cause
effective December 12, 2018. With respect to their
third-party beneficiary status, the Plaintiffs contend that
“the Selling Agreements clearly and expressly manifest
an intention that sales representatives, such as Plaintiffs,
will benefit from Selling Agreements in the form of
pass-through commissions, including trail commissions.”
(Doc. 19 at 16).
On
April 16, 2019, the Defendants filed a Motion to Dismiss the
Plaintiffs' claims pursuant to rules 12(b)(1), 12(b)(2),
and 12(b)(6) of the Federal Rules of Civil Procedure. The
Defendants assert that the Court “lacks personal
jurisdiction over [the] Defendants as to the claims of two of
the Plaintiffs, Keith Bowers and Chris Noone.” (Doc. 20
at 2). Moreover, the Defendants contend that the Plaintiffs
do not have standing to assert a breach of contract claim
because they are neither parties to the Selling Agreement nor
intended third-party beneficiaries. (Id. at 3).
Lastly, the Defendants argue that the remainder of the
Plaintiffs' claims - unjust enrichment, promissory
estoppel, and tortious interference with business relations -
fail as a matter of law.
II.
JURISDICTION and VENUE
The
Court possesses subject matter jurisdiction over this case
pursuant to 28 U.S.C. § 1332(a) because the amount in
controversy exceeds $75, 000, exclusive of interests and
costs, and complete diversity exists between the parties.
Venue is proper pursuant to 28 U.S.C. § 1391(b)(2).
The
Defendants, however, contend that the Court may not exercise
personal jurisdiction over them as it relates to the claims
of non-resident Plaintiffs Bowers and Noone. The Plaintiffs
disagree, asserting that the Court may exercise personal
jurisdiction over the Defendants because the Defendants'
contacts with Alabama give rise to both general and specific
jurisdiction.
The
Defendants are Ohio corporations, each with its principal
place of business located in Cincinnati, Ohio. Plaintiff
Bowers is a resident of the state of Georgia and Plaintiff
Noone is a resident of the state of Mississippi.
III.
PERSONAL JURISDICTION
A.
Standard of Review
“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.” Diamond Crystal Brands, Inc.
v. Food Movers Intern., Inc., 593 F.3d 1249, 1257 (11th
Cir. 2010) (quoting United Techs. Corp. v. Mazer,
556 F.3d 1260, 1274 (11th Cir. 2009)). “A prima facie
case is established if the plaintiff presents enough evidence
to withstand a motion for a directed verdict.”
Meier ex rel. Meier v. Sun Int'l Hotels, Ltd.,
288 F.3d 1264, 1269 (11th Cir. 2002). Moreover, whether a
district court may exercise personal jurisdiction over a
defendant is a question of law. Oldfield v. Pueblo De
Bahia Lora, S.A., 558 F.3d 1210, 1217 (11th Cir. 2009).
B.
Discussion
i. The
non-resident Plaintiffs fail to establish personal
jurisdiction over the Defendants
The
Defendants move to dismiss the claims of non-resident
Plaintiffs Bowers and Noone pursuant to Rule 12(b)(2) of the
Federal Rules of Civil Procedure. Specifically, the
Defendants assert that “Bowers and Noone, as
non-Alabama residents who have not alleged any conduct by
Defendants in Alabama that caused them alleged harm, are not
entitled to piggy back on the claims of other plaintiffs as
to which personal jurisdiction over Defendants may
exist.” (Id. at 9-10). Further, the Defendants
contend that the Plaintiffs' factual allegations fail to
establish either general or specific jurisdiction in
connection with the claims of Bowers and Noone. (Id.
at 10). With respect to general jurisdiction, the Defendants
assert that the Plaintiffs' factual allegations fail to
demonstrate that the Defendants' contacts with the forum
place them “at home” in the state of Alabama.
(Id. at 11). Regarding specific jurisdiction, the
Defendants contend that none of their contacts with the state
of Alabama give rise to Bowers' and Noone's alleged
injuries, thus defeating personal jurisdiction. (Id.
at 13).
The
Plaintiffs argue that the Defendants are “subject to
general jurisdiction in the state of Alabama with regard to
the claims of all Plaintiffs, including non-resident
Plaintiffs Bowers and Noone, by virtue of [the
Defendants'] continuous and systematic activities and
affiliations within the state of Alabama, which render it
essentially ‘at home' in Alabama . . ..”
(Doc. 19 at 7). In support of their general jurisdiction
claim, the Plaintiffs allege that the Defendants had the
following contacts with the forum: the Defendants maintained
a subsidiary, sold annuity products, registered to do
business, appointed a registered agent, and marketed life
insurance products in Alabama. (Id. at 8-9).
Concerning
specific jurisdiction, the Plaintiffs appear to argue that
because nonresident Plaintiffs Bowers and Noone entered into
Selling Agreements with the Defendants in Georgia and
Mississippi that were substantially similar to the Selling
Agreements the resident Plaintiffs entered into in Alabama,
the Court may exercise personal jurisdiction over the
Defendants. The Court disagrees with both of the
Plaintiffs' jurisdictional arguments.
“A
federal court sitting in diversity undertakes a two-step
inquiry in determining whether personal jurisdiction exists:
the exercise of jurisdiction must (1) be appropriate under
the state long-arm statute and (2) not violate the Due
Process Clause of the Fourteenth Amendment of the United
States Constitution.” United Techs. Corp. v.
Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009). Here,
“the two inquiries merge, because Alabama's
long-arm statute permits the exercise of personal
jurisdiction to the fullest extent constitutionally
permissible.” Sloss Indus. Corp. v. Euisol,
488 F.3d 922, 925 (11th Cir. 2007) (citing Ala. R. Civ. P.
4.2(b)). “Thus, the sole issue in this [C]ourt's
jurisdictional analysis is whether Alabama's exercise of
jurisdiction over [the Defendants] violates due
process.” Aeropower, Ltd. v. Matherly, 511
F.Supp.2d 1139, 1154 (M.D. Ala. 2007).
Addressing
general jurisdiction first, “[a] court may assert
general jurisdiction over foreign (sister-state or foreign
country) corporations to hear any and all claims against them
when their affiliations with the state are so
‘continuous and systematic' as to render them
essentially at home in the forum State.” Goodyear
Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915,
919 (2011). The United States Supreme Court has “made
clear that only a limited set of affiliations with a forum
will render a defendant amenable to [general jurisdiction]
there.” Daimler AG v. Bauman, 517 U.S. 117,
137 (2014); see also BNSF Ry. Co. v. Tyrrell, 137
S.Ct. 1549, 1558 (2017) (noting the limited circumstances
that give rise to general jurisdiction over non-resident
defendant).
Absent
exceptional circumstances, general jurisdiction only exists
over a corporate defendant in its place of incorporation or
principal place of business. E.g.,
Goodyear, 564 U.S. at 924; Daimler, 571
U.S. at 137; BNSF, 137 S.Ct. at 1558. Exceptional
circumstances exist when “a corporate defendant's
operations in another forum ‘[are] so substantial and
of such a nature as to render the corporation at home in that
State.'” BNSF, 137 S.Ct. at 1558 (quoting
Daimler, 571 U.S. at 139 n.19).
“The
textbook case of general jurisdiction appropriately exercised
over a foreign corporation that has not consented to suit in
the forum” is Perkins v. Benguet Consol. Mining
Co., 342 U.S. 437 (1952). Goodyear, 564 U.S. at
928 (citations omitted). In Perkins, the plaintiff
sued a Philippine mining corporation in Ohio on a claim that
did not arise in Ohio nor did it relate to the
defendant's activities in that state. Perkins,
342 U.S. at 415. The defendant mining corporation had stopped
its business activities in the Philippines because of World
War II and began conducting such activities in the state of
Ohio. Id. at 447. Specifically, the defendant
“corporation's president maintained his office
there, kept company files in that office, and supervised from
the Ohio office ‘the necessarily limited wartime
activities of the company.'” Id. at
447-48. Because these facts established that Ohio was the
defendant corporation's principal, albeit temporary,
place of business, Ohio courts could exercise general
jurisdiction over the defendant without violating due
process. Id. at 448.
In the
instant case, the Plaintiffs' factual allegations
concerning general jurisdiction fail to establish that the
Defendants are at home in Alabama. First, the Plaintiffs
concede that the Defendants are incorporated in Ohio and
maintain their principal places of business there. (Doc. 19
at 5). Next, unlike Perkins, the fact that the
Defendants “marketed and sold annuities and other
insurance products in the state of Alabama on a systematic
and regular basis” did not constitute relocation of
their principal places of business from Ohio to Alabama.
(Id. at 6). In fact, the Daimler court held
that general jurisdiction did not exist over a defendant
whose contacts with the forum state were far more substantial
than those of the Defendants in the present case. See
Daimler, 571 U.S. at 123 (holding that general
jurisdiction did not exist when the defendant's wholly
owned subsidiary maintained a production facility in the
forum state and was the largest supplier of luxury vehicles
there, accounting for 2.4% of the defendant's worldwide
sales). Indeed, “a corporation's ‘continuous
activity of some sorts within a state is not enough to
support the demand that the corporation be amenable to suits
unrelated to that activity.'” Id. at 132
(quoting Int'l Shoe Co. v. Washington, 326 U.S.
310, 318 (1945)).
The
Plaintiffs' arguments that the fact that the Defendants
appointed agents for service of process and registered to do
business in Alabama supports a finding of general
jurisdiction also fall short. See Beasley v. Providence
Hosp., 2018 WL 2994380 (S.D. Ala. 2018) (finding no
general jurisdiction even though the defendant was licensed
to do business in Alabama and had a registered agent for
service of process in the state); see also Consolidated
Development Corp. v. Sherritt, Inc., 216 F.3d 1286, 1293
(11th Cir. 2000) (holding “[t]he casual presence of a
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