Brake Shop, Inc. v. Dacey

830 F. Supp. 1008, 1993 U.S. Dist. LEXIS 12908, 1993 WL 377030
CourtDistrict Court, E.D. Michigan
DecidedSeptember 13, 1993
DocketCiv. A. No. 92-70470
StatusPublished

This text of 830 F. Supp. 1008 (Brake Shop, Inc. v. Dacey) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brake Shop, Inc. v. Dacey, 830 F. Supp. 1008, 1993 U.S. Dist. LEXIS 12908, 1993 WL 377030 (E.D. Mich. 1993).

Opinion

MEMORANDUM OPINION AND ORDER DENYING PLAINTIFFS’ MOTION FOR RECONSIDERATION

GADOLA, District Judge.

On July 7, 1992, this court granted defendants Brake World, Inc. and Brake World U.S.A., Inc.’s motion to dismiss for lack of personal jurisdiction 793 F.Supp. 154. Plaintiffs have since moved for reconsideration of this court’s decision pursuant to LR 7.1(h)(3) (Jan. 1, 1992).

On November 18, 1992, defendant Brake World U.S.A. filed a petition of bankruptcy under Chapter 11 in the United States Bankruptcy Court in the Middle District of Florida. Under 11 U.S.C. § 362, the action against Brake World U.S.A. is automatically stayed and this court will take no further action on this case with regard to this particular defendant. ■

[1009]*1009The court will deny plaintiffs’ motion for reconsideration for the reasons discussed below. Because this is a case of first impression in the Sixth Circuit, the court will more fully examine the issues involved than would normally be necessary in a denial of a motion for reconsideration.

Facts

Plaintiff The Brake Shop, Inc. and defendants Brake World and Brake World U.S.A. are all businesses involved in the repair and replacement of brakes. Plaintiff The Brake Shop is a Michigan corporation that operates in Michigan and twelve other states. Defendant Brake World is a California corporation operating exclusively in California; defendant Brake World U.S.A. is a Florida corporation operating exclusively in Florida. In addition to the two corporate defendants, plaintiffs have named two individual defendants, John A. Dacey, Jr. and Daniel H. Dacey.

The gravamen of plaintiffs’ complaint against the two corporate defendants is that they wrongfully duplicated the corporate plaintiff’s franchise operation. Complaint at 6-7. The individual defendants are alleged to have violated confidentiality provisions in their contracts with plaintiffs. Plaintiffs further allege that “[a]ll of the wrongful duplication by [the corporate defendants] occurred in the State of Michigan.” Plaintiffs’ resp. at iv.

Law

It is plaintiffs’ burden to establish the existence of personal jurisdiction over defendants. Welsh v. Gibbs, 631 F.2d 436, 438 (6th Cir.1980). A court must interpret the pleadings and affidavits in the light most' favorable to plaintiffs. Id.

Michigan’s corporate general personal jurisdiction statute, Mich.Comp.Laws Ann. § 600.711, reads in relevant part:

The existence of any of the following relationships between a corporation and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise general personal jurisdiction over the corporation and to enable such courts to render personal judgments against the corporation: ■
(3) The carrying on of a continuous and systematic part of its general business within the state. ■

Id. Michigan’s corporate limited personal jurisdiction statute, Mich.Comp.Laws Ann. § 600.715, reads in relevant part:

The existence of any of the following relationships between a corporation or its .agent and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise limited personal jurisdiction over such corporation and to enable such courts to render personal judgments against such corporation arising out of the act or acts which create any of the following relationships:
(1) The transaction of any business within the state.
(2) The doing or causing any act to be done, or consequences to occur, in the state resulting in an action for tort.
(5) Entering into a contract for services to be performed or for materials to be furnished in the state by the defendant.

Id. The reach of the Michigan long-arm statute is limited by the due process clause of the Fourteenth Amendment. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

In the July 7, 1992 order, this court found that it lacked both general and limited personal jurisdiction over defendant Brake World under the Michigan long arm statute. In their motion for reconsideration, plaintiffs contend that the court does have general personal jurisdiction over the corporate defendants because the individual defendants were promoters of the corporate defendants who-conducted business in Michigan on their behalf. Plaintiffs claim that the Daceys engaged in duplication activity, purchased car parts for Brake World, and recruited Brake [1010]*1010Shop employees for Brake World. These activities took place within Michigan from January 1990 until December 1991.

Plaintiffs attached to their response to the motion to dismiss the affidavits of Anthony Toscano, Jr. and Salvatore Toscano to support the above allegations. The Toscanos state that while they were employed by the Daceys in the Michigan franchises, the Daceys recruited them to move to California to work for defendant Brake World. Both allege that they left Michigan for San Diego, California; on May 28, 1990, and that they took with them brake equipment and auto parts for use by defendant Brake World in California. Brake World was incorporated in California on June 29, 1990.

In the July 7, 1992 order, the court relied on the fact that the corporate defendants did not exist at the time of the activities in question. Because the corporate defendants did not yet exist at the time of the activities to which the Toscanos attest, they could not have been carrying on “a continuous and systematic part of [their] general business” within the state of Michigan. Thus, this court has no general personal jurisdiction over defendant Brake World.

The court also found that it lacked limited personal jurisdiction over Brake World. Plaintiffs have failed to put forth any evidence that the corporate defendants transacted any business within Michigan, did or caused any act to be done or consequences to occur in Michigan which resulted in an action for tort, or entered into a contract for services to be performed or for materials to be furnished in Michigan by the corporate defendants. Mich.Comp.Laws Ann. § 600.715. All of the allegations supported by the affidavits concerned activities prior to the date of incorporation of defendant Brake World. On this basis, the court found that it lacked limited personal jurisdiction over Brake World.

Plaintiffs now argue that this court failed to take into consideration some case law finding jurisdiction over a corporation for the activities of its promoters. In their motion for reconsideration, plaintiffs cite Rees v. Mosaic Technologies, Inc., 742 F.2d 765

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Related

International Shoe Co. v. Washington
326 U.S. 310 (Supreme Court, 1945)
Hanson v. Denckla
357 U.S. 235 (Supreme Court, 1958)
World-Wide Volkswagen Corp. v. Woodson
444 U.S. 286 (Supreme Court, 1980)
John Welsh and Flo-Start, Inc. v. James W. Gibbs
631 F.2d 436 (Sixth Circuit, 1980)
Donald R. Rees v. Mosaic Technologies, Inc
742 F.2d 765 (Third Circuit, 1984)
Brake Shop, Inc. v. Dacey
793 F. Supp. 154 (E.D. Michigan, 1992)

Cite This Page — Counsel Stack

Bluebook (online)
830 F. Supp. 1008, 1993 U.S. Dist. LEXIS 12908, 1993 WL 377030, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brake-shop-inc-v-dacey-mied-1993.