GE Mobile Water v Red Desert

2014 DNH 049

• Court: District Court, D. New Hampshire
• Decided: March 7, 2014
• Docket: Case No. 13-cv-357-PB
• Status: Published

Opinion

GE Mobile Water v Red Desert 13-cv-357-PB 3/7/14

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

GE Mobile Water, Inc.

v. Case No. 13-cv-357-PB Opinion No. 2014 DNH 049 Red Desert Reclamation, LLC, et al.

MEMORANDUM AND ORDER

In February 2012, GE Mobile Water, Inc. entered into a

contract with Red Desert Reclamation, LLC to lease water

treatment equipment for use at Red Desert's Wyoming facility.

After Red Desert failed to make payments required under the

contract, GE Mobile sued it and two affiliated entities. Clean

Runner, LLC and Gate Street Capital, Inc.

Red Desert has moved to dismiss the complaint for lack of

personal jurisdiction.

I. BACKGROUND1

Red Desert is a Wyoming limited liability company. In

2012, it operated a facility in Rawlins, Wyoming for recycling

water used in the hydraulic fracturing of natural gas reserves.

1 Unless otherwise specified, the facts are taken from the complaint. Doc. No. 1. Red Desert used water treatment technology for its Wyoming

facility developed by Clean Runner, a Delaware limited liability

company. Red Desert and Clean Runner are managed by Cate

Street, a Delaware corporation with an office in Portsmouth, New

Hampshire. Cate Street planned to use the Wyoming facility as a

platform to showcase Clean Runner's technology, with the goal of

operating similar hydraulic fracturing water treatment

facilities throughout the country. Doc. Nos. 18-2, 18-4, 18-5,

18-6.

Beginning in September 2011, Steven Fischer, a GE Mobile

employee, began working with Judson J. Cleveland on a proposed

contract to lease water processing and treatment equipment for

use at the Red Desert facility. At the time, Cleveland was a

Managing Director of Cate Street, Chief Operating Officer of Red

Desert, and President of Clean Runner. Barry Glichenhaus and

Samuel Olson of Cate Street were also involved in negotiating

and finalizing the contract. When Fischer contacted his

counterparts regarding the contract, he did so either at offices

they maintained in their homes or at Cate Street's Portsmouth,

New Hampshire office.

Negotiations culminated in a Proposal from GE Mobile and a

$3,264 million Purchase Order from Red Desert. The Purchase

Order states that it was submitted by "Red Desert Reclamation, 2 LLC, One Cate Street, Suite 100, Portsmouth, NH 03801 USA." The

"ship to" section of the Purchase Order lists the same address.

Cleveland signed the Purchase Order on behalf of Red Desert on

February 28, 2012. Under his signature, Cleveland wrote,

"President, Clean Runner." The following day, a representative

of GE Mobile accepted the Purchase Order by signing it and the

Proposal.

GE Mobile delivered equipment to the Wyoming facility in

April 2012 and subsequently sent several invoices to Red Desert

at the Portsmouth, New Hampshire address. In August 2012,

Cleveland emailed Fischer a proposal to address Red Desert's

failure to make any of the payments required under the contract.

Cleveland's email identified him as "Judson C.

Cleveland/President/CEO/Clean Runner, Inc., One Cate Street,

Portsmouth, NH 03801-7108." Approximately one week later, GE

Mobile received a check from Red Desert for $20,000. The check

was drawn on an account that listed the account holder as "Red

Desert Reclamation, LLC/1 Cate Street, Suite 100, Portsmouth, NH

03801."

GE Mobile received no further payments, and the parties

ultimately agreed to close the Wyoming facility. After giving

notice, GE Mobile removed its equipment and technicians from the

site in early October 2012. 3 On February 27, 2013, GE Mobile received a letter from

Clean Runner on Red Desert letterhead. The letter listed Red

Desert's address as One Cate Street, Portsmouth, New Hampshire,

and stated that both Clean Runner and Red Desert were beginning

the process of winding down operations. Doc. No. 18-11. The

letter offered Clean Runner's and Red Desert's creditors a

global settlement of $300,000 on an acknowledged debt of $1,147

million.

II. PERSONAL JURISDICTION

A. Standard of Review

In objecting to a motion to dismiss for lack of personal

jurisdiction, the plaintiff must establish that personal

jurisdiction exists. Astro-Med, Inc. v. Nihon Kohden Am., Inc.,

591 F.3d 1, 8 (1st Cir. 2009) . Because I have not held a

hearing on the motion, GE Mobile must make a prima facie showing

that this court has personal jurisdiction. See Cossaboon v. Me.

Med. Ctr., 600 F.3d. 25, 31 (1st Cir. 2010). A prima facie

showing requires the plaintiff to "proffer [] evidence which, if

credited, is sufficient to support findings of all facts

essential to personal jurisdiction." Lechoslaw v. Bank of Am.,

N.A., 618 F.3d 49, 54 (1st Cir. 2010) (internal quotation marks

omitted); see also Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 4 (1st Cir. 2008) (a plaintiff asserting jurisdiction cannot rest

upon the pleadings but is "obliged to adduce evidence of

specific facts"). I consider GE Mobile's assertions to the

extent they are supported by the evidence of specific facts set

forth in the record, and I consider the facts offered by Red

Desert "to the extent that they are uncontradicted." See

Cossaboon, 600 F.3d at 31 (internal quotation marks omitted). I

construe the facts "in the light most congenial to the

plaintiff's jurisdictional claim." Hannon v. Beard, 524 F.3d

275, 279 (1st Cir. 2008). Despite this liberality, I will not

"credit conclusory allegations or draw farfetched inferences."

Negron-Torres v. Verizon Commc'ns, Inc., 478 F.3d 19, 23 (1st

Cir. 2007) .

B. Analysis

Whether a court has personal jurisdiction in a diversity

action over a nonresident defendant depends on whether both the

forum state's long-arm statute and the due process requirements

of the United States Constitution are satisfied. Cossaboon, 600

F.3d at 29 n.l. New Hampshire's long-arm statute permits a

court to exercise personal jurisdiction over a defendant to the

extent allowed by due process. Hemenway v. Hemenway, 159 N.H.

680, 685 (2010). I thus turn to the constitutional analysis,

which requires "sufficient minimum contacts with the state, such 5 that maintenance of the suit does not offend traditional notions

of fair play and substantial justice." Adelson v. Hananel, 510

F.3d 43, 49 (1st Cir. 2007) (citing Int'l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945) (internal quotation marks

omitted)).

A court may exercise either general or specific personal

jurisdiction depending on the nature of the defendant's contacts

with the forum state. Carreras v. PMG Collins, LLC, 660 F.3d

549, 552 (1st Cir. 2011) . At issue here is specific

jurisdiction, which "may only be relied upon where the cause of

action arises directly out of, or relates to, the defendant's

forum-based contacts." Cossaboon, 600 F.3d at 31.

The Supreme Court has recognized that a court can acquire

specific personal jurisdiction over a principal based on the

actions of an agent. Daimler AG v. Bauman, 134 S.Ct. 746, 754

(2014). Further, both this Court and the First Circuit have

consistently found that "[u]nder basic principles of agency law,

forum-related contacts made by an agent acting within the scope

of an agency relationship are attributable to the principal."

25 CP, LLC v. Firstenberg Mach. Co., 2009 DNH 185, 26-27 (citing

Dagesse v. Plant Hotel N.V., 113 F.Supp.2d 211, 216 n.2 (D.N.H.

2000)). See also Sawtelle v. Farrell, 70 F.3d 1381, 1389, n. 4

(1st Cir. 1995); Daynard v. Ness, Motley, Loadholt, Richardson & 6 Poole, P.A., 290 F.3d 42, 55 (1st Cir. 2002) .

I determine whether the court has sufficient "minimum

contacts" with the forum state to support a finding of specific

personal jurisdiction by considering three factors: relatedness,

purposeful availment, and reasonableness. See Adelson, 510 F.3d

at 49.

1. Relatedness

The relatedness inquiry requires that "the underlying claim

^arise out o f or be ^related to' the activities within the

forum state." Id. Relatedness is a "flexible, relaxed standard

which focuses on the nexus between the defendant's contacts and

the plaintiff's cause of action." Id. (internal citations and

quotation marks omitted).

The claims against Red Desert are primarily contractual in

nature. "[I]n contract claims, we may look to and draw

inferences from ^the parties' prior negotiations and

contemplated future consequences, along with the terms of the

contract and the parties' actual course of dealing.'" Id.

(citing Daynard, 290 F.3d at 52); see Bluetarp Fin., Inc. v.

Matrix Constr. Co, Inc., 709 F.3d 72, 80 (1st Cir. 2013).

"Furthermore, where the cause of action is for an alleged breach

of contract, we ask whether the defendant's activity in the

forum state was ^instrumental either in the formation of the 7 contract or its breach.'" Adelson, 510 F.3d at 49 (internal

citations omitted).

GE Mobile has submitted evidence to support its contention

that its contract negotiations with Red Desert's agents occurred

in New Hampshire. This evidence includes emails about the

contract with Portsmouth, New Hampshire addresses in the

signature lines as well as affidavits attesting that GE Mobile

officials contacted Red Desert's representatives regarding the

proposed contract either at their home offices or at Cate

Street's office in Portsmouth, New Hampshire. Doc. Nos. 1-2,

18-7.

The contract itself also explicitly links Red Desert to New

Hampshire. The contract contains two sections, a Proposal sent

by GE Mobile and a Purchase Order sent by Red Desert. In the

Proposal, GE Mobile listed Rawlins, Wyoming as Red Desert's

location, with no mention of New Hampshire. In the Purchase

Order, however. Red Desert listed a New Hampshire address in

both the "Ordered By" and "Ship to" sections. The phone and fax

numbers listed on the Purchase Order have New Hampshire area

codes. In entering the contract. Red Desert was making its ties

to New Hampshire clear. This made it reasonable for GE Mobile

and Red Desert to believe that the intended future consequences

of the contract would require relations between the parties in 8 New Hampshire.

The parties' course of dealing after signing the contract

also evidences their relationship with New Hampshire. Red

Desert argues that the scope of GE Mobile's actual performance

was limited to delivering goods and services in Wyoming, and

that its occasional contacts with agents in New Hampshire are

insufficient to establish minimum contacts. This argument,

however, ignores a considerable body of contradictory evidence.

Red Desert characterizes GE Mobile's act of mailing invoices to

Red Desert's address in New Hampshire as a unilateral action,

yet GE Mobile sent these invoices to Red Desert's New Hampshire

address because the contract provided that the invoices were to

be sent to that address. Moreover, the sole payment that Red

Desert made on the contract was made via a Red Desert corporate

check issued from its Portsmouth, New Hampshire address. Doc.

No. 18-10. GE Mobile has also submitted correspondence received

on Red Desert letterhead with a Portsmouth, New Hampshire

address and presented evidence in the form of emails from Red

Desert and Cate Street employees with New Hampshire addresses in

the signature lines. Doc. Nos. 1-4, 1-5. GE Mobile further

alleges by sworn affidavit that it engaged in telephone

conversations concerning late payments with Red Desert and Cate

Street employees located in New Hampshire. 9 The First Circuit found specific jurisdiction lacking when

the only contacts between a defendant and forum state involved

the defendant mailing a previously negotiated contract to the

forum state for a signature, followed by three emails to sort

out final logistics. Phillips, 530 F.3d at 29. This case is

more analogous, however, to the First Circuit's recent decision

in Bluetarp. See 709 F.3d at 80. As in Bluetarp, negotiations

and formation of the contract between GE Mobile and Red Desert

occurred in part in the forum state, and "the resulting

relationship contemplated the future consequences of

[defendants] . . . continuing to interact with [GE Mobile] in

[the forum state]." See id. "[A]s evidenced by the billing

statements and phone and email communications between the

parties, just such interplay did take place." Id. GE Mobile's

claim unequivocally relates to Red Desert's activities within

New Hampshire.

2. Purposeful Availment

The purposeful availment requirement ensures that

jurisdiction is "not based on merely ^random, isolated or

fortuitous' contacts with the forum state." Adelson, 510 F.3d

at 50 (citing Sawtelle, 70 F.3d at 1391. Courts focus on

whether the defendant's actions are voluntary and the assertion

of jurisdiction over the defendant is foreseeable. See Burger 10 King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (defendant's

actions are voluntary when they are unilateral); World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (assertion

of jurisdiction is foreseeable when the defendant's actions are

sufficient for him or her to "reasonably anticipate being haled

into court there"). By invoking the benefits and protections of

a state's laws, a defendant makes its presence before the

state's courts foreseeable. Daynard, 290 F.3d at 60.

Red Desert's contacts with New Hampshire were

unquestionably voluntary: it listed a New Hampshire address on

the Purchase Order, corresponded with GE Mobile using letterhead

listing a New Hampshire address, and listed New Hampshire

telephone and fax numbers in its contact information. It

"managed" its business out of New Hampshire. The sheer

abundance of representations acknowledge an ongoing relationship

with New Hampshire that establishes the foreseeability of

litigation within the state. See Adelson, 510 F.3d at 50.

Moreover, GE Mobile has submitted additional public records

showing that Red Desert considered its Portsmouth, New Hampshire

address to be a forum from which it conducted its business. Red

Desert listed Portsmouth, New Hampshire as its "principal

address" on its official corporate filing with the State of

Wyoming. It also included its Portsmouth, New Hampshire address 11 on its radio license, its State of Wyoming environmental

permits, and other public filings. Doc. Nos. 18-3, 18-13, 18-

14. In publically holding itself to be a corporation with its

primary address in New Hampshire, Red Desert freely and of its

own volition represented its strong New Hampshire contacts to

the entire world. See Adelson, 510 F.3d at 50; Carreras, 660

F.3d at 555 ("when a defendant deliberately targets its behavior

toward the society or economy of a particular forum, the forum

should have the power to subject the defendant to judgment

regarding that behavior"). These voluntary actions make it

foreseeable - even expected - that Red Desert could be haled

into court in New Hampshire in the event of a contract dispute.

3. Reasonableness

Even if a court finds that the relatedness and purposeful

availment requirements are met, specific personal jurisdiction

may nevertheless only be exercised if it is reasonable for the

court to do so. Factors that courts consider in assessing

reasonableness include (1) the defendant's burden of appearing

in the forum state; (2) the forum state's interest in

adjudicating the dispute; (3) the plaintiff's interest in

convenient and effective relief; (4) the judicial system's

interest in obtaining the most effective resolution; and (5) the

common interests of all sovereigns in promoting substantive 12 social policies. Adelson, 510 F.3d at 51 (citing Burger King,

471 U.S. at 477).

A consideration of these factors indicates that it is

reasonable to exercise specific personal jurisdiction here. Red

Desert would have no significant burden in appearing in New

Hampshire. Cleveland, its President, is a managing director at

Cate Street, with offices based in New Hampshire. The company

represented that its "managers" worked from Cate Street's New

Hampshire offices.

GE Mobile also has a significant interest in bringing suit

against Red Desert in New Hampshire because it is suing Cate

Street and Clean Runner here based on the same contractual

relationship. It would thus be convenient and efficient for GE

Mobile to present its claims against Red Desert in this

jurisdiction. Similarly, litigating the dispute in one forum

would be most convenient for the judicial system to come to an

effective and efficient resolution.

The other factors - New Hampshire's interest in

adjudicating the dispute and the common interests of sovereigns

in promoting substantive social policies - are of negligible

import given the weight of the first three factors, which all

favor exercising jurisdiction here. Accordingly, Red Desert's

contract-related contacts with New Hampshire in this case 13 constitute sufficient "minimum contacts" so as not to "offend

traditional notions of fair play and substantial justice." See

Adelson, 510 F.3d at 52 (quoting Int'l Shoe, 326 U.S. at 316).

III. CONCLUSION

For the reasons discussed above, I deny Red Desert's motion

to dismiss for lack of personal jurisdiction. Doc. No. 15.2

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

March 7, 2014

cc: Danielle Andrews Long, Esq, Scott H. Harris, Esq.

2 Clean Runner and Cate Street have moved to dismiss the claims brought against them on different grounds. I will address their arguments in a separate order.