MMR Holding Corp. v. Sweetser

675 F. Supp. 326, 1987 U.S. Dist. LEXIS 11674, 1987 WL 23540
CourtDistrict Court, M.D. Louisiana
DecidedDecember 3, 1987
DocketCiv. A. No. 87-110-B
StatusPublished
Cited by1 cases

This text of 675 F. Supp. 326 (MMR Holding Corp. v. Sweetser) is published on Counsel Stack Legal Research, covering District Court, M.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
MMR Holding Corp. v. Sweetser, 675 F. Supp. 326, 1987 U.S. Dist. LEXIS 11674, 1987 WL 23540 (M.D. La. 1987).

Opinion

POLOZOLA, District Judge.

This suit arises out of an employment contract dated June 25, 1986, between MMR Holding Corporation (“MMR”), a Delaware corporation with its principal place of business in Louisiana, and Willard M. Sweetser, Jr. (“Sweetser”), a Virginia resident. Under the “agreement” Sweetser was hired as president of MMR’s “Foley Group Division” which was headquartered in Virginia. The agreement provided, inter alia, that if Sweetser was discharged during the term of the agreement without “substantial and material justification,” he would be due certain severance payments from MMR. The contract further provided that any claims arising out of or related to the agreement were to be submitted for resolution to the American Arbitration Association (“AAA”).

On December 3, 1986, MMR terminated Sweetser’s employment. Sweetser filed a demand for arbitration with the Washington, D.C. region of the AAA on January 30, 1987. On February 10, 1987, MMR filed suit in the Nineteenth Judicial District Court, Parish of East Baton Rouge, State of Louisiana seeking recision of the employment contract, damages, declaratory and injunctive relief. Sweetser timely re[327]*327moved this action to this court asserting diversity jurisdiction under 28 U.S.C. § 1332.

The defendant has now filed a motion to dismiss asserting that this court lacks in ;personam jurisdiction over him. In the alternative, defendant seeks to have this suit transferred to a more convenient forum or, in the alternative, to stay pending arbitration.1

From October 1984 until June 24, 1986, Sweetser was employed as president of Howard P. Foley Enterprises, Inc. (“Foley Enterprises”), a District of Columbia corporation with its principal place of business in Alexandria, Virginia. Foley Enterprises operated an electrical and mechanical contracting business which performed contracts located in various states. From April 1985 to June 24, 1986, Sweeter maintained his office at Foley Enterpries headquarters in Alexandria, Virginia. In approximately early May of 1986, Foley Enterprises became financially unable to perform its obligations under then outstanding construction contracts. Thereafter, Foley Enterprises filed for bankruptcy.

After extensive negotiations were undertaken, a “Completion Agreement” dated June 16, 1986, was entered into between MMR and Foley Enterprises’ bonding company. Pursuant to this Completion Agreement, MMR undertook to complete approximately eighty to one hundred of Foley Enterprises’ construction projects, only one of which was located in Louisiana.

Sweetser was then employed as president of a new unit within MMR which was named the Foley Group Division. This unit was created to perform the contracts undertaken by MMR under the Completion Agreement. From June 25, 1986 until December 3, 1986, Sweetser served as president of the Foley Group Division of MMR. On December 2, 1986, Sweetser was terminated as an employee of MMR.

The first issue the court must determine is whether Sweetser has sufficient contacts with the state of Louisiana in order for the court to have personal jurisdiction over him. Plaintiffs seek to establish personal jurisdiction over the defendant under the Louisiana Long Arm Statute, La.R.S. 13:3201, which provides in pertinent part:

A court may exercise personal jurisdiction over a nonresident, who acts directly or by an agent, as to a cause of action, arising from any one of the following activities performed by the nonresident:
(1) Transacting any business in this state.
(2) Contracting to supply services or things in this state.

A two-step inquiry is necessary to determine whether a state’s long arm statute confers jurisdiction over a nonresident defendant in a federal diversity action. The court must first determine whether the state statute provides a basis for jurisdiction. If the requirements of the state statute have been met, the court must then ascertain whether assertion of jurisdiction over the defendant complies with federal due process requirements. Bean Dredging Corp. v. Dredge Technology Corp., 744 F.2d 1081, 1083 (5th Cir.1984).

Sweetser contends that there is neither a statutory nor constitutional basis for the assertion of personal jurisdiction over him. Defendant argues that this “cause of action” did not arise from the “transacting of any business in Louisiana,” nor from the “contracting to supply services in Louisiana” as required by the statutory language of La.R.S. 13:3201. (emphasis supplied)

Plaintiffs, however, assert that the Louisiana long arm statute has been consistently interpreted to extend to the maximum limits permitted by due process. Pedelahoe v. Astropark, Inc., 745 F.2d 346 (5th Cir.1984). This interpretation was based on the official comments of the redactors of the long arm statute. Plaintiffs contend the inquiry is narrowed to whether the defendant has sufficient contacts with the state so that the exercise of jurisdiction [328]*328would not offend traditional notions of fair play and substantial justice. Id.

The Fifth Circuit recently certified to the Louisiana Supreme Court the question of whether La.R.S. 13:3201 requires a direct nexus between the business transacted in Louisiana by the nonresident defendant and the plaintiff’s cause of action. See Petroleum Helicopters, Inc. v. Avco Corporation, 811 F.2d 922 (5th Cir.1987). The Louisiana legislature has also enacted legislation to amend R.S. 13:3201. 1987 La. Acts 418. This amendment provides in pertinent part:

B. In addition to the provisions of Subsection A, a court of this state may exercise personal jurisdiction over a nonresident on any basis consistent with the constitution of this state and of the Constitution of the United States.

In reply to the question certified by the Fifth Circuit Court of Appeals, the Louisiana Supreme Court stated:

The 1987 amendment was designed to ensure that the long-arm jurisdiction of a Louisiana court extends to the limits allowed by due process. See Official Comment Acts 1987, No. 418. When constitutional requirements of due process have been met (as the federal appellate court decided in this case), there is no longer a need to inquire into whether the defendant’s conduct falls within the reach of the long-arm statute. Now, under the express wording of the present Louisiana Long-arm Statute, the sole inquiry into jurisdiction over a nonresident is a one-step analysis of the constitutional due process requirements. If the assertion of jurisdiction meets the constitutional requirements of due process, the assertion of jurisdiction is authorized under the long-arm statute. The limits of the Louisiana Long-arm Statute and the limits of constitutional due process are coextensive.

Petroleum Helicopters, Inc. v. Avco Corporation, Inc., 513 So.2d 1188 (La.1987). The Louisiana Supreme Court also stated that the amendment was to be applied retroactively. Id.

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Bluebook (online)
675 F. Supp. 326, 1987 U.S. Dist. LEXIS 11674, 1987 WL 23540, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mmr-holding-corp-v-sweetser-lamd-1987.