United States District Court, N.D. Indiana, Hammond Division
WABASH POWER EQUIPMENT, CO., and NICKELSON INDUSTRIAL SERVICE, INC., Plaintiffs,
BTU STATE LINE, LLC, BTU SOLUTIONS, LLC, BTU SOLUTIONS DE, LLC, and STATE LINE ENERGY, LLC, Defendants.
FINDINGS, REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE PURSUANT TO 28 U.S.C. § 636(b)(1)(B) & (C)
JOHN E. MARTIN, Magistrate Judge.
This matter is before the Court on a Defendants BTU State Line LLC's, BTU Solutions, LLC's, BTU Solutions DE LLC's, and State Line Energy, LLC's Motion to Dismiss Plaintiffs' Complaint [DE 15], filed by Defendants on July 29, 2013. Plaintiffs filed a response on August 29, 2013, and Defendants filed a reply on September 16, 2013.
On November 20, 2013, Judge Theresa L. Springmann entered an Order [DE 30] referring this matter to the undersigned Magistrate Judge for a report and recommendation on the instant motion pursuant to 28 U.S.C. § 636(b)(1)(B). This Report constitutes the undersigned Magistrate Judge's combined proposed findings and recommendations pursuant to 28 U.S.C. § 636(b)(1)(C). For the following reasons, the Court recommends that the District Court deny the Motion.
Plaintiffs Wabash Power Equipment Co. and Nickelson Industrial Service, Inc., filed their Complaint on June 11, 2013. The allegations in the Complaint arise out of an auction of equipment from the State Line Energy electric generating plant in Hammond, Indiana. Plaintiffs purchased items sold in the auction and allege that Defendants made material misrepresentations about the items, breaching express warranties, violating the Indiana Crime Victim's Relief Act, and committing fraud in the inducement.
In the instant Motion, Defendants move pursuant to Federal Rule of Civil Procedure 12(b)(2) to dismiss named Defendants BTU State Line, LLC, BTU Solutions, LLC, and BTU Solutions DE, LLC, arguing that there is no jurisdiction over these defendants in the Northern District of Indiana. Defendants move pursuant to Rule 12(b)(6) to dismiss all Defendants, including State Line Energy, LLC, on the grounds that Plaintiffs have failed to state a plausible claim for relief against any of the defendants.
I. Motion to Dismiss for Lack of Personal Jurisdiction
Federal Rule of Civil Procedure 12(b)(2) allows a defendant to move for dismissal for lack of personal jurisdiction. "The plaintiff has the burden of establishing personal jurisdiction, and where, as here, the issue is raised by a motion to dismiss and decided on the basis of written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts." Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). All factual disputes are resolved in favor of the plaintiff. Id. A federal district court may exercise personal jurisdiction over a defendant if a court of general jurisdiction of the state in which it sits would have such jurisdiction. Fed.R.Civ.P. 4(k)(1)(A). This Court, sitting in Indiana, turns to the Indiana Rules of Trial Procedure, which provide for personal jurisdiction "on any basis not inconsistent with the Constitution of this state or the United States." Ind. R. Tr. P. 4.4(A). Thus, Indiana permits the exercise of personal jurisdiction to the full extent permitted by the Due Process clause of the United States Constitution. See LinkAmerica Corp. v. Albert, 857 N.E.2d 961, 967 (Ind. 2006).
To exercise personal jurisdiction over a defendant under the Due Process clause, the defendant must have "certain minimum contacts with [Indiana] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1946) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). A defendant "should reasonably anticipate being haled into court [in Indiana], " World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980), if it "purposefully avails itself of the privilege of conducting activities within the forum State." Hanson v. Denckla, 357 U.S. 235, 253 (1958). A court may exercise either "specific" or "general" personal jurisdiction over a non-resident defendant. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984).
Defendants argue that this Court lacks personal jurisdiction over BTU State Line, LLC, BTU Solutions DE, LLC, and BTU Solutions, LLC (collectively, the "BTU Defendants"). They argue that these defendants do not have minimum contacts with the Northern District of Indiana, nor do Plaintiffs' claims arise from these defendants' contacts with the forum state, and therefore the BTU Defendants are not subject to general or specific jurisdiction in this Court.
"A defendant is subject to general jurisdiction when it has continuous and systematic general business contacts' with the forum state." uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 425 (7th Cir. 2010) (quoting Helicopteros, 466 U.S. 408, 415-16). In other words, for the exercise of general jurisdiction to be appropriate, contacts with Indiana "must be so extensive to be tantamount to [a defendant] being constructively present in the state to such a degree that it would be fundamentally fair to require it to answer in an Indiana court in any litigation arising out of any transaction or occurrence taking place anywhere in the world." Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 787 (7th Cir. 2003). The Seventh Circuit Court of Appeals has identified three essential requirements for specific jurisdiction:
(1) the defendant must have purposefully availed himself of the privilege of conducting business in the forum state or purposefully directed [it]s activities at the state; (2) the alleged injury must have arisen from the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with traditional notions of fair play and substantial justice.
Felland v. Clifton, 682 F.3d 665, 673 (7th Cir. 2012).
Defendants argue that none of the BTU Defendants are subject to general jurisdiction in this district because they have not had continuous and systematic contacts with the State of Indiana since they do not conduct business in Indiana; own or use real property or assets in Indiana; do not supply or contract to supply goods, services, or materials to be furnished in Indiana; do not have bank accounts, employees, or offices in Indiana; and do not enter into contracts with entities or people in Indiana. Defendants argue that the BTU Defendants have not purposefully availed themselves of the privilege of conducting business in Indiana as none of the BTU Defendants own the power plant or contracted to sell any property from the plant, so the exercise of jurisdiction cannot comport with notions of justice. In support of their Motion, Defendants provide a declaration of Jared Rossi, a manager of each of the BTU Defendants.
Plaintiffs argue that BTU Solutions does business in Indiana: it owns and is decommissioning the shuttered electric plant in Hammond, and in service of the decommissioning solicited vendors and has employees and an office in Hammond. Plaintiffs attach several documents that they allege provide evidence of the contacts BTU Solutions has with Indiana. Plaintiffs also attach three affidavits: of Joe Smrz, president a company that did asbestos abatement at the State Line Energy Plant; of Brad Rafferty, an employee of Wabash Power Equipment Company at the State Line Energy Plant; and of John Piatti, an employee of Nickelson Industrial Service, Inc., who oversaw dismantling work done at the State Line Energy Plant. All three men relate in their affidavits that Curtis Barkley was the project manager at the State Line Energy Plant, and that Barkley and other people that the affiants worked with at the plant, including Chris Below and Johnny Fjord, represented themselves as employees of "BTU Solutions" and gave the affiants business cards identifying their employer as "BTU Solutions" with an address of PO Box 31669 in Houston. Likewise, email correspondence to affiants regarding the work at the State Line Energy Plant identifies the senders as working for "BTU Solutions." A form Access Agreement to pre-qualify firms to do work at the "State Line Generating Station in Hammond Indiana" is attached to Mr. Piatti's affidavit. It lists State Line Energy, LLC, as the owner of the energy plant and requires qualification certification for removal of equipment to be delivered to Chris Below of "BTU Environment Services, LLC, " with an address of PO Box 31668 in Houston.
In addition to the sworn affidavits, Plaintiff also attaches other documents they claim support their claims. Plaintiffs have attached screen shots from the website of "BTU Solutions Group." The site lists contact information for "BTU Solutions Group, LLC, " including PO Box 31669 in Houston and a Chicago street address. In a list of its decommissioning projects, it includes "Stateline, " a coal plant in Hammond, Indiana. Plaintiffs also attach a transcript of an earnings conference call from Dominion Resources CEO announcing that the company sold State Line Power Station to "BTU Solutions" and a newspaper article reporting Dominion's sale of the plant to "BTU Solutions of Sugar Land, Texas." Plaintiffs argue that the affidavits and other documents create a prima facie case that BTU Solutions is subject to both general and specific personal jurisdiction in Indiana.
In addition to their arguments that BTU Solutions purposefully directed its activities at Indiana through its purchase of and activities decommissioning the State Line Power Plant, Plaintiffs argue that exercising jurisdiction in Indiana comports with traditional notions of fair play and substantial justice because of BTU Solutions' decision to do business in the state. Plaintiffs also argue that their claims are based on injuries they received in connection with equipment being sold from the decommissioned power plant in Indiana. Among other allegations, Plaintiffs allege that Johnny Fjord, a member of both BTU Solutions, LLC, and BTU Solutions DE, LLC, itself the sole ...