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Gulf Coast Bank and Trust Co. v. Designed Conveyor Systems, LLC

United States District Court, M.D. Louisiana

January 11, 2017

GULF COAST BANK AND TRUST COMPANY
v.
DESIGNED CONVEYOR SYSTEMS, LLC

          RULING

          JUDGE JAMES J. BRADY UNITED STATES DISTRICT COURT

         This matter is before the Court on a Motion for a New Trial or to Alter Judgment Under Rule 59 (Doc. 23) brought by the Plaintiff, Gulf Coast Bank and Trust Company (“Gulf Coast”). The Defendant, Designed Conveyor Systems, LLC (“DCS”) filed an Opposition (Doc. 25) and the Plaintiff filed a Reply (Doc. 27). Oral argument is unnecessary. For the reasons stated herein, the Plaintiff's Motion for a New Trial is DENIED.

         I. Background[1]

         This case concerns a dispute between Gulf Coast, a bank incorporated in Louisiana with its principal place of business in Louisiana and DCS, an LLC established in Indiana with its principal place of business in Tennessee. Gulf Coast claims that it is the rightful owner of receivables that DCS owes to its subcontractor, Vinex, for work that Vinex performed in connection with a project in Denver, Colorado.

         DCS brought a motion to dismiss the case for lack of personal jurisdiction, among other arguments. This Court granted DCS' motion on the grounds that DCS' contacts with Louisiana were not sufficient to give this Court authority to assert general or specific jurisdiction over DCS. The Court dismissed the case without prejudice which would have allowed the Plaintiff to file in an appropriate jurisdiction. Rather than refiling in another jurisdiction, the Plaintiff now seeks to have the Court alter its judgment.

         The Plaintiff's main argument is that this Court failed to recognize that it had jurisdiction over the Defendant because the Defendant consented to the jurisdiction of Louisiana courts by complying with the Louisiana business registration statutes. The Plaintiff asserts that this is an independent basis for jurisdiction distinct from the general and specific jurisdiction tests which require an analysis of an entity's contacts with a given forum.

         II. Standard

         Altering or amending a judgment “is an extraordinary remedy that should be used sparingly.”[2] A Rule 59(e) motion “is not the proper vehicle for rehashing evidence, legal theories, or arguments that could have been offered or raised before the entry of judgment.”[3] “A court should refrain from altering or amending a ruling or judgment under Rule 59(e)…unless one of the following grounds is present: (1) the judgment is based upon manifest errors of law or fact; (2) the existence of newly discovered or previously unavailable evidence; (3) manifest injustice will result; or (4) an intervening change in controlling law has occurred.”[4]

         III. Parties' Arguments

         The Plaintiff's central argument in bringing this Rule 59 motion is that the Court's previous Ruling dismissing the case on the grounds of lack of personal jurisdiction presents a manifest error of law. The Plaintiff argues that a foreign company is not guaranteed a right to perform work in any state it desires; instead a state has to grant the foreign company the privilege of being able to perform work in its borders. The Plaintiff asserts that in exchange for granting this privilege, states may impose a variety of requirements on the company, and one such requirement that many states enforce is that the company must consent to the jurisdiction of the state's courts by appointing an agent for service of process. The Plaintiff argues that Louisiana has such a consent requirement, and that the United States Supreme Court holds these consent requirements constitutional under the due process clause.

         Applying the law to the facts here, the Plaintiff argues that the Defendant voluntarily designated a Louisiana agent for service of process and therefore Defendant has consented to general jurisdiction in any court in Louisiana.[5] The Plaintiff argues this Court did not address the various consent jurisdiction cases and therefore the Court's Ruling was manifestly erroneous.[6] The Plaintiff is effectively arguing that there are three bases for the Court to exercise jurisdiction over the Defendant and this Court only considered two of them in its previous Ruling. The Plaintiff asserts that a Louisiana court can exercise jurisdiction over a defendant if it has specific jurisdiction, general jurisdiction, or if the defendant has consented to the exercise of general jurisdiction by registering to do business in Louisiana.

         While both a finding of general jurisdiction and specific jurisdiction require a contacts analysis[7], Plaintiff appears to assert that a finding of jurisdiction by consent does not require a contacts analysis. In other words, the Plaintiff is effectively arguing that a foreign corporation consents to Louisiana's jurisdiction by registering to do business here, and that such an interpretation satisfies due process and an examination of an entity's contacts with Louisiana is unnecessary.

         The Defendant makes two arguments as to why the Motion should be denied. First, the Defendant argues that the Plaintiff is merely rearguing claims that this Court has already rejected. Second, the Defendant argues that the Motion should be denied because its previous Ruling was not manifestly erroneous given that Daimler changed the landscape of personal jurisdiction.[8]

         IV. Law & Analysis

         Every state in the country has a registration statute that requires foreign corporations doing business in the state to register and to appoint an agent for service of process.[9] Although all states require foreign corporations to register and appoint an agent, the jurisdictional consequences of complying with the registrations statutes vary. Some state registration statutes, like Arkansas', explicitly state that appointment of a registered agent has no effect on jurisdiction.[10] Other states, however, read their registrations statutes more broadly. For example, the Kansas Supreme Court held that complying with the Kansas statute and registering to do business in Kansas results in consent to general jurisdiction.[11]

         A state's interpretation of its registration statute is important because determining whether registering to do business establishes consent to general jurisdiction requires a court to perform a two-step analysis. First, a court must determine whether the applicable registration statute, here the Louisiana statute, equates compliance with consent to general jurisdiction (like the Kansas statute), or whether it is only a means to provide notice to defendants that they have been sued in a certain state (like the Arkansas statute). This first step is a matter of statutory interpretation. Second, if compliance with the Louisiana statute constitutes consent to general jurisdiction, this Court must consider whether such an interpretation of consent comports with the due process clause of the United States Constitution.[12]

         Although well-argued, Plaintiff's position that registering an agent in Louisiana is akin to consenting to general jurisdiction is untenable for three reasons. First, despite Plaintiff's assertions, it is not clear from the statute and Louisiana case law that the effect of complying with the Louisiana registration statute is that a non-resident company is consenting to the general jurisdiction of Louisiana courts. Plaintiff argues that Phillips[13], a Louisiana Supreme Court case, clearly held that registering an agent means that a non-resident company is consenting to general jurisdiction. This Court disagrees. Plaintiff relies on dicta from Phillips, and a Louisiana appellate court has noted that the registration statute should not be read so broadly.

         Second, even assuming that the Louisiana registration statute means that a company consents to general jurisdiction, this would be an unconstitutional interpretation of the statute based on the Fifth Circuit case Siemer v. Learjet.[14]

         Third, even if Siemer was not a due process case and was a limited statutory holding, this Court finds that, in light of Daimler, interpreting a registration statute as giving consent to general jurisdiction is untenable.

         A. The Court Did Not Commit a Manifest Error of Law In Not Relying On Phillips Because Phillips' Assertion That Compliance Constitutes Consent to Jurisdiction Was Dicta.

         The Plaintiff argues that Louisiana law is clear that designating an agent for service of process in Louisiana subjects the foreign company to general jurisdiction in Louisiana. This Court disagrees. Phillips is not so clear and therefore this Court's previous judgment was not based on a manifest error of law.

         Louisiana, like every other state in the country, requires a foreign entity to register to do business in the state before it can transact business in the state.[15] The law requires the entity to receive a certificate of authority from the secretary of state prior to doing business here.[16]Additionally, as a consequence of receiving authorization to transact business in the state, the foreign entity must maintain a registered agent of service and designate an office.[17] Nothing in the statutes explicitly says that by registering an agent a foreign entity is consenting to the general jurisdiction of Louisiana courts.

         The Plaintiff argues that based on the Louisiana Supreme Court case Phillips and its progeny, when a foreign entity designates an agent for service of process it is consenting to the general jurisdiction of any court in Louisiana. This Court does not read Phillips so broadly.

         In Phillips, the issue before the Louisiana Supreme Court was whether an out-of-state nonparty corporation could be subpoenaed to appear and produce documents at a deposition.[18] The court was not tasked with determining the jurisdictional consequences of the Louisiana registration statutes. In dicta, the Louisiana Supreme Court asserted that a consequence of designating an agent for service of process in Louisiana is to subject that foreign corporation to the jurisdiction of any Louisiana court.[19]

         As one appellate court has noted, the Louisiana Supreme Court did not decide “whether such a designation would automatically function as consent to personal jurisdiction in the state for suits arising out-of-state, when the defendant corporation did not have contacts within the state sufficient to satisfy due process.” In Taylor v. Arellano, this Louisiana appellate court held that Phillips should not be read in the broad way espoused by Plaintiff.[20]

         Although some Louisiana courts have adopted the broad reading of Phillips espoused by Plaintiff[21], the current question before the Court is whether its previous Ruling was based on a manifest error of law. Given that a Louisiana appellate court has interpreted Phillips narrowly, this Court committed no error by not relying on Phillips and implicitly finding that, as a matter of statutory ...


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