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The Moody Company, LLC v. Biological & Environmental Solutions LLC

United States District Court, W.D. Louisiana, Lafayette Division

February 23, 2018




         Currently pending before the court is the defendant's motion to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). [Rec. Doc. 5]. The motion was referred to the undersigned magistrate judge for review, report, and recommendation in accordance with the provisions of 28 U.S.C. § 636 and the standing orders of this Court. The motion is opposed. Considering the evidence, the law, and the arguments presented, and for the following reasons, it is recommended that the defendant's motion be granted and the case be dismissed without prejudice.


         The Moody Company invests and holds ownership interests in various entities including TMD Technologies Group, L.L.C. ("TMD"). On January 5, 2014, TMD entered into a letter of intent with the defendant, Biological & Environmental Solutions, L.L.C. The letter of intent describes the basis upon which the defendant intended to enter into certain agreements, such as, the defendant would loan money to TMD and one of its subsidiaries, Go Green BioProducts, L.L.C. ("GGB"), in the form of promissory notes that would be convertible to equity in GGB, and the defendant would have the opportunity to acquire an ownership interest in TMD in exchange for a capital investment.

         An issue arose with the intended agreements and the defendant filed suit in North Dakota against TMD and GGB seeking summary judgment on the enforcement and payment of the promissory notes.[1] The North Dakota court rendered a stipulated judgment in favor of the defendant, but the suit and collection of the judgment are still pending. The plaintiff alleges that the defendant indicated that it would seek relief against the plaintiff in connection with the pending litigation in North Dakota.

         As a result, the plaintiff filed a petition for declaratory judgment in Louisiana's 15th Judicial District Court. In the petition, the plaintiff seeks a declaratory judgment that the defendant is subject to personal jurisdiction in Louisiana and that the plaintiff is not liable to the defendant under any claim or cause of action. The defendant removed the action based on diversity jurisdiction and then filed the present motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2).


         A. Standard for Personal Jurisdiction

         The defendant contends that it has insufficient contacts with the State of Louisiana to support the exercise of jurisdiction by this Court. “Personal jurisdiction is an essential element of the jurisdiction of a district court, without which it is powerless to proceed to an adjudication.”[2] When, as in this case, a nonresident defendant challenges personal jurisdiction, the plaintiff, as the party seeking to invoke the power of the court, bears the burden of proving that jurisdiction exists.[3]Because the defendant's motion will be decided without an evidentiary hearing, the plaintiff is required to present facts sufficient to constitute a prima facie case of personal jurisdiction to satisfy their burden.[4] A prima facie showing of personal jurisdiction may be established by the pleadings, depositions, affidavits, or exhibits of record.[5] The court must accept as true the party's uncontroverted allegations and resolve any factual conflicts in favor of the plaintiff.[6] But the court is not required to credit conclusory allegations, even if left uncontroverted.[7]

         In determining whether personal jurisdiction is proper, a district court sitting in diversity, as in this case, applies the law of the forum state in which it sits.[8] The Louisiana Long-Arm Statute provides that this Court may exercise personal jurisdiction over any nonresident so long as the basis for such jurisdiction is consistent with the United States Constitution.[9] Consequently, the limits of the Louisiana Long-Arm statue are coextensive with the limits of constitutional due process.[10] This Court need only determine whether subjecting the defendant to suit in Louisiana would be consistent with the Due Process Clause of the Fourteenth Amendment.[11]

         The exercise of personal jurisdiction over a nonresident defendant satisfies due process when: (1) the defendant has purposefully availed itself of the benefits and protections of the forum state by establishing minimum contacts with that state, and (2) the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice.[12] In other words, due process is satisfied when the defendant's connection with Louisiana is such that the defendant should reasonably anticipate being haled into court in Louisiana.[13]

         The plaintiff contends that the defendant's contacts give rise to specific, as opposed to general, jurisdiction.[14] Specific jurisdiction applies when a nonresident defendant has purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities.[15]

         The inquiry used to determine whether specific jurisdiction exists has three steps. First, it must be determined whether the defendant has sufficient minimum contacts with the forum state or, in other words, whether the defendant has purposefully directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there.[16] Random, fortuitous, or attenuated contacts are insufficient.[17] Second, it must be determined whether the plaintiff's cause of action arises out of or results from the defendant's contacts with the forum.[18] Finally, if the plaintiff satisfies the first two prongs, the burden shifts to the defendant to defeat jurisdiction by showing that the forum state's exercise of jurisdiction would be unfair or unreasonable.[19]

         B. The plaintiff has failed to establish specific personal jurisdiction

         The defendant submitted evidence that establishes the following undisputed facts. The defendant is a North Dakota limited liability company with its members located in North Dakota, Minnesota, Colorado, or Wisconsin.[20] The defendant does not own any property in Louisiana, does not maintain any business operations or offices in Louisiana, does not have a Louisiana phone number or mailing address, does not have any officers, agents, members or employees in Louisiana, and does not ship, sell, or solicit the sale of any products in Louisiana.[21] The defendant is also not registered to do business in Louisiana, and has never derived income or paid any taxes to the State of Louisiana.[22]

         The plaintiff, relying only on the allegations set forth in its petition, contends that the defendant established minimum contacts in Louisiana by: (1) entering into contracts with a Louisiana entity; (2) contemplating ownership in a Louisiana entity; and (3) visiting Louisiana to conduct due diligence for the transaction. Taking these allegations as true, this Court concludes that the plaintiff has failed to meet its burden of making a prima facie showing of personal jurisdiction. The plaintiff has failed to demonstrate that the defendant has sufficient minimum contacts with Louisiana that arise from, or are directly related to, the plaintiff's cause of action for declaratory judgment.

         The mere fact that a party contracted with a resident of Louisiana is insufficient to establish minimum contacts necessary to support personal jurisdiction.[23] Rather, a court must evaluate “prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing ... in determining whether the defendant purposefully established minimum contacts within the forum.”[24] Under this approach, the Fifth Circuit has looked to certain factors that include: (1) the place of contracting, [25] (2) where the anticipated performance under the contract was due, [26] (3) whether the contract contains an arbitration or choice-of-law clause, [27] and (4) whether the defendant's officers visited the forum state.[28]

         The plaintiff contends that it is not liable to the defendant based on the letter of intent and subsequent promissory notes that were executed between the defendant and TMD. The plaintiff alleges that it is not a party to the letter of intent and should not be liable based on its ownership interest in TMD. The plaintiff does not allege where it was executed or where the anticipated performance would occur. ...

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