Brit Uw, Limited v. Manhattan Beachwear, LLC , 235 F. Supp. 3d 48 ( 2017 )


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  •                             UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF COLUMBIA
    BRIT UW, LIMITED,                                  :
    :
    Plaintiff,                                  :       Civil Action No.:       16-0523 (RC)
    :
    v.                                          :       Re Document No.:        7
    :
    MANHATTAN BEACHWEAR, LLC,                          :
    :
    Defendant.                                  :
    MEMORANDUM OPINION
    GRANTING DEFENDANT’S MOTION TO DISMISS
    I. INTRODUCTION
    Plaintiff Brit UW, Limited (Brit) seeks declaratory relief to establish that it need not pay
    Defendant Manhattan Beachwear, LLC (MBW) under a professional liability insurance policy
    that Brit provided. MBW’s involvement in this controversy began when it retained Clyde
    Hettrick, a partner at Dickstein Shapiro LLP (Dickstein), to represent it in an insurance matter.
    During the representation, Mr. Hettrick left Dickstein to form his own firm, and took MBW with
    him as a client. MBW later came to regret this decision, to the extent that it fired Mr. Hettrick
    and sued him (and his new firm) for malpractice. Brit—one of several insurers on Dickstein’s
    professional liability policy—declined coverage of the malpractice suit.
    MBW, through a variety of legal machinations, both received a judgment for
    $63,888,486.49 against the defendants in the malpractice action, and obtained assignment of the
    defendants’ claims against Dickstein’s insurers, including Brit. Noting that MBW was poised to
    sue it for millions, Brit filed this action seeking, inter alia, a declaration of non-coverage over
    the malpractice claims. Now before the Court is MBW’s motion to dismiss this action for lack of
    personal jurisdiction, lack of subject matter jurisdiction, failure to join a party, lack of venue, and
    forum non conveniens. The Court concludes that it does not have personal jurisdiction over
    MBW under either specific or general jurisdiction, and thus dismisses the action in its entirety
    without reaching the other issues.
    II. BACKGROUND1
    This case involves an insurance dispute between plaintiff Brit, an insurer, and defendant
    MBW,2 an erstwhile3 swimwear manufacturer. Brit was one of several insurers that issued a
    professional liability insurance policy to Dickstein, and MBW was one of Dickstein’s clients.
    The origins of this case began to germinate in 2007, when MBW claimed that it lost
    $11,459,421 due to a fire and theft in Indonesia. Soura Decl. ¶ 8, ECF No. 7-1; Compl. ¶ 17, ECF
    No. 1. MBW disagreed with its insurer’s handling of the claim, and hired Clyde Hettrick—then a
    partner at Dickstein in the Los Angeles office—to represent it in the Indonesia matter. Soura
    1
    For the purposes of resolving this motion, the Court accepts the factual allegations of
    the plaintiff. See Talenti v. Clinton, 
    102 F.3d 573
    , 574 (D.C. Cir. 1996). The Court also considers
    the parties’ affidavits and declarations. See Mwani v. bin Laden, 
    417 F.3d 1
    , 7 (D.C. Cir. 2005).
    2
    MBW is a limited liability company organized in Delaware. Soura Decl. ¶ 3, ECF No.
    7-1. MBW’s members include LLCs organized in Nevada with members residing in California
    and Florida. Soura Decl. ¶ 3. Its principal place of business appears to be in California. See Soura
    Decl. ¶ 4 (stating that MBW’s principal place of business was California until 2010); Affidavit of
    Service, ECF No. 5 (stating that MBW’s CEO was served in California).
    3
    Up until 2010, MBW engaged in the manufacture and sale of women’s swimwear.
    Soura Decl. ¶¶ 4, 7. Whether or not MBW continued to engage in such commercial activities
    after 2010 is a point of contention in this case. According to MBW, all manufacturing and related
    tasks were taken over by MBW Inc.—a different entity than the defendant here—in 2010,
    leaving MBW in existence only to pursue certain legal claims, including the Indonesia-based
    claim underlying this action. Soura Decl. ¶ 7. Brit believes that MBW may have remained
    involved with or responsible for manufacturing activities after 2010 and requests jurisdictional
    discovery. Pl.’s Mem. P. & A. Opp’n Def.’s Mot. Dismiss (Pl.’s Opp’n) at 42–43, ECF No. 13.
    As discussed infra Part III.C, the Court denies jurisdictional discovery and does not investigate
    MBW’s corporate structure because, even if MBW continued to produce swimwear, this Court
    lacks personal jurisdiction.
    2
    Decl. ¶ 9. The retainer agreement was negotiated in California, mailed from California, and
    contained a California arbitration provision. Soura Decl. ¶ 9. Brit and several other London
    insurers provided professional liability insurance to Dickstein at the time.4 Compl. ¶¶ 1,7; see
    also Primary Professional Liability Insurance Policy, ECF No. 1-1, Ex. A. After submitting a
    claim package on MBW’s behalf in the Indonesia matter, Mr. Hettrick left Dickstein and started
    his own law firm, Compl. ¶ 18; Soura Decl. ¶ 10, retaining MBW as a client, Compl. ¶ 18; Soura
    Decl. ¶ 10.
    Relations between Mr. Hettrick and MBW soon soured. In June of 2011, MBW replaced
    Mr. Hettrick with lawyers from Dickstein’s Los Angeles office for the Indonesia matter, Soura
    Decl. ¶ 12, and in 2012 MBW sued Mr. Hettrick for malpractice in Los Angeles Superior Court,
    Compl. ¶ 28; see also Complaint for Legal Malpractice, Manhattan Beachwear, LLC v. Hettrick
    Law, P.C., No. BC497520 (Cal. Super. Ct. Dec. 14, 2012), ECF No. 1-3, Ex. C. Dickstein’s
    insurers, including Brit, were not named in the malpractice case. See Complaint for Legal
    Malpractice, Manhattan Beachwear, LLC v. Hettrick Law, P.C., No. BC497520 (Cal. Super. Ct.
    Dec. 14, 2012). Brit declined to provide coverage in the malpractice suit. Compl. ¶ 31.
    4
    Brit was the lead underwriter for Dickstein’s professional liability insurance policy from
    2003 through the 2012–2013 policy at issue in this case. Lowther Decl. ¶¶ 6, 12, ECF No. 13-2.
    Each year the D.C. office of Dickstein Shapiro negotiated and executed a new one-year
    professional liability insurance policy. Lowther Decl. ¶ 5. Negotiations typically took place by
    phone and email, and involved an in-person meeting in Brit’s London office. Lowther Decl.
    ¶¶ 10, 11, 16, 17. The policies were delivered to the D.C. office by email. Gladdis Decl. ¶ 11,
    ECF No. 13-4. During the term of the insurance policies, Brit collaborated with the D.C.
    Dickstein office by phone and email, Lowther Decl. ¶¶ 20, 21, and attended occasional in-person
    meetings in D.C., see Lowther Decl. ¶¶ 24, 25 (describing approximately one in-person meeting
    every two years). The D.C. office paid the insurance premium, Lowther Decl. ¶ 13, and
    submitted all claims to Brit, Lowther Decl. ¶ 29, including the notification of the claims at issue
    in this case, Lowther Decl. ¶¶ 32, 33.
    3
    The malpractice case was ongoing when Mr. Hettrick died in 2013. Following his death,
    MBW took an unorthodox approach5 to resolving the matter. First, MBW reached a settlement
    with Mr. Hettrick’s estate and Hettrick’s new law firm. See generally Settlement Agreement,
    ECF No. 1-4, Ex. D. Instead of disposing of the court case, however, the settlement provided that
    the case would proceed to a bench trial but the estate would not contest MBW’s allegations on
    damages or culpability. Settlement Agreement ¶ 3 (“The ESTATE . . . agree[s] not to contest the
    nature or amount of any claims made by MB against the ESTATE. Liability and the extent of
    MB’s damages against the ESTATE will be determined . . . in an uncontested prove-up hearing
    . . . . and shall be entered as a judgment against the ESTATE in the ACTION”). The estate
    further agreed to assign6 any claims it might have against Brit (or Dickstein’s other insurers) to
    MBW. Compl. ¶ 33; Soura Decl. ¶ 16; Settlement Agreement ¶ 4 (“[T]he ESTATE shall assign
    to MB . . . any and all assignable claims against [the professional liability insurers]”). In
    exchange for these concessions, MBW agreed not to collect on the judgment from Hettrick’s
    estate. See generally Settlement Agreement.
    A bench trial occurred pursuant to this agreement, and the court issued a judgment of
    $63,888,486.49 in MBW’s favor. Compl. ¶ 34; Judgment After Court Trial, Manhattan
    Beachwear, LLC v. Hettrick Law, P.C., No. BC 497520 (Cal. Super. Ct., August 10, 2015), ECF
    No. 7-1, Ex. B. Although this judgment was entered against Hettrick’s estate, the settlement
    5
    Based on the unusual circumstances of this judgment, Brit variously alleges that it was
    “obtained through fraud and/or collusion” or suffered from other defects. See, e.g., Compl. ¶ 35.
    These claims form part of Brit’s claim for relief, but are not at issue in resolving this motion.
    6
    The record here contains only an agreement between Hettrick’s estate and MBW to so
    assign the claims: “[T]he ESTATE shall assign to MB and/or MB’s designated assignee, in the
    form attached hereto as Exhibit A, any and all assignable claims against Lloyd’s and any agents,
    representatives, related companies or other persons or entities against whom a claim may be
    brought . . .” Settlement Agreement, Stay and Covenant Not to Execute ¶ 4, ECF 1-4. Neither
    party, however, disputes that such an assignment in fact occurred.
    4
    agreement contemplated that MBW would bring suit against Brit and Dickstein’s other insurers
    to enforce the judgment.7 Settlement Agreement, ¶ 10, ECF No. 1-4, Ex. D (“Through the
    Assignment . . . MB . . . shall file an action against [Dickstein’s insurers] . . . .”).
    Brit filed this suit seeking declaratory judgment to protect it against MBW’s8 claims.9
    MBW moves to dismiss the complaint for lack of personal jurisdiction, as per Federal Rule of
    Civil Procedure 12(b)(2). MBW further moves to dismiss for lack of subject matter jurisdiction,
    as per Rule 12(b)(1); improper venue, as per Rule 12(b)(3); failure to join a party, as per Rule
    12(b)(7); and forum non conveniens. See generally Mem. P. & A. Supp. Def.’s Mot. Dismiss
    (Def.’s Mot. Dismiss), ECF No. 7.
    III. ANALYSIS
    The Court begins, and ends, its analysis by considering MBW’s motion to dismiss for
    lack of personal jurisdiction. Because the Court agrees with MBW that MBW is not subject to
    either specific jurisdiction on this claim or general jurisdiction in the District, the Court will
    grant the motion and dismiss the complaint in its entirety.
    7
    It appears from the record that Mr. Hettrick’s new law firm was defended, under a
    reservation of rights, by its own insurer in the malpractice lawsuit. No claims by or relating to
    Mr. Hettrick’s separate insurer are at issue here.
    8
    According to MBW, it assigned its rights in the judgment and settlement to SFA Group,
    LLC (SFA), such that “SFA owns the right to pursue coverage under the Dickstein insurance program,
    including the coverage provided by Brit.” Def.’s Mot. Dismiss at 10, ECF No. 7; see also Soura
    Decl. ¶ 18; Assignment of Rights and Acknowledgement of Assignment, ECF No. 7-1, Ex. C;
    Assignment of Judgment and Acknowledgement of Assignment, ECF No. 7-1, Ex. D. As discussed
    infra notes 17 and 20, the Court finds that it need not reach this issue to resolve the case.
    9
    Since the initiation of this suit, in fact, SFA sued Brit and the other insurers in
    California Superior Court, arguing that they wrongfully refused coverage in the malpractice
    action. See generally Complaint, SFA Group, LLC v. Certain Underwriters at Lloyd’s, No. BC
    618980 (Cal. Super. Ct. May 2, 2016), ECF No. 7-2, Ex. A.
    5
    Personal jurisdiction requires that the court be able to exercise jurisdiction over a party
    under both “the applicable long-arm statute” and “the demands of due process.” United States v.
    Ferrara, 
    54 F.3d 825
    , 828 (D.C. Cir. 1995); accord GTE New Media Servs. Inc. v. BellSouth
    Corp., 
    199 F.3d 1343
    , 1347 (D.C. Cir. 2000). When a case, such as this one, Compl. ¶ 3, is
    brought in diversity, “the federal district court’s personal jurisdiction over the defendant is
    coextensive with that of a District of Columbia court.” Helmer v. Doletskaya, 
    393 F.3d 201
    , 205
    (D.C. Cir. 2004).
    The plaintiff bears the burden of establishing that the court may properly exercise
    personal jurisdiction over each defendant. Crane v. N.Y. Zoological Soc’y, 
    894 F.2d 454
    , 456
    (D.C. Cir. 1990). The Court will resolve factual discrepancies in favor of the plaintiff, 
    Crane, 894 F.2d at 456
    , but “[b]are allegations and conclusory statements are insufficient.” Johns v.
    Newsmax Media, Inc., 
    887 F. Supp. 2d 90
    , 95 (D.D.C. 2012); see also Second Amendment
    Found. v. U.S. Conference of Mayors, 
    274 F.3d 521
    , 524 (D.C. Cir. 2001). In addition to the
    pleadings, the Court may consider other evidence, such as affidavits. See Mwani v. bin Laden,
    
    417 F.3d 1
    , 7 (D.C. Cir. 2005).
    Personal jurisdiction may be satisfied by either specific or general jurisdiction. D’Onofrio
    v. SFX Sports Grp., Inc., 
    534 F. Supp. 2d 86
    , 90 (D.D.C. 2008). Specific jurisdiction requires
    only sufficient “‘minimum contacts’ with [the forum],” but requires that the plaintiff’s claims
    arise from those contacts. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 
    466 U.S. 408
    ,
    414 (1984) (quoting Int’l Shoe Co. v. Washington, 
    326 U.S. 310
    , 316 (1945)). General jurisdiction,
    on the other hand, “sets a high bar,” requiring that the defendant have “continuous and
    systematic” contacts with the forum state—but then permits the forum to adjudicate any claims
    against the defendant, whether or not the claims are related to the defendant’s actions in the
    6
    forum. 
    D’Onofrio, 534 F. Supp. 2d at 90
    (citation omitted). The Court considers the applicability
    of each in turn.
    A. Specific Jurisdiction
    MBW argues that neither of its two acts arguably relating to D.C.—retaining lawyers at
    Dickstein, a firm headquartered in D.C., and taking assignment of the Hettrick estate’s claims
    against Dickstein’s insurers—should subject it to personal jurisdiction in D.C. See, e.g., Reply
    Mem. Supp. Def.’s Mot. Dismiss (Def.’s Reply), ECF No. 14 at 7–11. Brit does not seriously
    contend that merely hiring Hettrick, a Dickstein attorney residing and working in California,
    creates personal jurisdiction.10 Instead, Brit hangs its hat on the argument that MBW accepted
    10
    Any argument that retaining Hettrick alone satisfied the requirements of specific
    jurisdiction would be unsuccessful. The D.C. Circuit has previously found that merely hiring a
    law firm with a D.C. office falls beneath the threshold for minimum contacts. See Thompson
    Hine, LLP v. Taieb, 
    734 F.3d 1187
    (D.C. Cir. 2013). In Thompson Hine, the court based its
    conclusion on: the short duration of the contract, the lack of a “choice-of-law provision” or
    “consent to suit in the District” in the retainer, the execution of the retainer outside the District,
    and the lack of any requirement in the retainer “that the firm perform work or receive payment in
    the District.” 
    Id. at 1192.
    MBW’s contacts with D.C. here are even more remote. MBW’s
    retainer agreement was negotiated in and mailed from California, and was with Clyde Hettrick, a
    lawyer located in California. Soura Decl. ¶ 9, ECF No. 7-1. In Thompson Hine, the work under
    the retainer actually ended up being performed by lawyers located in 
    D.C., 734 F.3d at 1188
    –89,
    but here Brit does not dispute the Dickstein lawyers performed work only in California.
    Brit’s attempted reliance on Xenophon is misplaced. Pl.’s Opp’n at 12, ECF No. 13
    (“This case is more analogous to Xenonphon [sic] . . .” In Xenophon, the court identified personal
    jurisdiction when the non-resident defendant hired a resident-corporation to perform D.C.-
    specific public relations tasks. Xenophon Strategies, Inc. v. Jernigan Copeland & Anderson,
    PLLC, No. 15-1774, 
    2016 WL 1367734
    , at *4–5 (D.D.C. Apr. 6, 2016). Brit does not argue here
    that the work Dickstein performed bore any relation to D.C. Instead, Brit’s gloss is that the
    presence of a D.C. choice-of-law provision in Xenophon (and its absence in Thompson Hine) was
    the hinge on which personal jurisdiction turned. See Pl.’s Opp’n at 12. This Court disagrees. The
    Xenophon decision clearly holds that the choice-of-law provision is one small piece in the larger
    minimum contacts puzzle, and that the D.C.-specific nature of the contract services was more
    important in finding personal jurisdiction. See generally Xenophon, No. 15-1774, 
    2016 WL 1367734
    . Even if Brit’s interpretation were correct, only Dickstein’s insurance policy with Brit
    contained a D.C. choice-of-law provision, not the retainer agreement between MBW and
    Dickstein (indeed, that retainer agreement actually contained a California arbitration provision).
    Compare Primary Professional Liability Insurance Policy, ECF No. 1-1, Ex. A, with Soura Decl.
    7
    D.C. personal jurisdiction by taking assignment of the Hettrick estate’s claims against Brit under
    the professional liability policy, which it argues was a “D.C. contract.” See, e.g., Pl.’s Mem. P.
    & A. Opp’n Def.’s Mot. Dismiss (Pl.’s Opp’n), ECF No. 13 at 9–13. Because the Court concludes
    that taking assignment of the contract does not meet the minimum contacts with the forum
    requirement of the due process clause, exercising specific jurisdiction over MBW is not warranted.
    The District of Columbia’s long-arm statute permits a court to “exercise personal
    jurisdiction over a person” when “a claim for relief aris[es] from the person’s . . . transacting any
    business in the District of Columbia.” D.C. Code § 13-423 (2012). This provision is interpreted
    “to provide jurisdiction to the full extent allowed by the Due Process Clause” such that “the
    statutory and constitutional jurisdictional questions . . . merge into a single inquiry: would
    exercising personal jurisdiction accord with the demands of due process?” Thompson Hine, LLP
    v. Taieb, 
    734 F.3d 1187
    , 1189 (D.C. Cir. 2013) (internal quotation marks and citation omitted).
    Due process is satisfied if the defendant has “certain minimum contacts with [the forum]
    such that the maintenance of the suit does not offend ‘traditional notions of fair play and
    substantial justice,’” Int’l Shoe Co. v. Washington, 
    326 U.S. 310
    , 316 (1945) (quoting Milliken v.
    Meyer, 
    311 U.S. 457
    , 463 (1940)), and that the defendant “should reasonably anticipate being
    haled into court” in the forum, World-Wide Volkswagen Corp. v. Woodson, 
    444 U.S. 286
    , 297
    (1980). The court analyzes the “quality and nature of the defendant’s activity” in the forum to
    determine if the defendant “purposefully avail[ed] itself of the privilege of conducting activities
    within the forum State, thus invoking the benefits and protections of its laws.” Burger King
    Corp. v. Rudzewicz, 
    471 U.S. 462
    , 474–75 (1985) (quoting Hanson v. Denckla, 
    357 U.S. 235
    ,
    ¶ 9. The choice-of-law provision’s relevance is thus highly circumscribed. Moreover, the
    Supreme Court has held that “such a [choice-of-law] provision standing alone [is] insufficient to
    confer jurisdiction.” Burger King Corp. v. Rudzewicz, 
    471 U.S. 462
    , 482 (1985).
    8
    253 (1958)); see also IMark Mktg. Servs., LLC v. Geoplast S.p.A., 
    753 F. Supp. 2d 141
    , 154
    (D.D.C. 2010). In some cases, a single act may suffice to bring the defendant within the forum’s
    personal jurisdiction, if the act is “neither irregular nor casual.” Int’l 
    Shoe, 326 U.S. at 319
    –20.
    In Burger King, the Supreme Court rejected a “mechanical test” to establish personal
    jurisdiction over a non-resident defendant who entered into a contract with a resident. Burger
    
    King, 471 U.S. at 478
    . Although such a mechanical test is inappropriate, on some occasions
    entering into a contract may suffice to create personal jurisdiction—as it did in Burger King
    itself. “[T]he contract ‘alone’ could supply the necessary ‘minimum contacts’” when the contract
    is so wide-reaching and exacting that its terms create a “‘substantial connection’ between the
    non-resident and the forum.” Thompson 
    Hine, 734 F.3d at 1193
    (quoting Burger 
    King, 471 U.S. at 475
    –76). To determine if the contract is one that creates such a substantial connection, the
    Court uses a “highly realistic” lens to analyze the “prior negotiations and contemplated future
    consequences, along with the terms of the contract and the parties’ actual course of dealing” and
    determines if the defendant “purposefully established minimum contacts within the forum.”
    Burger 
    King, 471 U.S. at 479
    (citation omitted). The focus is on the actions of the defendant
    because “[t]he unilateral activity of those who claim some relationship with a nonresident
    defendant cannot satisfy the requirement of contact with the forum State.” 
    Id. at 474–75
    (quoting
    
    Hanson, 357 U.S. at 253
    ); see also Helmer v. Doletskaya, 
    393 F.3d 201
    , 205–06 (D.C. Cir. 2004)
    (finding that personal jurisdiction was proper over a defendant who entered into a contract in
    D.C. when that contract required sending monthly billing statements to D.C. and having bills
    paid from D.C. accounts).
    Contrary to Brit’s apparent position, the analysis of the defendant’s contacts with the
    forum state is required when the defendant is the assignee of a contract. Brit appears to argue that
    9
    if the initial contract was sufficiently connected to D.C.,11 then any assignee would automatically
    step into the shoes of the assignor and “submit[] to a D.C. court’s jurisdiction under the D.C.
    long-arm statute.” See Pl.’s Opp’n, ECF No. 13 at 10. The Court finds that this standard is not
    supported by the law of this circuit or in harmony with the teachings of Burger King. Neither of
    the two cases Brit cites, Johnson and Farouki, applied a mechanical rule to chain the personal
    jurisdiction of the assignee to that of the assignor. Instead, both courts performed the standard
    analysis, guided by Burger King, to determine if the assignee’s contacts with the forum state
    were sufficient to indicate that the assignee purposefully availed itself of the forum state.
    For example, in Johnson the court held that specific jurisdiction was proper over a
    defendant who took assignment of a mortgage on D.C. property and thereafter received a stream
    of income from D.C.12 Johnson v. Long Beach Mortg. Loan Trust 2001-4, 
    451 F. Supp. 2d 16
    , 31
    11
    Brit does not specify the precise degree of connection between the contract and the
    District required for a contract to be, in its terms, a “D.C. contract,” which would allow a District
    of Columbia court to exercise personal jurisdiction over the parties (and their assignees).
    Because the Court does not accept Brit’s position, it does not explore the contours of such a
    “D.C. contract.” However, the argument that the original contract here was such a “D.C.
    contract” would not be as straightforward as Brit suggests.
    Brit discusses negotiations for Dickstein’s insurance policy—which involved email and
    phone communication with the District—and that the executed policy was sent to the District by
    email. See Pl.’s Opp’n at 10, ECF No. 13. But, these contacts are not very helpful in establishing
    personal jurisdiction. See Katopothis v. Windsor-Mount Joy Mut. Ins. Co., No. 14-380, 
    2016 WL 5374081
    , at *16 (D.D.C. Sept. 26, 2016) (“[E]mail and telephone communications sent into the
    District of Columbia are not sufficient to [confer personal jurisdiction] in themselves, even if
    they are made pursuant to an underlying contract between a resident [plaintiff] and a nonresident
    [d]efendant . . . . After all, such communications are incidental to nearly every business
    relationship; they are not indicative of any desire to do business in D.C. and do not suffice to
    show purposeful availment or minimum contacts.” (internal quotation marks and citations
    omitted)); Dove v. United States, No. 86-0065, 
    1987 WL 18739
    , at *3 (D.D.C. Oct. 9, 1987)
    (holding that “the mere delivery of documents . . . . does not confer jurisdiction”).
    12
    Furthermore, the court in Johnson identified an alternative basis of personal
    jurisdiction against the defendant under D.C. Code § 13-423(a)(5) because the defendant had a
    security interest in D.C. property. 
    Johnson, 451 F. Supp. 2d at 30
    . No such alternative basis of
    specific jurisdiction applies here.
    10
    (D.D.C. 2006). The court in Johnson repeatedly emphasized the continuing contacts of the
    assignee with D.C.—specifically, that the assignee contemplated and received continual
    mortgage payments from D.C. based on its ownership interest in real property in D.C. 
    Id. at 30.
    When the court stated that “[t]aking assignment of a mortgage note is neither an ‘irregular nor
    casual’ act” it did so in the context of the continual income stream and other D.C. connections
    that flow from a mortgage note. 
    Id. at 31
    (quoting Int’l 
    Shoe, 326 U.S. at 320
    ); see also Farouki
    v. Petra Int’l Banking Corp., 
    811 F. Supp. 2d 388
    , 399 (D.D.C. 2011) (finding that the court had
    personal jurisdiction over a bank which took assignment of a loan when the assignment occurred
    in D.C. and the assignment involved a claim to D.C. property), vacated in other part, 
    705 F.3d 515
    (D.C. Cir. 2013). This analysis tracks the Supreme Court’s admonition in Burger King to
    take a “highly realistic” approach to the contacts contemplated by the contract.
    Johnson drew heavily on the Supreme Court’s analysis in McGee, which is also helpful
    
    here. 451 F. Supp. 2d at 31
    –33. In McGee, the Supreme Court permitted a forum to exercise
    personal jurisdiction over a defendant when the “suit was based on a contract which had
    substantial connection with that State.” McGee v. Int’l Life Ins. Co., 
    355 U.S. 220
    , 223 (1957).
    The contract at issue was actually the assignment of a prior life insurance policy to a new insurer.
    
    Id. at 221–22.
    The Court held that the assignee had a substantial connection to the forum state
    because the new contract was “delivered in [the forum state], the premiums were mailed from
    there and the insured was a resident of that State when he died.” 
    Id. at 223.
    As in Johnson and
    Farouki, this analysis thus focused on the contacts of the assignee to the forum state. If the rule
    were as Brit suggests, the Court would have had no cause to address the assignee’s contacts with
    the forum and could have concluded its analysis after determining that the assignor was subject
    to personal jurisdiction.
    11
    From McGee, Johnson, and Farouki, this Court concludes that the applicable test for
    exercising personal jurisdiction over a non-resident assignee, when the assignee’s purported
    connection to the forum state stems from the assignment, is whether the assignee’s contacts with
    the forum state are sufficient to satisfy the minimum contacts requirement of the due process
    clause. In other words, the assignee must “purposefully establish[] minimum contacts with the
    forum,” as determined through a “highly realistic” analysis that considers the assignee’s “prior
    negotiations and contemplated future consequences, along with the terms of the [assignment] and
    the parties’ actual course of dealing.” Burger 
    King, 471 U.S. at 479
    . If the assignee has taken an
    interest in real property in the district, or if the assignment was executed in the district, or if the
    assignee receives an income stream from the district, or other similar connections to the forum
    are present, then exercising personal jurisdiction over the assignee may be appropriate.13
    Although the D.C. Circuit has not provided guidance on this issue, this conclusion is in accord
    with that in other circuits. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 
    338 F.3d 773
    ,
    784 (7th Cir. 2003) (holding that “an assignee does not step automatically into the shoes of the
    assignor for purposes of personal jurisdiction” and collecting cases). The Court thus turns to the
    connections between the assignment and the forum in this case.
    Brit argues that MBW’s contacts with D.C. resulting from the assignment of the claims
    against Brit suffice to create specific jurisdiction over MBW. However, there are virtually no
    contacts tying the assignment to the District. Brit does not argue that the assignment was
    13
    This analysis is in harmony with Johnson’s statement that “an assignee of a contract
    created and to be performed in a particular forum may be subject to the jurisdiction of the
    forum’s courts, even if the assignee has no other relevant contacts with the forum.” 
    Johnson, 451 F. Supp. 2d at 31
    (D.D.C. 2006) (emphasis added) (citing McGee, 
    355 U.S. 220
    ). As Burger
    King established, a non-resident entering into any type of contract, assignment or not, may or
    may not be subject to personal jurisdiction depending on the connection between the contract and
    the forum. See Burger King Corp. v. Rudzewicz, 
    471 U.S. 462
    , 475–76 (1985).
    12
    negotiated or executed in the District,14 unlike the assignment at issue in Farouki. By taking
    assignment, MBW had no reason to anticipate receiving any revenue from D.C., much less a
    continuous stream—indeed, MBW’s hoped-for reward would likely be collected from Brit, a
    London insurer, and, as MBW notes, it took assignment only of the “right to collect on a loss that
    had already occurred” rather than any ongoing “insurable risk” that might require “continuing
    performance,” see Def.’s Reply at 9, ECF No. 14. This is in stark contrast to the assignments
    found to satisfy the requirements of personal jurisdiction in McGee, where the assignee received
    continuing premium payments from the 
    forum, 355 U.S. at 223
    , and Johnson, where the assignee
    received monthly mortgage payments from 
    D.C., 451 F. Supp. 2d at 31
    .15 Nor did MBW gain
    any interest in D.C. property through the assignment, unlike in 
    Johnson, 451 F. Supp. at 31
    , and
    Farouki, 
    811 F. Supp. 2d 399
    .
    14
    Because the proper focus is on the assignee’s contacts, Brit’s arguments that
    Dickstein’s professional liability insurance policy may have been negotiated or executed in the
    District, see Pl.’s Opp’n at 10, ECF No. 13, are not persuasive. Had the place of execution of the
    original contract been a dispositive factor, the analysis in McGee, Johnson, and Farouki would
    have been much simpler.
    Similarly, Brit’s reliance upon the choice-of-law provision in the professional liability
    policy, see Pl.’s Opp’n at 9, is unavailing. The provision does not select D.C. as the forum for
    future litigation. Because courts in other jurisdictions are competent to apply D.C. law, the
    choice-of-law provision does not establish that either party would be haled into court in the
    District. In addition, the provision appears in the contract between Dickstein, not a party here,
    and Brit—not MBW. Furthermore, Burger King is clear that “such a provision standing alone
    [is] insufficient to confer 
    jurisdiction.” 471 U.S. at 482
    .
    15
    The facts here also differ from those in the cases cited by Brit because here it was the
    party with the greater connection to the forum state that served as the assignor. See Johnson v.
    Long Beach Mortg. Loan Trust 2001-4, 
    451 F. Supp. 2d 16
    , 25–27 (D.D.C. 2006) (plaintiff who
    continued to pay mortgage payments to assignee was a D.C. resident); McGee v. Int’l Life Ins.
    Co., 
    355 U.S. 220
    , 220 (1957) (decedent who continued to pay insurance premiums to assignee
    resided in the forum state). Thus, in this case neither interested party after the assignment had a
    substantial connection to D.C.
    13
    In sum, the court does not find any “prior negotiations,” “contemplated future
    consequences” or “terms of the [assignment] and the parties’ actual course of dealing” that
    suggest that MBW “purposefully established minimum contacts” with D.C. by taking assignment
    of the Hettrick estate’s claims against Brit under the professional liability policy.16 See Burger
    
    King, 471 U.S. at 479
    . In applying Burger King’s “realistic” lens, the Court sees no reason that
    MBW would have expected to be haled into court in the District based on taking assignment of
    claims against a London insurer. This conclusion is in line with others in this circuit in the
    general contract context. See Fasolyak v. The Cradle Soc’y, Inc., No. 06-01126, 
    2007 WL 2071644
    , at *6 (D.D.C. July 19, 2007) (finding that arguments in favor of personal jurisdiction
    “lose their force when, as is the case here, both parties to the dispute are nonresidents, the
    contract contemplates no performance in the District of Columbia, and the defendant engaged in
    no act directed at District citizens or acted pursuant to a contract that anticipated future
    consequences here”). Because MBW’s purposeful actions directed at the forum state do not pass
    the due process threshold of minimum contacts, the Court concludes that exercising specific
    jurisdiction over MBW is not appropriate here.17
    16
    Indeed, the Settlement Agreement specified California law for any disputes between
    MBW and the estate. Settlement Agreement ¶ 22, ECF No. 1-4, Ex. D.
    17
    The Court notes that, if SFA were the proper defendant, it would likely also not be
    subject to this Court’s specific jurisdiction. Under the facts as alleged, SFA, like MBW, is only
    connected to D.C. by taking assignment of the claims against Brit. SFA’s connection is even
    more attenuated than MBW’s because SFA took assignment of the legal claims from MBW rather
    than directly from the Hettrick estate. See Soura Decl. ¶ 18, ECF No. 7-1 (“On January 1, 2016,
    MBW transferred its rights in the settlement agreement and the judgment to SFA Group, LLC.”);
    see also Assignment of Rights and Acknowledgement of Assignment, ECF No. 7-1, Ex. C.
    14
    B. General Jurisdiction
    Brit argues that MBW is subject to general jurisdiction in D.C. because it “promoted and
    sold its products through retailers in D.C.”18 Pl.’s Opp’n at 14, ECF No. 13. MBW argues that its
    contacts are insufficient to meet the “exceptional” standard warranting general jurisdiction in a
    forum that is not the defendant’s place of incorporation or principal place of business. See Def.’s
    Mot. Dismiss at 11–14, ECF No. 7; Def.’s Reply at 4–7, ECF No. 14. The Court concludes that,
    even if MBW undertakes activities in D.C. as Brit alleges, it is not “essentially at home” in the
    District and thus general jurisdiction is not appropriate.
    D.C. law provides for general jurisdiction over “foreign corporation[s] doing business in
    the District” under D.C. Code § 13-334(a) (2012). Gorman v. Ameritrade Holding Corp., 
    293 F.3d 506
    , 509 n.1 (D.C. Cir. 2002). That jurisdiction is “coextensive with the reach of
    constitutional due process.”19 Freedman v. Suntrust Banks, Inc., 
    139 F. Supp. 3d 271
    , 278
    (D.D.C. 2015) (quoting 
    Gorman, 293 F.3d at 510
    ). The Supreme Court has recently spoken to
    the extent of permissible general jurisdiction: “A court may assert general jurisdiction over
    18
    In its reply brief, MBW argues that the activities Brit cites are actually performed by
    MBW Inc., a separate corporate entity that now handles all manufacturing and sales. See, e.g.,
    Def.’s Reply at 6, ECF No. 14 (“Brit conflates MBW LLC (the defendant herein) with MBW
    Inc., and argues as if the two separate entities are synonymous. They are not. MBW LLC ceased
    all manufacturing and distribution operations in 2010, but continued to exist to pursue the
    insurance claim . . . . Meanwhile, MBW Inc. has been the operating entity responsible for
    manufacturing and distributing swimwear for nearly six years.”). According to MBW, the
    defendant-entity “presently has no contacts with the District whatsoever.” Def.’s Mot. Dismiss at
    13, ECF No. 7. The Court does not resolve these issues of corporate structure because, even if
    the activities in question were attributable to the defendant, they would not satisfy the high bar
    required for exercising general jurisdiction over MBW.
    19
    A separate barrier exists here barring Brit from benefiting from the D.C. Code’s grant
    of general jurisdiction—D.C. law requires “that personal service be made within the District of
    Columbia.” Everett v. Nissan Motor Corp., 
    628 A.2d 106
    , 108 (D.C. 1993) (citing D.C. Code
    § 13–334(a) (2012)). It appears that service in this case was effected in California. See Affidavit
    of Service, ECF No. 5 (noting that MBW was served through its CEO in Sacramento,
    California).
    15
    foreign (sister-state or foreign-country) corporations to hear any and all claims against them
    when their affiliations with the State are so ‘continuous and systematic’ as to render them
    essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 
    564 U.S. 915
    , 919 (2011) (quoting Int’l 
    Shoe, 326 U.S. at 317
    ). Corporate defendants are
    paradigmatically “at home” at either their place of incorporation or principal place of business.
    Daimler AG v. Bauman, 
    134 S. Ct. 746
    , 749 (2014).
    A corporation is not “essentially at home” merely because it uses the stream of commerce
    to deliver products to the forum state. See 
    Goodyear, 564 U.S. at 927
    (“Flow of a manufacturer’s
    products into the forum, we have explained, may bolster an affiliation germane to specific
    jurisdiction . . . [but] do[es] not warrant a determination that, based on those ties, the forum has
    general jurisdiction over a defendant.”). Indeed, it would be “unacceptably grasping” to exercise
    “general jurisdiction in every State in which a corporation engages in a substantial, continuous,
    and systematic course of business.” 
    Daimler, 134 S. Ct. at 761
    (internal quotation marks
    omitted). In Daimler, the Supreme Court held that general jurisdiction was not proper over the
    defendant in California, even though the defendant was substantially involved in commerce
    there: it had three offices with employees and was the largest seller of luxury vehicles in the
    state. 
    Id. at 752.
    The Supreme Court concluded that:
    If [the defendant’s] California activities sufficed to allow adjudication of this
    Argentina-rooted case in California, the same global reach would presumably be
    available in every other State in which [the defendant’s] sales are sizable. Such
    exorbitant exercises of all-purpose jurisdiction would scarcely permit out-of-state
    defendants “to structure their primary conduct with some minimum assurance as
    to where that conduct will and will not render them liable to suit.”
    
    Id. at 761–62
    (quoting Burger 
    King, 471 U.S. at 472
    )).
    Although Daimler and Goodyear set a high bar for asserting general jurisdiction over
    foreign entities, the Supreme Court left open the possibility that “in an exceptional case, a
    16
    corporation’s operations in a forum other than its formal place of incorporation or principal place
    of business may be so substantial and of such a nature as to render the corporation at home in
    that State.” 
    Id. at 761
    n.19. With these principles in mind, the Court considers whether exercising
    general jurisdiction over MBW is proper here.
    This is clearly not the prototypical case of general jurisdiction because it is undisputed
    that MBW is not incorporated in D.C. and does not have its principal place of business in D.C.
    See Soura Decl. ¶¶ 3–4, ECF No. 7-1 (stating that “MBW is a Delaware limited liability
    company” with members that are residents of Delaware, Nevada, California, and Florida and that
    the principal place of business during manufacturing was California); see also Def.’s Mot.
    Dismiss at 1, 12–13, ECF No. 7 (“MBW never manufactured any products in the District, never
    sold or delivered any merchandise in this District, never maintained an office in this District,
    never had employees in the District . . .”); Def.’s Reply at 4, ECF No. 14. Instead, Brit focuses
    its argument on the activities that MBW does perform within the District. These activities are
    largely those which a major nationwide manufacturer would be expected to undertake in every
    state. Brit claims that MBW “purposefully introduces its products into D.C. and benefits by
    selling its products within D.C.” through “retailers and merchants.” Pl.’s Opp’n at 14–15, ECF
    No. 13. Brit also claims that MBW “markets its clothing products through various brand names
    that are advertised and sold to District of Columbia residents,” including in magazines that are
    available in the District such as “People Magazine, Allure, Glamour, and Fitness Magazine.”
    Pl.’s Opp’n at 14–15. Accepting each of these allegations as true, MBW is far less involved in
    D.C. than the Daimler defendant was in California. Unlike the defendant in Daimler, MBW does
    not have any physical offices or employees in the District, and there is no evidence in the record
    as to its size of the market share in the district. Compare Soura Decl. ¶ 6, ECF No. 7-1 (“[MBW]
    17
    was never registered to do business in the District and never had an agent for service of process
    there. It never had a customer in the District, never manufactured merchandise in the District,
    never sold directly or shipped products to the District, and never had any employees in the
    District.”), with 
    Daimler, 134 S. Ct. at 752
    .
    This conclusion is buttressed by other decisions from this jurisdiction. In Freedman v.
    Suntrust Banks, Inc., the court rejected general jurisdiction over a defendant who “operate[d]
    numerous retail branches and ATMs, and maintain[ed] a significant ‘brick-and-mortar’
    presence” in D.C. because Daimler “explicitly foreclose[d]” subjecting such a defendant to
    general jurisdiction in each of multiple “primary bases of operation.” 
    139 F. Supp. 3d 271
    , 279
    (D.D.C. 2015). Brit’s comparison of this case to Marshall v. I-Flow LLC, 
    856 F. Supp. 2d 104
    (D.D.C. 2012), is unpersuasive for several reasons. Pl.’s Opp’n at 14, ECF No. 13. First,
    Marshall was decided before the Supreme Court’s further clarification of the standard for
    general jurisdiction in Daimler. Second, MBW’s alleged activities within the district are far short
    of the activities undertaken in Marshall, which include the defendant “establish[ing] and
    benefit[ing] from a partnership with the George Washington University Hospital, devot[ing] an
    entire [sales] region to sales in Washington, D.C.” and using “expert medical consulting services
    of prominent Washington, D.C. medical facilities and physicians.” 
    Marshall, 856 F. Supp. 2d at 108
    (internal quotation marks and citations omitted). Brit nowhere claims that MBW engaged in
    a “partnership” with a D.C. entity or performed any acts that would similarly render it
    “essentially at home” in the District. The Court thus concludes that exercising general
    jurisdiction over MBW is not appropriate.20
    20
    The Court notes that it would likely reach the same conclusion as to the exercise of
    general jurisdiction over SFA. Like MBW, SFA Group is not incorporated in D.C. and does not
    have its principal place of business in D.C. Soura Decl. ¶ 19, ECF No. 7-1. It is not disputed that
    18
    C. Jurisdictional Discovery
    Brit requests that, should the Court be unconvinced of its jurisdiction over MBW, the
    Court should grant Brit jurisdictional discovery. Because the Court agrees with MBW that such
    discovery is unwarranted, it denies Brit’s request.
    Jurisdictional discovery is appropriate “if a party demonstrates that it can supplement its
    jurisdictional allegations through discovery.” GTE New Media Servs. 
    Inc., 199 F.3d at 1351
    . A
    plaintiff seeking jurisdictional discovery must provide “specific discoverable facts,” Cheyenne
    Arapaho Tribes of Okla. v. United States, 
    558 F.3d 592
    , 596 (D.C. Cir. 2009), rather than “mere
    conjecture or speculation” that discovery could lead to personal jurisdiction, FC Inv. Grp. LC v.
    IFX Mkts., Ltd., 
    529 F.3d 1087
    , 1094 (D.C. Cir. 2008).
    In this case, Brit argues that jurisdictional discovery might reveal that MBW undertook
    “a specific marketing campaign for the D.C. region,” and that such a campaign might include
    “working with D.C. retailers, targeting advertising in the D.C. area, and employees who are
    responsible for sales in D.C.” Pl.’s Opp’n at 43, ECF No. 13. According to Brit, these facts, if
    established, would provide for the general jurisdiction of this Court over MBW. Pl.’s Opp’n at
    42–43 (citing 
    Marshall, 856 F. Supp. 2d at 108
    ).21
    Even if jurisdictional discovery established the facts that Brit alleges, this Court would
    still conclude that exercising general jurisdiction over MBW would not be appropriate. In
    SFA has not “conducted any business in Washington D.C. [sic].” Soura Decl. ¶ 20. General
    jurisdiction over SFA would thus also be inappropriate as it is not “essentially at home” in the
    District. See also Def.’s Mot. Dismiss at 14, ECF No. 7 (“SFA does not conduct and has never
    conducted any business in the District of Columbia, and does not have any employees here. It is
    not registered to do business in the District and it does not have an office or an agent for service
    of process here. None of its members reside in the District. SFA has no contacts with the District
    and therefore it cannot be subject to general personal jurisdiction here.” (citations omitted)).
    21
    Brit does not argue that jurisdictional discovery could establish specific jurisdiction
    over MBW, and the Court does not address this possibility.
    19
    Daimler, the Supreme Court held that a defendant was not subject to general jurisdiction despite
    having offices and employees in the forum state, and specifically targeting sales of the
    defendant’s products to retailers in the forum state. Daimler AG v. Bauman, 
    134 S. Ct. 746
    , 752
    (2014). Brit’s claimed contacts here are less broad in scope than the contacts that existed in
    Daimler, and general jurisdiction would thus remain improper. Even if MBW did “work[] with
    D.C. retailers,” or “target[] advertising in the D.C. area,” or have “employees who are
    responsible for sales in D.C.,” Pl.’s Opp’n at 43, these contacts would not be sufficient to show
    that MBW was “essentially at home” in the District, Goodyear Dunlop Tires Operations, S.A. v.
    Brown, 
    564 U.S. 915
    , 919 (2011). Thus, because Brit has not demonstrated that “discovery will
    enable it to show that the court has personal jurisdiction over the defendant,” the Court denies
    Brit’s request for jurisdictional discovery as futile. FC Inv. 
    Grp., 529 F.3d at 1093
    –94; see also
    Simon v. Republic of Hungary, 
    37 F. Supp. 3d 381
    , 394 (D.D.C. 2014) (denying jurisdictional
    discovery to show general jurisdiction when it would be futile), appealed in other part, 
    812 F.3d 127
    (D.C. Cir. 2016).
    IV. CONCLUSION
    For the foregoing reasons, Defendant’s motion to dismiss (ECF No. 7) is GRANTED.
    An order consistent with this Memorandum Opinion is separately and contemporaneously issued.
    Dated: January 26, 2017                                            RUDOLPH CONTRERAS
    United States District Judge
    20
    

Document Info

Docket Number: Civil Action No. 2016-0523

Citation Numbers: 235 F. Supp. 3d 48

Judges: Judge Rudolph Contreras

Filed Date: 1/26/2017

Precedential Status: Precedential

Modified Date: 1/13/2023

Authorities (22)

Purdue Research Foundation v. Sanofi-Synthelabo, S.A., ... , 338 F.3d 773 ( 2003 )

Helmer, John v. Doletskaya, Elena , 393 F.3d 201 ( 2004 )

Mwani, Odilla Mutaka v. Bin Ladin, Usama , 417 F.3d 1 ( 2005 )

GTE New Media Services Inc. v. BellSouth Corp. , 199 F.3d 1343 ( 2000 )

Cheyenne Arapaho Tribes of Oklahoma v. United States , 558 F.3d 592 ( 2009 )

Gorman, David J. v. AmeriTrade Hold Corp , 293 F.3d 506 ( 2002 )

Pier F. Talenti v. William J. Clinton, as the President of ... , 102 F.3d 573 ( 1996 )

Kent B. Crane v. New York Zoological Society , 894 F.2d 454 ( 1990 )

FC Investment Group LC v. IFX Markets, Ltd. , 529 F.3d 1087 ( 2008 )

united-states-of-america-appellantcross-appellee-v-virginia-l-ferrara , 54 F.3d 825 ( 1995 )

D'ONOFRIO v. SFX Sports Group, Inc. , 534 F. Supp. 2d 86 ( 2008 )

Farouki v. Petra International Banking Corp. , 811 F. Supp. 2d 388 ( 2011 )

IMARK Marketing Services, LLC v. Geoplast, S.P.A. , 753 F. Supp. 2d 141 ( 2010 )

Johnson v. LONG BEACH MORTGAGE LOAN TRUST 2001-4 , 451 F. Supp. 2d 16 ( 2006 )

International Shoe Co. v. Washington , 66 S. Ct. 154 ( 1945 )

World-Wide Volkswagen Corp. v. Woodson , 100 S. Ct. 559 ( 1980 )

McGee v. International Life Insurance , 78 S. Ct. 199 ( 1957 )

Hanson v. Denckla , 78 S. Ct. 1228 ( 1958 )

Burger King Corp. v. Rudzewicz , 105 S. Ct. 2174 ( 1985 )

Goodyear Dunlop Tires Operations, S. A. v. Brown , 131 S. Ct. 2846 ( 2011 )

View All Authorities »