Delmarva Pole Building Supply, Inc. v. Richardson ( 2019 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
DELMARVA POLE BUILDING :
SUPPLY, INC., :
:
Plaintiff, : C.A. No. K18C-11-022 JJC
: In and for Kent County
v. :
:
DAVIS RICHARDSON, :
:
Defendant. :
MEMORANDUM OPINION AND ORDER
Submitted: May 7, 2019
Decided: May 28, 2019
Upon Defendant’s Motion to Dismiss: GRANTED
Nicole M. Faries, Esquire, Baird Mandalas Brockstedt, LLC, Wilmington,
Delaware, Attorney for Plaintiff.
Veronica O. Faust, Esquire, Morris James, LLP, Rehoboth Beach, Delaware,
Attorney for Defendant.
Clark, J.
Defendant Davis Richardson (hereinafter “Mr. Richardson”) is a Maryland
resident who moves to dismiss Plaintiff Delmarva Pole Building Supply, Inc.’s
(hereinafter “Delmarva’s”) complaint pursuant to Superior Court Civil Rule 12(b)(2)
for lack of personal jurisdiction. The record demonstrates that Mr. Richardson’s
contact with Delmarva in Delaware was limited to telephone calls and emails. The
parties met regarding the contract in Maryland, they executed the contract in
Maryland, and performance by Delmarva occurred in Maryland. Under the
circumstances of this case, the Court does not have personal jurisdiction over Mr.
Richardson. Accordingly, Delmarva’s motion to dismiss the matter must be
GRANTED.
PROCEDURAL BACKGROUND, ARGUMENTS OF THE PARTIES,
AND FACTS OF RECORD
The facts of record are those alleged in the complaint and those referenced in
the documents and affidavits submitted by the parties. Mr. Richardson and
Delmarva contracted for Delmarva to build a pole barn at Mr. Richardson’s property
in Easton, Maryland. Mr. Richardson is a resident of Maryland, and Delmarva is a
Delaware corporation whose principal place of business is in Wyoming, Delaware.
All personal contact between the two parties occurred in Maryland, and the parties
executed the contract in Maryland. Furthermore, Delmarva presented a Maryland
business license number applicable to the Maryland construction job. After
Delmarva constructed the building, Mr. Richardson allegedly breached the contract
by refusing to pay the amount owed. Delmarva then sued Mr. Richardson in
Delaware for breach of contract and unjust enrichment. Mr. Richardson next moved
to dismiss the Delaware suit for lack of personal jurisdiction.
In his motion to dismiss, Mr. Richardson argues that none of his alleged
actions fit within the criteria of Delaware’s Long-Arm Statute, found at 10 Del. C. §
2
3104 (hereinafter the “Statute”). He also argues that even if he engaged in an act
enumerated in the Statute, his contacts with Delaware would not constitute a
“substantial enough connection with this State to make exercise of jurisdiction over
the defendant reasonable.”1
Delmarva counters that Mr. Richardson’s solicitation of a Delaware company
to complete the Maryland project fits several of the Statute’s criteria. It also argues
that Mr. Richardson possessed the necessary minimum contacts with Delaware to
invoke jurisdiction. Namely, it argues that Delaware workers and materials were
used when constructing the building, the building location in Maryland was only
23.2 miles from the Delaware state line, and Mr. Richardson caused them injury.
Accordingly, Delmarva argues that subjecting Mr. Richardson to suit in Delaware
would not violate notions of fair play and justice.
In advancing their positions regarding jurisdiction, the parties stipulated that
discovery on the issue of personal jurisdiction was unnecessary. However, both
parties requested leave to submit affidavits to develop an evidentiary record on the
issue. The parties also filed supplemental letter memoranda in support of their
positions.2
1
See Jackson v. McDowell, 1986 WL 6587, at *4 (Del. Super. May 30, 1986) (discussing
defendant’s direct conduct in Delaware, including meeting with two people to review direct mail
material and coming to Wilmington on seven occasions to discuss campaign strategy, as “not of
sufficient quality to justify the assumption of jurisdiction in this case.”).
2
In a March 22, 2019, Order, the Court notified the parties it intended to convert the motion to
dismiss to one for summary judgment because the parties relied upon matters outside the pleadings.
Rather than evaluating the matter as one for summary judgment, the matter is appropriately
evaluated as a motion to dismiss. See Tell v. Roman Catholic Bishops of Diocese of Allentown,
2010 WL 1691199, at *3 (Del. Super. Apr. 26, 2010) (recognizing that “[c]onsideration of
affidavits on a motion to dismiss for lack of personal jurisdiction is now an accepted part of this
state’s jurisprudence.”). Considering the motion to be one for summary judgment would
inappropriately shift the burden to the defendant in a matter where the plaintiff bears the burden
to establish jurisdiction. This correction of the record to reflect that the Court is evaluating the
matter through the lens of a Rule 12(b)(2) motion does not unfairly prejudice either party. The
parties requested the Court’s decision regarding personal jurisdiction to be based upon the
complaint, affidavits, and contractual documents submitted.
3
When viewed in the light most favorable to Delmarva, the record
demonstrates that Mr. Richardson called Delmarva to inquire about a building. The
sales representative then travelled to Maryland and met him to discuss the potential
project. By phone, Mr. Richardson then called the sales representative in Delaware
and requested that she send him an architectural drawing for the building. Delmarva
prepared it and emailed it to him. After several subsequent emails, Delmarva again
sent a second sales representative to Maryland where the parties executed the
contract. Delmarva prepared the building materials in Delaware, drove them to
Maryland, and then erected the building in Maryland. While Mr. Richardson never
travelled to Delaware in relation to the contract, he called and emailed Delmarva
several times. He also mailed checks to Delaware for payment. According to two
Delmarva sales representatives offering affidavits, Mr. Richardson emailed
Delmarva nine to ten times, and called Delmarva three to four times. Thereafter, all
contact between the parties during construction occurred in Maryland, and not
Delaware.
STANDARD APPLICABLE TO A RULE 12(B)(2) MOTION TO
DISMISS
In Delaware, a plaintiff has no requirement to allege facts in the complaint to
establish personal jurisdiction.3 However, when personal jurisdiction is challenged
in a motion to dismiss, the plaintiff bears the burden of proof to establish a basis for
long-arm jurisdiction. 4 Since the plaintiff retains the evidentiary burden to prove his
3
Hart Holding Co., Inc. v. Drexel Burnham Lambert Inc., 593 A.2d 535, 538 (Del. Ch. 1991)
(citing 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1363 (3d
ed. 1998)).
4
Jackson, 1986 WL 6587, at *1.
4
or her case, the plaintiff may ordinarily undertake reasonable discovery to aid such
proof.5
A trial court has discretion to shape the procedure necessary to resolve a Rule
12(b)(2) motion to dismiss.6 Since the central question is one of fact, a trial court
may hold a preliminary hearing and determine the necessary facts, or it may decide
the matter on affidavits alone. 7 The trial court also has the discretion to defer the
decision until the parties complete focused discovery or full discovery.8 Only when
the facts alleged in the complaint clearly demonstrate that claimed personal
jurisdiction over a defendant is frivolous, may the trial court preclude reasonable
discovery in aid of establishing personal jurisdiction. 9
To determine whether the Court has jurisdiction over a defendant, it employs
a two-prong test. First, it must consider whether the Statute confers jurisdiction and
authorizes service of process on the defendant. 10 Second, if the Court determines
that the defendant’s conduct falls within one of the enumerated categories, 11 the
Court must evaluate whether the plaintiff demonstrates that subjecting the defendant
to jurisdiction in Delaware does not violate the Due Process Clause of the Fourteenth
Amendment.12 Compliance with Due Process is satisfied via “the so-called
minimum contacts requirement,” because when a non-resident defendant has
sufficient minimum contacts with Delaware, that non-resident “should reasonably
anticipate being required to defend [himself or herself] in Delaware’s courts.”13
5
Hart, 593 A.2d at 539.
6
Id.7
Id.8
Id.9
Id.10
Eagle Force Holdings, LLC v. Campbell, 187 A.3d 1209, 1228 (Del. 2018).
11
Jackson, 1986 WL 6587, at *1.
12
Eagle Force Holdings, 187 A.3d at 1228.
13
Id. (internal citations omitted).
5
ANALYSIS
Delmarva argues that Mr. Richardson’s act of soliciting it to perform work in
Maryland was sufficient to subject him to personal jurisdiction in Delaware.
Delmarva argues that Mr. Richardson’s actions fall within three categories in the
Statute. Namely, it alleges that he “(1) [t]ransact[ed] any business. . . in the State,”
. . . (3) [c]ause[d] tortious injury in the State by an act or omission in this State”. . .
[and] (4) [c]ause[d] tortious injury in the State or outside of the State by an act or
omission outside of the State [because he] solicit[ed] business. . . in the State.”14 To
satisfy the Statute’s requirements, only one of these qualifying actions is necessary.
As a threshold matter, Delmarva’s complaint includes a breach of contract
claim and an unjust enrichment claim. Accordingly, the only relevant prong of the
Statute, is the one that enables suit and service of process if Mr. Richardson
transacted “any business. . . in the State.” Paragraph (c)(3) and (c)(4) of the Statute,
described above, apply to persons causing “tortious injury.” Delmarva does not raise
a tort claim.
Consequently, the focus here is whether Mr. Richardson’s calls and emails
from Maryland to Delaware regarding a single construction project demonstrates
that he “transacted any business. . . in the State.”15 The parties signed the contract
in Maryland, Mr. Richardson did not travel to Delaware, and Delmarva built the pole
barn in Easton, Maryland. As a consequence, there are no material facts of record
other than Mr. Richardson’s calls and emails that support personal jurisdiction over
Mr. Richardson.
Delmarva relies primarily on two cases in support of its argument. Both have
Delaware contacts greater than those present in the case at hand and are
distinguishable. First, Delmarva argues that this case is similar to Mid-Atlantic
14
10 Del. C. § 3104(c).
15
See 10 Del. C. § 3104(c)(1).
6
Machine & Fabric v. Chesapeake Shipbuilding, Inc., where the Superior Court
found a defendant to be subject to Delaware personal jurisdiction. 16 In that decision,
the Superior Court examined whether a Connecticut defendant that solicited business
from a Delaware corporation to perform work in Maryland, conferred jurisdiction
on Delaware courts.17 As is relevant in the present case, the court focused on
whether the defendant’s actions amounted to “transacting any business” in
Delaware.18 Similarly to the case at hand, the Connecticut defendant had no place
of business in Delaware, the negotiation and execution of the contract occurred in
Maryland, and all contracted-for operations were completed in Maryland. 19 Unlike
the case at hand, however, (1) the Connecticut defendant’s representatives
personally appeared in the plaintiff’s Delaware office to present its plans and
specifications, and (2) the approval to commence the work also took place in the
plaintiff’s Delaware office.20 Because the situs of execution of the contract was in
Delaware, the Court found that it had jurisdiction over the out-of-state defendant
pursuant to 10 Del. C. § 3104(c)(1).21 In contrast, Mr. Richardson never appeared
in Delaware and did not execute a contract in Delaware, which makes the Mid-
Atlantic decision distinguishable.
Second, Delmarva relies on the District of Delaware case, Wilmington Supply
Co. v. Worth Plumbing & Heating, Inc.22 There, a Delaware corporation sued a
Pennsylvania corporation for unpaid plumbing and heating supplies. 23 There, unlike
the single transaction at issue in this case, the out-of-state defendant created an open
16
492 A.2d 250 (Del. Super. 1985).
17
Mid-Atlantic, 492 A.2d at 252.
18
See 10 Del. C. § 3104(c)(1); Mid-Atlantic, 492 A.2d at 253 (“Thus, if jurisdiction lies under §
3104, it must be pursuant to paragraph (1) of subsection (c).”).
19
Mid-Atlantic, 492 A.2d at 252.
20
Id.21
Id. at 256.
22
505 F.Supp. 777 (D. Del. 1980).
23
Wilmington Supply, 505 F. Supp. at 778.
7
running credit account and it telephonically placed more than five hundred orders
for plumbing and heating supplies with the Delaware company.24 The supplies were
delivered to defendant at various construction sites in Pennsylvania, but the
defendant visited Delaware on multiple occasions to either pick up or return some
of the supplies to the plaintiff’s location in Delaware. 25 As a result, the court found
that the defendant satisfied 10 Del C. § 3104(c)(1)’s criteria, because it transacted
business in Delaware. 26 Unlike the case at hand, placing more than five hundred
orders with a Delaware company and repeated physical visits to the Delaware
plaintiff’s place of business constituted transacting business in Delaware.
The facts bearing upon jurisdiction in this case align more closely with two
cases that Mr. Richardson cites. First, in Fischer v. Hilton,27 the Delaware District
Court held that it did not have personal jurisdiction over an out-of-state defendant
who sold a faulty truck to a Delaware plaintiff. 28 There, a Delaware resident
approached the defendant at his Ohio business and offered to buy a used truck. 29
The parties executed the contract in Ohio, and the plaintiff accepted delivery of the
truck in Ohio.30 Like in the case at hand, the Ohio defendant called the plaintiff in
Delaware regarding the transaction. 31 Nevertheless, the court held that the Delaware
Long-Arm Statute does not apply to a contract executed and performed substantially
out of state.32 The court further held that “[a]lthough isolated phone calls arguably
may be related to the constitutional due process question, . . . such phone calls do
24
Id.
25
Id. at 778-79.
26
Id. at 781.
27
549 F.Supp. 389 (D. Del. 1982).
28
Fischer, 549 F.Supp. at 393.
29
Id. at 390.
30
Id.31
Id.32
Id. at 391.
8
not constitute a transacting of business within the State of Delaware for purposes of
subsection (c)(1) [of the Long-Arm Statute].”33
Second, in Blue Ball Properties, Inc. v. McClain,34 the District of Delaware
likewise found no personal jurisdiction over an out-of-state defendant in a breach of
contract action. 35 In Blue Ball, the court held an evidentiary hearing to decide the
issue.36 In doing so, it emphasized the fact-specific nature of the inquiry. There, the
sole contact that defendant had with Delaware was that he signed the contract in
Delaware.37 The parties negotiated the contract in Maryland and performance
occurred in Maryland.38 Here, unlike the facts relevant to the court’s decision in
Blue Ball, Mr. Richardson did not sign the contract in Delaware. In fact, the
evidence of record does not establish that he has ever visited Delaware. The Blue
Ball decision also supports a finding of lack of jurisdiction over Mr. Richardson.
The Court finds persuasive New York’s approach to interpreting their long-
arm statute’s equivalent provision. Two federal cases applying New York law
examined contacts that were limited to telephone calls from outside the State of New
York into the State of New York. Those cases held that such solicitations alone were
not sufficient to constitute the transaction of business.
First, the Southern District of New York in Tyco Intern. Ltd. v. Walsh,39
recognized that
[g]enerally, telephone contacts between a nondomiciliary
defendant and a New York party are insufficient by themselves
to confer jurisdiction under [New York’s equivalent provision to
paragraph (c)(1) in Delaware’s Statute]. A nondomiciliary
defendant will be subject to jurisdiction. . ., however, if the
33
Id. (emphasis added).
34
658 F.Supp. 1310 (D. Del. 1987).
35
Blue Ball, 658 F.Supp. at 1312.
36
Id.37
Id. at 1316.
38
Id.39
2003 WL 553580 (S.D.NY. Feb. 27, 2003).
9
defendant uses these telephone communications to deliberately
“project” himself into business transactions occurring within the
State. . . In order for these telephone contacts to sustain
jurisdiction, the defendant must do more than place an order or
engage in business negotiations regarding a contract whose
center of gravity is outside the state. Rather, he must use the
“telephone link” as a means of projecting himself into the “local
commerce” of the state.40
In the Tyco case, a New Jersey defendant negotiated a deal with a New York
plaintiff, through multiple telephone calls. 41 All other circumstances relevant to
jurisdiction involved activity outside New York. 42 The court, in dismissing the
matter for lack of jurisdiction, did not find telephone calls alone sufficient to warrant
a finding that the defendant had transacted business within New York. 43
Similarly, the Second Circuit Court of Appeals decision in Fiedler v. First
City National Bank of Houston,44 recognized that telephone solicitations alone
regarding a single contract are insufficient to confer jurisdiction under New York’s
long-arm statute.45 In that decision, the Second Circuit cited a string of New York
cases recognizing that “New York courts have consistently refused to sustain
§302(a)(1) jurisdiction solely on the basis of defendant’s communication from
another locale with a party in New York.”46
In the case at hand, there is no meaningful difference between a telephone
solicitation regarding an isolated contract and an email solicitation regarding one.
Notwithstanding Mr. Richardson’s calls and emails in this case, the center of gravity
of the Maryland construction job was in Maryland. Had Mr. Richardson engaged in
40
Tyco Intern., 2003 WL 553580, at *4.
41
Id. at *1.
42
Id.
43
Id. at *4.
44
807 F.2d 315 (2d Cir. 1986).
45
Fiedler, 807 F.2d at 317-18.
46
Id. at 318 (citations omitted).
10
a course of dealing with Delmarva regarding multiple contracts, or had he physically
visited Delmarva’s Delaware facility, the result in this case may have been different.
Likewise, the result may have been different had he not signed the contract in
Maryland, or had he not limited his meetings with Delmarva representatives to
meeting sites in Maryland. Such circumstances, however, are not present. As a
consequence, the Court does not find that Mr. Richardson transacted business in the
State of Delaware. Since Delmarva is unable to demonstrate that its suit meets the
first prong of the two-prong personal jurisdiction test, the Court need not address the
second prong by examining whether extending personal jurisdiction would
otherwise satisfy Due Process.47
CONCLUSION
For the reasons discussed, Mr. Richardson’s motion to dismiss for lack of
personal jurisdiction must be GRANTED. Because the merits of Delmarva’s claims
have not been addressed, this dismissal is without prejudice to Delmarva’s ability to
refile the case in an appropriate court.
IT IS SO ORDERED.
/s/Jeffrey J Clark
Judge
JJC:jb
Via File & Serve Xpress
47
See Eagle Force Holdings, 187 A.3d at 1228.
11