Opinion
CAUSE NO. 1:21-cv-287-LG-RPM
2021-11-17
5P EXEQUY HOLDING, LLC, Plaintiff v. SOUTHERN MISSISSIPPI CEMETERY PROPERTIES, LLC, Denco Holdings, Inc., Pinnacle Financial Partners, Access Financial Group, Inc., and John Does 1-10, Defendants
William P. Symmes, Symmes & Estes, PLLC, Gulfport, MS, for Plaintiff. George R. Arrants, Jr., Pro Hac Vice, Kramer Rayson, LLP, Knoxville, TN, Randall Scott Wells, Rushing & Guice, PLLC, Biloxi, MS, for Defendants Southern Mississippi Cemetery Properties, LLC, Denco Holdings, Inc. Michael Clark McCabe, Jr., Butler Snow LLP, Gulfport, MS, for Defendants Pinnacle Bank.
William P. Symmes, Symmes & Estes, PLLC, Gulfport, MS, for Plaintiff.
George R. Arrants, Jr., Pro Hac Vice, Kramer Rayson, LLP, Knoxville, TN, Randall Scott Wells, Rushing & Guice, PLLC, Biloxi, MS, for Defendants Southern Mississippi Cemetery Properties, LLC, Denco Holdings, Inc.
Michael Clark McCabe, Jr., Butler Snow LLP, Gulfport, MS, for Defendants Pinnacle Bank.
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
LOUIS GUIROLA, JR., UNITED STATES DISTRICT JUDGE
BEFORE THE COURT is the [4] Motion to Dismiss filed by Defendant, Access Financial Group, Inc. ("Defendant" or "Access"). Plaintiff filed a [13] Response, to which Defendant [17] replied. After due consideration of the parties’ submissions, the record in this matter, and the applicable law, the Court finds that the Motion should be granted.
BACKGROUND
In April 2018, Plaintiff, 5P Exequy Holding, LLC, purchased certain cemetery properties from Marshall Properties, which had in turn bought them from Defendant Southern Mississippi Cemetery Properties, LLC ("SMCP") in 2017. (Compl. ¶ 11, ECF No. 1-1). On October 4, 2018, Plaintiff entered into a "Bill of Sale and Assignment/Assumption Contracts Agreement" with SMCP and Defendant Denco Holdings, Inc. ("Denco") regarding three of these properties. (Id. ¶ 12). Plaintiff's agreement with SMCP "provided for the transfer, by SMCP ... the Cemetery Business Assets to 5P Exequy," including "trust fund deposits funding preneed contracts of the Business." (Id. ¶ 13). Plaintiff claims that the trust funds for these properties "were maintained on deposit with Pinnacle Bank and Access Financial Group." (Id. ¶ 15). The gravamen of this action is Plaintiff's allegation that Defendants SMCP and Denco have failed to "turn over" alleged trust funds relating to "grave openings and closings, vaults and memorials." (Id. ¶¶ 16-18).
This allegation has been disputed by Defendant Access via the affidavit of its president, which declares that Access at no time retained any such trust funds and provided only recordkeeping services for Defendant Denco. (See Aff. Christopher Chigas ¶¶ 10-17, ECF No. 4-1); see also Durham v. Katzman, Wasserman & Bennardini , 375 F. Supp. 2d 495, 499 (S.D. Miss. 2005) (holding that "the non-resident defendant has the ability with the pre-trial 12(b)(2) motion, to litigate, through the use of affidavits or live testimony, the facts necessary to determine personal jurisdiction") (citations omitted).
In the subsequent lawsuit, filed on April 20, 2021, in the Chancery Court of Harrison County, Mississippi, Plaintiff brought several causes of action against Defendants SMCP and Denco, seeking the trust funds themselves, an accounting of the funds, compensatory and punitive damages for conversion, breach of contract, unjust enrichment, and negligence, a declaratory judgment that it is entitled to these funds, and a permanent injunction against the disposal of relevant assets or evidence. (Id. ¶¶ 20-71). Plaintiff also included Defendants Pinnacle Financial Partners ("Pinnacle") and Access Financial Group, Inc. ("Access") for the express purpose of obtaining from these parties the trust funds and related materials allegedly in their possession. (Id. ¶ 19).
The lawsuit was removed to this Court on September 3, 2021, on the basis of diversity jurisdiction. (Not. Removal, ECF No. 1). Defendant Access Financial Group thereafter filed a Rule 12(b)(2) Motion to Dismiss for lack of personal jurisdiction, citing both the Mississippi long-arm statute and due process considerations. (Mot. Dismiss, ECF No. 4). Plaintiff filed a [13] Response, opposing both grounds for dismissal, to which Defendant [17] replied. The issues are fully briefed and now ripe for disposition by the Court.
DISCUSSION
I. Rule 12(b)(2) Motion to Dismiss Standard
" Federal Rule of Civil Procedure 12(b)(2) authorizes a defendant to assert by motion that the court lacks personal jurisdiction. ‘If the court has no jurisdiction over a defendant, the defendant has an unqualified right to have an order entered granting its motion to dismiss.’ " Scheaffer v. Albertson's LLC , No. H-21-2326, 2021 WL 4822159, at *4 (S.D. Tex. Oct. 15, 2021) (quoting Read v. Ulmer , 308 F.2d 915, 917 (5th Cir. 1962)). "If a party raises the defense of lack of personal jurisdiction, the non-moving party bears the burden of proving personal jurisdiction." Dontos v. Vendomation NZ Ltd. , 582 F. App'x 338, 342 (5th Cir. 2014) (citing Luv N’ Care, Ltd. v. Insta-Mix, Inc. , 438 F.3d 465, 469 (5th Cir. 2006) ).
" ‘Plaintiff bears the burden of establishing a district court's jurisdiction over a non-resident, but it need only make a prima facie case if the district court rules without an evidentiary hearing.’ " CEH Energy, LLC v. Kean Miller, LLP , 691 F. App'x 215, 216 (5th Cir. 2017) (quoting Johnston v. Multidata Sys. Int'l Corp. , 523 F.3d 602, 609 (5th Cir. 2008) ). " ‘The court may determine the jurisdictional issue by receiving affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery.’ " Kee v. Howard L. Nations, P.C. , No. 4:20CV127-SA-JMV, 2021 WL 4449986, at *2 (N.D.Miss. Sep. 28, 2021) (quoting Thompson v. Chrysler Motors Corp. , 755 F.2d 1162, 1165 (5th Cir. 1985) ). "When considering whether a plaintiff has made a prima facie case for jurisdiction, the court must take the uncontroverted allegations in the plaintiff's complaint as true." Kee , 2021 WL 4449986, at *2 (citing Cypress Pharms., Inc. v. CRS Mgmt., Inc. , 827 F. Supp. 2d 710, 716 (S.D. Miss. 2011) ).
II. Application to Defendant
"A federal court sitting in diversity may assert [personal] jurisdiction if (1) the state's long-arm statute applies, as interpreted by the state's courts; and (2) if due process is satisfied under the fourteenth amendment to the United States Constitution." Johnston v. Multidata Sys. Int'l Corp. , 523 F.3d 602, 609 (5th Cir. 2008). Here, Defendant argues that both Mississippi's long-arm statute and the Due Process Clause of the Fourteenth Amendment fail to justify the Court's exercise of personal jurisdiction.
First, Defendant argues that Mississippi's long-arm statute fails to vest the Court with personal jurisdiction. The statute provides:
Any nonresident person, firm, general or limited partnership, or any foreign or other corporation not qualified under the Constitution and laws of this state as to doing business herein, who shall make a contract with a resident of this state to be performed in whole or in part by any party in this state, or who shall commit a tort in whole or in part in this state against a resident or nonresident of this state, or who shall do any business or perform any character of work or service in this state, shall by such act or acts be deemed to be doing business in Mississippi and shall thereby be subjected to the jurisdiction of the courts of this state.
Miss. Code Ann. § 13-3-57. The long-arm statute therefore contains three prongs: the contract prong, the tort prong, and the doing business prong. Plaintiff appears to invoke all three prongs to justify personal jurisdiction over Defendant.
Under the contract prong, a nonresident is subject to personal jurisdiction in Mississippi if it enters into a contract with a Mississippi resident that is to be at least partially performed in Mississippi. Notably, the only relevant contract involving Defendant is a Third-Party Recordkeeping Agreement (TPA) with a Tennessee corporation, Denco Holdings, Inc. (See 3rd Party Recordkeeping Agmt., ECF No. 4-2); (see also Aff. Christopher Chigas, ¶¶ 9-10, ECF No. 4-1). Because the TPA involved two nonresidents, Plaintiff's use of the contract prong must fail. Further, the Court cannot base its personal jurisdiction on Plaintiff's theory that "Mississippi businesses ... rel[ied]" on the recordkeeping services contemplated in the TPA. See Martin & Martin v. Jones , 616 F. Supp. 339, 343 (S.D. Miss. 1985) ("Under Mississippi law, however, a third party beneficiary [of a contract between nonresidents] may not obtain in personam jurisdiction over a nonresident defendant by utilizing the contract prong of the long arm statute.") (quoting Johnson v. Warnaco, Inc. , 426 F. Supp. 44, 47 (S.D. Miss. 1976) ); see also Martin , 616 F. Supp. at 343 n. 3 ("[T]he long arm statute is to be construed liberally but is to be applied without enlargement of its provisions.") (citing Johnson , 426 F. Supp. at 47 ). The contract prong thereby fails to confer personal jurisdiction.
It should be noted that Plaintiff does not advance a breach of contract claim against Defendant Access. Plaintiff mentions Defendant Access in its breach of contract claim against Defendant SMCP, but the allegation asserts that SMCP "failed and refused to release and/or authorize" Access to release the disputed funds from the trust account. (Compl. ¶ 36-37, ECF No. 1-1).
Under the tort prong, a nonresident is subject to personal jurisdiction if any of the elements—or any part of an element—of the tort allegedly committed by the defendant took place in Mississippi. Allred v. Moore & Peterson , 117 F.3d 278, 282 (5th Cir. 1997). Although the Complaint broadly alleges negligence against plural "Defendants" (Id. ¶¶ 66-71), Plaintiff also specifies that it involved Access to obtain a court order that Access relinquish the trust funds in dispute and provide certain paperwork relating to them. (Id. ¶ 19). Plaintiff has since elaborated on the extent to which it seeks to hold Access liable for negligence. Specifically, Plaintiff says in its response brief that it has "allege[d] Negligence in that funds from certain trusts were not properly maintained nor were they transferred as required by this Transaction." (Resp. Opp. Mot. Dismiss, 6, ECF No. 13). Plaintiff has also [14] moved to amend its Complaint to assert "that Plaintiff foreseeably relied on information provided by Defendants, as both trustee and recordkeeper of trust account funds which Defendants are believed to have negligently maintained." (Am. Compl. ¶ 19, ECF No. 14-1). Hence, the long-arm statute may provide personal jurisdiction if these alleged negligent acts or parts thereof were committed in Mississippi.
Defendant resists this "negligent maintenance" claim substantively. The provided affidavit declares that Access served only as recordkeeper, never "as trustee for any of the preneed funeral or cemetery trusts that are the subject of this lawsuit," "nor has it ever been in possession of any preneed funeral or cemetery trust funds." (Aff. Christopher Chigas ¶¶ 16-17, ECF No. 4-1). This affidavit evidence stands uncontested. The Court need not regard this evidence, however, as Plaintiff's allegations fail to confer personal jurisdiction on their own terms.
In deciding this question, the Court must distinguish between the injury and its resultant consequences. The term "injury" refers to "invasion of any legally protected interest of another", while the term "damage" means the "harm, detriment or loss sustained by reason of an injury." Jobe v. ATR Mktg., Inc. , 87 F.3d 751, 753 (5th Cir. 1996). Hence, the "tort occurs where and when the actual injury takes place, not at the place of the economic consequences of the injury." Cycles, Ltd. v. W.J. Digby, Inc. , 889 F.2d 612, 616 (5th Cir. 1989). The case law illustrates this principle at work. In the case of Walker v. World Ins. Co. , plaintiff insureds sued their insurer as well as a third-party nonresident business which had contracted with the insurer to make medical necessity determinations for certain claims. 289 F. Supp. 2d 786, 787 (S.D. Miss. 2003). Although the plaintiffs alleged "negligent infliction of emotional distress" in the contested medical necessity determination, the Court agreed with the third-party business that the tort prong of the long-arm statute did not confer personal jurisdiction. Id. at 788-89. "The actual injury or tort underlying Plaintiffs’ emotional distress claim is the alleged wrongful preparation by [the nonresident business] of the determination regarding Plaintiffs’ insurance claim(s)," and all such activities "related to the preparation of the determination occurred in Iowa." Id. at 789 (citing Jobe v. ATR Marketing, Inc. , 87 F.3d 751 (5th Cir. 1996) ) (emphasis in original).
Likewise, here, there is no allegation that Defendant committed the tortious "negligent maintenance" of the relevant trust funds anywhere in the state of Mississippi. (See Am. Compl. ¶ 19, ECF. No. 14-1). Neither the Complaint nor the proposed amendments establish the location of the trust funds or any negligent maintenance thereof, and it was Plaintiff's responsibility to do so. CEH Energy, LLC , 691 F. App'x at 216. Although Plaintiff may have experienced financial injury in Mississippi or elsewhere, it "may not rely on the location of the resulting consequence of the tort to establish personal jurisdiction." Walker , 289 F. Supp. 2d at 789 ; see also Roxco, Ltd. v. Harris Specialty Chems., Inc. , 133 F. Supp. 2d 911, 915-16 (S.D. Miss. 2000) ("Roxco here merely alleges that it suffered some form of economic consequence in Mississippi as a result of an alleged tort caused by defendants.... Since Roxco is merely describing the alleged consequences of an injury, ... Roxco cannot establish personal jurisdiction under the tort prong of Mississippi's Long-Arm Statute."). Hence, Plaintiff's theory under the tort prong fails to justify exercise of personal jurisdiction over Defendant.
Under the doing business prong, a nonresident is subject to jurisdiction if it has conducted any type of business in Mississippi. Walker , 289 F. Supp. 2d at 788. This prong requires that (1) the nonresident purposefully do some act or consummate a transaction in Mississippi, and (2) the assumption of jurisdiction by Mississippi not offend traditional notions of fair play and substantial justice. Internet Doorway, Inc. v. Parks , 138 F. Supp. 2d 773 (S.D. Miss. 2001) (citing Gross v. Chevrolet Country, Inc. , 655 So. 2d 873, 877 (Miss. 1995) ). Plaintiff does not specify the act or transaction performed by Defendant in Mississippi which would justify this Court's exercise of personal jurisdiction thereover. Indeed, the Court already found that Plaintiff did not locate its allegations of "negligent maintenance" of trust funds in Mississippi.
An additional requirement—a connection between the act or transaction that occurred in Mississippi and the claims asserted in the lawsuit—was abolished in 1991 by the Mississippi Legislature. Gross , 655 So. 2d at 877.
Therefore, the Mississippi long-arm statute fails to confer personal jurisdiction over Defendant Access. The Court pretermits consideration of the due process factors, because the long-arm statute must be independently satisfied to establish personal jurisdiction over a nonresident. See Walker , 289 F. Supp. 2d at 789 ("Because [the defendant] is not amenable to jurisdiction under the long-arm statute, the Court need not analyze whether it is subject to jurisdiction under a due process analysis.")
Due process requires a plaintiff to prove (1) that the defendant purposely availed itself of the benefits and protections of the forum state by establishing "minimum contacts" with the state; and (2) that the exercise of jurisdiction does not offend "traditional notions of fair play and substantial justice." Johnston , 523 F.3d at 609.
IT IS THEREFORE ORDERED AND ADJUDGED that the [4] Motion to Dismiss filed by Defendant, Access Financial Group, Inc., is GRANTED.
SO ORDERED AND ADJUDGED this the 17th day of November, 2021.