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Bally Gaming, Inc. v. Caldwell

United States District Court, S.D. Mississippi, Northern Division

March 28, 2014


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For Bally Gaming, Inc., Plaintiff: Donald Alan Windham, Jr., LEAD ATTORNEY, Benjamin Bryant, William C. Reeves, BALCH & BINGHAM, LLP - Jackson, Jackson, MS.

For Michael Caldwell, Defendant: Jason S. McCarter - PHV, LEAD ATTORNEY, PRO HAC VICE, SOUTHERLAND, ASBILL & BRENNAN, LLP - Atlanta, Atlanta, GA; Samuel Justin Casey - PHV, LEAD ATTORNEY, PRO HAC VICE, SUTHERLAND, ASBILL & BRENNAN, LLP - Atlanta, Atlanta, GA; Clint D. Vanderver, Philip A. Gunn, WELLS, MARBLE & HURST, PLLC, Ridgeland, MS.


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This cause is before the Court on the defendant Michael Caldwell (" Caldwell" )'s motion to dismiss (docket entry 5), and motion to strike plaintiff's punitive damages claim (docket entry 7). Having carefully considered the motions and the plaintiff Bally Gaming, Inc. (" Bally" )'s responses, the memoranda of the parties and the applicable law, and being fully advised in the premises, the Court finds as follows:

Bally, a Nevada corporation, brought this action against Caldwell, an officer of Delta Investments & Development LLC (" Delta" ), a bankrupt Nevada corporation. Caldwell is a resident citizen of the State of South Carolina. Caldwell moves to dismiss pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1), 12(b)(2), and 12(b)(6) on grounds of lack of subject matter jurisdiction, lack of personal jurisdiction, and failure to state a claim for which relief can be granted.

Delta was the owner and operator of the Grand Station Casino (" Casino" ), which it operated on a vessel located in Vicksburg, Mississippi, known as the " Star of Vicksburg" (" Vessel" ), and the Grand Station Hotel (" Hotel" ). It acquired the Casino, Vessel and Hotel in December of 2010 for a purchase price of $3.25 million. Delta then sold its interest in the Hotel in March of 2011 to Great Southern Investment Group, Inc., for $2.1 million. Delta and Bally subsequently entered discussions regarding the use of Bally games in the Casino. In May of 2011, Bally made a $3 million loan to Delta to be used for renovation and operation of the Casino, and Delta executed certain loan documents including a Secured Promissory Note, a Loan Agreement, and a Preferred Ship Mortgage encumbering the Vessel. Delta subsequently defaulted on the loan. In April of 2012, Delta filed for bankruptcy in the Southern District of Mississippi. The proceeding has been converted to one under Chapter 7 of the Bankruptcy Code and remains pending as Case Number 12-01160-NPO.

Bally brings the present action against Caldwell for fraud, negligent misrepresentation, and director or officer liability. Caldwell asserts that he has not purposely availed himself of the jurisdiction of this Court and requests that he be dismissed for lack of personal jurisdiction. Neither plaintiff nor defendant has requested an evidentiary hearing. When a district court rules on a motion to dismiss for lack of personal jurisdiction without an evidentiary hearing, the plaintiff must only make a prima facie case that jurisdiction is proper. Quick Techs., Inc. v. Sage Group, PLC, 313 F.3d 338, 343 (5th Cir. 2002). In determining whether a prima facie case for personal jurisdiction exists, a court must accept the uncontroverted allegations in the plaintiff's complaint as true, and all factual conflicts contained in the parties' affidavits must be resolved in favor of the plaintiff. Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990).

A federal court sitting in diversity may exercise personal jurisdiction only to the extent allowed a state court under applicable state law. Allred v. Moore & Peterson, 117 F.3d 278, 281 (5th Cir. 1997). " A state court or a federal court sitting in diversity may assert 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." Id. at 281 (quoting Cycles, Ltd. v. W.J. Digby, Inc., 889 F.2d 612, 616 (5th Cir. 1989)). However, if Mississippi law does not provide for the assertion of personal jurisdiction, the court need not consider

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the due process issue. Cycles, 889 F.2d at 616.

Mississippi's long-arm statute provides:

Any nonresident person ... 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 subject to the jurisdiction of the courts of this state.

Miss. Code Ann. § 13-3-57. Thus, a court may exercise jurisdiction over a defendant if (1) the defendant entered into a contract with the plaintiff to be performed in whole or in part in Mississippi (the contract prong); (2) the defendant committed a tort, in whole or in part, against a plaintiff in Mississippi (the tort prong); or (3) the defendant was " doing business" in Mississippi (the " doing business" prong). See Roxco, Ltd. v. Harris Specialty Chems, Inc., 133 F.Supp.2d 911, 915 (S.D.Miss. 2000).

Although Bally is a Nevada corporation, it is qualified to do business in Mississippi; therefore, it is a " resident" within the meaning of Mississippi's long-arm statute and is entitled to utilize its provisions. Breeland v. Hide-A-Way Lake, Inc., 585 F.2d 716, 720 (5th Cir. 1978)(citing C.H. Leavell & Co. v. Doster, 211 So.2d 813 (Miss. 1968)). Bally asserts that Caldwell is amenable to the personal jurisdiction of Mississippi ...

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