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Omni Technologies, LLC v. Know Ink, LLC

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

September 27, 2019

OMNI TECHNOLOGIES, LLC PLAINTIFF
v.
KNOW INK, LLC DEFENDANT

          MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT KNOW INK, LLC’S MOTION [7] TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND LACK OF PROPER VENUE AND DENYING DEFENDANT KNOW INK, LLC’S ALTERNATIVE MOTION [7] TO TRANSFER VENUE

          HALIL SULEYMAN OZERDEN UNITED STATES DISTRICT JUDGE

         THIS MATTER IS BEFORE THE COURT on Defendant Know Ink, LLC’s Motion [7] to Dismiss for Lack of Personal Jurisdiction and Lack of Proper Venue Or, in the Alternative, Motion to Transfer Venue. After review of the Motion, the record, and relevant legal authority, the Court finds that it lacks personal jurisdiction over Defendant Know Ink, LLC, and the Motion [7] to Dismiss for Lack of Personal Jurisdiction should be granted. The Court further finds that the alternative Motion [7] to Transfer Venue should be denied.

         I. BACKGROUND

         A. Factual background

         This matter arises out of a distributorship agreement entered into between Plaintiff Omni Technologies, LLC (“Plaintiff” or “Omni”), and Defendant Know Ink, LLC (“Defendant”). Compl. [1] at 2. Plaintiff is a Mississippi limited liability corporation, id. at 1, with its principal place of business in Mississippi, Mem. in Opp’n [13] at 1. Defendant is a Missouri limited liability corporation, Compl. [1] at 1, and both of its members reside in Missouri. Id.

         The parties’ business relationship began on July 21, 2015, when they entered into a contract under which Plaintiff would act as the sole distributor of Defendant’s election management software in the States of Mississippi and Alabama (“July 2015 Contract”). Id. Plaintiff and Defendant later renegotiated the July 2015 Contract and entered into two separate agreements on March 31, 2017, one covering Alabama and all of its counties (“Alabama Contract”), Compl. [1] at 3, and one covering the following counties in Mississippi: Jones, Hancock, Oktibbeha, Pearl River, Warren, George, Tippah, Benton, Attala, Tallahatchie, Yazoo, Prentiss, Chickasaw, Leflore, Jasper, Sunflower, Grenada, Bolivar, Noxubee, and Lowndes (“Mississippi Contract”), Mississippi Contract [12-4] at 11. Plaintiff alleges that it signed the Alabama Contract in its office in Bay St. Louis, Mississippi, Aff. of Rodney Necaise [12-1] at 1, while Defendant contends this Contract was accepted in St. Louis, Missouri, Aff. of Kevin Schott [7-3] at 1. Under the terms of both contracts, Plaintiff had the sole and non-assignable right to market, promote, and solicit orders on behalf of Defendant in the respective territory covered by each agreement. Compl. [1] at 3; Mississippi Contract [12-4] at 2.

         During the time the contracts were in effect, Defendant shipped marketing materials to Plaintiff’s Bay St. Louis office and conducted training sessions of Plaintiff’s principals there. Aff. of Rodney Necaise [12-1] at 2. Defendant also attended conferences in Mississippi. Id.; Aff. of Kevin Schott [7-3] at 2.

         As of September 1, 2017, nine counties in Alabama had purchased Defendant’s software. Compl. [1] at 3. Plaintiff alleges that Defendant failed to pay Plaintiff commissions due on sales in these nine counties and four other counties in Alabama, in an amount of no less than $197, 036.00. Id. Plaintiff also contends that it was denied the opportunity to provide technical support to these thirteen Alabama counties, which would have generated additional income over a period of three to five years. Id.

         In connection with the Alabama Contract, on April 2, 2018, Defendant forwarded to Plaintiff correspondence titled, “Notice to Cure Breach of Contract and Demand Compliance with Distributor Responsibilities, ” id., which gave Plaintiff thirty days to cure certain alleged breaches identified in the letter, Correspondence April 2, 2018 [12-6] at 1. Plaintiff disputes whether it breached the Alabama Contract with Defendant. Compl. [1] at 4.

         B. Procedural history

         Plaintiff filed suit in this Court on October 15, 2018, advancing claims for breach of contract, bad faith, conversion, unjust enrichment, and open account. Id. at 4-6. The bad faith, conversion, unjust enrichment, and open account causes of action are based upon facts alleged in the Complaint that pertain only to the Alabama Contract. Id. at 2-6. Specifically, these relate to the alleged failure of Defendant to pay Plaintiff commissions on software sales in Alabama. Id. at 4-6. Mississippi is referenced only in the breach of contract claim, where Plaintiff states merely that “Omni contracted with Know Ink to present and sell Know Ink’s election management software in Mississippi and Alabama in return for commissions.” Id. at 4. The alleged breach is described as “failing to remit payment as agreed and denying Omni’s participation in the sales.” Id. This allegation incorporates the facts stated earlier in the Complaint, id., which only allege that Defendant failed to pay Plaintiff commissions on Alabama sales and denied Plaintiff participation in sales in Alabama, id. at 3. The Complaint is devoid of any allegation that Defendant failed to pay any commissions on Mississippi sales or prevented Plaintiff from participating in sales in Mississippi. See Id . Based on the Complaint in its entirety, although Mississippi is mentioned in the breach of contract claim, the Complaint does not allege any harm that occurred under, or actual breaches of, the Mississippi Contract.

         Defendant filed the present Motion [7] to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) and 12(b)(3), asserting that the Court lacks personal jurisdiction over it and that venue here is improper. Mot. [7] at 1. The Motion also requests that, as an alternative to dismissal, the Court transfer the case to the Eastern District of Missouri. Mot. [7] at 2. Defendant maintains that it does not have the requisite minimum contacts with the State of Mississippi to satisfy the requirements of Mississippi’s long-arm statute and the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Id. Defendant further maintains that venue here is improper because this district does not fall into any of the three statutory categories set forth in 28 U.S.C. § 1391. Mem. in Supp. [8] at 13. Defendant relies on the argument that almost no part of the events sued upon occurred in Mississippi, and those actions that did occur in Mississippi were only tangentially related to the harm actually alleged in the Complaint. Id. at 4, 15.

         Plaintiff’s Response [12] in Opposition contends that personal jurisdiction over Defendant comports with the Mississippi long-arm statute and the Due Process Clause, because Defendant had sufficient minimum contacts with Mississippi, specifically, the Mississippi Contract and shipment of Defendant’s products, technical materials, and sales materials to Mississippi. Mem. in Opp’n [13] at 5-6. Plaintiff does not directly respond to the alternative Motion [7] to Transfer Venue but does assert that customers and potential customers of the Mississippi and Alabama Contracts reside in Mississippi and Alabama. Mem. in Opp’n [13] at 13.

         In reply, Defendant counters that there is no personal jurisdiction in Mississippi because the Mississippi Contract was not “actually performed in whole or in part in Mississippi.” Reply [15] at 3 (emphasis in original). Further, it argues that the Alabama Contract has no factual connection to Mississippi and the Mississippi contacts Plaintiff alleges are insufficient to meet the nexus requirement under the Due Process analysis. Id. at 3-6. Defendant submits that the requirements of both the Mississippi long-arm statute, Miss. Code Ann. § 13-3-57, and Due Process are not satisfied, and this Court should not assume jurisdiction over it.

         II. DISCUSSION

         A. Personal jurisdiction and Rule 12(b)(2)

         “Where a court finds it lacks personal jurisdiction, it may dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(2).” Herman v. Cataphora, Inc., 730 F.3d 460, 466 (5th Cir. 2013). “[T]he party seeking to invoke the power of the court . . . bears the burden of establishing jurisdiction but is required to present only prima facie evidence.” Pervasive Software, Inc. v. Lexware GMBH & Co. KG, 688 F.3d 214, 219 (5th Cir. 2012) (quotation omitted). In determining whether a prima facie case exists, this Court must accept as true a plaintiff’s uncontroverted allegations and resolve in the plaintiff’s favor all conflicts between the jurisdictional facts contained in the parties’ affidavits and other documentation. See Id . at 219-20 (quotation omitted); Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002) (“In considering a motion to dismiss for lack of personal jurisdiction, a district court may consider affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery.”) (quotation omitted).

         To ascertain whether personal jurisdiction exists over a party, this Court follows a two-step analysis. ITL Int’l, Inc. v. Constenla, S.A., 669 F.3d 493, 496 (5th Cir. 2012). First, the Court must examine whether Defendant is amenable to suit under the Mississippi long-arm statute. Id. at 496-97. Next, it must evaluate whether the exercise of personal jurisdiction comports with the Due Process Clause of the Fourteenth Amendment. Id. at 497. If Mississippi law does not support the exercise of personal jurisdiction, the Court need not reach the Due Process question. Cycles, Ltd. v. W.J. Digby, Inc., 889 F.2d 612, 621 (5th Cir. 1989).

         B. The Mississippi long-arm statute

         “Federal Rule of Civil Procedure 4(k)(1)(A) confers personal jurisdiction over any defendant who would be subject to personal jurisdiction under the long-arm statute of the state in which the district court sits.” ITL Int’l, Inc., 669 F.3d at 497.

         The Mississippi long-arm statute provides, in relevant part, as follows:

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. Mississippi courts interpret this statute as authorizing

“three activities” which will permit Mississippi courts to exercise personal jurisdiction over a nonresident defendant: “(1) if that person has entered into a contract to be performed in Mississippi; (2) has committed a tort in Mississippi; or, (3) is conducting business in Mississippi.”

Dunn v. Yager, 58 So.3d 1171, 1184 (Miss. 2011) (quoting Yatham v. Young, 912 So.2d 467, 469-70 (Miss. 2005)); see also Miss. Code Ann. § 13-3-57. The three prongs of Mississippi’s long-arm statute are commonly referred to as “the contract prong, the tort prong, and the ...


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