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Childress Cattle, LLC v. Cain

United States District Court, W.D. Kentucky, Louisville Division

August 9, 2017

CHILDRESS CATTLE, LLC PLAINTIFF
v.
CHRISTIE CAIN AND R & C CAIN FARMS DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          JOSEPH H. MCKINLEY, JR., CHIEF JUDGE UNITED STATES DISTRICT COURT.

         This matter is before the Court on Defendants' Motion to Dismiss [DN 3], Plaintiff's Motion for Default Judgment [DN 7-1], Plaintiff's Motion for Leave to File Responsive Pleading [DN 8], Plaintiff's Motion to Strike [DN 12], and Defendants' Motion for Leave to File a Sur-Reply for Motion for Default Judgment [DN 13]. Fully briefed, these matters are ripe for decision.

         I. Background

         Plaintiff Childress Cattle, LLC (hereinafter “Childress”) operates as a cattle broker, selling cattle that it acquires from various stockyards to interested buyers. (Compl. [DN 1-2] ¶ 5.) Defendant R & C Cain Farms (hereinafter “Cain Farms”) is in the business of buying cattle and was a customer of Childress' for several years prior to this action. (Id. ¶ 6.) Cain Farms was owned and operated by Roger Cain, now deceased. (Id. ¶ 3.) Plaintiff alleges that Roger Cain and his wife, Christie Cain, were partners in Cain Farms. (Id.) During these years, Cain Farms entered into several oral contracts with Childress in which Childress was to deliver cattle to Cain Farms and, in return, Cain Farms was to tender the agreed upon price. (Id. ¶ 6.) As of September 9, 2015, Cain Farms' account with Childress was paid in full. (Id. ¶ 8.) Between September 9, 2015 and December 22, 2015, Cain Farms ordered and received eight shipments of cattle from Childress for a total of $675, 239.63. (Id. ¶ 21.) As of December 22, 2015, Cain Farms' had remitted payments totaling $380, 607.65. (Id.) Since then, Cain Farms has failed to tender further payment, leaving an outstanding balance of $294, 631.98 as of April 28, 2017. (Id.) Due to this nonpayment, Childress contacted Christie Cain of Cain Farms many times requesting payment and informing Cain Farms of its intent to repossess the cattle; however, Cain Farms still failed to tender prompt payment. [Id.] Childress was unable to repossess the cattle, as it believes the cattle have all been sold. [Id.] As such, Childress filed suit on June 23, 2017 alleging breach of contract, breach of oral contract, conversion, and quantum meruit against Cain Farms and Christie Cain. (Id. ¶¶ 24-45.)

         Before the Court now is Defendants' Motion to Dismiss premised upon a lack of personal jurisdiction, a lack of subject matter jurisdiction, improper service of process, and improper venue. In addition, various other motions are now before the Court as well. The Court will address each in turn.

         II. Discussion

         A. Motion to Dismiss

         Defendants' Motion to Dismiss sets forth several theories for relief, including: lack of personal of personal jurisdiction, a lack of subject matter jurisdiction, improper service of process, and improper venue.

         1. Personal Jurisdiction

         a. Standard of Review

         The party asserting personal jurisdiction has the burden of showing that such jurisdiction exists. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). Personal jurisdiction is “[a]n essential element of the jurisdiction of a district . . . court” and without personal jurisdiction the court is “powerless to proceed to an adjudication.” Employers Reinsurance Corp. v. Bryant, 299 U.S. 374, 382 (1937); Schall v. Suzuki Motor of Am., Inc., No. 4:14-CV-00074-JHM, 2017 WL 2059662, at *1 (W.D. Ky. May 12, 2017). When a district court rules on a Rule 12(b)(2) motion to dismiss without an evidentiary hearing, the plaintiff need only make a “prima facie” case that the court has personal jurisdiction. See, e.g., Conn v. Zakharov, 667 F.3d 705, 711 (6th Cir. 2012).

         “In a diversity case, a federal court determines whether personal jurisdiction exists over a nonresident defendant by applying the law of the state in which it sits.” Third Nat. Bank in Nashville v. WEDGE Grp. Inc., 882 F.2d 1087, 1089 (6th Cir. 1989) (citing American Greetings Corp. v. Cohn, 839 F.2d 1164, 1167 (6th Cir.1988)); see also First Nat. Bank of Louisville v. J. W. Brewer Tire Co., 680 F.2d 1123, 1125 (6th Cir. 1982). Thus, the Court will apply Kentucky law. Kentucky's long-arm statute permits Kentucky courts to exercise personal jurisdiction over certain nonresident defendants. Churchill Downs, Inc. v. NLR Entm't, LLC, No. 3:14-CV-166-H, 2014 WL 2200674, at *5 (W.D. Ky. May 27, 2014) (citing KRS § 454.210). However, “the Kentucky Supreme Court [has] clarified that this statute is not co-extensive with federal due process.” Id. (citing Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51, 56 (Ky. 2011)). A plaintiff's claims must instead “meet one of the nine explicit categories of the long-arm statute, even if federal due process would otherwise permit personal jurisdiction.” Id. In order to assert personal jurisdiction over a defendant under the Kentucky long-arm statute, a plaintiff must show: “(1) [the defendant's] conduct falls under a statutory category identified in KRS § 454.210(2)(a), and (2) [the plaintiff's] claim ‘arises from' that statutory provision.” Id. (citing Caesars, 336 S.W.3d at 58). Under the second prong, “[a] claim ‘arises from' certain conduct when there is a ‘reasonable and direct nexus' between the conduct causing injury and the defendant's activities in the state.” Id. (citing Caesars, 336 S.W.3d at 59).

         Upon a finding that the above requirements are met, each defendant must “have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Hinners v. Robey, 336 S.W.3d 891, 897 (Ky. 2011) (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

         b. Parties to the Action Generally

         Both Defendants here, Cain Farms and Christie Cain, contend that Childress' Complaint should be dismissed for lack of personal jurisdiction. Specifically, Cain Farms, as an Indiana entity, and Christie Cain, as an Indiana resident, argue that they are not subject to personal jurisdiction under the Kentucky long-arm statute or the Due Process Clause due to their lack of contacts with the Commonwealth of Kentucky.

         In its Complaint, Childress alleges that Cain Farms is a partnership and that Roger and Christie Cain were both general partners. Defendants argue that Cain Farms was in fact a sole proprietorship and that Christie Cain was neither a partner nor an agent of the sole proprietorship, rather, she was simply Roger Cain's wife. Though these matters may be dispositive as to the claims against the Defendants individually, here, the Court will take all allegations in the well-pleaded complaint as true and save all questions of material fact for later proceedings. Johnson v. Kentucky Youth Research Ctr., Inc., 682 S.W.2d 799, 800 (Ky. Ct. App. 1985) (assuming the allegations in the complaint as true, that defendant was a sole proprietorship, and saving the question of whether the entity was a sole proprietorship or a partnership for summary judgment).

         Plaintiff has plausibly shown that Cain Farms was a partnership and Christie Cain was a partner because the name of the entity-R & C Cain Farms-reflects Roger and Christie Cain's initials, Christie signed checks on behalf of R & C Cain Farms to pay for the cattle at issue, the checks Christie signed were issued from R & C Cain Farms' checking account rather than a personal account, Christie fielded phone calls from Bonnie Childress regarding payment for the cattle, and Christie corresponded with Childress regarding payment and cattle after Roger's death. These facts give rise to the reasonable inference that a general partnership was formed. Therefore, for the purposes of this Opinion, Cain Farms will be treated as a partnership and Christie Cain as a partner. Accordingly, the Court must determine that each Defendant is subject to jurisdiction in the Commonwealth sufficient to satisfy the long-arm statute and that each Defendant had minimum contacts with the Commonwealth of Kentucky in order to properly assert personal jurisdiction.

         c. Cain Farms

         As to Cain Farms, “a partner's actions may be imputed to the partnership for the purpose of establishing minimum contacts.” Guy v. Layman, 932 F.Supp. 180, 182 (E.D. Ky. 1996) (quoting Sher v. Johnson, 911 F.2d 1357, 1366 (9th Cir. 1990)); see also Stirling v. Hunt, No. 12-2737, 2013 WL 3328674, at *9 (W.D. Tenn. July 1, 2013) (adopting the reasoning in Guy, 932 F.Supp. at 182). Thus, Roger and Christie Cain's contacts with Kentucky will be examined in order to determine if this Court has sufficient personal jurisdiction over Cain Farms.[1]

         i. Long-Arm Statute

         Childress argues that this court has personal jurisdiction over Cain Farms pursuant to Kentucky's long-arm statute, KRS § 454.210, as Cain Farms is a nonresident of Kentucky. This requires two separate showings by Childress, as the Court must both determine “(1) whether the law of the state in which the district court sits authorizes jurisdiction, and (2) whether the exercise of jurisdiction comports with the Due Process Clause.” Brunner v. Hampson, 441 F.3d 457, 463 (6th Cir. 2006).

         As to the first requirement, the Kentucky Supreme Court has found that the statute requires a two-prong showing before a court can exercise personal jurisdiction over a nonresident. Ceasar's, 336 S.W.3d at 57. First, the Court must find that a nonresident's conduct or activities fall within one of nine enumerated subsections in KRS § 454.210. Id. at 58. Second, the Court must determine if the plaintiff's claims arise from the defendant's actions. Id. This requires a showing of “a reasonable and direct nexus between the wrongful acts alleged in the complaint and the statutory predicate for long-arm jurisdiction[.]” Id. at 59.

         The Court finds that Cain Farms' activities in the state constitute “transacting any business in this Commonwealth, ” the first of the nine possibilities for jurisdiction under KRS § 454.210. “Courts construing the definition of “transacting business” have defined the terms using their plain meaning. Black's Law Dictionary defines ‘transact' as ‘[t]o carry on or conduct (negotiations, business, etc.) to a conclusion.'” Aces High Coal Sales, Inc. v. Cmty. Tr. & Bank of W. Georgia, No. CV 15-161-DLB-HAI, 2017 WL 3122661, at *14 (E.D. Ky. July 21, 2017) (citing Bayou City Expl., Inc. v. Consumer Advocate Servs. Enters., LLC, No. 1:14-CV-99-DJH, 2015 WL 4094259, at *3 (W.D. Ky. July 7, 2015)). “[T]he key inquiry in personal jurisdiction cases concerns the activities of the defendant, not the plaintiff.” Philmo, Inc. v. Checker Food Holding Co., No. 1:15-CV-00098-JHM, 2016 WL 1092862, at *3 (W.D. Ky. Mar. 21, 2016) (quoting Spectrum Scan, LLC v. AGM CA, No. 3:07 CV 72 H, 2007 WL 2258860, at *3 (W.D. Ky. Aug. 2, 2007)). The Court must consider that, “a contract with a Kentucky company [does] not alone support the exercise of jurisdiction over a nonresident [d]efendant under KRS 454.210(2)(a)(1).” Churchill Downs, 2014 WL 2200674, at *6 (citing Spectrum Scan, 2007 WL 2258860, at *2-3); see also Calphalon Corp. v. Rowlette, 228 F.3d 718, 722 (6th Cir. 2000) (“[T]he mere existence of a contract . . . is insufficient to confer personal jurisdiction over [a non-resident defendant]”). Instead, “Kentucky courts have required a course of direct, affirmative actions within a forum that result in or solicit a business transaction.” Gentry v. Mead, No. CV 16-100-DLB-CJS, 2016 WL 6871252, at *3 (E.D. Ky. Nov. 21, 2016) (quoting Modern Holdings, LLC v. Corning, Inc., No. 13-CV-405, 2015 WL 1481443, at *6 (E.D. Ky. Mar. 31, 2015)).

         Here, Cain Farms' conduct amounted to that necessary to confer jurisdiction under the Kentucky long-arm statute. Cain Farms entered into several contracts within the state between 2011 and 2016, performed and paid-in full on those contracts, entered into eight oral contracts between September 9, 2015 and November 9, 2015 alone, partially paid on those 2015 contracts, contacted Childress and was contacted by Childress numerous times regarding these and all contracts between 2011 and 2015, and maintained an ongoing business relationship with Childress Cattle in the state for a number of years. Further it is clear that the contracts created between Cain Farms and Childress have given rise to the instant action, meaning there is a “reasonable and direct nexus between the conduct causing injury and the defendant's activities in the state, ” Caesars, 336 S.W.3d at 59, as the nonpayment on these contracts provide the basis for the instant suit. Based on these facts, and because the parties do not dispute the fact that Cain Farms transacted business in Kentucky under the long-arm statute, Cain Farms' conduct sufficiently falls within the provision of the long-arm statute permitting personal jurisdiction over any nonresident defendant “transacting any business in this [C]ommonwealth.” KRS § 454.210(2)(a)(1); see Phoenix Process Equip. Co. v. Capital Equip. & Trading Corp., No. 3:16-CV-00024-JHM, 2017 WL 157834, at *3 (W.D. Ky. Jan. 13, 2017); Philmo, No. 1:15-CV-00098-JHM, 2016 WL 1092862, at *3 (collecting cases).

         ii. Due ...


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