Opinion ID: 75842
Heading Depth: 2
Heading Rank: 1

Heading: Personal Jurisdiction over the Corporate Defendants

Text: 19 The Corporate Appellants argue that district court's entry of summary judgment on the reverse alter ego claim should be vacated because the district court lacked personal jurisdiction over them. They contend that they are not residents of Georgia but are separate and distinct entities organized under Florida law, that none of the transactions took place in Georgia, and that there was no nexus shown to connect them to Georgia. They also maintain that the district court's factual findings are not supported by the record. 20 On remand, the district court found that the Corporate Defendants had the requisite contacts to satisfy due process for the exercise of general jurisdiction. Specifically, the court found that MFIP's contacts were established by its maintenance of financial records and business information in Atlanta, Georgia, use of a Georgia mailing address, employment of Georgia accountants, use and maintenance of an Atlanta, Georgia bank account, interest in a Georgia polo farm, and entry into a joint venture agreement which contained Georgia choice-of-law and forum selection clauses and lease which called for the application of Georgia law. R34-357-4-5. The court found that MBI's maintenance of accounting and financial records in Georgia, procurement of services for accounting, bookkeeping, banking and administration in Georgia, and signature on documents calling for the application of Georgia law were sufficient contacts to support the exercise of jurisdiction. Id. at 6-7. The court found that its jurisdiction was warranted over PFH by its maintenance of financial records and procurement of accounting services in Atlanta, and its banking transactions through MFIP's Atlanta bank account. Id. at 7-8. 21 We review a district court's determinations regarding personal jurisdiction de novo, Francosteel Corp. v. M/V Charm, 19 F.3d 624, 626 (11th Cir.1994), and review the district court's findings of fact for clear error. Honduras Aircraft Registry, Ltd. v. Gov't of Honduras, 129 F.3d 543, 546 (11th Cir.1997). In a diversity action, a federal court has personal jurisdiction over a non-resident defendant to the extent permitted by the forum state's long-arm statute. Moore v. Lindsey, 662 F.2d 354, 357-58 (5th Cir. Unit B 1981). The Georgia long-arm statute provides for the exercise of personal jurisdiction over any nonresident ... if in person or through an agent, he: (1) Transacts any business within this state; ... or (4) Owns, uses, or possesses any real property situated within this state. O.C.G.A. § 9-10-91. The statute confers jurisdiction to the maximum extent permitted by due process. SES Indus., Inc. v. Intertrade Packaging Mach. Corp., 236 Ga.App. 418, 512 S.E.2d 316, 318 (Ga.Ct.App.1999) (citation omitted). Under due process, the nonresident must have fair warning that a particular activity may subject them to the jurisdiction of a foreign sovereign. Id. (internal quotation marks and citation omitted). In determining whether the nonresident was provided with fair warning, a court should consider whether the nonresident's conduct and connection with the forum state are such that the nonresident should reasonably anticipate being haled into court there, Coopers & Lybrand v. Cocklereece, 157 Ga.App. 240, 276 S.E.2d 845, 850 (Ga.Ct.App.1981), and whether the nonresident acted to avail itself of the forum state's law, the claim relates to those acts, and the exercise of jurisdiction is reasonable. SES Indus., Inc., 512 S.E.2d at 318. 22 In actions arising directly or indirectly from business transacted in the state, the Georgia courts construe the term transacting any business most liberally [] to uphold the jurisdiction of the court. Brooks Shoe Mfg., Inc. v. Byrd, 144 Ga.App. 431, 241 S.E.2d 299, 300-01 (Ga.Ct.App.1977) (internal citation omitted); Shellenberger v. Tanner, 138 Ga.App. 399, 227 S.E.2d 266, 274 (Ga.Ct.App.1976) (interpreting the prior version of the long arm statute and holding that the minimum contact requirement was satisfied ipso facto by a showing that the nonresident transacted business in Georgia and that the cause of action arose from that transaction). The Georgia courts have found that the minimum contact requirement is satisfied where a substantial connection existed between [the nonresident], the controversy, and property [that the nonresident owned] within the state, Forrister v. Manis Lumber Co., 232 Ga.App. 370, 501 S.E.2d 606, 609 (Ga.Ct.App.1998), and where the nonresident, through a third-party, initiates and negotiates a contract with a Georgia resident and travels to Georgia to inspect the subject of the contract and to sign the final sales order. SES Indus., Inc., 512 S.E.2d at 318. Jurisdiction is determined based on the totality of the circumstances and on consideration of whether the defendant purposely availed itself of the privilege of conducting business activities within Georgia and has thereby invoked the benefits and protections of the laws of this state. Brooks Shoe Mfg. Inc., 241 S.E.2d at 301. 23 Personal jurisdiction may be general, which arise from the party's contacts with the forum state that are unrelated to the claim, or specific, which arise from the party's contacts with the forum state that are related to the claim. Madara v. Hall, 916 F.2d 1510, 1516 n. 7 (11th Cir.1990); see also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 n. 9, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984) (a state exercises general jurisdiction when the defendant's contacts with the forum do not arise from or are not related to the cause of action). The due process requirements for general personal jurisdiction are more stringent that for specific personal jurisdiction, and require a showing of continuous and systematic general business contacts between the defendant and the forum state. Consolidated Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1292 (11th Cir.2000). The nonresident corporation's contacts with the forum that are unrelated to the litigation must be substantial to warrant the exercise of general jurisdiction. Id. 24 General jurisdiction may not be exercised unless the contacts are continuous and systemic. Borg-Warner Acceptance Corp. v. Lovett & Tharpe, Inc., 786 F.2d 1055, 1057 (11th Cir.1986). Although a single business transaction in the forum state by a foreign corporation whose officers resided in the same foreign state, the corporation was not licensed to do business in the forum state, and the corporation did not maintain an office or employees, solicit business, provide services or close sales, sell or purchase products, or carry on any other activity in the forum state does not satisfy the continuous and systemic rule, id., [a] single event may be a sufficient basis if its effects within the forum are substantial enough.... Shellenberger, 227 S.E.2d at 272; see also Georgia R.R. Bank & Trust Co. v. Barton, 169 Ga.App. 821, 315 S.E.2d 17, 20 (Ga.Ct.App.1984) (finding the effect of a $125,000 default substantial enough to establish legally sufficient contacts.) However, the indirect ownership of property, sporadic concert performances, and the sale of performance recordings are insufficient contacts for the exercise of general jurisdiction. Madara, 916 F.2d at 1516 n. 7. 25 The Georgia courts tend to place more emphasis on the tests for minimum contacts than doing business. Klein v. Allstate Ins. Co., 202 Ga.App. 188, 413 S.E.2d 777, 779 (Ga.Ct.App.1991). Although some contacts standing alone may be insufficient to show the minimum contacts, those same contacts with additional evidence may be sufficient to show minimum contacts. 7 Htl Sp. Z O.O. v. Nissho Corp., 245 Ga.App. 625, 538 S.E.2d 525, 527-28 (Ga. Ct.App.2000). The courts have held that the following contacts constitute transacting business within the meaning of the Long Arm Statute: executing guarantees which contained a Georgia choice of law clause, Drennen v. First Home Sav. Bank, 204 Ga.App. 714, 420 S.E.2d 376, 378 (Ga. Ct.App.1992); negotiating the terms of an agreement within the state, Genesis Research Inst., Inc. v. Roxbury Press, Inc., 247 Ga.App. 744, 542 S.E.2d 637, 639 (Ga. Ct.App.2000); 8 and availing oneself of a Georgia financial institution's resources, Georgia R.R. Bank & Trust Co., 315 S.E.2d at 20. Jurisdiction is proper where the defendants' contacts with the forum proximately resulted from actions by the defendants themselves that create a `substantial connection' with the forum state. Sturm v. Marriott Marquis Corp., 26 F.Supp.2d 1358, 1373 (N.D.Ga.1998) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2184, 85 L.Ed.2d 528 (1985)). Where a defendant's contacts are methodical, purposeful and significant and result from decisions as a director of a general partnership whose sole asset is located in Georgia, the defendant is presumed to have foreseen the decisions would affect Georgia and subject him to Georgia jurisdiction. Id. We have held that jurisdiction can be shown by the maintenance of financial records, Miller v. Laird, 474 F.2d 999, 1000 (5th Cir.1973) (per curiam), or a bank account, United States Sec. and Exch. Comm'n v. Carrillo, 115 F.3d 1540, 1545, 1548 (11th Cir.1997) within the forum. Although a defendant may purposely avail himself of a forum state by participating in a meeting in the forum state for the significant negotiation of important terms of a contract, a defendant's attendance at a meeting in the forum state for the signing of a boilerplate contract does not necessarily rise to purposely availment. Sea Lift, Inc. v. Refinadora Costarricense de Petroleo, S.A., 792 F.2d 989, 993-94 (11th Cir.1986). 9 Further, general partners in Georgia, who are served and provided their day in court, are jointly liable with the partnership for all debts and obligations of the partnership. Co-op Mortgage Inv. Assoc. v. Pendley, 134 Ga.App. 236, 214 S.E.2d 572, 576 (Ga.Ct.App.1975). 26 The record reflects sufficient contacts by MFIP, MBI, and PFH to establish jurisdiction. Despite Stephen's statements within his affidavit, that none of the Corporate Defendants owned real property, transacted business, or purchased or sold goods in Georgia, R34-344, Affidavit at 2, the record shows that they owned property, transacted business, and purchased goods in Georgia. 27 Tracie Byrd, a Georgia resident, was an officer and paid employee of defendant Optima Management. She testified that she performed clerical and administrative services, at the direction of Matthews or Stephen, for MFIP from 1993 until 1997, at an Atlanta office. 10 R15-229, Ex. 12 at 24-25, 39-42. She prepared letters for MFIP for the signature of either Douglas or Stephen Matthews. Id. at 65. In 1995, she notarized an assignment of loan from Matthews to MFIP in Georgia. R16-226, Ex. 17. She said that, during that period of time she worked for Optima, MFIP maintained a bank account at Nationsbank and that she became a signatory of that account at Matthews's request. R15-229, Ex. 12 at 44-45. In Atlanta, she wrote checks on the MFIP account when she received invoices from Matthews. Id. at 46-48. She stated that, although she received copies of the bank statements, the MFIP bank records were kept in Florida. Id. at 48. She testified that she maintained MFIP's accounting records on a computer program until April 1997, and prepared MFIP's and PFH's financial statements with information provided by Matthews. Id. at 51, 166-67, 169. Byrd said that the PFH accounts were maintained in Florida, but that she had performed some typing for PFH, was a signatory on PFH's Nationsbank account, and had signed a check for PFH. Id. at 85, 74-75, 82-85. 28 Matthews did not recall any other MFIP bank accounts except for the Nationsbank account. R1-8-136. The Nationsbank account records showed that it was opened and maintained at a bank in Georgia. R1-8, Ex. 35; R15-228, Ex. 9 at MFIP signature card. The MFIP signature card shows a business address in Florida and a mailing address in Atlanta, Georgia. R15-228, Ex. 9 at MFIP signature card. The account was used for deposits from Matthews's offshore enterprises, and for payments of costs relating to Matthews's personal aircraft. R1-8 at 126-44; 84-85, 169. During 1996, MFIP transferred more than $400,000 to Optima, which was used for Matthews's personal expenses or negotiated by Matthews for cash. R16-226, Exs. 41-47. MFIP funds, drawn on MFIP's Georgia bank account by Byrd, bookkeeper Banne Greg in Atlanta, or Matthews, were used to pay Matthews's dues and expenses at the Palm Beach Polo and Country Club, R1-8 at 90-91; R15-229, Ex. 12 at Ex. 22, and Matthews's children's Atlanta school tuition, R1-8 at 86, Ex. 16; R16-226, Ex. 14. The Atlanta, Georgia accounting firm of Smith & Radigan performed services for MFIP, PFH, and MBI from 1994 until 2000. R16-226, Ex. 6. The MBI records were maintained by Matthews. R1-6-34. 29 In 1990, MFIP gave Matthews an unsecured promissory note for $2,150,000, to be governed by ... the laws of the State of Georgia. 11 R9-146-47, Ex. 111. In 1991, MFIP entered into the Polo JV Joint Venture Agreement (Polo JV) with the Pasco M. Domenicone Vacation Home Trust (Domenicone Trust) regarding a polo farm in Georgia, which called for the application of Georgia law, arbitration in the City of Atlanta, and the venue of any legal action only in the courts of Forsyth County, Georgia. R15-229, Ex. 26, Ex. 118 at 13-15. On 1 March 1991, MFIP leased the polo farm to Matthews and required the application of Georgia law, R1-8, Ex. 34 at 1-2, 12 and the Polo JV entered into an agreement with Pasco M. Domenicone, consenting to jurisdiction in Forsyth County, Georgia, R15-229, Ex. 23, Ex. 47 at 2. MFIP was subsequently sued by the Domenicone Trust in Georgia, and entered an appearance in that case. R26-277-3. 30 The record clearly shows that MFIP, MBI, and PFH continuously, systematically, and purposely availed themselves of the privilege of conducting business activities within Georgia. MFIP, MBI, and PFH hired accounting services in Georgia. MFIP and PFH maintained bank accounts at a Georgia financial institution. MFIP executed a promissory note, a joint venture agreement, and a lease each of which contained a Georgia choice of law clause, maintained its banking records in Georgia, and used secretarial and bookkeeping services in Georgia. PFH used secretarial services in Georgia. MBI, as a general partner of MFIP, is jointly liable with MFIP for all debts and obligations of the partnership. 31 Further, in stipulated orders entered by the district court on 8 August 1997 and on 3 February 1999, MFIP and PFH agreed that any disputes concerning the sale of certain named properties would be resolved by the district court. R10-150-5; R33-324-5. Because MFIP and PFH agreed to personal jurisdiction in Georgia and have failed to present evidence that the stipulated orders were signed under duress or are unreasonable, they cannot assert that personal jurisdiction violates due process. See Alexander Proudfoot Co. World Headquarters L.P. v. Thayer, 877 F.2d 912, 921(11th Cir.1989). A court cannot dismiss a suit for lack of personal jurisdiction after a defendant has consented to litigate the action in that court. Pardazi v. Cullman Med. Ctr., 896 F.2d 1313, 1317 (11th Cir.1990). 32 For these reasons, we find that the district court correctly determined that it possessed personal jurisdiction over the Corporate Defendants.