The opinion of the court was delivered by: Sandra S. Beckwith, Chief Judge United States District Court
ORDER This matter is before the Court on motions to dismiss filed by Defendant Governor and Bank of Scotland (Doc. No. 16), Defendants Chris Langridge, Hugh Agnew, and David Mills (Doc. No. 18), and Defendant John Gerard Metcalfe (Doc. No. 19). For the reasons set forth below, the motions to dismiss of the Bank of Scotland and Defendants Langridge, Agnew, and Mills are well-taken and are GRANTED. The claims against these Defendants are DISMISSED WITHOUT PREJUDICE. Defendant Metcalfe's motion to dismiss is not well-taken and is DENIED.
Plaintiff Thomas & Thomas Rodmakers, Inc. ("Thomas & Thomas") is an Ohio corporation with its principal place of business in Hamilton County, Ohio. Complaint (Doc. No. 2) ¶ 1; Notice of Removal (Doc. No. 1) ¶ . Plaintiff Lon Deckard is a citizen of the state of Ohio and the sole shareholder of Thomas & Thomas. Notice of Removal ¶ 6; Compliant ¶ 2. Plaintiff L&L3, LLC is a Massachusetts limited liability company whose members are citizens of the state of Ohio. Notice of Removal ¶ 7. Defendant Sharpe's. Inc. ("Sharpe's") is a Delaware corporation with its principal place of business in Massachusetts. Id. ¶ 8. Sharpe's is a wholly owned subsidiary of Defendant Sharpe's Holdings, Ltd. ("Sharpe's Holdings") which is a corporation organized under the laws of the United Kingdom. Id. ¶ 9. The Bank of Scotland is a corporation constituted by an Act of Parliament with its head office in Scotland. Id. ¶ 11. Defendants Metcalfe, Langridge, and Mills are citizens of the United Kingdom. Id. ¶¶ 10, 12, 14. Metcalfe is the majority shareholder of Sharpe's Holding. Complaint ¶ 6. Defendant Langridge is the managing director of Sharpe's Holdings, id. ¶ 8, and Defendant Mills is a director of Sharpe's Holdings. Id. ¶ 10. Defendant Agnew is a citizen of Australia. Notice of Removal ¶ 13; Complaint ¶ 9..
The present lawsuit arises out of business dealings among this international cast of players. Thomas & Thomas is in the business of manufacturing and selling fly fishing rods. Complaint ¶ 12. In August 2005, Thomas & Thomas entered into an Asset Purchase Agreement with Sharpe's. Complaint ¶ 13. Under this agreement, Sharpe's agreed to purchase all of the assets of Thomas & Thomas, including its business and goodwill. Id. ¶ 13. Pursuant to the agreement, Sharpe's was to pay Thomas & Thomas $100,000 at closing, another $200,000 three months after closing, and then an additional sum for the inventory, estimated to be approximately $480,000. Id. ¶ 14. Additionally, Sharpe's and Metcalfe were supposed to sell 10% of the outstanding shares of Sharpe's Holdings to Thomas & Thomas, which in turn was going to allocate the shares to Plaintiff and his two children. Id. ¶ 15.
In a separate and related agreement, Sharpe's agreed with L&L3 to temporarily lease and then purchase land on which Thomas & Thomas was located, and to continue to operate the business from that location pursuant to a lease or subsequent purchase. Id. ¶ 16.
On or about August 24, 2005 the Agreement closed and Sharpe's made an initial payment of $120,174.39 to Thomas & Thomas. Id. ¶ 21. Sharpes then began to operate the business from the same location. Id. Since that time, however, Sharpe's and Metcalfe have failed to fulfill the remaining terms of the Asset Purchase Agreement, including making the additional payments, delivering shares of stock, and purchasing the buildings and land owned by L&L3. Id. ¶¶ 22-24.
The complaint further alleges that the Bank of Scotland assumed effective control of Sharpe's by, inter alia, appointing three board of directors of Sharpe's Holdings and by making dayto-day financial and operational decisions concerning Sharpe's. Id. ¶ 25. The complaint specifically alleges that the Bank of Scotland appointed Defendant Langridge to be managing director of Sharpe's Holdings and that he exercises decision-making authority over Sharpe's Holdings for the benefit of the Bank of Scotland. Id. ¶ 26.
On May 31, 2006, Plaintiffs filed a complaint against the Defendants in the Hamilton County, Ohio Court of Common Pleas. Count One of the complaint asserts a claim for breach of the Asset Purchase Agreement against each of the Defendants. Count Two of the complaint asserts a claim for tortious interference with a business relationship against the Bank of Scotland. This claim alleges that the Bank of Scotland induced the other Defendants to breach the asset agreement between Sharpe's and Thomas & Thomas. Count Three of the complaint asserts a claim for fraud against Defendants Metcalfe, Sharpe's and Sharpe's Holdings. This claim alleges that the Defendants made material false representations upon which Plaintiffs relied in entering into the Asset Purchase Agreement. Finally, Count Four asserts a claim for breach of fiduciary duty against Defendants Langridge, Mills, and Agnew. This claim alleges that the Defendants have failed to operate Thomas & Thomas in the best interests of the corporation and the shareholders. The complaint seeks damages in excess of $100,000, an order directing delivery of stock certificates to Plaintiffs, and an award of attorney's fees and costs.
The Bank of Scotland removed the case from state court on July 3, 2006 pursuant to 28 U.S.C. §§ 1441 and 1446. The Court's subject matter jurisdiction is based on diversity of citizenship in that the parties are completely diverse and the amount in controversy is in excess of $75,000.
On July 12, 2006, the Court administratively closed the case as to Sharpe's Holdings, Doc. No. 11, based on the suggestion of bankruptcy filed by Defendants Langridge, Agnew, and Mills. Doc. No. 10. On July 31, 2006, the Court entered a default judgment against Sharpe's and awarded Plaintiffs damages totaling approximately $795,000.
Also on July 31, 2006, the remaining Defendants filed the instant motions to dismiss. Each of the Defendants contend that personal jurisdiction is lacking because of insufficient contacts with the state of Ohio. Additionally, each of the Defendants argues that Plaintiffs' service of process was insufficient. The individual Defendants argue that the service of process was insufficient because Plaintiffs' failed to effect service in compliance with the requirements of the Hague Convention. The Bank of Scotland apparently argues that service of process was insufficient because of failure to meet state service of process requirements which parallel the state requirements for application of the long arm statute.
In response, Plaintiffs apparently concede that there are jurisdictional defects with respect to Defendants Mills and Agnew because they now move the Court to voluntarily dismiss the claims against these individuals. Plaintiffs, however, contend that service was properly effected on each of the other Defendants. Finally, Plaintiffs argue that each of the Defendants is subject to personal jurisdiction in this district.
Alternatively, Plaintiffs move the Court to permit discovery on personal jurisdiction issues.
The Court will take up these issues seriatim.
Because Plaintiffs commenced service of process prior to Defendants removal of the case to federal court, state law determines the validity of service. Cowen v. American Med. Sys., Inc., 411 F. Supp.2d 717, 720 (E.D.Mich. 2006). As this case originated in the Hamilton County Court of Common Pleas, Ohio law applies to the issues raised concerning service of process. After removal, however, any defects in service may be cured according to the Federal Rules of Civil Procedure. Id.
As indicated, the remaining Defendants in this case are citizens of the United Kingdom. The record indicates that, as to the Bank of Scotland, Leslee Deckard, a process server designated by the state court of common pleas, served the complaint on Lynden Scourfield, who is stated to be an agent for the Bank, on June 12, 2006. Doc. No. 21, at 15. Additionally, Defendant Langridge states that Leslee Deckard personally served him with the complaint in the United Kingdom on June 12, 2006. Doc. No. 17, at 13. Langridge, however, contends that service in this manner was ineffective under the Hague Convention because service was not perfected by the Central Authority and because Deckard is not a solicitor in the United Kingdom. Finally, Plaintiffs effected service on Metcalfe by express mail. Metcalfe admits in his affidavit, Doc. No. 18, Ex. A ¶ 6, that he received a copy of the complaint at his home in the United Kingdom.
Compliance with the Hague Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil or Commercial Matters, to which both the United States and the United Kingdom are signatories, is mandatory in all cases in which it applies. Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 705 (1988). Or, as the Court stated in Collins v. Collins, 844 N.E.2d 910 (Ohio Ct. App. 2006), the Hague Convention "preempts inconsistent methods of service of process prescribed by state law by virtue of the Supremacy Clause of Article VI of the United States Constitution." Id. at 913. Under the Hague Convention, each country must establish a "Central Authority" through which documents from foreign countries are served. Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). The Hague Convention, however, also permits service to be made by any method of service permitted by the internal law of the country in which service is made. Paracelsus Healthcare Corp. v. Philips Med. Sys., Nederland, B.V., 384 F.3d 492, 496 (8th Cir. 2004). Therefore, in this case, since it seems apparent that Plaintiffs did not try to effect service through the Central Authority in the United Kingdom, service on the Defendants will be valid to the extent it comports with the law of the United Kingdom.
The Court starts with Defendant Metcalfe since his case is the most easily resolved. As indicated, Plaintiffs served Metcalfe by express mail and he admits that he received the complaint at home. The Hague Convention permits service of documents by international mail if the country in which service is made does not object to service by mail. Sibley v. Alcan, Inc., 400 F. Supp.2d 1051, 1053 (N.D. Ohio 2005). The United Kingdom has not objected to the provisions of the Hague Convention that permit service by mail, see Judicial Assistance in the United Kingdom, available at http://travel.state.gov/law/ info/judicial/judicial_671.html (visited April 2, 2007), and the Civil Procedure Rules of the United Kingdom expressly permit service by mail. See CPR 6.2(1)(b), available at http:// www.dca.gov.uk/civil/procrules_fin/contents/parts/part06.htm (visited April 2, 2007); see also Noirhomme v. Walklate, (1992) 1 Lloyd's Rep. 427, 430 (Q.B.)(also available at 1991 WL 839840). Therefore, the Court concludes that service of the complaint on Defendant Metcalfe complied with both the Hague Convention and the law of the United Kingdom.
Accordingly, Defendant Metcalfe's motion to dismiss on the grounds of improper service of process is ...