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Decker Construction Co. v. Wesex Corp.

United States District Court, S.D. Ohio, Eastern Division

June 24, 2019

DECKER CONSTRUCTION CO., Plaintiff,
v.
WESEX CORPORATION, et al. Defendants.

          Deavers Magistrate Judge.

          OPINION & ORDER

          ALGENON L. MARBLEY UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Third-Party Defendant Mark Schrader's Motion to Dismiss. (ECF No. 35). CCL Label, Inc. (“CCL”), a Defendant in this case, filed a Third-Party Complaint against Mark Schrader, formerly the Chief Financial Officer (“CFO”) of Wesex Corporation (“Wesex”), for fraudulent misrepresentation. Wesex is also named as a defendant in this case. CCL, the manager of a construction project in New Albany, Ohio, alleges that Schrader executed false affidavits to conceal the fact that Wesex, the project's general contractor, was not using their payments from CCL to compensate the project's subcontractors for their materials and labor. Schrader has filed a Motion to Dismiss, arguing that he is not subject to Personal Jurisdiction in Ohio, and that CCL has failed to state a claim. For the reasons below, this Court DENIES Third-Party Defendant Schrader's Motion to Dismiss.

         I. BACKGROUND

         A. Factual Background

         CCL hired Wesex Corporation (“Wesex”) to build an office building in New Albany, Ohio and the two parties entered into a Design-Builder agreement on December 15, 2015. (ECF No. 36-1 at ¶ 6). Mark Schrader (“Schrader”) was CFO of Wesex from January 2016 to October 13, 2017 and was heavily involved with the project, which ran from early March 2016 until early 2017. (ECF No. 9 at 15 ¶ 13; ECF No. 35-1 at ¶ 3; ECF No. 36-1 at ¶ 11). Upon earning the contract, Wesex contracted with a series of subcontractors; it would be Wesex's responsibility to pay the subcontractors. (ECF No. 3 at ¶¶ 6-8). Wesex would submit pay applications to CCL asking to be reimbursed for paying the subcontractors, pursuant to the contract. (ECF No. 9 at ¶¶ 15-16). Schrader regularly called CCL's Manager of Design and Construction Worldwide in Ohio about these pay applications to make sure they were going smoothly. (ECF No. 36-1 at ¶ 12). With these pay applications, Schrader executed affidavits promising that the subcontractors had been paid. (Id. at ¶ 16). CCL, relying on the veracity of these affidavits, continued work on the project and did not terminate Wesex as general contractor. (Id. at ¶ 15). However, CCL alleges that these affidavits turned out to be false and that Wesex was not paying its subcontractors. (Id. at ¶ 17). Subcontractors began complaining to CCL and filed actions in Ohio state courts. (Id.). Schrader spoke with CCL representatives in Ohio on the phone, promising that the issues were being cleared up, but CCL contends they never were. (Id. at ¶ 19). CCL also alleges that Wesex's failure to pay the subcontractors led to lawsuits being filed against CCL as the project manager and liens being placed on the project. (ECF No. 36 at 17).

         B. Procedural Background

         The plaintiff in this lawsuit, Decker Construction Company (“Decker”), was one of the subcontractors allegedly not compensated by Wesex. Decker filed suit in the Licking County Court of Common Pleas against CCL for Unjust Enrichment and against Wesex for Breach of Contract, Unjust Enrichment, and violating Ohio's Prompt Pay Act. Ohio Rev. Code Ann. § 4113.61 (2011). CCL subsequently removed this case to federal court. CCL then filed an answer to Decker's Complaint (ECF No. 1; ECF No. 9) and filed a Third-Party Complaint against Schrader, alleging fraudulent misrepresentation. (ECF No. 9). CCL also filed a Crossclaim against Wesex (Id.) and a Counterclaim against Decker. (Id.).

         Before this Court is Third-Party Defendant Schrader's Motion to Dismiss, in which he argues he is not subject to personal jurisdiction in Ohio. (ECF No. 35). He also argues CCL fails to state a claim for which relief can be granted.

         II. LAW & ANALYSIS

         A. Personal Jurisdiction

         1. Standard of Review The burden of proof for establishing personal jurisdiction always rests on the plaintiff. See CompuServe Inc. v. Patterson, 89 F.3d 1257, 1262-63 (6th Cir. 1996). When the defendant moves to dismiss for lack of personal jurisdiction, the plaintiff must specifically establish jurisdiction through an affidavit or some similar instrument and cannot just point to the pleadings as evidence of the propriety of personal jurisdiction. See Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991) (citing Weller v. Cromwell Oil Co., 504 F.2d 927, 930 (6th Cir. 1974)). Without an evidentiary hearing for the issue of personal jurisdiction, the plaintiff just has to make “‘a prima facie showing of jurisdiction.'” Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002) (quoting Neogen Corp. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002)) (internal citation omitted). To meet this requirement, plaintiff must “‘[establish] with reasonable particularity sufficient contacts between [the Defendants] and the forum state to support jurisdiction.'” Neogen Corp., 282 F.3d at 887 (quoting Provident Nat'l Bank v. Cal. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987)).

         When determining whether to grant a motion to dismiss under Rule 12(b)(2), the Court must construe facts in the light most favorable to the non-movant. Most importantly, the Court shall not consider any of the movant's assertions that contradict the plaintiff's. See CompuServe, 89 F.3d at 1262 (citing Theunissen, 935 F.2d at 1459). This rule serves to prevent defendants defeating personal jurisdiction by denying any facts plead related to jurisdiction. See Id.

         Determining whether the underlying claims arise out of federal or state law is a court's threshold task. For federal claims, courts evaluate only whether due process is violated by applying personal jurisdiction. For state-law diversity claims, however, courts must also examine whether personal jurisdiction is valid under the applicable state law and then whether personal jurisdiction would violate the Due Process clause of the Fourteenth Amendment. See Tharo Sys., Inc. v. cab Produkttechnik GmbH & Co. KG, 196 Fed.Appx. 366, 369 (6th Cir. 2006) (quoting Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 888 (6th Cir. 2002)). The Sixth Circuit has “recognized that Ohio's long-arm statute is not coterminous with federal constitutional limits, ” and has “consistently focused on whether there are sufficient minimum contacts between the nonresident defendant and the forum state so as not to offend ‘traditional notions of fair play and substantial justice'” when analyzing the propriety of personal jurisdiction under Ohio's long-arm statute. Bird, 289 F.3d at 871 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). ...


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