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Moment, LLC v. Mammoth Outdoor Sports, Inc.

United States District Court, D. Nevada

March 3, 2017

MOMENT, LLC, Plaintiff,
v.
MAMMOTH OUTDOOR SPORTS, INC. et al., Defendants.

          ORDER

          ROBERT C. JONES United States District Judge

         This case arises out of an alleged breach of a contract involving the purchase of ski equipment. Pending before the Court are a Motion to Remand (ECF No. 8) and two Motions to Dismiss (ECF Nos. 6, 7). For the reasons given herein, the Court grants the motions to dismiss in part and denies them in part, and it denies the motion to remand.

         I. FACTS AND PROCEDURAL HISTORY

         Plaintiff Moment, LLC (“Moment”), a manufacturer of ski equipment, entered into five different contracts with Defendant Mammoth Outdoor Sports, Inc. (“Mammoth”) to sell and deliver ski equipment on October 30 and 31, 2013. (Compl. ¶¶ 12-13, 15-19, ECF No. 4). The amount of the sales as recorded on five invoices totals $118, 743.03. (Id. ¶¶ 15-19). Moment alleges that Defendant Sierra Lifestyle, Inc. (“SLI”) owns Mammoth and that Philip Hertzog owns both Mammoth and SLI. (Id. ¶¶ 14, 22). One of the Defendants, presumably Mammoth, [1]sent a check in the amount of $7, 000 to Moment on October 31, 2013. (Id. ¶ 20). Upon delivery of the products, Hertzog signed an agreement and terms sheet, which set forth applicable charges for returns and late payments. (Id. ¶¶ 23-24).

         On February 21, 2014, Moment sent an e-mail to Mammoth to inquire about a payment plan because Defendants had made no payments since October 13, 2013. (Id. ¶ 27). The parties agreed to a payment plan, but Mammoth failed to provide payments according to the plan. (Id. ¶¶ 29-30). From May 1, 2014 to October 20, 2015, Moment contacted Mammoth numerous times to inquire about payment. (Id. ¶¶ 32-51). During that period, Mammoth made multiple assurances that it would have money to pay the debt, including by obtaining capital through various financing sources. (Id.). Other than the first payment, Moment has received no further payments from Defendants. (Id. ¶ 55). Moment alleges that Defendants negotiated in bad faith by promising to pay the debt with no intent to do so. (Id. ¶¶ 52-54).

         Moment makes the following claims against Defendants: (1) five claims of breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) unjust enrichment/quantum meruit; and (4) fraudulent misrepresentation. Moment filed the case in Nevada state court and Defendants removed. Moment moves the Court to remand the case to state court. Defendants move the Court to dismiss Moment's claims for lack of personal jurisdiction, insufficient service of process, and failure to state a claim.

         II. PERSONAL JURISDICTION

         A. Legal Standards

         A defendant may move to dismiss for lack of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). Jurisdiction exists if: (1) provided for by law; and (2) the exercise of jurisdiction comports with due process. See Greenspun v. Del E. Webb Corp., 634 F.2d 1204, 1207 (9th Cir. 1980). When no federal statute governs personal jurisdiction, a federal court applies the law of the forum state. See Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Where a state has a “long-arm” statute providing its courts jurisdiction to the fullest extent permitted by the Due Process Clause of the Fourteenth Amendment, as Nevada does, see Arbella Mut. Ins. Co. v. Eighth Judicial Dist. Court, 134 P.3d 710, 712 (Nev. 2006) (citing Nev. Rev. Stat. § 14.065), a court need only address federal due process standards, see Boschetto, 539 F.3d at 1015. Technically, Nevada's long-arm statute restricts extra-territorial jurisdiction to the limits of both the U.S. and Nevada Constitutions. See Nev. Rev. Stat. § 14.065(1). But Nevada's Due Process Clause is textually identical to the Due Process Clause of the Fourteenth Amendment in relevant respects, compare U.S. Const. amend. XIV, § 1, with Nev. Const. art. 1, § 8(5), and the Nevada Supreme Court reads the state clause as coextensive with the federal clause, see, e.g., Wyman v. State, 217 P.3d 572, 578 (Nev. 2009). Until the Fourteenth Amendment was adopted in 1868, no federal due process clause applied to the states. See Barron v. City of Baltimore, 32 U.S. 243, 250-51 (1833) (Marshall, C.J.). The Declaration of Rights comprising Article I of the Nevada Constitution, which was adopted in 1864, was included in order to impose certain restrictions on the State of Nevada that were already imposed against the federal government under the Bill of Rights, and the Nevada Supreme Court has not interpreted the protections of the Declaration of Rights to exceed the scope of their federal counterparts. Michael W. Bowers, The Sagebrush State 43-44 (3rd ed., Univ. Nev. Press 2006); Michael W. Bowers, The Nevada State Constitution 24 (1993). In summary, the exercise of personal jurisdiction in Nevada need only comport with the Due Process Clause of the Fourteenth Amendment.

         1. General Jurisdiction

         There are two categories of personal jurisdiction: general jurisdiction and specific jurisdiction. In the mid-to-late-Twentieth Century, the federal courts developed a rule that general jurisdiction existed over a defendant in any state with which the defendant had “substantial” or “continuous and systematic” contacts such that the assertion of personal jurisdiction over him would be constitutionally fair even where the claims at issue were unrelated to those contacts. See Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1171 (9th Cir. 2006) (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984)). A state court has general jurisdiction over the state's own residents, for example. The Supreme Court has clarified, however, that general jurisdiction exists only where the defendant is at “home” in the forum state. See Daimler AG v. Bauman, 134 S.Ct. 746, 760-62 (2014). The Court noted that “continuous and systematic” contacts alone are not enough to create general jurisdiction without more. See Id. The quoted phrase was in fact first used in the context of a specific jurisdiction analysis. See Id. at 761 (citing Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 317 (1945)). “Accordingly, the inquiry under Goodyear is not whether a foreign [defendant's] in-forum contacts can be said to be in some sense ‘continuous and systematic, ' it is whether that [defendant's] ‘affiliations with the State are so “continuous and systematic” as to render [the defendant] essentially at home in the forum State.'” Id. (quoting Goodyear Dunlop Tires Operations S.A. v. Brown, 131 S.Ct. 2846, 2851 (2011)).

         2. Specific Jurisdiction

         Even where there is no general jurisdiction over a defendant, specific jurisdiction exists when there are sufficient contacts with the forum state such that the assertion of personal jurisdiction “does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co., 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). The standard has been restated using different verbiage. See World-wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (“[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.”); Hanson v. Denckla, 357 U.S. 235, 253 (1958) (“[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.”). From these cases and others, the Court of Appeals has developed a three-part test for specific jurisdiction:

(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

Boschetto, 539 F.3d at 1016 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004)) (internal quotation marks omitted).

The plaintiff bears the burden on the first two prongs. If the plaintiff establishes both prongs one and two, the defendant must come forward with a “compelling case” that the exercise of jurisdiction would not be reasonable. But if the plaintiff fails at the first step, the jurisdictional inquiry ends and the case must be dismissed.

Id. (citations omitted).

         The “purposeful direction” option of the first prong uses the “Calder-effects” test, under which “the defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010) (quoting Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1206 (9th Cir.2006) (en banc)); see also Walden v. Fiore, 134 S.Ct. 1115, 1124 (2014) (“[T]he relationship must arise out of contacts that the ‘defendant himself ' creates with the forum State.” (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)) (emphasis in Walden)). The second and third prongs of the Calder-effects test are conjunctive, not disjunctive. That is, a defendant must not only cause harm to a person who he knows will feel a “judicially sufficient amount of harm” in the forum state (the third prong), see Yahoo! Inc., 433 F.3d at 1207, the intentional activity must be ...


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