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AMG Resources Corp. v. Canadian Metal Commodities Inc.

United States District Court, D. Arizona

August 6, 2019

AMG Resources Corporation, Plaintiff,
v.
Canadian Metal Commodities Incorporation, et al., Defendants.

          ORDER

         Before the Court is Defendants Canadian Metal Commodities, Inc. (“CMC”) and Gerald Mrakava's motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). (Doc. 18.) The motion is fully briefed (Docs. 22, 25), and the Court heard oral argument on July 15, 2019. For the reasons stated below, Defendants' motion is granted.

         I. Background

         Plaintiff AMG Resources Corporation (“AMG”) is a processor and marketer of scrap metal incorporated in Delaware with its principal place of business in Allegheny County, Pennsylvania. (Doc. 19-1 at 145.) AMG also has commercial offices around the country, including one in Phoenix, Arizona. (Id. at 164-66.) CMC is a seller of scrap metal incorporated in Canada with its principal place of business in Canada. (Doc. 20 ¶¶ 2, 4.) Mrakava is a Canadian citizen and the sole officer and director of CMC. (Id. ¶¶ 1-3.)

         In November 2016, Mrakava reached out to James Orendorff, a resident of Phoenix, Arizona and President of AMG's Pacific Division, in hopes of forming a business relationship. (¶¶ 10-11.) After brief phone discussions, Orendorff flew to Calgary, Alberta, Canada to meet with Mrakava to discuss the possibility of AMG distributing CMC's scrap metal in the United States. (¶¶ 11-12.) Following his return to Arizona, Orendorff told Eric Goldstein, AMG's President, to begin drafting a non-disclosure agreement (“NDA”). (¶ 13; Doc. 1 ¶ 11.) Orendorff then forwarded the NDA drafted by Goldstein to Mrakava. (Doc. 1 ¶ 12.) Although the parties exchanged several drafts of the NDA and participated in a conference call to discuss the terms, they never finalized or agreed to terms of the NDA. (¶¶ 13-14; Doc. 20 ¶¶ 13, 16, 18.) Regardless, the parties formed a business relationship and agreed in January 2017 to the terms of a Scrap Metal Brokering and Shipping Arrangement (the “Master Contract”), although the parties dispute who drafted it.[1] (Doc. 1 ¶¶ 14-15; Doc. 20 ¶¶ 20-21.)

         Following the drafting of the Master Contract, AMG and CMC engaged in several preliminary arrangements for transactions in which AMG would send railcars to Canada to pick up scrap metal from CMC and deliver it to customers in Iowa and Indiana. (Doc. 19-1 at 11-15.) The parties arranged four transactions in total, but ultimately no scrap metal was delivered to Iowa or Indiana. (Id. at 15-18.)

         Based on these four failed transactions, AMG filed a lawsuit against Defendants in the Court of Common Pleas of Allegheny County, Pennsylvania, alleging breach of contract and fraud claims (the “Pennsylvania Litigation”). (Id. at 6-20). Defendants moved to dismiss the claims for lack of personal jurisdiction and the court granted their motion. (Id. at 37, 160-62.) AMG did not appeal the Pennsylvania court's decision; instead it filed this action, which is nearly identical to the complaint filed in the Pennsylvania Litigation “save for its references to ‘Pennsylvania' (instead of ‘Arizona') in its jurisdictional allegation.” (Docs. 18 at 6; 1 ¶ 9.) Defendants again have moved to dismiss the claims against them for lack of personal jurisdiction.

         II. Legal Standard

         “Where a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). In the absence of an evidentiary hearing, and where the plaintiff's proof is based on written materials, “the plaintiff need only make a prima facie showing of jurisdictional facts.” Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). The court must assume the truth of uncontroverted allegations in the plaintiff's complaint, and conflicts between facts contained in the parties' affidavits must be resolved in the plaintiff's favor. Am. Tel. & Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588-89 (9th Cir. 1996). The court, however, “may not assume the truth of allegations in a pleading which are contradicted by an affidavit.”[2] Data Disc, Inc., v. Sys. Tech Assocs., Inc., 557 F.2d 1280, 1284-85 (9th Cir. 1977).

         III. Discussion

         A. Personal Jurisdiction Principles

         “Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over persons.” Daimler AG v. Bauman, 571 U.S. 117, 125 (2014). Arizona allows courts to exercise jurisdiction co-extensive with federal due process standards. Ariz. R. Civ. P. 4.2(a). The Court therefore may exercise personal jurisdiction over a defendant who is not physically present in the state if the defendant has sufficient minimum contacts with the state such that the suit can be maintained without offending traditional notions of fair play and substantial justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

         Personal jurisdiction may be general or specific depending on the strength of the defendant's contacts with the forum state. Id. at 317-18. General personal jurisdiction exists over a non-resident defendant when the defendant's contacts with the forum state are so continuous and systematic “as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” Id. Where a defendant's contacts are not so substantial, a court can exercise specific personal jurisdiction when a lawsuit arises out of the defendant's activities within the forum state. Helicopteros Nacionales de Colo., S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984). Here, AMG does not contend that the Court has general personal jurisdiction over Defendants. The issue is whether the Court can exercise specific personal jurisdiction.

         In determining whether the Court can exercise specific personal jurisdiction over a non-resident defendant, the Court employs a three-pronged test:

(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 ...

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