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Berry v. Ulrich Hereford Ranch, Inc.

United States District Court, D. Kansas

July 24, 2017

Richard Berry d/b/a Clov-Lan Farms, plaintiff,
v.
Ulrich Hereford Ranch, Inc., et al., Defendants.

          MEMORANDUM AND ORDER

          J. THOMAS MARTEN, JUDGE

         Plaintiff Richard Berry, doing business as Clov-Lan Farms, purchased nine heads of cattle from defendant Peter Ulrich at an auction in Alberta, Canada. Plaintiff alleges that the cattle were sick and unhealthy and is suing to recover damages from the defendants.

         The court now takes up the following motions: Defendants Lilybrook Herefords, Inc., Andy Schuepbach, and Hans Ulrich's, (Lilybrook, Schuepbach, and Hans Ulrich are collectively referred to as “Lilybrook Defendants”) Motion to Dismiss Plaintiff's Complaint for Failure to Establish Personal Jurisdiction Pursuant to Federal Rule of Civil Procedure 12(b)(2) (Dkt. No. 31); defendant Claresholm Veterinary Services, LTD.'s (“CVS”) Motion to Dismiss Plaintiff's Complaint for Failure to Establish Personal Jurisdiction Pursuant to Federal Rule of Civil Procedure 12(b)(2) (Dkt. No. 18); and defendant Balog Auction Services, Inc.'s (“Balog”) Motion to Dismiss Plaintiff's Complaint for Failure to Establish Personal Jurisdiction Pursuant to Federal Rule of Civil Procedure 12(b)(2) (Dkt. No. 29). For the following reasons, the court grants the defendants' motions.

         I. Factual Background

         Plaintiff, Richard Berry d/b/a Clov-Lan farms, is a Kansas resident who purchased nine bulls at a live cattle auction on February 23, 2016. Before this purchase, plaintiff had approximately twenty telephone conversations, and exchanged approximately eighteen emails, with Schuepbach. Plaintiff, Lilybrook Herefords, and Schuepbach ultimately agreed to purchase Lilybrook cattle. Plaintiff made a $10, 000 down payment on December 23, 2014. The parties subsequently rescinded the contract and plaintiff was refunded the down payment. During this series of events, Schuepbach told Berry about Ulrich Hereford Ranch cattle.

         The details of the conversation between plaintiff and Schuepbach are disputed. Plaintiff contends Schuepbach made assurances of quality that induced him to purchase cattle from Peter Ulrich and Ulrich Hereford Ranch; Schuepbach contends he informed plaintiff that Ulrich's cattle descended from the same cowherd as Lilybrook's animals and categorically denies he ever made any representations about the quality, health, soundness, or merchantability of Ulrich's cattle. For the purposes of resolving the motion to dismiss, the court assumes Berry's recitation is correct.

         Lilybrook is a Canadian corporation that raises and sells purebred Hereford cattle with its principal place of business in Claresholm, Alberta, Canada. Both Schuepbach and Hans Ulrich are Canadian citizens who reside in Claresholm, Canada. Neither Schuepbach nor Hans Ulrich own or lease any real or personal property in Kansas, have bank accounts or lines of credit in Kansas, owe or paid taxes in Kansas, or have a mailing address or telephone listing in Kansas. Additionally, Lilybrook has never registered to do business in Kansas, had a registered agent in Kansas for service of process, had any offices or employees outside of Canada, maintained an office, facility, or location in Kansas, had any employees, agents, sales people, personnel, or representatives that worked or lived in Kansas, done business in Kansas as a partner or joint venture' purposefully directed any mass solicitations or advertisements to Kansas, or leased any property in Kansas.

         During 2015 and 2016, Peter Ulrich requested CVS to look over his cattle in Alberta, Canada. The inspection was conducted in Alberta and an invoice was sent to Peter Ulrich for the services. CVS is a small and large animal clinic based in Claresholm, Alberta, Canada. CVS regularly does business with Peter Ulrich and Ulrich Hereford Ranch.

         Balog is a resident of Alberta, Canada, with its primary place of business in Lethbridge, Alberta, Canada. Balog proclaims itself as “one of the most successful Purebred Livestock Auctioneer's [sic] on the Continent.” It sells items through its auction service to five Canadian Provinces and thirteen States in the United States of America. Every Thursday, Balog conducts a live video cattle auction on the website “dmls.ca.” Direct Livestock Marketing Services, (“DLMS”) is a Canadian-registered website that is owned by a third-party that is neither a subsidiary nor a company related to Balog.

         While using DLMS's website during an auction, a buyer is able to hear and watch the auction in real time, to read specific weight, age, gender, breed, and breeder information about each cattle sold, make bids in real time, and to watch as other buyers bid on the cattle. Balog's goal is “to bring the entire world into your corral.” Prior to the February 23, 2016 auction, DLMS was retained by Ulrich Hereford Ranch to assist with the auction.

         On that date, Ulrich Hereford Ranch sold fifty bulls through Balog. Plaintiff was unable to personally attend, so he attempted to place bids through the DLMS owned website. Plaintiff was unsuccessful in making any bids through the DLMS website, and at the time, Balog was unaware of plaintiff's failed attempt. Plaintiff, still trying to bid, called DLMS on the telephone. Whitney Bosovich, a DLMS employee, was present at the auction and took plaintiff's call. Plaintiff directed DLMS to place bids on cattle and Peter Ulrich approved this procedure.

         Plaintiff was able to successfully bid by telephone and was the highest bidder on nine bulls. Payment for the bulls was to be made directly to Peter Ulrich or Ulrich Hereford Ranch. Balog was not involved in any way with payment. Balog first spoke with plaintiff nine months after the auction when plaintiff called to complain about the livestock he had purchased. Plaintiff alleges that Balog endorsed the cattle sold by Peter Ulrich and Ulrich Hereford Ranch, Inc. in widely distributed advertising material which stated that the cattle are “high quality performance cattle, ” “a powerful set of bulls, ” and “will make a difference and move your program to a higher bracket.” Lilybrook Defendants did not receive any money or any other benefit from the sale of cattle by Peter Ulrich or Ulrich Hereford Ranch. Additionally, Ulrich Hereford Ranch, Inc., Peter Ulrich, and the Lilybrook Defendants had not agreement regarding the sale of cattle to plaintiff. Plaintiff did not ask for CVS to perform any services. Each animal was subjected to an inspection where a veterinarian was required to certify, among other things, that the vet had personally inspected each animal in the shipment and that each was “free from any evidence of communicable disease.” Dr. Connie Fancy, on behalf of CVS, inspected each shipment of cattle Peter Ulrich and Ulrich Hereford Ranch, Inc. sent to Clov-Lan.

         CVS contends it never believed the inspection of cattle in Alberta, Canada would require defending a court case in Kansas; plaintiff, however, contends that each veterinary health certificate completed for every shipment of cattle from Peter Ulrich and Ulrich Hereford Ranch, Inc. to Clov-Lan indicated that the cattle were being sent to Clov-Lan in Pomona, Kansas. For the purposes of resolving the motion to dismiss, the court assumes that the latter is correct.

         Plaintiff does not convert that CVS is not registered to do business in Kansas, does not conduct business in Kansas, has never applied for a certificate of authority to conduct business in Kansas, does not maintain a registered agent for service of process in Kansas, does not pay taxes in Kansas, does not have any offices in Kansas, does not have any employees, agents, distributors, bank accounts, property, advertise, market or supply any goods in Kansas. Plaintiff accuses Lilybrook Herefords, Inc., Andy Schuepbach, and Hans Ulrich of fraud and negligent misrepresentation by making assurances concerning the quality of Peter Ulrich Hereford Ranch, Inc.'s cattle, thereby inducing plaintiff to purchase the cattle. Plaintiff further claims CVS negligently inspected the cattle and made negligent misrepresentations about their health. Finally, plaintiff alleges Balog negligently injured plaintiff and made negligent misrepresentations as to the health of the cattle.

         II. Conclusions of Law

         A. Personal Jurisdiction Over Lilybrook Herefords, Inc., Andy Schuepbach, Hans Ulrich, Claresholm Veterinary Services, LTD., and Balog Auction Services, Inc.

         1. Legal Standard

         The standard governing a Rule 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction is well established. The plaintiff bears the burden of establishing personal jurisdiction over the defendants. Edison Trust Number One v. Patillo, No. 10-1159, 2010 WL 5093831, at *1 (D. Kan. Dec. 8, 2010) (quotations omitted). The plaintiff must show that under the laws of the forum state jurisdiction is proper, and that exercising jurisdiction would not offend traditional notions of fair play and substantial justice. Id. The extent of the burden depends on the stage at which the court considers the jurisdictional issue. Id. at 1. The plaintiff's burden in the preliminary stages of litigation is light and the plaintiff must make a prima facie showing. Dudnikov v. Chalk & Vermillion Fine Arts, 514 F.3d 1063, 1069 (10th Cir. 2008); Hutton & Hutton Law Firm, LLC v. Girardi & Keese, 96 F.Supp.3d 1208, 1215 (D. Kan. Mar. 31, 2015). This prima facie showing may be made by an affidavit or other written materials, that, if taken as true, support jurisdiction over the defendant. TH Agric. & Nutrition, LLC v. Ace European Grp. Ltd., 488 F.3d 1282, 1286 (10th Cir.2007); Shophar v. Kansas, 2017 U.S. Dist. LEXIS 42390, *9 (D. Kan. Mar. 23, 2017). The defendant may defeat the plaintiff's prima facie showing of personal jurisdiction by presenting a “compelling case demonstrating ‘that the presence of some other considerations would render jurisdiction unreasonable.'” AST Sports Sci., Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1056 (10th Cir.2008) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)). In cases of a Motion to Dismiss for Lack of Personal Jurisdiction, all well-pled factual allegations in the plaintiff's petition that are uncontroverted are accepted as true and viewed in light most favorable to the plaintiff. Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). If affidavits conflict, factual disputes must be resolved by the court in the plaintiff's favor, and a prima facie showing by the plaintiff, notwithstanding a contrary presentation by the moving party, is sufficient. Ryan Transp. Servs., Inc. v. Fleet Logistics. L.L.C., Nos. 04-2445-CM, 04-2497-CM, 2005 U.S. Dist. LEXIS 24554, at *10 (D. Kan. Oct. 21, 2005) (quoting Behagen v. Amateur Basketball Ass'n, 744 F.2d 731, 733 (10th Cir. 1984)). Well-pled facts, as opposed to mere conclusory allegations, must be accepted as true. Wenz, 55 F.3d at 1505.

         The test for personal jurisdiction first requires asking if any applicable statute authorizes service of process on the defendants. Dudnikov v. Chalk & Vermilion Fine Arts, 514 F.3d 1063, 1070 (10th Cir. 2008). The second question is whether exercising statutory jurisdiction comports with the Fourteenth Amendment's constitutional due process demands. Id. Kansas law authorizes service of process pursuant ot a “long-arm” statute.[1] The statute corresponds directly with the intent of constitutional limitations imposed by the Fourteenth Amendment. Federated Rural Elect Ins. Corp. v. Kootenai Elec. Coop., 17 F.3d 1302, 1305 (10th Cir. 1994); Jenkins-Dyer v. Drayton, 2014 U.S. Dist. LEXIS 148130, *7-8 (D. Kan. Oct. 16, 2014). More precisely, if jurisdiction is consistent with due process, the long-arm statute of Kansas grants jurisdiction over a nonresident defendant. Jenkins-Dyer, 2014 U.S. Dist. LEXIS 148130, at *8.

         The Fourteenth Amendment's Due Process Clause grants personal jurisdiction over a nonresident defendant when: (1) the defendant has such “minimum contacts” with the forum state that they reasonably should anticipate being haled into court there; and (2) if minimum contacts is established with the forum state, defending a lawsuit in the forum would not “offend traditional notions of fair play and substantial justice.” Dudnikov, 514 F.3d at 1070. If jurisdiction is found to be lacking at any stage of the proceeding, the court must ...


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