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Dollar Rent A Car, Inc. v. Westover Car Rental, LLC

United States District Court, M.D. Florida, Fort Myers Division

November 16, 2017

DOLLAR RENT A CAR, INC., an Oklahoma corporation, THRIFTY RENT-A-CAR SYSTEM, INC., an Oklahoma corporation, and THE HERTZ CORPORATION, a Delaware Corporation, Plaintiffs,
v.
WESTOVER CAR RENTAL, LLC, a Delaware limited liability company, PHILIP R. MOOAR, CARL P. PALADINO, JOEL CASTLEVETERE, ENRICO D'ABATE, and MICHAEL G. DILLON, Defendants.

          OPINION AND ORDER

          JOHN E. STEELE UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Defendants' Motion to Dismiss Plaintiffs' Second Amended Complaint for Lack of Personal Jurisdiction and Alternative Motion to Transfer Venue (Doc. #59) filed on June 6, 2017. Plaintiffs filed a Response in Opposition (Doc. #60) on June 20, 2017, and Defendants filed a Reply (Doc. #63) on June 30, 2017. For the reasons set forth below, Defendants' Motion to Dismiss is granted without prejudice.

         I.

         This case arises out of a terminated franchise relationship in the rental car industry. Plaintiffs Dollar Rent a Car, Inc. (Dollar), Thrifty Rent-a-Car System, Inc. (Thrifty), and The Hertz Corporation (Hertz) filed a six-count Second Amended Complaint (Doc. #58) against Westover Car Rental, LLC (Westover) and Westover's five individual owners, Philip R. Mooar, Carl P. Paladino, Joel Castlevetere, Enrico D'Abate, and Michael G. Dillon (collectively, the Individual Defendants). The first five counts allege breach of various agreements by various defendants, while the sixth count seeks a declaratory judgment as to Defendants' post-termination obligations not to compete. The agreements at issue are: (1) Westover's March 21, 2006 License Agreements with Dollar (Doc. #58-1) and Thrifty (Doc. #58-4) and a December 20, 2006 Amendment to those Agreements (Doc. #58-2) (collectively, the License Agreements); (2) an April 30, 2010 Revised Personal Guaranty Agreement (the Personal Guaranty) that the Individual Defendants executed with Dollar (Doc. #58-3); and (3) a July 31, 2015 Vehicle Purchase Participation Agreement (the VPPA) between Westover and Hertz (Doc. #58-5).[1]

         Subject matter jurisdiction is premised on diversity of citizenship.[2] With respect to personal jurisdiction, the Second Amended Complaint avers that Westover and each Individual Defendant contractually consented to jurisdiction in Florida. As to Westover only, the Complaint also alleges that the Court has specific personal jurisdiction pursuant to two provisions in Florida's long-arm statute, Fla. Stat. § 48.193.

         Defendants move to dismiss the Second Amended Complaint on the ground that the Court lacks personal jurisdiction over Westover and each Individual Defendant. Alternatively, Defendants request the case be transferred to the Buffalo Division of the United States District Court for the Western District of New York. Plaintiffs oppose both dismissal and transfer but believe any transfer should be to Tulsa, Oklahoma.

         II.

         The jurisdictional basics are well established. To hear a case, a federal court must have jurisdiction over both the subject matter of the action and the parties to the action. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584, (1999). Absent either, “the court is powerless to proceed to an adjudication.” Id.

         A federal court sitting in diversity may exercise personal jurisdiction over an out-of-state defendant if (1) personal jurisdiction is authorized under the forum state's long-arm statute and (2) the exercise of such jurisdiction comports with constitutional due process. Carmouche v. Tamborlee Mgmt., Inc., 789 F.3d 1201, 1203 (11th Cir. 2015); Licciardello v. Lovelady, 544 F.3d 1280, 1283 (11th Cir. 2008). “The Florida long-arm statute provides two bases for the exercise of personal jurisdiction: specific and general jurisdiction.” PVC Windoors, Inc. v. Babbitbay Beach Const., N.V., 598 F.3d 802, 808 (11th Cir. 2010). “[G]eneral jurisdiction refers to the power of the forum state to exercise jurisdiction in any cause of action involving a particular defendant, regardless of where the cause of action arose, ” id. at 808 n.8, and is rooted in the fact that a defendant has “engaged in substantial and not isolated activity within [Florida].” Fla. Stat. § 48.193(2). Specific jurisdiction, in contrast, refers to “jurisdiction over causes of action arising from or related to a defendant's actions within the forum.” PVC Windoors, 598 F.3d at 808; see generally Fla. Stat. § 48.193(1).

         Unlike subject matter jurisdiction, “the requirement that a court have personal jurisdiction may be intentionally waived, or for various reasons a defendant may be estopped from raising the issue.” Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 703, 704 (1982). That is, a party may impliedly or expressly consent to a particular court's exercise of jurisdiction, irrespective of whether personal jurisdiction would otherwise be authorized under the applicable long-arm statute and satisfy due process. Id. at 703; see also Ruhrgas, 526 U.S. at 584; Alexander Proudfoot Co. World Headquarters v. Thayer, 877 F.2d 912, 919-21 (11th Cir. 1989).

         A plaintiff suing a nonresident defendant bears both the initial burden of alleging a prima facie case of personal jurisdiction and, if that jurisdiction is challenged, the ultimate burden of establishing that its exercise is proper. Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1350 (11th Cir. 2013); Oldfield v. Pueblo De Bahia Lora, S.A., 558 F.3d 1210, 1217 (11th Cir. 2009). If the defendant raises more than mere “conclusory assertions” that personal jurisdiction is lacking, [3] the plaintiff must then “produc[e] evidence supporting jurisdiction.” Mosseri, 736 F.3d at 1350; see also Posner v. Essex Ins. Co., 178 F.3d 1209, 1215 (11th Cir. 1999).

         III.

         The Second Amended Complaint avers that the Court has personal jurisdiction over Westover and the Individual Defendants because all have contractually consented to - and waived the right to challenge - personal jurisdiction in Florida. (Doc. #58, ¶¶ 17-18.) The Complaint asserts that personal jurisdiction exists as to Westover for the additional reason that Westover “has engaged in actions . . . that constitute sufficient contacts with the State of Florida.”[4] (Id. ¶ 17.) Defendants disagree that they have contractually consented to personal jurisdiction in Florida. Defendants have also filed affidavits disputing the contention that the Court has specific jurisdiction over Westover pursuant to Florida's long-arm statute.

         Erie principles[5] dictate that when, as here, a federal court sitting in diversity is asked to enforce a contractual jurisdiction clause, the court must assess whether such a clause is enforceable under the forum state's law. Alexander Proudfoot, 877 F.2d at 919. However, as with any challenge to personal jurisdiction, the district court first “must determine ‘whether the allegations of the complaint state a cause of action.'” PVC Windoors, Inc. v. Babbitbay Beach Const., N.V., 598 F.3d 802, 808 (11th Cir. 2010) (quoting Wendt v. Horowitz, 822 So.2d 1252, 1260 (Fla. 2002)); see also Taylor v. Moskow, --- Fed. App'x ---, 2017 WL 4899742, at *2 (11th Cir. Oct. 31, 2017) (per curiam) (affirming the district court's finding that because the complaint “failed to state a claim for conspiracy, that count was beyond the reach of Florida's long-arm statute”). The Court thus begins there.

         A. Pleading Sufficiency of the Second Amended Complaint

         1. Breach of License Agreements and Personal Guaranty (Counts I, II, & V)

         Counts I, II, and V allege breaches of the License Agreements and Personal Guaranty. Count I is based on Westover's alleged breach of its obligation to pay Dollar/Thrifty sums due under the License Agreements. Counts II and V allege that the Individual Defendants breached the Personal Guaranty by, respectively, refusing compensate Dollar/Thrifty for the damages suffered as a result of Westover's breaches of the License Agreements, and failing to provide Plaintiffs with timely notice that Westover was terminating the License Agreements.[6]

         Under Florida law, “[t]he elements of a breach of contract action are (1) a valid contract; (2) a material breach; and (3) damages.” Beck v. Lazard Freres & Co., LLC, 175 F.3d 913, 914 (11th Cir. 1999); Abbott Labs., Inc. v. Gen. Elec. Capital, 765 So.2d 737, 740 (Fla. 5th DCA 2000). Defendants have not challenged the pleading sufficiency of Counts I, II, and V, and the Court is satisfied that the Second Amended Complaint adequately alleges breach of the License Agreements and Personal Guaranty.

         2. Declaratory Judgment (Count VI)

         Count VI seeks a declaration, pursuant to 28 U.S.C. § 2201, as to the parties' obligations following Westover's termination of the franchise relationship. Specifically Dollar and Thrifty request a declaration that, contrary to Defendants' assertion that they have been released from any such obligation, Defendants are in fact bound to abide by the License Agreements' post-termination covenants not to compete.

         “[A] declaratory judgment may only be issued in the case of an ‘actual controversy.' That is, under the facts alleged, there must be a substantial continuing controversy between parties having adverse legal interests.” Emory v. Peeler, 756 F.2d 1547, 1552 (11th Cir. 1985). Based on the allegations in the Second Amended Complaint, the Court finds there exists a substantial and continuing “actual controversy” between the parties as to the applicability of the non-compete provisions.[7] Plaintiffs have thus adequately stated a claim for declaratory relief.

         3. Breach of the VPPA (Counts III and IV)

         Count III alleges that the VPPA required Westover “to purchase and pay for a certain number of vehicles that were agreed to between Westover and Dollar/Thrifty” (Doc. #58, ¶ 51), and that “[a]fter agreeing to purchase 70 vehicles in one round and 65 vehicles in another round, Westover attempted to cancel those orders and refused to take delivery or pay for them.” (Id. ¶ 52.) Count IV is based on the Individual Defendants' failure to compensate Hertz for the damages caused by this alleged breach, as required under the Personal Guaranty.

         While Defendants have not exactly argued that Count III fails to state a claim, they do contend that the VPPA imposes no obligation on Westover to purchase any vehicles and, in fact, “expressly prohibits any orders of vehicles.” (Doc. #59, p. 14.) According to Defendants, the VPPA “is only an agreement to agree in the future regarding vehicle orders and the terms thereof. Whatever orders and/or payments for vehicles that may have been made by Westover were . . . [made] pursuant to a separate written vehicle supply agreement which has not been produced by Plaintiffs and which is not a part of this lawsuit.”[8] Id. Defendants, in other words, do not believe any non-performance breached the VPPA.

         Based on the available materials, the Court agrees. Even assuming the VPPA is an enforceable contract under Florida law[9]and accepting as true the allegation that Westover placed an order for vehicles which it later cancelled, that cancellation did not materially breach the VPPA. To the contrary, the express terms of the VPPA leave clear that Westover's failure to “purchase its full allocation of vehicles” instead “constitute[s] a material default under the License Agreement.” (Doc. #58-5 (emphasis added).) Since ...


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