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CHS Inc. v. Farmers Propane Inc.

United States District Court, D. Minnesota

August 19, 2019

CHS Inc., Plaintiff,
v.
Farmers Propane Inc., Defendant.

          ORDER

          Wilhelmina M. Wright United States District Judge

         This matter is before the Court on Plaintiff CHS Inc.'s Motion for Default Judgment, (Dkt. 11), and Defendant Farmers Propane Inc.'s Motion to Vacate and Dismiss, (Dkt. 25). For the reasons addressed below, the complaint is dismissed for lack of personal jurisdiction, the Clerk's entry of default is set aside, and the motion for default judgment is denied.

         BACKGROUND

         Plaintiff CHS Inc., a Minnesota corporation, conducts its business in the energy, grain, and food solutions sectors. Defendant Farmers Propane Inc., an Ohio corporation, sells propane. In or around 2013, CHS and Farmers Propane entered into an agreement (the original contract) in which CHS would sell propane to Farmers Propane on credit. After Farmers Propane failed to pay the amount due under the agreement, the parties entered into a series of subsequent contracts concerning Farmers Propane's obligation to pay CHS. The most recent contract (the Promissory Note) is the subject of this lawsuit.

         CHS alleges that Farmers Propane failed to make any of the periodic payments required under the Promissory Note. CHS initiated this lawsuit on May 24, 2018, and served Farmers Propane with the summons and complaint on July 3, 2018. Farmers Propane had 21 days to file an answer or otherwise respond to the complaint. See Fed. R. Civ. P. 12(a)(1)(A)(i). That deadline passed without Farmers Propane answering or otherwise responding to the complaint. CHS applied for an entry of default, Fed.R.Civ.P. 55(a), and the Clerk of Court entered default on August 27, 2018. Thereafter, CHS filed the pending motion for default judgment.

         On November 6, 2018, Farmers Propane moved to dismiss CHS's complaint. The Court struck Farmers Propane's motion because it did not comply with the Local Rules. Farmers Propane subsequently filed the pending motion to vacate and dismiss on November 16, 2018.

         ANALYSIS

         The parties primarily dispute whether the Court has personal jurisdiction over Farmers Propane. Because the existence of personal jurisdiction is a threshold question, the Court addresses this issue first in the context of Farmers Propane's motion to dismiss. See Falkirk Mining Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 372 (8th Cir. 1990) (explaining that personal jurisdiction is a threshold issue and must be addressed before the merits of a dispute).

         I. Motion to Dismiss for Lack of Personal Jurisdiction

         CHS alleges that Farmers Propane has sufficient minimum contacts with Minnesota and, therefore, is subject to this Court's specific personal jurisdiction. Farmers Propane counters that CHS's proffered contacts are insufficient.

         When personal jurisdiction is challenged, the plaintiff asserting the district court's personal jurisdiction over a defendant “must make a prima facie showing that personal jurisdiction exists.” K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591-92 (8th Cir. 2011). This showing requires the plaintiff to plead “sufficient facts to support a reasonable inference that the defendant[ ] can be subjected to jurisdiction within the state.” Id. (alteration in original) (internal quotation marks omitted). Although the evidence necessary to make this prima facie showing is minimal, such evidence must withstand testing through competing affidavits and exhibits supporting or opposing the motion. Id. at 592. Pleadings alone are insufficient. Id. When deciding whether the plaintiff has succeeded in making this requisite showing, the district court views the evidence in the light most favorable to the plaintiff and resolves all factual conflicts in the plaintiff's favor. Digi-Tel Holdings, Inc. v. Proteq Telecomms. (PTE), Ltd., 89 F.3d 519, 522 (8th Cir. 1996).

         A federal court follows state law when determining the bounds of the federal court's personal jurisdiction. Walden v. Fiore, 571 U.S. 277, 283 (2014). Because Minnesota's long-arm statute extends jurisdiction to the maximum limit permitted by due process, a federal court in Minnesota must determine only whether its exercise of personal jurisdiction comports with due process. Wessels, Arnold & Henderson v. Nat'l Med. Waste, Inc., 65 F.3d 1427, 1431 (8th Cir. 1995).

         Due process requires a non-resident defendant to have sufficient minimum contacts with the forum state such that “the maintenance of the lawsuit does not offend traditional notions of fair play and substantial justice.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92 (1980) (internal quotation marks omitted). “[T]he plaintiff cannot be the only link between the defendant and the forum.” Walden v. Fiore, 571 U.S. 277, 285 (2014). Sufficient minimum contacts exist when a defendant has engaged in an act “by which the defendant purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 821 (8th Cir. 2014) (internal quotation marks omitted). The nature of the defendant's contact with the forum state must be “such that [the defendant] should reasonably anticipate being haled into court there.” World-Wide Volkswagen, 444 U.S. at 297. When, as here, a plaintiff asserts that a defendant is subject to specific personal jurisdiction, a district court may adjudicate causes of action “arising from or related to the defendant's actions in the forum state.” Wessels, 65 F.3d at 1432 n.4.

         The United States Court of Appeals for the Eighth Circuit considers five factors to determine the sufficiency of a defendant's contacts with the forum state: (1) the nature and quality of contacts, (2) the quantity of contacts, (3) the relation of the cause of action to the contacts, (4) the interest of the forum state in providing a forum for its residents, and (5) the convenience of the parties. Land-O-Nod Co. v. Bassett Furniture Indus., Inc., 708 F.2d 1338, 1340 (8th Cir. 1983). The first three factors are given “primary” importance, whereas the last two are “secondary.” See Johnson v. Arden, 614 F.3d 785, 794 (8th Cir. 2010); accord Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996).

         The alleged contacts between Farmers Propane and Minnesota are analyzed under each of the Land-O-Nod factors, below.

         A. Nature and ...


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