United States District Court, E.D. Virginia, Norfolk Division
NEW VENTURE HOLDINGS, L.L.C. D/B/A THE DUMP, Plaintiff,
DEVITO VERDI, INC., Defendant.
OPINION AND ORDER
S. DAVIS CHIEF UNITED STATES DISTRICT JUDGE
matter is before the Court on a Motion to Dismiss filed by
Defendant DeVito Verdi, Inc. ("Defendant" or
"DeVito Verdi"), pursuant to Federal Rule of Civil
Procedure 12(b)(2), or alternatively under Federal Rules of
Civil Procedure 8, 9(b), and 12(b)(6). ECF No. 4. For the
reasons stated below, Defendant's Motion to Dismiss for
lack of personal jurisdiction is GRANTED. As
a result, the Court does not reach a decision on the
alternative bases for dismissal. The Court
PROVIDES Plaintiff New Venture Holdings,
LLC, doing business as The Dump ("Plaintiff" or
"New Venture"), with leave to amend the Complaint
to cure all defects within fifteen (15) days after the entry
of this Order.
FACTUAL AND PROCEDURAL HISTORY
New Venture is a Virginia corporation and operates a chain of
discount furniture stores under the trade name "The
Dump." Compl., ECF No. 1 ¶¶ 1, 5. New Venture
has "The Dump" stores located in Atlanta, Georgia;
Chicago, Illinois; Dallas, Texas; Houston, Texas;
Philadelphia, Pennsylvania; Phoenix, Arizona; Turnersville,
New Jersey; Norfolk, Virginia; Hampton, Virginia; and
Richmond, Virginia. Verdi Decl., ECF No. 6 ¶ 24. New
Venture's business requires effective advertising and
marketing; New Venture relies on television, radio, print
media, its online website, and social media for its
advertising. Compl, ¶¶ 5, 7. Prior to March 2018,
New Venture relied on in-house resources and regional
advertising agencies to carry out its advertising and
marketing. Id. ¶ 6. Because of its growing
national platform and a desire to improve marketing efforts,
in late 2017 and early 2018, New Venture began looking for a
national advertising agency to take over its advertising and
marketing. Id. ¶ 8.
DeVito Verdi is a New York-based advertising agency.
Id. ¶ 9. In 2018, New Venture and DeVito Verdi
began discussions for DeVito Verdi to become New
Venture's principal advertising agency. Id.
¶ 12. For several years prior to these discussions,
DeVito Verdi had solicited New Venture's business. For
instance, in 2014, Paul McCormick, DeVito Verdi's
executive vice president of account management, sent an email
to Brian Hostetler, vice president of marketing for New
Venture, who was located in Virginia, about an advertising
campaign DeVito Verdi had done for Tribe Hummus. Hostetler
Decl. ¶ 9, ECF No. 10, Ex. B. On January 8, 2016,
McCormick sent another email to Hostetler about a television
commercial by DeVito Verdi that won an award. Id.
DeVito Verdi also mailed a letter dated June 29, 2016 to New
Venture's Virginia Beach office, which attaches images of
advertisements it created for other companies including
another retail furniture store. Id- ¶ 12(a), Ex. C.
DeVito Verdi followed up on this letter with several
telephone calls. In total, New Venture submitted records of 7
phone calls from 2017 and 2018. Id., Ex. D. DeVito
Verdi also promotes its advertising and marketing services on
its website, describing its capabilities and creative and
production processes. Compl. ¶¶ 11-13.
an early 2018 telephone call between New Venture and DeVito
Verdi, the parties reached an agreement in principle, but
E.J. Strelitz, the chief executive officer of New Venture,
would not agree to hire DeVito Verdi until he personally met
with DeVito Verdi. Verdi Decl. ¶ 13. Therefore, the
parties held an in-person meeting at New Venture's store
in Chicago, Illinois. Id. ¶ 14. At that
meeting, the parties reached an agreement on DeVito
Verdi's engagement as New Venture's advertising
DeVito Verdi drafted a letter agreement for the engagement
and sent it to New Venture in Virginia. Id. ¶
15. However, this was not the final contract. Following edits
and further negotiation, New Venture put the agreement on its
letterhead, and sent it back to DeVito Verdi in New York
City, where DeVito Verdi executed the agreement on March 23,
2018 (the "Agreement"). Id. ¶ 16;
Hostetler Decl. ¶ 15; Compl. ¶ 10.
agreement provides that DeVito Verdi would provide work in
four separate categories, with a flat monthly payment from
New Venture for each category of work: (a) Strategy and
Creative; (b) In-Store Communications Creative; (c) Public
Relations and Social Media; and (d) Digital, Website
Development, Optimization, SEO, SEM. Agreement, ECF No. 1, Ex. 1.
agreement further provides that New Venture must approve
every advertisement and will own all finished product.
Id. ¶ 1(a) . It also states that New Venture
must reimburse DeVito Verdi for out-of-pocket expenses, but
only expenses authorized by New Venture. Id. ¶
2. Moreover, it provides that New Venture will be responsible
for booking all business travel, i.e. all travel was subject
to Plaintiff's approval.
to the agreement, DeVito Verdi commenced work for The Dump on
or after March 26, 2018. Following the execution of the
agreement, representatives of New Venture went to DeVito
Verdi's offices in New York to discuss DeVito Verdi's
work on two occasions. Verdi Decl. ¶ 21. Employees of
DeVito Verdi visited New Venture's store in Philadelphia,
Pennsylvania, and traveled to North Carolina to view how and
where New Venture purchases its inventory. Id.
¶ 22. At no point did any DeVito Verdi employee visit
Virginia. Id. ¶ 28. The parties exchanged
several emails and telephone calls during their contractual
relationship. Hostetler Decl. ¶ 8. New Venture submits
copies of these emails. Id., Ex. 1. DeVito Verdi
also provided New Venture with ideas for 15 and 30-second
television commercials, Verdi Decl. ¶ 31, and samples of
in-store advertisements for The Dump store in Chicago,
id. ¶ 30.
19, 2018, New Venture filed a complaint against DeVito Verdi
in the Circuit Court for the City of Virginia Beach. Compl.,
ECF No. 1. Count I of the Complaint alleges breach of
contract or in the alternative, unjust enrichment,
id. ¶¶ 26-43; Count II alleges fraudulent
inducement, id. ¶¶ 44-60; Count III
alleges a c breach of fiduciary duty, id.
¶¶ 61-65; and Count IV seeks a declaratory judgment
that Defendant is in breach of its obligations and Plaintiff
has no continuing obligations under the agreement,
Id. ¶¶ 66-68. On July 11, 2018, Defendant
removed the action to this Court pursuant to 28 U.S.C. §
1441 et seq. Notice of Removal, ECF No. 1. On the
same day, Defendant also filed a motion to dismiss in this
Court. ECF No. 4. The motion and accompanying memorandum
argue that the Court lacks personal jurisdiction over
Defendant, and alternatively, that the Complaint fails to
state claims upon which relief can be granted, as required by
Rule 8; and as to Count II, argues that the Complaint fails
to plead fraud with particularity as required by Rule 9(b) .
ECF No. 5. On August 3, 2018, Plaintiff filed a response. ECF
No. 10. On August 9, 2018, Defendant filed a reply. ECF No.
11. The Court has reviewed the parties' submissions and
concludes that a hearing is not necessary. Local Civil Rule
7(J); Fed.R.Civ.P. 78.
STANDARD OF REVIEW
may move to dismiss an action for lack of personal
jurisdiction. Fed.R.Civ.P. 12(b)(2). "When a court's
personal jurisdiction is properly challenged by a Rule
12(b)(2) motion, the jurisdictional question thus raised is
one for the judge, with the burden on the plaintiff
ultimately to prove the existence of a ground for
jurisdiction by a preponderance of the evidence."
Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989);
New Wellington Fin. Corp. v. Flagship Resort Dev.
Corp., 416 F.3d 290, 294 (4th Cir. 2005) (a plaintiff
''bears the burden of proving to the district court
judge the existence of [personal] jurisdiction over the
defendant by a preponderance of the evidence.").
may resolve a 12(b)(2) motion in one of two ways. A district
court may hold an evidentiary hearing, or may rule on the
motion papers, supporting legal memoranda, and the relevant
allegations in the complaint. Combs, 886 F.2d at
676; PBM Prods. v. Mead Johnson Nutrition Co., No.
3.O9cv269, 2009 WL 3175665, at *2, 2009 U.S. Dist. LEXIS
93312, at *4 (E.D. Va. Sept. 29, 2009) ("[A] district
court may look to both plaintiff and defendant's
plaintiff must make a prima facie showing of a sufficient
jurisdictional basis to survive a motion to dismiss. New
Wellington Fin. Corp., 416 F.3d at 294. To evaluate
whether a plaintiff has made a prima facie showing of
jurisdiction, the court "'must construe all relevant
pleading allegations in the light most favorable to the
plaintiff, assume credibility, and draw the most favorable
inferences for the existence of jurisdiction.'"
Id. (quoting Combs, 886 F.2d at 676);
MJL Enterprises, LLC v. Laurel Gardens, LLC, No.
2:15cvl00, 2015 WL 6443088, at *2 (E.D. Va. Oct. 23, 2015).
In cases where "the defendant provides evidence which
denies facts essential for jurisdiction, 'the plaintiff
must, under threat of dismissal, present sufficient evidence
to create a factual dispute on each jurisdictional element
which has been denied by the defendant and on which the
defendant has presented evidence.'" Colt Def.,
L.L, C. v. Heckler & Koch Def., Inc., No.
2;O4cv258, 2004 U.S. Dist. LEXIS 28690, at *29-30 (E.D. Va.
Oct. 22, 2004) (quoting Indus. Carbon Corp. v.
Equity Auto & Equip. Leasing Corp., 737
F.Supp. 925, 926 (W.D.Va. 1990)).
any motion pursuant to Rule 12(b)(2), the ultimate question
is whether the plaintiff has proven that the Court has
personal jurisdiction over the defendant." People
Exp. Airlines, Inc. v. 200 Kelsey Assocs., LLC,
922 F.Supp.2d 536, 541 (E.D. Va. 2013). "'Personal
jurisdiction' is the phrase used to express a court's
power to bring a person into its adjudicative process."
Noble Sec, Inc. v. MIZ Enq'q, Ltd., 611
F.Supp.2d 513, 525 (E.D. Va. 2009) (citing Black's Law
Dictionary 857 (7th ed. 1999)). "Federal district courts
may exercise such personal jurisdiction "only to the
degree authorized by Congress under its constitutional power
to ordain and establish the lower federal courts.'"
Id. (quoting ESAB Grp., Inc. v. Centricut,
Inc., 126 F.3d 617, 622 (4th Cir. 1997)). There are two
types of personal jurisdiction: general and specific. CFA
Inst, v. Inst, of Chartered Fin. Analysts of India, 551
F.3d 285, 292 n. 15 (4th Cir. 2009). "General personal
jurisdiction . . . requires "continuous and
systematic' contact with the forum state, such that a
defendant may be sued in that state for any reason,
regardless of where the relevant conduct occurred.7'
Id. Specific jurisdiction "requires only that
the relevant conduct have such a connection with the forum
state that it is fair for the defendant to defend itself in
that state." Id. (citing Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
further discussed below, because Plaintiff does not assert
that general personal jurisdiction exists, the Court focuses
on specific personal jurisdiction. "[F]or a district
court to assert [specific] personal jurisdiction over a
nonresident defendant, two conditions must be satisfied: (1)
the exercise of jurisdiction must be authorized under the
[forum] state's long arm statute; and (2) the exercise of
jurisdiction must comport with the due process requirements
of the Fourteenth Amendment." Carefirst of Md., Inc.
v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 397
(4th Cir. 2003).
long-arm statute provides that "[a] court may exercise
personal jurisdiction over a person, who acts directly or by
an agent, as to a cause of action arising from" a number
of enumerated activities, including "[t]ransacting any
business in this Commonwealth" and "[c]ontracting
to supply services or things in this Commonwealth[.]"
Va. Code Ann. § 8.01-328.1(A)(1) & (2). The Fourth
Circuit has noted that "a single act by a nonresident
which amounts to 'transacting business' in Virginia
and gives rise to a cause of action may be sufficient to
confer jurisdiction upon [Virginia] courts[.]"
English & Smith v. Metzger, 901 F.2d 36, 38-40
(4th Cir. 1990) (quoting Danville Plywood Corp. v. Plain
& Fancy Kitchens, Inc., 218 Va. 533, 534-35 (1977)).
However, "[w]hen jurisdiction over a person is based
solely upon [Virginia's long-arm statute], only a cause
of action arising from acts enumerated [therein] may be
asserted against him." Va. Code § 8.01-328.1(C).
long-arm statute has been determined "to extend personal
jurisdiction to the extent permissible under the [United
States Constitution's] due process clause, [so that] the
statutory inquiry merges with the constitutional
inquiry." Consulting Enq'rs Corp. v. Geometric,
Ltd., 561 F.3d 273, 277 (4th Cir. 2009). The due process
requirement is satisfied if the defendant has
"sufficient 'minimum contacts' with the forum
state such that 'the maintenance of the suit does not
offend traditional notions of fair play and substantial
justice.'" Id. (quoting Int'l Shoe
Co. v. Wash., 326 U.S. 310, 316 (1945)). The Fourth
Circuit employs a three-prong test to determine whether the
exercise of specific jurisdiction comports with the
requirements of due process: "Ml) the extent to which
the defendant purposefully availed itself of the privilege of
conducting activities in the forum state; (2) whether the
plaintiff's claims [arose] out of those activities; and
(3) whether the exercise of personal jurisdiction is
constitutionally reasonable.'" Universal
Leather, LLC v. Koro AR,S.A., 773 F.3d 553,
559 (4th Cir. 2014) (quoting Tire Eng'g &
Distrib., LLC v. Shandong Linqlong Rubber Co., 682 F.3d
292, 302 (4th Cir. 2012)) . As to the third ...