West Virginia Bank Wins Dismissal of Contract Claim for Lack of Personal Jurisdiction

West Virginia Bank Wins Dismissal of Contract Claim for Lack of Personal Jurisdiction

 Virginia's long-arm statute extends personal jurisdiction to the fullest extent permitted by due process. A Virginia court may exercise specific jurisdiction over a defendant when the defendant has sufficient minimum contracts with Virginia such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. To establish "minimum contacts," a plaintiff must show that the defendant purposefully directed activities at Virginia residents and that the litigation results from alleged injuries arising out of those activities. A court may exercise general jurisdiction over a defendant whose activities in Virginia have been continuous and systematic. A court with general jurisdiction over a defendant may adjudicate claims entirely distinct from the defendant's in-state activities. To survive a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure Rule 12(b)(2), a plaintiff must demonstrate personal jurisdiction by a preponderance of the evidence. In Hunt v. Calhoun County Bank, the United States District Court for the Eastern District of Virginia analyzed whether it could exercise personal jurisdiction over non-residents in a contract dispute [an enhanced version of this opinion is available to lexis.com subscribers].

James L. Bennett ("Bennett") is the president and a board member of Calhoun County Bank (the "Bank"), a West Virginia corporation. In June 2007, William H.G. Hunt, Sr. ("Hunt"), a Virginia resident, entered a contract with the Bank in which the Bank agreed to sell Hunt royalty interests for $40,000. Hunt sued the Bank and Bennett for breach of contract and fraud alleging that he transferred $40,000 to an agent of the Bank but that the Bank refused to transfer the royalty interests. He asserts that he suffered over $180,000 in damages as a result of the Bank's breach and he seeks specific performance or compensatory damages. Hunt also alleges that Bennett fraudulently misrepresented his intention to transfer the royalty interests. The Bank and Bennett moved to dismiss for lack of personal jurisdiction and also for failure to state a claim upon which relief can be granted.

The court first rejected Hunt's argument that the Bank and Bennett waived personal jurisdiction by filing their motions, and it went on to analyze whether it had specific jurisdiction over defendants. To determine whether specific jurisdiction comports with due process, a court considers: (1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the state; (2) whether the plaintiffs' claims arise out of those activities directed at the state; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable. In analyzing whether a business defendant has purposefully availed itself of the forum state, courts consider whether the defendant (1) maintains offices or agent in the forum state, (2) owns property in the forum state, (3) reached into the forum state to solicit or initiate business, (4) deliberately engaged in significant or long-term business activities in the forum state, (5) contractually agreed that the law of the forum state would govern disputes, (6) made in-person contact with the resident of the forum in the forum state regarding the business relationship, the nature, quality and extent of the parties' communications about the business being transacted, and (7) whether the performance of contractual duties was to occur in the forum. Considering these factors, the court found that plaintiff had not presented sufficient evidence that defendants purposefully availed themselves of Virginia.

 Read the rest of the article at the Virginia Business Litigation Lawyer Blog.

For more information about LexisNexis products and solutions connect with us through our corporate site.