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Matheson Tri-Gas, Inc. v. Flextm, Inc.

United States District Court, S.D. Texas, Houston Division

May 24, 2018

MATHESON TRI-GAS, INC., Plaintiff,
v.
FLEXTM, INC., Defendant.

          MEMORANDUM AND ORDER

          NANCY F. ATLAS SENIOR UNITED STATES DISTRICT JUDGE

         In this breach of contract action, Defendant FlexTM, Inc. (“FlexTM”) has filed a Motion to Dismiss For Lack of Personal Jurisdiction and For Improper Venue [Doc. # 3] (the “Motion”) asserting lack of personal jurisdiction and improper venue. Plaintiff, Matheson Tri-Gas, Inc. (“Matheson”) filed a timely response, to which Defendant replied.[1] The Motion is now ripe for decision. Having considered the parties briefing, the applicable legal authorities, and all pertinent matters of record, the Court concludes that the Motion should be denied.[2]

         I. BACKGROUND

         Plaintiff is a Delaware corporation whose principal place of business is Basking Ridge, New Jersey. Defendant is a North Dakota corporation whose principal place of business is Wahpeton, North Dakota.[3] Defendant does not operate, or otherwise conduct any business, in the State of Texas. Additionally, none of the interactions between Plaintiff and Defendant in this case occurred in, or were directed towards, the State of Texas.

         On April 1, 2010, Plaintiff and non-party Ro-Banks Tool & Manufacturing Co. (“Ro-Banks”) entered into a product supply agreement with respect to the purchase and sale of liquid argon (the “Argon Agreement”). The Argon Agreement, which is governed by Texas law, contains mandatory forum selection clause (the “Forum Selection Clause”). Specifically, the Forum Selection Clause provides that the parties to the Argon Agreement “agree to consent to the exclusive jurisdiction of the courts of the State of Texas with regard to any dispute arising hereunder.” Argon Agreement [Doc. # 10-3], ¶ 12(f).

         Prior to entering into the Argon Agreement, in August 2007, Ro-Banks and a predecessor entity of Plaintiff also entered into an agreement with respect to the purchase and sale of bulk oxygen (the “Oxygen Contract”). Oxygen Contract [Doc. # 10-2]. The Oxygen Contract, which is governed by West Virginia law, does not contain a forum selection clause. Whether the Court may exercise personal jurisdiction over Defendant in this case depends entirely on whether there is prima facie evidence of Defendant's agreement to the Argon Agreement. Therefore, the Court focuses in this Memorandum and Order on the Argon Agreement.

         On November 19, 2010, Defendant and Ro-Banks entered into an Asset Purchase Agreement (the “APA”). Pursuant to the terms of the APA, Defendant purchased from Ro-Banks, among other assets, “all contracts and agreements to which [Ro-Banks] is a party including, without limitation, all service contracts, product distribution agreements, rental agreements and franchise agreements, as listed on Exhibit 2.1(d) (collectively, the ‘Operating Contracts'); to which [Defendant] has expressly informed [Ro-Banks] it has an interest their continuation.” APA [Doc. # 10-7], ¶ 2.1(d). The parties to the APA did not prepare an Exhibit 2.1(d).[4] According to Bradley Odegard, Defendant's President, Defendant neither had any interest in continuing the Argon Agreement nor intended or expected for the Argon Agreement to be a “Purchased Asset” within the meaning of the APA.[5]

         Less than a month after Defendant completed its purchase of Ro-Banks's assets, it began purchasing argon from Plaintiff's predecessor-in-interest[6] and continued making purchases of argon from Plaintiff thereafter. Defendant took delivery in North Dakota of all of its purchases from Plaintiff. The location of the source of Plaintiff's supply of this argon is not established by the record, but there is no evidence that the supply originated in Texas. Defendant stored the argon in a tank located on Ro-Banks's former property in North Dakota, property that Defendant acquired (or at least acquired a right to occupy) via the APA. Defendant cites no evidence that the pricing of its argon purchases from Plaintiff or its predecessor differed from what was required under the Argon Agreement.

         On October 2, 2014, Josh Rahn, Defendant's Controller and Human Resources Manager, emailed Vince Watje, his sales contact with Plaintiff, asking for a copy of the “lease” governing the argon storage tank. On October 15, 2014, Watje responded that he had obtained a copy of the Argon Agreement and that he intended to bring a copy of that agreement to Rahn the next day. The Argon Agreement was not attached to Watje's email. The record before the Court includes no evidence that Watje provided a copy of the Argon Agreement to Rahn or any of Defendant's other employees on or before October 16, as he had promised.

         On October 20, 2014, Watje and Gregg Hoffmann, Plaintiff's Regional General Manager, met with Rahn and Odegard. According to Plaintiff, Watje and Hoffmann brought copies of the Argon Agreement to this meeting, discussed the agreement with Rahn and Odegard, and left copies of it with Rahn and Odegard.[7]Plaintiff also contends that at no time during the meeting, or in any follow-up thereto, did Defendant claim it was not bound by the Argon Agreement, object to it, or dispute any of its terms.[8] Defendant sharply disagrees with Plaintiff's description of what transpired during the October 20, 2014 meeting. Specifically, Odegard avers that during the meeting, the Argon Agreement was not discussed and that neither he nor Rahn ever received a copy.[9] Odegard also avers that at no point during the meeting did Watje or Hoffmann state that Plaintiff believed Defendant was party to the Argon Agreement.[10]

         Following the October 20, 2014 meeting, Defendant continued to purchase argon from Plaintiff for approximately three years. According to Plaintiff, Defendant's argon purchases were made in accordance with the terms of the Argon Agreement, including its pricing provisions.[11] In contrast, Defendant asserts that all of its purchases from Plaintiff were made and priced on a per-transaction basis, and not pursuant to any binding agreement between it and Plaintiff.

         On October 16, 2017, Defendant informed Plaintiff that it would no longer purchase argon from Plaintiff because it believed it had been materially overcharged by Plaintiff for a significant period of time. Nearly a month later, on November 14, 2017, Hoffmann emailed Odegard a copy of the Argon Agreement and asked him when he would have time to discuss the agreement. According to Defendant, Hoffmann's November 14, 2017 email was the first time it became aware of the Argon Agreement or that Plaintiff believed it had a binding contract with Defendant regarding the sale of argon.

         Plaintiff filed the instant litigation against Defendant in December 2019. Plaintiff alleges, among other causes of action, breach of the Argon Agreement and seeks damages resulting therefrom.

         II. LEGAL STANDARDS

         A. Personal Jurisdiction

         Plaintiff has the burden of establishing that this Court has personal jurisdiction over Defendant. See Int'l Energy Ventures Mgmt., LLC v. United Energy Group, Ltd., 800 F.3d 143, 151 (5th Cir. 2015). On a motion to dismiss, a plaintiff is required to present only a prima facie case for personal jurisdiction. Walk Haydel & Assoc., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 241 (5th Cir. 2008). Where, as here, the Court has not conducted a full evidentiary hearing, the Court makes only a preliminary finding on the basis of the evidence presented by the parties “to help it resolve the ...


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