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Delta Grow Seed Co. Inc. v. Sikeston Seed Co. Inc.

June 6, 2007



On February 15, 2007, plaintiff filed this case in the Lonoke County Circuit Court alleging claims for breach of contract, for fraud and misrepresentation, and for an accounting arising from the sale of seed by plaintiff during years 2004 through 2006. Defendants removed the case to this Court on March 8th on the basis of diversity jurisdiction since plaintiff is an Arkansas corporation and the defendants are citizens of Missouri.

Defendants filed a motion to dismiss, on March 26th, contesting personal jurisdiction.*fn1 In support of their motion, they filed a brief and an affidavit by Gooch, who is the president and sole shareholder of Sikeston Seed.

Defendants assert that they assume that plaintiff is invoking the provisions of the Arkansas long-arm statute which allows the exercise of personal jurisdiction over a non-resident defendant to the fullest extent permitted by the Fourteenth Amendment's due process clause, turning on whether they have "minimum contacts" with Arkansas so as not to offend traditional notions of fair play and substantial justice. They argue that they have no connection with Arkansas, as set forth in Gooch's affidavit, except for the fact that the other contracting party to the contracts at issue is from Arkansas.

Gooch's March 23rd affidavit, submitted on behalf of both defendants, states that he is a citizen and resident of Missouri; he does not live in Arkansas; Sikeston Seed is a Missouri corporation with its principal place of business located in Missouri; it primarily does business with local growers and farmers in the Scott, Mississippi, New Madrid and Stoddard Counties of Missouri; and it does not do business in states other than Missouri. He continues that, in the dealings between plaintiff and Sikeston Seed giving rise to this case, he was the sole contact for Sikeston Seed and Emery Hughes*fn2 was his contact with plaintiff. Gooch states that Sikeston Seed was first hired by plaintiff to perform seed cleaning for plaintiff in 2001 and 2002 when Hughes called upon Gooch personally at Sikeston Seed's place of business in Missouri and hired Sikeston Seed to clean soybeans for his company. He recounts that all of the discussions relating to this business transaction occurred in Missouri and the actual soybean cleaning also occurred in Missouri.

Gooch relates Hughes met with him again in early 2002 in Missouri where they reached an agreement for his company to grow plaintiff's parent soybean seeds in 2002 in Missouri for sale in 2003; the arrangement for this transaction were made in person between Hughes and him at his place of business in Missouri; the soybeans were actually grown and sold in Missouri; and all actions which related to these arrangements and their performance occurred in Missouri.

He continues that Sikeston Seed was hired in early 2004 to clean seeds for plaintiff in Missouri and to grow plaintiff's parent seed in Missouri in 2004 for sale in 2005, the solicitation of Sikeston Seed to perform these services was made by Hughes in person at Sikeston Seed's business in Missouri, the seed cleaning was performed in Missouri, and the seed was grown and sold in Southeast Missouri.

Gooch avers that Sikeston Seed advertises its services and products in Southeast Missouri publications; it has never directed its advertising to Arkansas farmers or growers; it does not solicit business for any entities in Arkansas, has no place of business in Arkansas, has no assets in Arkansas, has no bank accounts in Arkansas, and has no employees or agents in Arkansas. He states that Sikeston Seed is not registered with the Arkansas Secretary of State or the Arkansas State Plant Board, which registration would be a pre-requisite to Sikeston Seed engaging in its line of business in Arkansas; it was last registered with the Arkansas State Plant Board in 1998, but allowed its registration to expire because it was not in fact doing business in Arkansas and had no intention of doing any business in Arkansas in the future; Sikeston Seed voluntarily withdrew in 1998 from doing any business or being qualified to do any business in Arkansas; and it has done no business in Arkansas since that time.

On April 5th, plaintiff filed a response in opposition supported by brief and an affidavit by Emery Hughes, president of plaintiff, along with exhibits. It asserts that each of the defendants have had substantial and continuous contacts with Arkansas.

Plaintiff contends that it need only make a prima facie showing of personal jurisdiction over defendants by establishing the requisite minimum contacts by looking at the nature and quality of defendants' contacts with Arkansas, the quantity of contacts, the relationship between the cause of action and the contacts, Arkansas's interest in providing a forum for its residents, and the convenience of the parties. It argues that defendants' contacts with Arkansas are substantial and pursuant to their business as reflected in the Agreements which subjected them to the jurisdiction of Arkansas courts; the contacts are numerous as illustrated by the six shipments of seed produce to Arkansas as well as numerous phone calls and correspondence; defendants' contacts with Arkansas relate directly to the cause of action of this litigation; Arkansas's interest in providing a forum for its residents to bring these causes of action is great and unquestionable; and there is no overwhelming inconvenience to defendants in being subject to the jurisdiction in Arkansas since they reside in the bordering State of Missouri.

The April 3rd affidavit by Hughes states that from 2004 through 2006, defendants purchased seed from plaintiff as well as receiving and processing seeds grown by plaintiff that were then sold and delivered to seed customers. He continues that defendants also received and processed seeds for plaintiff that were grown by third-party suppliers which defendants would ship to various seed customers after processing the third-party seed for plaintiff.

Hughes states that, at the outset of the business relationship between the parties, plaintiff presented defendants with a "Conditioning Agreement" and an "Associate Production and Marketing Agreement" (Agreements) which each provide that they shall be interpreted in accordance with Arkansas law and jurisdiction for any related cause of action, and each Agreement is entered into in Lonoke County, Arkansas. He sets out that plaintiff requested defendants to execute and return the Agreements to plaintiff; that defendants failed to deliver executed Agreements to plaintiff; that defendants represented to plaintiff that they would perform and continue to perform pursuant to the terms of the Agreements; that defendants did perform and continued to perform, except for the breaches alleged in the complaint, pursuant to the terms of the Agreements by processing seeds for plaintiff and performing the other various obligations set forth in the Agreements; that defendants never expressly rejected the terms of the Agreements nor did they perform contrary to the terms of the Agreements to plaintiff's knowledge at the time; that plaintiff relied on defendants' representations and purported performance of the Agreements by not requiring defendants to deliver executed copies of the Agreements to plaintiff before continuing their business relationship; and that as a result of defendants' representations and purported performance of the Agreements, defendants further represented to plaintiff that defendants would abide by all of the terms contained in the Agreements.

Hughes states, in performing the Agreements, defendants processed and shipped numerous orders of seed product to Arkansas, including but not limited to: shipment to United Agri Products, Inc. located in Blytheville, Arkansas on April 26, 2005; shipment to Agriliance, LLC, located in Texarkana, Arkansas on February 4, 2005; shipment to Vincent Soybean & Grain Co., Inc, located in Crawfordville, Arkansas on March 7, 2005; shipment to UAP Delta located in Portland, Arkansas; shipment to Home Oil Company located in Frenchman's Bayou, Arkansas on March 23, 2005; and shipment to plaintiff located in Scott, Arkansas on February 18, 2002. Copies of the order statements reflecting those shipments are attached to the affidavit.

Finally, Hughes avers that defendants continuously made numerous telephone calls and sent numerous correspondence to plaintiff's office in Arkansas in performing the subject Agreements.

Defendants filed a reply, on April 10th, with a supplemental affidavit by Gooch. They assert that the connections with the forum found to be too attenuated and insubstantial to satisfy due process in a recent case Eighth Circuit case are similar to those at issue here. They summarize that Sikeston Seed is a Missouri corporation, Gooch is a resident of Missouri, they do not engage in business in Arkansas, they do not sell products in Arkansas, they do not solicit business from Arkansas, Sikeston Seed is not registered with the Arkansas Secretary of State, Sikeston Seed is not registered with the Arkansas State Plant Board, the contract at issue was entered into in Missouri, the alleged breach as well as the alleged fraudulent activities all occurred within Missouri while plaintiff's ...

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