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MITCHELL ENERGY CORP. v. MARY HELEN COAL CO.

October 13, 1981

MITCHELL ENERGY CORPORATION, and Blackhawk Energy, Inc., Plaintiffs,
v.
MARY HELEN COAL CO., INC., Defendant



The opinion of the court was delivered by: GREEN

MEMORANDUM OPINION

Defendant has moved to dismiss the complaint on the grounds of lack of personal jurisdiction over defendant Mary Helen Coal Co., Inc., (Mary Helen), under the District of Columbia long-arm statute; lack of subject-matter jurisdiction because the complaint fails to allege the principal places of business of plaintiffs Mitchell Energy Corporation (Mitchell), and Blackhawk Energy, Inc., (Blackhawk), and erroneously alleges that Blackhawk is incorporated in the District of Columbia, thereby failing to establish diversity jurisdiction; and improper venue because Blackhawk is not incorporated in the District of Columbia.

 For purposes of the motion and as outlined from the pleadings, the facts are as follows. On April 10, 1979, plaintiff Blackhawk and defendant entered into a written contract, (April 10 Agreement), whereby Mary Helen agreed to sell, and Blackhawk to purchase, 85,000 tons of coal, contingent upon Blackhawk being selected as a supplier of the Defense Fuel Supply Center (DFSC) in Alexandria, Virginia under a certain government solicitation. The coal was to meet specifications described in the contract, and was to be delivered to six locations, five in Washington, D.C. and one in Alexandria, Virginia. The agreement provided for a price of $ 37.00 per net ton, f. o. b. rail cars at mine. Defendant's mines are in the vicinity of Belfry, Kentucky.

 However, plaintiff Mitchell Energy, and not Blackhawk, was the successful bidder on certain portions of the specified solicitation, and was awarded a contract calling for the delivery of up to 77,000 tons of coal to designated government installations. After a period of negotiation, a new agreement, dated October 3, 1979, (October 3 Agreement), and entitled Supplement to and Amendment of Contract Dated April 10, 1979, was entered into by Blackhawk, Mitchell, and Mary Helen. That Agreement recited that as the principals of Mitchell Energy were identified in all respects to the principals of Blackhawk Energy, Blackhawk assigned all its rights and interest in the April 10 Agreement to Mitchell. Further, the Agreement incorporated the April 10 Agreement except for enumerated changes, which included the total quantity of coal to be delivered (now 67,000 tons), and elimination of one of the District of Columbia delivery points. Previous to the October 3 Agreement, an Escrow Agreement dated August 21, 1979, was executed by the parties, delineating the method of payment for the 67,000 net tons of coal.

 It appears from the complaint that defendant began coal deliveries prior to the October 3 Agreement. Plaintiffs state that deliveries began shortly after the award of the DFSC contract to Mitchell, which was in July of 1979, and that in or about August 1979, Mitchell was notified by DFSC that the coal was not meeting the specifications for the percentage of volatile matter, dry. Complaint P 10. Defendant has stated that coal deliveries began in mid-July.

 The gravamen of plaintiffs' complaint is that Mary Helen repeatedly breached the contract by shipments of non-conforming coal. In November of 1979, plaintiffs allege, DFSC informed Mitchell that no further shipments of coal from Mary Helen would be accepted under the contract due to volatile matter exceeding 38 percent.

 Mary Helen Coal is a corporation organized under the laws of the state of Kentucky, with its business office located in Indianapolis, Indiana. Its mining operation is in Belfry, Kentucky, and it operates several coal mines within a ten mile radius of Belfry. It is undisputed that Mary Helen is not authorized, registered, or licensed to do business in the District of Columbia, nor does it maintain a registered agent here. It has never maintained an office, an agent for transacting business, a telephone listing, mail box, or bank account in the District. Nor has it ever possessed, leased, or owned property here. It does not regularly solicit business or advertise in the District of Columbia. Mary Helen has been listed as a supplier of coal in the Keystone Coal Industry Manual, which is distributed nationally, including Washington, D.C. Defendant has dealings with only one customer which has an office in D.C., and in that case the initial contact was made through that company's West Virginia office, and all coal was delivered to a point in Virginia for export. Some orders were placed with defendant in Indianapolis by telephone from the company's Washington, D.C. office.

 Defendant asserts that the above factors render it impossible to subject it to jurisdiction in the District of Columbia for general purposes on the basis of "doing business" here, and that its dealings in the transaction at issue do not constitute "transacting any business in the District of Columbia" for the purposes of the D.C. long-arm statute, D.C. Code § 13-423, so as to render it amenable to suit here on claims arising from the instant transaction.

 As to this transaction, defendant has asserted, and it is not disputed, that the initial solicitation was made to Mary Helen in Indianapolis by a third party broker located in Ohio on behalf of Blackhawk. Subsequently, Blackhawk contacted Mary Helen directly. The April 10 Agreement was drafted and executed by Blackhawk and mailed to Mary Helen in Indianapolis, where it was signed and returned to Blackhawk by mail. The only time any agent of defendant was present in Washington, D.C. in connection with this contract was when two of defendant's employees had a meeting with Iverson Mitchell, Jr., an officer of both Blackhawk and Mitchell, to discuss various questions relating to the contract. The importance of this meeting is the subject of serious dispute between the parties. Defendant claims that only the terms of an escrow agreement and consideration of a price escalation provision were discussed, and that nothing was finalized, signed or executed at that time. Plaintiffs, whose argument for jurisdiction rests largely upon defendant's presence in the District for this meeting, claim that the purpose of the meeting was to renegotiate the April 10 Agreement and negotiate the terms of the Escrow Agreement and the October 3 Agreement, and that the meeting did in fact lead in a very substantial way to the October 3 Agreement and the August 21 Escrow Agreement. Defendant asserts that the final terms of the October 3 Agreement were in fact negotiated at a meeting at its office in Indianapolis, and the Agreement was executed by all parties there that same day.

 In further support of its argument that the loci of its activities in relation to this contract were Kentucky and Indianapolis, and not Washington, D.C., defendant points to the facts that the coal was shipped f. o. b. rail cars at mine in Kentucky, that defendant transferred title to the coal to plaintiff at that point, and did not pay for shipping beyond there, and that the testing facilities for determining whether the coal met specifications were also in Kentucky. Therefore, defendant concludes, the only connection of the District of Columbia with this transaction is that it is where the plaintiffs happened to be located. Defendant did not, it claims, transact any business in the District which could subject it to the jurisdiction of this Court.

 Plaintiffs, on the other hand, insist that the presence of defendant's agents in Washington for what they term an essential contract negotiation session, combined with telephone and mail communications between the parties in Washington and Indianapolis, is sufficient to confer jurisdiction based upon the transaction of business. Plaintiffs further bolster their jurisdictional claim pointing to the delivery of most of the coal to points in the District of Columbia, and defendant's appearance in the national coal industry publication.

 The Court finds that defendant's contacts with the District of Columbia are not sufficient to support jurisdiction under D.C. Code § 13-423 or under the Due Process Clause of the Fourteenth Amendment.

 The party seeking to invoke federal jurisdiction has the burden of establishing that it exists. The plaintiff need only make a prima facie showing of jurisdictional facts to prevail; otherwise a defendant could obtain a dismissal simply by controverting the facts established by plaintiff through affidavits. However, if the submitted materials raise questions of credibility or disputed questions of fact, the Court may take evidence at a preliminary hearing to resolve these issues. At such a hearing, plaintiff must establish the jurisdictional facts by a preponderance of the evidence. Data Disc, Inc. v. Systems Technology Associates, 557 F.2d 1280 (9th Cir. 1977). In this case, although at first blush it appears that important factual matters are in dispute, a closer examination of the entire record reveals that resolution can occur without an evidentiary hearing.

 The first apparent factual dispute concerns where the October 3 Agreement was signed. Plaintiffs' assertions in this regard are curiously self-contradictory, and ultimately support defendant's version of the facts. Plaintiffs' Memorandum in Opposition to Defendant's Motion to Dismiss and the accompanying affidavit of Josephine Mangiapane, President of Blackhawk Energy, state that the October 3 Agreement was executed in the District of Columbia on behalf of Mitchell and sent via mail to Mary Helen for signing in Indianapolis. Defendant, on the other hand, supported by the affidavits of Charles Stewart and George Davis, who purport to have been present at the time, claims that the Agreement was executed at its office in Indianapolis. Defendant's affiants also assert, and plaintiff does not deny, that Josephine Mangiapane was not present at the October 3, 1979 meeting in Indianapolis. The affidavit of Iverson O. Mitchell III, who was present at that meeting on behalf of plaintiffs, confirms defendant's version of the facts, that is, that the agreement was signed on October 3 in Indianapolis. Plaintiff did mail from Washington, D.C. at a later date a copy of the executed government contract award to Mitchell Energy to be appended to the Agreement. This version of the facts, ...


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