United States v. Ivey

No. 89-CV-71179-DT (E.D. Mich. August 13, 1990)

The court holds that it has personal jurisdiction over two alien defendants under Michigan's long-arm statute in an action under the Comprehensive Environmental Response, Compensation, and Liability Act. Defendant Ivey was both President and a director of defendant Liquid Disposal, Inc. (LDI) at all times that LDI owned a site in Michigan for the disposal of combustible liquid organic waste. LDI is a Michigan corporation and had its principal place of business there. The court holds that Ivey's contacts with Michigan are sufficient to confer personal jurisdiction. The court next holds that the exercise of personal jurisdiction over Ivey is constitutional, because he purposely availed himself of the privilege of conducting activities in Michigan. He engaged in many activities related to LDI's management, and LDI's acts and their consequences have a substantial connection with Michigan. Finally, the court holds that jurisdiction over defendant Ineco is proper, because Ineco owns the majority share of LDI and an interest in the Michigan mortgage to the LDI site.

[Another decision in this litigation is published at 20 ELR 20918.]

Counsel for Plaintiffs
Susan Schneider
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
Jeffrey Haynes
Vanderkloof & Haynes
P.O. Box 980, 860 W. Longlake Rd., Ste. 200, Bloomfield
Hills, MI 48303-0980
(313) 540-8388

[20 ELR 21384]

Zatkoff, J.:

Memorandum Opinion and Order

This matter is before the Court on defendants' motion to [20 ELR 21385] dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). Defendants C. Robert Ivey and Ineco, Ltd., assert that this Court lacks personal jurisdiction over them. Previously, on May 3, 1990, this Court held that jurisdiction over these defendants by virtue of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq., is not permitted. Specifically, the Court found that CERCLA did not allow for service of process over alien defendants in a foreign country. Therefore, the Court turned to the Michigan long-arm statute. At that time, it was not clear to the Court the extent of defendants' contacts with Michigan. Accordingly, the Court ordered that defendants and plaintiff submit supplemental briefs describing defendants' contacts with Michigan.

The Michigan "Long-arm" statute, which provides limited personal jurisdiction over an individual, MCLA 600.705, provides in relevant part:

The existence of any of the following relationships between an individual or his agent and the state shall constitute a sufficient basis of jurisdiction to enable a court of record of this state to exercise limited personal jurisdiction over the individual and to enable the court to render personal judgments against the individual or his representative arising out of an act which creates any of the following relationships:

* * *

(6) Acting as a director, manager, trustee, or other officer of a corporation incorporated under the laws of, or having its principal place of business within this state.

From the evidence submitted, it is clear that jurisdiction as to defendant Ivey is proper. Ivey was both president and a director of defendant Liquid Disposal, Inc. (LDI) from April 18, 1974-June 27, 1989; LDI was incorporated under the laws of Michigan; and LDI had its principal place of business in Michigan. LDI's business involved the disposal of combustionable liquid organic wastes, primarily by incineration, at a site located on Hamlin Road in Shelby Township, Michigan. LDI owned the site from at least 1967 to 1984. Its many customers were business or other entities, most of which were located in Michigan, whose waste materials were transported to the facility for disposal. Clearly, jurisdiction over Ivey is proper under the Michigan "Long-arm" statute.

Even though defendant Ivey's contacts fit within the framework of the Michigan "long-arm" statute, it is necessary to determine whether exercise of jurisdiction over him passes constitutional muster. As indicated by the Sixth Circuit in Lanier v. American Board of Endodontics, 843 F.2d 901 (6th Cir. 1988), although the statute may, by its terms, give jurisdiction to the court, it must also pass constitutional muster as applied to the particular case. Id. at 909. The court continued:

Under the federal constitution, long-arm jurisdiction may only be asserted if (1) defendants purposely avail themselves of the privilege of conducting activities in Michigan; and (2) the acts of the defendants or consequences caused by the defendants must have had a substantial enough connection with the form to make the exercise of jurisdiction over the defendants reasonable. Citing Southern Machine Company v. Mohasco Industries, Inc. 401 F.2d 374, 381 (6th Cir. 1968). See also, Burger King v. Rudzwicz, 471 U.S. 462, 105 S. Ct. 2174, 885, L. Ed. 2d 528 (1985); R. L. Lipton Distributing v. Dribeck Importers, Inc., 11 F.2d 967 (6th Cir. 1987).

Id.

In Burger King, the court extensively addressed the constitutional requirements for jurisdiction. The court explained that the due process clause protects an individual's liberty interests by requiring that a court exercise jurisdiction only over defendants with "contacts, ties or relations" with the forum state sufficient to provide them with fair warning their activities may subject them to suit there. Burger King, 471 U.S. at 471-72.

This "fair warning" requirement has been met when a defendant has "purposely directed" his activities at residence of the forum . . . and the litigation results from the alleged injuries that "arise out of or relate to" those activities.

Id. at 472.

"By requiring these minimum contacts, the constitution provides defendants with the opportunity to foresee the possibility of being hailed into court so they can structure their activities accordingly." Lanier, 843 F.2d at 910.

There is no question that defendant Ivey purposely availed himself of the privilege of conducting activities in Michigan. He oversaw the management of LDI, negotiated sources of finance, assessed the viability of the operation of LDI and approved in detail capital expenditures. Furthermore, he visited on numerous occasions various government offices in Michigan regarding air and water pollution at LDI. The acts of defendant LDI and the consequences have a substantial connection with Michigan so that the exercise of jurisdiction over Ivey is reasonable.

The Michigan long-arm statute that deals with corporations, MCLA § 600.715, states:

The existence of any of the following relationships between a corporation or its agent and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise limited personal jurisdiction over such corporation and to enable such courts to render personal judgments against such corporation arising out of the act or acts which create any of the following relationships:

(1) the transaction of business within the state

(3) the ownership, used for possession of real or tangible personal property situated within the state for contracting to insure any person, property or risk located within this state at the time of contracting.

In this case, Ineco owns the majority share of LDI and owns an interest in the Michigan mortgage to the LDI site. Maziv Industries, which was LDI's parent corporation and 80% shareholder also held a mortgage to the site, which was transferred to Ineco. It is the opinion of this Court that Ineco has sufficient contacts with the state of Michigan to support the jurisdiction of this Court and that the exercise of jurisdiction is constitutional.

Therefore, it is the opinion of this Court that defendants have sufficient minimum contacts with the state of Michigan in order to confer jurisdiction upon this Court. Accordingly, defendants' motion to dismiss for lack of jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) is hereby DENIED.