Federal Court Finds that Minimum Contacts Were Satisfied by Informal Partnership

Federal Court Finds that Minimum Contacts Were Satisfied by Informal Partnership

A Kentucky Federal District Court recently considered the question of whether certain minimal contacts with Kentucky connected with the formation and operation of an informal partnership were sufficient to vest in that court jurisdiction over the California resident partner. The court found that the contacts were sufficient to give rise to personal jurisdiction.  Clark v. Wenger, Civ. Act. No. 1:14-CV-00002-TBR, 2014 WL 4742989 (W.D. Ky. Sept. 22, 2014).

 

Clark, based in Kentucky, and Wenger, based in California, entered into a partnership for the breeding and sale of Bernese Mountain Dog puppies.  That partnership relationship was never reduced to a written “partnership agreement.”  Still, over time Clark identified certain conduct of Wenger which she asserted violated express terms to which they had agreed  For example, it was asserted that Wenger had bred two of the partnership’s dogs in her possession and sold for her own account the puppies, and had let the male out for stud, again keeping the fees earned for herself.  Based upon these violations of the partnership agreement, Clark sued Wenger in Kentucky.

 

After the suit was removed to federal court (there was as well a dispute as to the timeliness of the removal, but that I will leave to those interested in the rules of federal removal), Wenger sought to have the suit dismissed on the grounds she did not have “minimum contacts” with Kentucky sufficient to permit her to be sued in Kentucky. 

 

The Court found what Wenger’s dealings with Clark were sufficient to confer jurisdictions. Specifically, from California, Wenger had several phone conversations with Clark as to the partnership which bred the puppies in Kentucky, and certain sale proceeds of partnership property (i.e., puppies) had been sent to Clark in Kentucky.  From there the Court concluded:

 

Wenger’s conduct pursuant to her business agreement with Clark facilitated the transaction of business in the Commonwealth of Kentucky.  Such affirmative conduct constitutes purposeful availment.

 

 

Hence Wenger could be sued in Kentucky.

 

The suit was ultimately remanded to the Kentucky state court on the basis that the amount in controversy was less than the federal jurisdictional threshold of more than $75,000 for cases in diversity.