Civil Practice – Jurisdiction – Conspiracy Theory

There are no factual allegations plausibly connecting Third-Party Defendant Westerfeld Construction by Glick LLC to South Carolina.

We affirmed the judgment of the district court.

Westerfeld Construction, a Florida-based general contractor, was sued in federal district court in South Carolina. At issue on appeal was whether Westerfeld, which does no business in South Carolina, is nevertheless subject to personal jurisdiction in that state. The district court held that it had neither general nor specific jurisdiction over Westerfeld and dismissed the claims against it. We agreed.

The dispute arose from the “Rebuild Florida Project,” a state-funded hurricane recovery effort for which Westerfeld served as general contractor. Westerfeld hired Jessup Construction, LLC as a subcontractor. Jessup later entered into a joint venture with GSH of Alabama, LLC and obtained a $5.8 million loan from Plaintiff Mobilization Funding, LLC to finance its work. The loan was governed by South Carolina law and included South Carolina forum-selection provisions, as Mobilization Funding maintained a presence in that state. Westerfeld, however, was not a party to any of the loan documents.

After Mobilization Funding declared Jessup in default and sued the borrowers and guarantors in South Carolina, GSH and its members asserted third-party claims against Westerfeld, alleging fraud, conspiracy, and related torts. Westerfeld moved to dismiss, arguing that South Carolina courts lacked personal jurisdiction over it.

Applying the prima facie standard applicable where no evidentiary hearing is held, the district court concluded it lacked both general and specific jurisdiction. We agreed. GSH did not challenge the absence of general jurisdiction on appeal, and the record confirmed that Westerfeld had no offices, employees, property, or business operations in South Carolina.

We therefore focused on specific jurisdiction, which requires purposeful availment of the forum state. GSH relied primarily on a Funds Control Agreement between Jessup and Mobilization Funding, which governed the disbursement of project funds and referenced Westerfeld’s role in directing payments. But Westerfeld was not a signatory to that agreement, and we held that the unilateral conduct of third parties cannot establish jurisdiction over a nonresident defendant. Due process requires jurisdiction to be based on the defendant’s own forum-directed conduct.

GSH alternatively invoked the conspiracy theory of jurisdiction, arguing that Mobilization Funding’s South Carolina contacts should be imputed to Westerfeld. While the Fourth Circuit has recognized that theory, it requires particularized allegations plausibly establishing both the existence of a conspiracy and the defendant’s participation in it. The court concluded that GSH’s allegations—centered on a generic referral program and speculative coordination—were conclusory and equally consistent with ordinary arm’s-length business dealings. Such allegations failed to cross the line from possibility to plausibility.

Finally, we found no abuse of discretion in the district court’s denial of jurisdictional discovery or its decision not to rely on a disputed affidavit. Because GSH failed to establish a prima facie case of jurisdiction, dismissal was proper.

Affirmed.

Mobilization Funding LLC v. Stokes (Lawyers’ Weekly No. 001-214-26, 16 pp.) (Pamela Harris, J.) Appealed from the U.S. District Court for the District of South Carolina, at Beaufort (Richard Mark Gergel, J.) ARGUED: Robert Foust Parsley, BRADLEY ARANT BOULT CUMMINGS LLP, Nashville, Tennessee, for Appellants. Mark Anthony Bible, Jr., KENISON DUDLEY CRAWFORD, LLC, Greenville, South Carolina, for Appellee. ON BRIEF: Joseph Paul Schilleci, Jr., SCHILLECI & TORTORICI, P.C., Birmingham, Alabama, for Appellants. U.S. Court of Appeals for the Fourth Circuit