LP SOLUTIONS LLC v. DUCHOSSOIS et al
ORDER ON MOTION TO DISMISS FOR LACK OF JURISDICTION granting 6 Motion to Dismiss for Lack of Jurisdiction; mooting 6 Motion to Stay By JUDGE D. BROCK HORNBY. (ccs)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
LP SOLUTIONS, LLC,
CRAIG J. DUCHOSSOIS,
Individually and as Co-Executor of
the Estate of Richard Bruce
Duchossois; RICHARD J.
DUCHOSSOIS; KIMBERLY T.
DUCHOSSOIS; DAYLE P.
THOMAS A. SMITH, Co-Executor of
the Estate of Richard Bruce
CIVIL NO. 2:18-CV-25-DBH
ORDER ON MOTION TO DISMISS FOR LACK OF JURISDICTION
The issue here is whether a federal court in Maine, with diversity
jurisdiction, has specific personal jurisdiction over a family of mostly Illinois
residents. Five members of that family—Richard L. Duchossois and his children
Craig J. Duchossois, Kimberly T. Duchossois, Dayle P. Duchossois-Fortino, and
Richard Bruce Duchossois1—signed contracts giving a Maine company the
option to acquire their interests in an Illinois limited partnership involving
Illinois real estate and the right to a portion of the cash distributions from the
Collectively, the Duchossoises, the Family, or the defendants. Richard Bruce Duchossois died
in 2014, before this lawsuit arose. His estate has participated in the lawsuit, and all relevant
underlying matters, through its co-executors, Craig J. Duchossois and Thomas A. Smith, named
as defendants here in that capacity. Craig J. Duchossois is also an individual defendant.
partnership in the meantime. The Maine company, LP Solutions, LLC (LPS),
exercised its options in due course. When the Duchossoises stopped making
payments allegedly due under the agreements, LPS sued them in Maine state
court for breach of contract and unjust enrichment. Compl. ¶¶ 63-83 (ECF No.
5-2). The Duchossoises removed the case to federal court and moved to dismiss
for lack of personal jurisdiction or, in the alternative, for a stay pending the
results of a related lawsuit in Illinois state court between LPS and the Illinois
partnership’s General Partner. Notice of Removal (ECF No. 1); Defs.’ Mot. 1-2
(ECF No. 6). After briefing and argument, I now GRANT the defendants’ motion
and DISMISS the complaint, concluding on a prima facie record that the
defendants have not purposefully availed themselves of Maine and thus that
there is no specific personal jurisdiction over them here.
Under the First Circuit’s “prima facie review” standard for determining
personal jurisdiction, I accept the specific facts that the plaintiff alleges so far as
record evidence supports them. I also accept the facts that the defendants offer
to the extent they are uncontradicted. Cossaboon v. Maine Med. Ctr., 600 F.3d
25, 31 (1st Cir. 2010). I construe the plaintiff’s “properly documented evidentiary
proffers . . . in the light most favorable to [its] jurisdictional claim.” A Corp. v.
All American Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016).
Four of the five defendants are domiciled in Illinois, and their agents2 acted
on their behalf from Illinois. Before he died in July of 2014, Richard Bruce
Duchossois split his time between South Carolina and Florida, where his estate
is now in probate. The defendants have no connections to Maine apart from this
lawsuit and the events underlying it. Defs.’ Mot. 2-3.
In September of 2013, the defendants received form letters from the
plaintiff soliciting the purchase of their interests in Elm Street Plaza Venture, an
Illinois limited partnership (the Partnership). An agent of the plaintiff, William
Gendron, followed up by phone with an agent of the defendants, Jennifer Hager,
about the offer. Hager rejected the offer based on tax considerations. Gendron
then told Hager about LPS’s “Option Program,” which he said would have
attractive tax consequences for the defendants.
Hager asked to see the
agreements embodying the Option Program. A few days later Gendron emailed
a draft of the Option Agreement to another Duchossois agent, Janet Czosek,
along with a letter outlining the proposal. That proposal said the Option Program
would allow the defendants to “lock [in]” the value of their partnership interests
“at today’s market value, receive a significant portion of the purchase price on a
tax-deferred basis and avoid tax recapture.” Affordable Option Program, Hager
Decl. Ex. D (ECF No. 6-8). Czosek forwarded these materials to Hager. Fully
The defendants’ financial affairs are managed largely by their agents, who are employees of
various entities controlled by the Family in addition to being agents of the defendants
individually. The children’s primary agent in dealing with LPS was Jennifer Hager; the father’s
was Janet Czosek. Hager and Czosek communicated regularly and coordinated their work on
behalf of the Duchossoises. Czosek Decl. ¶¶ 1-5 (ECF No. 6-1); Hager Decl. ¶¶ 1-5 (ECF No. 64).
drafted versions of the Option Agreement arrived in Illinois by FedEx shortly
thereafter, already signed by a representative of the plaintiff. Hager and Czosek
emailed LPS that the terms of the Option Agreement were acceptable, collected
signatures from the Duchossoises in Illinois and South Carolina, and, in early
October, FedExed the executed agreements to the plaintiff in Maine. An LPS
employee then emailed Hager and Czosek that the signed agreements lacked
witness signatures. Hager and Czosek obtained new signature pages from the
Duchossoises (presumably with witness signatures) and sent them to the
plaintiff.3 Defs.’ Mot. 4-6; Czosek Decl. ¶¶ 10-21 (ECF No. 6-1); Hager Decl.
¶¶ 20-27 (ECF No. 6-4); Pl.’s Opp’n 3, 7 (ECF No. 7); Gendron Decl. ¶¶ 4-8 (ECF
The Option Agreements gave the plaintiff a twenty-year option to purchase
each of the defendants’ interests in the Partnership for a specified amount4 (the
plaintiff would also take on certain related tax liability incurred by a defendant
for selling the interest during his or her lifetime). Option Agreement ¶ 2, Booth
Decl. Ex. 2 (ECF No. 7-3).5 The plaintiff agreed to pay 50% of the option price
upon execution of the Option Agreement, followed by two additional installment
payments of about 10% of the option price, to be paid annually, with the balance
due upon exercise of the option. Id. ¶¶ 3, 5. In turn, prior to exercise, the
The parties dispute whether these events amount to “negotiations,” but do not meaningfully
dispute the underlying facts, and nothing turns on the label.
4 In total, $71,023 each for the children and $284,091 for the father.
5 The signed Option Agreements and Assignments are all contained in this exhibit. The terms of
the agreements are identical, save for dollar amounts and the identity and location of the
particular defendant. I therefore cite them all generally as “Option Agreement” or “Assignment.”
defendants agreed to pay the plaintiff a portion of cash flow distributions from
the Partnership equal to the proportion LPS had paid of the option price (e.g., if
LPS had paid 50% of the option price, it would be entitled to 50% of normal
distributions from the partnership). Id. ¶ 6. The defendants also agreed not to
alienate or encumber their partnership interests and to vote their interests as
directed by the plaintiff. Id. ¶ 4. The Agreements specify that communications
to the plaintiff were to be sent to its address in Maine. Id. ¶ 9. They also contain
a Maine choice-of-law provision. Id. ¶ 10.
The defendants agreed that, upon the plaintiff’s exercise of the options,
they would transfer their partnership interests to the plaintiff for nominal
consideration by executing the Assignment of Partnership Interest, attached to
the Option Agreements as an exhibit.
Id. ¶ 5.
The Assignments purport to
transfer completely the defendants’ partnership interests to the plaintiff.
Assignment of Partnership Interest ¶ 1, Ex. A. to Option Agreement, Booth Decl.
Ex. 2 (ECF No. 7-3).
Unlike the Option Agreements, the Assignments are
governed by “the laws of the state where the Partnership is domiciled,” which is
Illinois. Id. ¶ 5.
Performance, Exercise of Options, and Breach
Once the Option Agreements were signed, LPS made the initial installment
payments to the defendants in Illinois in October of 2013 by mailing checks to
the children and wiring money to the father. Booth Decl. ¶ 10 (ECF No. 7-1);
Booth Decl. Ex. 3 (ECF No. 7-4).
In June 2014, the defendants paid the plaintiff a portion of cash
distributions from the Partnership, as required by paragraph six of the Option
Agreements. It did so by sending checks into Maine. Booth Decl. ¶ 25; Booth
Decl. Ex. 8 (ECF No. 7-9).
After Richard Bruce Duchossois died in July 2014, an agent notified the
plaintiff by email.6 The plaintiff then exercised its option on his interest and, in
late August, sent the balance of the option price to Richard Bruce Duchossois’s
estate by check. The estate executed the Assignment and sent it to the plaintiff
in Maine in early August. Booth Decl. ¶¶ 10, 17; Booth Decl. Ex. 4 (ECF No. 75); Defs.’ Mot. 7; Hager Decl. ¶ 31.
In October of 2014, LPS made the second round of installment payments
to the other four defendants (again by mailing checks to the children and wiring
money to the father). Booth Decl. ¶ 10; Booth Decl. Ex. 3.7
On November 12, 2014, Hager on behalf of the Duchossoises emailed
Gendron that “[w]e are anxious to speak to you about the tax consequences” of
the Option Agreements. Booth Decl. Ex. 5 (ECF No. 7-6). Gendron understood
this to mean that the defendants wanted the plaintiff to exercise its remaining
options on the Family’s interests. Gendron Decl. ¶ 14. Hager and Gendron
spoke by phone on the 18th about this wish, and the parties corresponded back
and forth into January about getting the Assignments signed. Gendron Decl.
¶¶ 14-18; Booth Decl. ¶¶ 19-22. The plaintiff exercised its Options effective as
of December 2014.
The plaintiff received Richard L. Duchossois’s signed
Assignment in December and scans of the remaining signed Assignments in
The email appears to be a follow up to a phone call. Booth Decl. Ex. 4 (ECF No. 7-5).
There is actually no record of this wire transfer in Booth Decl. Ex. 3, which has all the payments
to the Duchossoises in the record. But there is an earlier email from Czosek asking that all
payments to the father be made via wire transfer.
Booth Decl. ¶¶ 21-23.
The plaintiff paid the balance on
Richard L. Duchossois’s interest by wire transfer on December 30, 2014, and on
the remaining interests by check on February 3, 2015. Booth Decl. ¶ 10; Booth
Decl. Ex. 3.
In June of 2015 and May and June of 2016, the defendants sent their
Partnership distributions by check to the plaintiff in Maine.8 Booth Decl. ¶¶ 2627. The parties engaged in routine correspondence regarding these payments.
Booth Decl. Ex. 11 (ECF No. 7-12).
The parties also collaborated on tax issues.
Specifically, the plaintiff
prepared and sent the defendants certain tax forms for tax years 2014 and 2015
to shift the defendants’ Partnership tax liabilities to the plaintiff. Booth Decl.
¶¶ 31-32. The plaintiff says the defendants “solicited” it to prepare these forms,
Pl.’s Opp’n at 10, a characterization that is arguably9 supported by the record,
at least as to the forms for tax year 2014. Booth Decl. ¶ 32; Booth Decl. Ex. 10
(ECF No. 7-11). (The Option Agreement and Assignment are silent on the parties’
responsibilities for accomplishing the shift in tax burden.)
In October of 2016, the Partnership experienced a “capital event” that led
to combined distributions of over $1,000,000 to the defendants. The defendants
By that time, the plaintiff had been sued in Illinois state court by the Partnership, the General
Partner, and several other partnerships controlled by the General Partner. That suit was initiated
in March of 2015; the defendants also received notice that month from the General Partner that
the Partnership did not recognize the defendants’ assignments. Defs.’ Mot. 8; Hager Decl. ¶¶ 3435; Czosek Decl. ¶¶ 28-30. The defendants nevertheless forwarded Partnership distributions to
the plaintiff in June of 2015 and May and June of 2016. Booth Decl. ¶¶ 26-27.
9 This characterization of the correspondence the plaintiff has cited is a stretch, but I accept it
for purposes of the motion.
have refused to turn over these distributions to the plaintiff despite its demands.
Booth Decl. ¶¶ 33-34; Compl. ¶¶ 42-47.
This is the factual record I use for the prima facie jurisdictional analysis.10
1. Subject Matter Jurisdiction
The defendants removed the case from Maine Superior Court on the basis
of diversity jurisdiction. Notice of Removal ¶ 7 (citing 28 U.S.C. § 1332(a)(1)).
The parties are diverse: the plaintiff is a citizen of Maine, while the defendants
are citizens of other states. Id. ¶ 14.
I conclude that the amount-in-controversy requirement is also satisfied.
The defendants aggregate the value of the plaintiff’s claims against each of them
in their Notice of Removal to reach an amount in controversy of $1,044,490. Id.
¶ 15(c). But claims by a single plaintiff against multiple defendants cannot be
aggregated to satisfy the amount in controversy requirement unless those
The plaintiff’s brief requests jurisdictional discovery in the event that I have “concerns or
doubts” about the sufficiency of the defendants’ contacts with Maine. Pl.’s Opp’n 5 n.2. This is
akin to disfavored “‘wait and see’ pleading,” see Kader v. Sarepta Therapeutics, Inc., __ F.3d __,
No. 17-1139, 2018 WL 1616954, at *9 (1st Cir. Apr. 4, 2018). In any event, I conclude that there
is no need for jurisdictional discovery. “[A] plaintiff [has] the obligation to present facts to the
court which show why jurisdiction would be found if discovery were permitted. . . . Failure to
allege specific contacts, relevant to establishing personal jurisdiction, in a jurisdictional recovery
request can be fatal to that request.” United States v. Swiss Am. Bank, Ltd. 274 F.3d 610, 62627 (1st Cir. 2001). The plaintiff’s brief does not specify what contacts could or would be found
in discovery. At oral argument, the plaintiff’s counsel mentioned only the defendants’ submission
to the IRS of certain tax forms prepared for them by the plaintiff—contacts which are not related
to this dispute—but no other specific contacts. The plaintiff has thus not offered a “more detailed
description of the ‘additional pertinent avenues of inquiry’ that it hope[s] to pursue.” Id. at 626.
Further, the plaintiff presumably already possesses evidence of nearly all the defendants’
contacts with Maine—phone calls and emails to it—and has had an opportunity to put that
evidence in the record. Although the “threshold for limited jurisdictional discovery is ‘relatively
low,’” Plixer Int’l, Inc. v. Scrutinizer GmbH, No. 16-cv-578, 2017 WL 5905282, at *2 (De. Me.
May 5, 2017) (citation omitted), I am satisfied the plaintiff has not met it here. Id. (“[T]he district
court has broad discretion to determine whether limited discovery should be allowed.” (citing
Swiss Am. Bank, Ltd., 274 F.3d at 625-26)).
defendants are jointly liable. 14AA Wright & Miller, Fed. Prac. & Proc. Juris.
§ 3704 n.15 (4th ed.) (collecting cases). Nevertheless I am satisfied that the
amount claimed against each defendant individually satisfies the jurisdictional
threshold. Compl. ¶¶ 43-44.
2. Personal Jurisdiction
When subject matter jurisdiction is based upon diversity of citizenship, a
federal court asserts personal jurisdiction in accordance with the law of the
forum (here, Maine) and the Fourteenth Amendment’s due process clause.
Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir. 1995).
The federal court
becomes “the functional equivalent of a state court sitting in the forum state.”
Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 34 (1st
Cir. 2016) (quoting Sawtelle, 70 F.3d at 1387). The Maine Law Court says that
its statutory analysis tracks the due process clause. Murphy v. Keenan, 667
A.2d 591, 593 (Me. 1995) (“Maine’s jurisdictional reach is coextensive with the
due process clause of the United States Constitution.”). This leaves only the
federal constitutional inquiry.11
The plaintiff asserts specific, not general,
That is, unless the Maine Law Court has a narrower interpretation of the Fourteenth
Amendment than the First Circuit. In that case, Maine’s jurisdictional reach is not in fact
coextensive with the due process clause—a matter of federal law—but is controlled by the Law
Court’s interpretation and application of the Fourteenth Amendment—a state standard. In a
diversity case like this one, that narrower interpretation would govern. See Maine Helicopters,
Inc. v. Lance Aviation, Inc., 563 F. Supp. 2d 292, 294-95 (D. Me. 2008); 4 Wright & Miller, Fed.
Prac. & Proc. Civ. § 1068 (4th ed.) (“A state’s judicial interpretations of the reach of its
jurisdictional statutes are binding on the federal courts.”). I conclude that the Maine Law Court
does not have a materially narrower interpretation than the First Circuit of how far due process
extends. Its three-part test, although formulated differently, substantially overlaps the federal
standard. See In re Emma B., 169 A.3d 945, 948 n.3 (Me. 2017) (test is (1) forum’s state’s
legitimate interest in the subject matter of the litigation; (2) defendant’s reasonable anticipation
of litigation in the forum; (3) “traditional notions of fair play and substantial justice”).
“The Due Process Clause of the Fourteenth Amendment requires that a
defendant ‘have certain minimum contacts with [the forum state] such that the
maintenance of the suit does not offend traditional notions of fair play and
substantial justice.’” Baskin-Robbins, 825 F.3d at 35 (quoting Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945)). The First Circuit has said that the legal
elements of minimum contacts analysis in specific jurisdiction cases are, in the
conventional jargon, relatedness, purposeful availment, and reasonableness. Id.
(citing C.W. Downer & Co. v. Bioriginal Food & Sci. Corp., 771 F.3d 59, 65 (1st
The plaintiff “ordinarily must shoulder the burden of proving
personal jurisdiction over the defendant.” United States v. Swiss Am. Bank, Ltd.
191 F.3d 30, 40 (1st Cir. 1999).
“Jurisdictionally speaking, each defendant must stand or fall based on its
own contacts with the forum.” Phillips Exeter Acad. v. Howard Phillips Fund,
Inc., 196 F.3d 284, 288 n.2 (1st Cir. 1999). Because all the defendants’ contacts
with Maine were accomplished through their agents, however, I analyze them all
at once save, briefly, on one of the “Gestalt” reasonableness factors.
Looming large over any analysis of personal jurisdiction in a contract
case12 like this one is the Supreme Court’s seminal decision in Burger King Corp.
v. Rudzewicz, 471 U.S. 462 (1985). The Court there rejected the notion that a
“contract with an out-of-state party alone can automatically establish sufficient
minimum contacts” in the plaintiff’s home forum. Id. at 478.
The parties agreed at oral argument that the same analysis applies to the plaintiff’s unjust
enrichment claim. The First Circuit has repeatedly used a contract-oriented jurisdictional
analysis in cases with related breach of contract and unjust enrichment claims. See, e.g., C.W.
Downer, 771 F.3d at 64, 66; Bluetarp Fin., Inc. v. Matrix Const. Co., Inc., 709 F.3d 72, 77, 80
(1st Cir. 2013).
Instead, we have emphasized the need for a “highly realistic”
approach that recognizes that a “contract” is “ordinarily but
an intermediate step serving to tie up prior business
negotiations with future consequences which themselves are
the real object of the business transaction.” It is these
factors—prior negotiations and contemplated future
consequences, along with the terms of the contract and the
parties’ actual course of dealing—that must be evaluated in
determining whether the defendant purposefully established
minimum contacts with the forum.
Id. at 479 (citations omitted). The First Circuit describes this as a “‘contractplus’ analysis.” United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 621 (1st
Cir. 2001) (quoting Ganis Corp. of California v. Jackson, 822 F.2d 194, 197-98
(1st Cir. 1987). It applies to both relatedness and purposeful availment. Adams
v. Adams, 601 F.3d 1, 7 n.10 (1st Cir. 2010).
“Relatedness requires that ‘the action . . . directly arise out of the specific
contacts between the defendant and the forum state.’” Baskin-Robbins, 825
F.3d at 35 (quoting Sawtelle, 70 F.3d at 1389)).
It is a “flexible, relaxed
standard.” Id. (citing Pritzker v. Yari, 42 F.3d 53, 61 (1st Cir. 1994)). In addition
to Burger King’s “contract-plus” factors, the First Circuit frequently notes that
“[a] consideration in a contract action such as this is whether the defendant’s
forum-based activity was instrumental in the contract’s formation or breach.”
Bluetarp Fin., Inc. v. Matrix Const. Co., Inc., 709 F.3d 72, 80 (1st Cir. 2013)
(citing Adelson v. Hananel, 510 F.3d 43, 49 (1st Cir. 2007)); accord C.W. Downer,
771 F.3d at 66;
Adams, 601 F.3d at 6; Phillips Exeter, 196 F.3d at 289.
Sometimes the court uses only the “instrumental in either the formation or
breach” language and not the broader language of Burger King.
Carreras v. PMG Collins, LLC, 660 F.3d 549, 554 (1st Cir. 2011); Phillips v.
Prairie Eye Center, 530 F.3d 22, 27 (1st Cir. 2008).
Relatedness is meant to focus “the court’s attention on the nexus between
a plaintiff’s claim and the defendant’s contact with the forum.” Baskin-Robbins,
825 F.3d at 35. There is some uncertainty in the cases, however, about how
tight that nexus must be. Compare Carreras, 660 F.3d at 554-55 (only contacts
going to formation or breach are related) and Swiss American, 274 F.3d at 622
(letter to the forum not a related contact because “not essential to either the
formation or the breach of the alleged contract”) with Bluetarp, 709 F.3d at 8082 (finding relatedness based in part on a number of contemplated future
consequences not strictly relevant to breach) and Ganis Corp., 822 F.2d at 19798 (under Burger King, “the court is to look at all of the communications and
transactions between the parties, before, during and after the consummation of
the contract”). Relatedness is “the least developed prong of the due process
inquiry.” Sawtelle, 70 F.3d at 1389.
Here, it is true that the plaintiff initially reached out to the defendants in
Illinois about entering these agreements, as the defendants note. Defs.’ Mot. 11.
But to form the contracts at issue, the defendants signed the Option Agreements
and then sent them back into Maine.13 Who initiated a contact may affect the
13 The defendants claim that the contracts were formed in Illinois, where they were signed. Defs.’
Reply 1 (ECF No. 8); Defs.’ Mot. 11. The plaintiff says that the defendants “gave effect to” the
Option Agreements by sending them to Maine. Pl.’s Opp’n 13. If the defendants are correct,
then the contracts were not “‘formalized and entered into’ in the forum state,” Prairie Eye Ctr.,
530 F.3d at 27 (citation omitted), and mailing them to Maine was a merely ministerial act. If the
plaintiff is correct, then mailing the contracts to Maine was necessary to their formation and
thus legally significant. Neither the plaintiff nor the defendants cite any authority on contract
formation to support their position. Under Maine law, “[t]he establishment of a contract requires
assessment of foreseeability and thus purposeful availment of a particular
forum, Prairie Eye Ctr., 530 F.3d at 29 (1st Cir. 2008), but that does not mean
that the defendants’ sending the agreements to Maine is not a related contact.
Later, the defendants sent the executed Assignments into Maine after soliciting
the plaintiff in Maine to exercise its options (or, in Richard Bruce Duchossois’s
case, after his estate notified the plaintiff of his death). “The transmission of
information into [the forum] by way of telephone or mail is unquestionably a
contact for purposes of our analysis.”
Sawtelle, 70 F.3d at 1389-90 (citing
Burger King, 471 U.S. at 476). These contacts are all related to the plaintiff’s
The plaintiff asserts that the defendants breached the contracts by failing
to make payments due to it in Maine and that this failure is a Maine contact. I
agree. Citing some district court cases, the defendants argue vehemently that
they have no Maine contacts related to breach, because the failure to make a
payment due14 in the forum is not a forum contact. Defs.’ Mot. 12. The First
that the parties mutually assent ‘to be bound by all its material terms; the assent must be
manifest in the contract, either expressly or impliedly; and the contract must be sufficiently
definite to enable the court to determine its exact meaning and fix exactly the legal liabilities of
the parties.’” Forrest Assocs. v. Passamaquoddy Tribe, 760 A.2d 1041, 1044 (Me. 2000) (citation
omitted). An acceptance requires “a communication in the same medium [as the offer] purporting
to accept it in the exact terms of the offer.” Zamore v. Whitten, 395 A.2d 435, 439 (Me. 1978),
overruled on other grounds by Bahre v. Pearl, 595 A.2d 1027 (Me. 1991). Under the common
law “mailbox rule,” “unless the offer provides otherwise . . . an acceptance under an option
contract is not operative until received by the offeror.” Restatement (Second) of Contracts § 63(b)
(1981). I assume arguendo that the contracts were formed either when they were received in
Maine or sent to Maine. In either case, the Maine contact would be “instrumental” to formation.
14 The defendants also assert that payments are not “due” in Maine because the contracts say
only that notices and communications, but not payments specifically, are to be sent to the
plaintiff in Maine. Defs.’ Mot. 14; Option Agreement ¶ 9. The First Circuit has engaged in similar
reasoning. Adams, 601 F.3d at 8 & n.13 But unlike the defendant in Adams, the defendants
here in fact sent payments to the plaintiff in Maine. Booth Decl. ¶¶ 25-27. “Inferences can be
drawn from ‘ . . . the parties’ actual course of dealing.’” Bluetarp, 709 F.3d at 80. On this record,
the clear inference is that payments to the plaintiff were due in Maine.
Circuit disagrees: the failure to make payments in the forum is not enough by
itself to satisfy relatedness. Phillips Exeter, 196 F.3d at 291 (this failure “alone
does not possess decretory significance”). But “a contract arguably is breached
where a promisor fails to perform. Indeed, courts repeatedly have held that the
location where payments are due under a contract is a meaningful datum for
jurisdictional purposes.” Id. (citing Burger King, 471 U.S. at 480).
The parties dispute the relevance of the defendants’ Maine contacts in the
course of performing the agreements.
Those contacts are the defendants’
Partnership distribution payments to the plaintiff and related communications,
as well as the parties’ collaboration on tax issues, especially the defendants’
solicitation of the plaintiff to prepare certain tax forms. The defendants say that
these contacts are not “instrumental” to either formation or breach, while the
plaintiff says that they are part of Burger King’s “contract-plus” framework.
Keeping in mind that relatedness is a “flexible, relaxed standard,” BaskinRobbins, 825 F.3d at 35, and Burger King’s admonition that the “contract-plus”
factors “must be evaluated,” 471 U.S. at 479 (emphasis added), I conclude that
communications) are related contacts but that the tax preparation contacts are
not. Although collaboration on tax filings was predictable, it is nowhere required
in the contracts themselves15—unlike the plaintiff’s right to distributions, see
Option Agreement ¶ 6. Further, the defendants’ payments have a tighter nexus
The Option Agreements include certain tax liability as part of the option price, Option
Agreement ¶¶ 1(f), 2(a)(ii), and the Assignments call for allocation of tax credits as between the
parties, Assignment ¶ 4, but neither calls for any particular performance in satisfying the IRS of
the shift of the defendants’ tax liability to the plaintiff.
with the plaintiff’s claim—breach by failure to pay—than this unspecified aspect
of their performance with which the plaintiff finds no fault.
In sum, the defendants’ related contacts with Maine are: sending the
signed Option Agreements into Maine; soliciting the plaintiff in Maine to exercise
its options; sending the executed Assignments into Maine; sending three
Partnership distributions each into Maine (one under the Option Agreements
and two under the Assignments); corresponding with the plaintiff’s agents in
Maine about all of the above; and refusing to send further distributions into
Maine (presumably there are communications from the defendants to this effect
but they are not in the record).
I conclude that these contacts are sufficient to satisfy the relatedness
requirement. See Adams, 601 F.3d at 6 (despite absence of “typical factors,”
relatedness satisfied, arguendo, by defendant’s accepting funds from, agreeing
to repay, and then failing to repay forum resident); Prairie Eye Ctr., 530 F.3d at
27-28 (despite absence of “typical factors,” relatedness satisfied, arguendo,
where plaintiff’s claim arose “out of his contractual relationship with” the
defendant and defendant sent communications to plaintiff in the forum). I am
mindful that relatedness is not satisfied “merely because a plaintiff’s cause of
action arose out of the general relationship between the parties,” Phillips Exeter,
196 F.3d at 290, and that the failure to make payments in the forum may not
itself be sufficient, id. at 291. But here the Duchossoises have at least as many
contacts with Maine as the defendant had with the forum in Adams.
In reaching this conclusion, I do not consider paragraph four of the Option
Agreements, which required the defendants to vote their Partnership interests
as directed by LPS. Option Agreement ¶ 4. Being “subject to ‘substantial control
and ongoing connection to [the forum state] in the performance of the [the]
contract’” can support a finding of relatedness. Adams, 601 F.3d at 6 (quoting
Prairie Eye Ctr., 530 F.3d at 27). But there is no record evidence of the plaintiff
exercising any control, let alone substantial control, over the defendants
pursuant to this provision. Although the defendants could still have been subject
to this control, it is not clear that control was “substantial.” In any case, like the
tax preparation contacts, the possibility of voting control has only an attenuated
connection to the plaintiff’s claims.
b. Purposeful Availment
This standard “requires that the defendant’s contacts ‘represent a
purposeful availment of the privilege of conducting activities in the forum state,
thereby invoking the benefits and protections of that state’s laws and making the
defendant’s presence before the state’s courts foreseeable.’” Bluetarp, 709 F.3d
at 82 (quoting Hannon v. Beard, 524 F.3d 275, 284 (1st Cir. 2008)). “The focus
is on the defendant’s intentions, and the cornerstones are voluntariness and
This focus “prohibits jurisdiction based on ‘random,
fortuitous, or attenuated contacts.” C.W. Downer, 771 F.3d at 66 (quoting, at
bottom, Burger King, 471 U.S. at 475).
“Voluntariness requires that the defendant’s contacts with the forum state
‘proximately result from actions by the defendant himself.’” Prairie Eye Ctr., 530
F.3d at 28 (quoting Burger King, 471 U.S. at 475). “The defendant’s contacts
‘must be deliberate, and not based on the unilateral actions of another party.”
Bluetarp, 709 F.3d at 82 (quoting Prairie Eye Ctr., 530 F.3d at 28).
Voluntariness is not an issue here.
Knowing that the plaintiff was in
Maine, the defendants entered into agreements with it, sent payments, and
directed communications to it there. These contacts are “plainly voluntary.”
Prairie Eye Ctr., 530 F.3d at 28 (contacts “plainly voluntary” where defendant
knew that plaintiff was a forum resident and mailed contractual documents to
the plaintiff in the forum); accord Bluetarp, 709 F.3d at 82; cf. Adams, 601 F.3d
Foreseeability is the critical issue here.
It “requires that the
contacts . . . be of a nature that the defendant could ‘reasonably anticipate being
haled into court [in the forum].’”
Prairie Eye Ctr., 530 F.3d at 28 (citation
I conclude that the defendants’ contacts with Maine, though not
random or fortuitous, are too attenuated to make jurisdiction over them here
After being solicited from Maine, the defendants knowingly entered into
contracts with a Maine entity, but that is not enough.
awareness of the location of the plaintiff is not, on its own, enough to create
personal jurisdiction over the defendant.”
Prairie Eye Ctr., 530 F.3d at 28;
accord Adams, 601 F.3d at 7. “Without evidence that the defendant actually
reached out to the plaintiff’s state of residence to create a relationship—say, by
solicitation—the mere fact that the defendant willingly entered into a tendered
relationship does not carry the day.” Phillips Exeter, 196 F.3d at 292. Sending
the signed Agreements and Assignments to Maine, then, does not by itself show
purposeful availment. Cf. Prairie Eye Ctr., 530 F.3d at 29 (“It stretches too far
to say that [the defendant], by mailing a contract with full terms to [the forum]
for signature and following up with three e-mails concerning the logistics of
signing the contract, should have known that it was rendering itself liable to suit
in [the forum].”); accord Carreras, 660 F.3d at 556.
The record contains more than the mere awareness of the plaintiff’s
location and accompanying contacts found inadequate in Phillips Exeter, Prairie
Eye Center, and Adams, but not much more: a Maine choice-of-law clause in the
Option Agreements, soliciting the plaintiff to exercise its options, and paying out
three Partnership cash flow distributions each over three years, or one payment
Standing alone, choice-of-law provisions cannot confer jurisdiction, but
they can help demonstrate purposeful availment. Burger King, 471 U.S. at 482.
The Option Agreements here (¶ 10) have a Maine choice-of-law provision.17 But
the Assignments have a conflicting choice-of-law provision: they are governed by
“the laws of the state where the Partnership is domiciled,” which is Illinois.
Assignment ¶ 5.
The parties cite no cases on how conflicting choice-of-law
provisions affect jurisdiction. I consider them a wash.
Soliciting the plaintiff to exercise its options was merely an extension of
the parties’ preexisting relationship that had been initiated by the plaintiff. By
The alleged breach itself, while a Maine contact, does not tend to show that the defendants
purposefully availed themselves of the benefits and protections of Maine.
17 But they do not have a forum selection clause, which in conjunction with a choice-of-law
provision can make jurisdiction “eminently foreseeable.” Bluetarp, 709 F.3d at 82. This
combination was “very significant” to the finding or jurisdiction in Bluetarp. Id.
soliciting the plaintiff to exercise the options, the defendants did not “reach out
to the plaintiff’s state of residence to create a relationship.” Phillips Exeter, 196
F.3d at 292 (although presumably they did “benefit from [this] contact,” id.).
More significant are the payments. The contracts arguably18 envision an
ongoing, long term arrangement between the parties, as reflected by the
defendants’ regularly forwarding Partnership distributions to the plaintiff. But
those payments were made just once a year.19
The First Circuit has
distinguished such “occasional payments into the forum” from “a constant
stream of payments.”
Baskin-Robbins, 825 F.3d at 38-39 (contrasting the
annual payments in Phillips Exeter with the fourteen years of monthly payments
in the case before it).
The former “lack any ‘decretory significance’ in the
jurisdictional calculus” while the latter are “jurisdictionally significant.” Id.; see
also Ganis Corp., 822 F.2d at 195, 198 (finding jurisdiction based on contract
requiring five years of monthly loan repayments and other plus factors). But see
Baskin-Robbins, 825 F.3d at 38. (“Viewed in isolation,  payment flows . . . are
suggestive, though perhaps inconclusive.”). To the extent purposeful availment
18 It is not clear whether the parties expected the plaintiff to receive distributions directly from
the Partnership after the Assignments were executed. In fact the defendants continued
forwarding them to the plaintiff, perhaps because they were aware that the Partnership did not
recognize the Assignments. If the parties expected the plaintiff to be paid directly by the
Partnership, that would undermine the notion of a long term, ongoing relationship between the
parties. I assume that the parties expected the defendants to continue forwarding Partnership
distributions to the plaintiff, as their course of performance reflects.
19 Nothing in the contracts themselves requires the cash flow distributions to be annual. Nor
am I aware of anything else in the record—besides the parties’ course of performance—suggesting
that the Partnership makes distributions to its limited partners annually (or after capital events).
Only a small portion of the underlying Partnership agreement is in the record. Hager Decl. Ex.
B (ECF No. 6-6). I view course of performance, then, as indicative of the regularity of
turns on the frequency of cash flow, the defendants’ payments into Maine are
not numerous enough to make jurisdiction foreseeable.
A defendant who “has created ‘continuing obligations’ between himself and
residents of the forum” has “manifestly . . . availed himself of the privilege of
conducting business there.” Burger King, 471 U.S. at 476. But unlike Burger
King, this is not a case where the defendants “entered into a carefully structured
20-year relationship that envisioned continuing and wide-reaching contacts with
[the plaintiff] in [the forum].” Id. at 480. The option here may have been for
twenty years, but the contracts and their performance reflect only sporadic and
relatively minimal obligations in Maine for the defendants.
Absent are the
substantial, ongoing, interdependent controls and commitments that are typical
of franchise and services contract cases and often justify jurisdiction. See, e.g.,
Burger King, 471 U.S. at 479-82 (defendant “deliberately reached out” to
negotiate with forum corporation to purchase a long term franchise, subjecting
himself to significant control from the forum and setting in motion numerous inforum activities on his behalf); Baskin-Robbins, 825 F.3d at 36-40 (ongoing
franchise contract with continuous services in the forum on the defendantfranchisee’s behalf plus visits to the forum by defendant’s personnel); Cossart v.
United Excel Corp., 804 F.3d 13, 21 (1st Cir. 2015) (defendant recruited plaintiff
in the forum to perform significant services on its behalf in the forum and
facilitated this by providing office equipment to the plaintiff in the forum); C.W.
Downer, 771 F.3d at 66-69 (defendant visited the forum to initiate the
relationship, “actively negotiated the contract,” and “procured the performance
of extensive services in the . . . forum” that “required interactive communications
between the [parties] for an extended period of time”); Bluetarp, 709 F.3d at 8082 (formation of credit agreement contemplated significant future in-forum
activity on behalf of out-of-state defendant; defendant in fact used plaintiff’s
services and received monthly billing statements from plaintiff); Adelson, 510
F.3d at 50 (defendant formalized employment contract in the forum and regularly
sought approval of finances from the plaintiff’s office in the forum).20
Analogically, the plaintiff’s best case from the First Circuit on foreseeability
is probably Ganis Corp. The court there approved jurisdiction in California over
Massachusetts residents who obtained a loan from a California lender and then
defaulted on it. 822 F.2d at 195-96. The Note called for five years of monthly
installment payments to the lender at its offices in California and contained a
California choice-of-law provision. Id. at 195. Jurisdiction rested on these two
contacts, an unwitting misrepresentation that the defendants sent to the plaintiff
in California, and the many documents that the defendants saw or signed
bearing the plaintiff’s California address. Id. at 198. The court concluded that
the defendants could not “knowingly avail themselves of the benefits of interstate
commerce, even if it is through the use of agents, without also subjecting
themselves to the corresponding obligations of such a bi-coastal transaction.”
Id. at 197.
Like the defendants in Ganis Corp., the Duchossoises have allegedly
refused to make payments due in Maine under a contract with a Maine choice-
Nor is this case like Pritzker v. Yari, 42 F.3d 53 (1st Cir. 1994), where purposeful availment
rested on the defendant’s “knowingly acquiring an economically beneficial interest in the
outcome of a [forum-based] lawsuit that involved control over property in [the forum].” Id. at 62.
of-law provision, and have seen or signed numerous documents bearing LPS’s
Maine address. They also may have sent a misrepresentation into Maine, insofar
as they warranted in the Assignments that they had “the power and authority to
transfer the Partnership Interest” to LPS, Assignment ¶ 3(c), whereas the
underlying Partnership agreements prohibited the transfer. Defs.’ Mot. 8; Illinois
Litigation Am. Compl. ¶ 5, Reichl Decl. Ex C (ECF No. 6-12). “The transmittal of
such a misrepresentation, even if unwitting, has been held to represent
substantial contacts for the purpose of finding personal jurisdiction.” Ganis
Corp., 822 F.2d at 198. But as noted supra, the Maine choice-of-law provision
in the Option Agreements is neutralized by a conflicting provision in the
Assignments, and the defendants here made only annual payments to the
plaintiff, not monthly payments. Baskin-Robbins, 825 F.3d at 38-39. More
significantly, the Ganis Corp. defendants reached out into interstate commerce
to find a loan. 822 F.2d at 195 (defendants’ agent solicited a Texas company
who in turn solicited the plaintiff in California). The Duchossoises, by contrast,
did not reach out into interstate commerce looking to sell their Partnership
interests, but were solicited from Maine by LPS. Cf. Carreras, 660 F.3d at 55556 (“A company does not subject itself to jurisdiction in a forum simply by
following up with forum residents who, without prior solicitation, have expressed
interest in purchasing the company’s product.”); Redondo Const. Corp. v. Banco
Exterior de Espana, S.A., 11 F.3d 3, 5 (1st Cir. 1993) (jurisdiction over defendant
who traveled to forum to solicit plaintiff’s business). Their contacts with Maine
are quantitatively and qualitatively more limited than the Ganis Corp.
For all these reasons, I conclude that the defendants did not purposefully
avail themselves of the privilege of conducting activities in Maine in a way that
would make jurisdiction over them here foreseeable.
Because the plaintiff has not demonstrated that the defendants have the
requisite minimum contacts with Maine, the issue of reasonableness is not
determinative, Sawtelle, 70 F.3d at 1394, but I analyze it anyway. See Scottsdale
Capital Advisors Corp. v. The Deal, LLC, __ F.3d __, No. 17-1968, 2018 WL
1601792, at *4 (1st Cir. Apr. 3, 2018) (helpful for district court to analyze all
three elements of specific jurisdiction even where circuit court analyzes only one
“Reasonableness” means “that, even where purposefully generated
contacts exist, courts must consider a panoply of other factors which bear upon
the fairness of subjecting a nonresident to the authority of a foreign tribunal.”
Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 209 (1st Cir. 1994) (citation
Reasonableness is a question of “the fundamental fairness of an
exercise of jurisdiction.” Swiss American, 274 F.3d at 621 (citation omitted).
The Supreme Court has identified five factors in assessing whether it is
reasonable under the Fourteenth Amendment due process clause to require a
defendant to appear in a particular forum. The First Circuit calls them the
Gestalt factors. They are: (1) the defendant’s burden in appearing, (2) the forum
state’s interest in adjudicating the dispute, (3) the plaintiff’s interest in obtaining
convenient and effective relief, (4) the judicial system’s interest in obtaining the
most effective resolution of the controversy, and (5) the common interests of all
sovereigns in promoting substantive social policies. Ticketmaster, 26 F.3d at
209. The burden is on the defendants to demonstrate unreasonableness. Id. at
The weaker the plaintiff’s showing on relatedness and purposeful
availment, the less the defendant needs to show on this prong to defeat
(i) The Defendants’ Burden
Only a “special or unusual burden” carries any weight here. Adelson, 510
F.3d at 51 (legally blind diabetic living in Israel did not face special or unusual
burden in appearing in Massachusetts); accord Baskin-Robbins, 825 F.3d at 40.
Only Richard L. Duchossois, at 96 years old, potentially faces such a burden. At
oral argument, counsel for the defendants conceded that the senior Duchossois
is in good health. The defendants’ burden in appearing is relatively minor. I
therefore put little weight on this defendant-favoring factor.
(ii) The Forum State’s Interest
Maine has a “‘manifest interest’ in providing its resident with a convenient
forum for redressing injuries by out-of-state actors.” Baskin-Robbins, 825 F.3d
at 40 (quoting Burger King, 471 U.S. at 473); accord C.W. Downer, 771 F.3d at
70 (calling this a “particularly weighty factor”); Harriman v. Demoulas
Supermarkets, Inc., 518 A.2d 1035, 1036 (Me. 1985) (“Maine has an interest in
providing . . . Maine citizens [with] a means of redress against nonresidents.”).
The defendants point out that this interest always exists where the
plaintiff has sued an out-of-state defendant in its home forum and argues that
it should not count for much, Defs.’ Mot. 16—not unlike how the first Gestalt
factor counts for a defendant only if the defendant’s burden is out of the ordinary.
The argument is foreclosed by First Circuit precedent. E.g., Baskin-Robbins,
825 F.3d at 40. This factor somewhat supports a Maine forum.
(iii) The Plaintiff’s Interest in Obtaining Convenient and Effective
“Courts regularly cede some deference to the plaintiff’s choice of forum.”
Baskin-Robbins, 825 F.3d at 41. The defendants nevertheless argue that the
plaintiff “easily may bring its claims” in Illinois. Defs.’ Mot. 16. “Putting this
spin on the matter—emphasizing that the plaintiff could just as easily litigate in
a [non-forum] court—effectively nullifies the plaintiff’s choice to litigate its suit
[in the forum].” Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138,
151 (1st Cir. 1995). This factor supports a Maine forum.
(iv) The Judicial System’s Interest in Obtaining the Most Effective
Resolution of the Controversy
This lawsuit’s center of gravity is in Illinois: it concerns in part the
alienability of Illinois limited partnership interests in Illinois real estate governed
by Illinois law, issues which have been raised in a pending Illinois lawsuit.
Maine’s only interest in the suit is that LPS is a Maine resident.
That said, the documentary evidence should be readily available in both
fora, and while Illinois appears to have more potential witnesses,21 the
distribution is not overwhelmingly in Illinois’s favor, and depositions are
generally held in the deponent’s home jurisdiction.
The litigation can be
efficiently conducted in either forum, with a slight edge to Illinois.
Four of the five defendants are in Illinois (Thomas A. Smith has a Florida address, Booth Decl.
Ex. 4). Each side offered two agents’ declarations, probably the primary fact witnesses.
The defendants argue that an Illinois court would be better equipped to
apply Illinois law. Defs.’ Mot. 16. This is probably true. See N. Laminate Sales,
Inc. v. Davis, 403 F.3d 14, 26 (1st Cir. 2005) (efficient administration of justice
is served where court is familiar with the law that governs the dispute); but see
Baskin-Robbins, 825 F.3d at 41 (“A federal court sitting in [Maine] is fully
capable of applying [Illinois] law.”).
They also argue that proceeding with the case here risks “duplicative” or
“piecemeal” litigation given the pending Illinois litigation. Defs.’ Mot. 16. This
might be true if the defendants were parties to that litigation. See Bluetarp, 709
F.3d at 83 (there was “at least a question” of efficiency where an earlier suit was
filed in another forum, though it did not “tip the constitutional balance”). But
they are not. In fact, the plaintiff’s counsel represented at oral argument that
the plaintiff has sought their participation in the Illinois litigation, a request
which was opposed by the General Partner and denied by the judge. At most,
the Illinois litigation (depending on the outcome) could furnish some issue
preclusion arguments against LPS by the Duchossoises.
Conversely, the plaintiff argues that because this is the only suit between
these parties, efficiency favors proceeding here. Pl.’s Opp’n 18. That is true to
an extent, but this suit is still in its infancy and could easily be refiled in Illinois
if dismissed now.
Usually this factor is a wash. Baskin-Robbins, 825 F.3d at 40; Nowak v.
Tak How Invs., Ltd., 94 F.3d 708, 718 (1st Cir. 1996). Here, it supports an
(v) The Common Interests of All Sovereigns in Promoting Substantive
Maine “has a legitimate stake in providing its citizens with a convenient
forum for adjudicating disputes.” Baskin-Robbins, 825 F.3d at 41. This interest
has arguably been accounted for by the second factor, but it routinely makes an
appearance under this factor as well.
Illinois, as noted above, has a strong interest in this case. That said, the
defendants have not articulated any specific Illinois “substantive social policies”
that are at stake. The First Circuit has been skeptical of resolving this factor on
the basis of which forum’s law will govern, especially when weighed against an
interest like Maine’s in providing a convenient forum for its citizens. Id. (“[The
defendant contends that a] Washington statute will determine [the outcome of
the case]. That is true as far as it goes, but it does not take [the defendant] very
far. A federal court sitting in [the forum] is fully capable of applying Washington
law. Equally as important, Washington’s interest in the matter does not trump
[the forum state’s] interest.” (citing Burger King, 471 U.S. at 483)).
Illinois’s interest in this case is stronger than Washington’s was in BaskinRobbins, however: not only an Illinois statute is at issue, but also Illinois
property interests in Illinois real estate. This factor modestly favors Illinois.
I conclude that if I am incorrect and the defendants have in fact
purposefully availed themselves of the privilege of conducting activities in Maine,
the plaintiff has made at best a weak showing of relatedness and purposeful
availment, and therefore the defendants need to show less on the Gestalt factors
to defeat jurisdiction.
Ticketmaster, 26 F.3d at 210.
But “[t]aken in their
entirety, the Gestalt factors are in rough equipoise,” Baskin-Robbins, 825 F.3d
at 41, and do not “tip the constitutional balance,” Nowak, 94 F.3d at 717. If
purposeful availment were satisfied, it would not be unreasonable to exercise
jurisdiction over the defendants here.
I GRANT the defendants’ motion and DISMISS the complaint. Their request
for a stay is MOOT.
DATED THIS 11TH DAY OF APRIL, 2018
/S/D. BROCK HORNBY
D. BROCK HORNBY
UNITED STATES DISTRICT JUDGE
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