Filmore et al v. VSP North America LLC et al

Filing 21

Magistrate Judge Marianne B. Bowler: ORDER entered. MEMORANDUM AND ORDER Re: Defendants' Motion to Dismiss Plaintiffs' Complaint for Lack of Personal Jurisdiction (Docket Entry # 6 ). Defendants' motion to dismiss (Docket Entry # 6 ) is ALLOWED. (Patton, Christine)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
JEFFREY FILMORE, and
BARRACUDA INVESTMENTS, INC.,
Plaintiffs,
v.

CIVIL ACTION NO.
18-10256-MBB

VSP NORTH AMERICA, LLC, VSP
FLORIDA, LLC, JOHN VON
STACH, and RYAN WALKER,
Defendants.

MEMORANDUM AND ORDER RE:
DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’
COMPLAINT FOR LACK OF PERSONAL JURISDICTION
(DOCKET ENTRY # 6)
January 14, 2019
BOWLER, U.S.M.J.
Pending before this court is a motion to dismiss for lack
of personal jurisdiction filed by defendants VSP North America,
LLC (“VSP”) and John Von Stach (“Von Stach”) pursuant to Fed. R.
Civ. P. 12(b)(2) (“Rule 12(b)(2)”).1

(Docket Entry # 6).

Plaintiffs Jeffrey Filmore (“Filmore”) and Barracuda
Investments, Inc. (“Barracuda”) oppose the motion.2
Entry # 13).

(Docket

After conducting a hearing, this court took the

motion (Docket Entry # 6) under advisement.

VSP and Von Stach are collectively referred to as
“defendants.”
2
Filmore and Barracuda are collectively referred to as
“plaintiffs.”
1

PROCEDURAL BACKGROUND
Plaintiffs initiated this action on February 8, 2018 by
filing a complaint seeking damages against defendants as well as
VSP Florida, LLC (“VSP-FL”) and Ryan Walker (“Walker”).
Entry # 1).

(Docket

The complaint sets out the following claims:

(1)

breach of contract (Count I); (2) unjust enrichment (Count II);
(3) common law fraud (Count III); and (4) unfair and deceptive
trade practices in violation of Massachusetts General Laws
chapter 93A, sections 2 and 11 (“chapter 93A”) (Count IV).
(Docket Entry # 1).
VSP and VSP-FL.

Counts I and II raise claims only against

(Docket Entry # 1).

Defendants seek a dismissal under Rule 12(b)(2) for lack of
personal jurisdiction, as defendants are not residents of
Massachusetts.

Furthermore, defendants argue that Massachusetts

General Laws chapter 223A, section three (“chapter 223A, § 3”),
does not authorize the exercise of personal jurisdiction over
defendants.
STANDARD OF REVIEW
This circuit entertains different standards for reviewing a
motion to dismiss for want of personal jurisdiction under Rule
12(b)(2).

As suggested by both plaintiffs and defendants,

“‘[t]he most conventional’” and more frequently employed method
is the “‘prima facie’ method.”

Daynard v. Ness, Motley,

Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 51 (1st Cir.

2

2002) (internal citation omitted).

This method allows a court

to “‘consider . . . whether the plaintiff has proffered evidence
that, if credited, is enough to support findings of all facts
essential to personal jurisdiction.’”

Adelson v. Hananel, 510

F.3d 43, 48 (1st Cir. 2007) (quoting Boit v. Gar-Tec Products,
Inc., 967 F.2d 671, 675 (1st Cir. 1992)).

A plaintiff has the

burden of demonstrating “‘evidence of specific facts’” with
properly documented evidentiary proffers.

Vysedskiy v. OnShift,

Inc., Civil Action No. 16-12161-MLW, 2017 WL 4391725 at *1 (D.
Mass. Sept. 29, 2017) (quoting Foster-Miller, Inc. v. Babcock &
Wilcox Canada, 46 F.3d 138, 145 (1st Cir. 1995)).
includes the affidavits in the record.

Such evidence

See Daynard v. Ness,

Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d at 45.

A

plaintiff’s properly documented proffers must be taken as true
for the purpose “of determining the adequacy of the prima facie
jurisdictional showing.”

Id. at 51 (citing Foster-Miller, Inc.

v. Babcock & Wilcox Canada, 46 F.3d at 145).

More specifically,

this court “take[s] these facts ‘as true (whether or not
disputed) and construe[s] them in the light most congenial to
the plaintiff[s’] jurisdictional claim.’”

Id. at 51 (citing

Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass’n, 142 F.3d
26, 34 (1st Cir. 1998)).
Another standard of review requires more than a prima facie
showing.

This standard is appropriate “‘when the proffered

3

evidence is conflicting and the record is rife with
contradictions, or when a plaintiff’s affidavits are “patently
incredible.”’”

Rooney v. Walt Disney World Co., No. CA 02-

12433-GAO, 2003 WL 22937728 (D. Mass. Nov. 25, 2003) (quoting
Boit v. Gar-Tec Products, Inc., 967 F.2d at 676).

The

evidentiary record in the case at bar does not suggest that
plaintiffs’ evidence is “rife with contradictions” or “patently
incredible.”

The prima facie standard therefore applies.
FACTUAL BACKGROUND

Filmore maintains a principal place of business in Beverly,
Massachusetts.

(Docket Entry # 1, ¶ 1).

At all times relevant

to the case at bar, Filmore was a principle of Barracuda, a
Massachusetts corporation with a “usual place of business” in
Beverly, Massachusetts.3

(Docket Entry # 1, ¶¶ 2, 3).

VSP is a “Michigan limited liability company” with a
principal place of business in Grand Rapids, Michigan.
Entry # 1, ¶ 4).

(Docket

VSP sells generators to dealers “located in

approximately 15 states throughout the United States and in
Africa.”

(Docket Entry # 7-1, ¶ 6).

Massachusetts is not one

of the 15 states in which VSP’s dealers are located, nor has VSP
ever “sold any of its generators or other products in
Massachusetts or to Massachusetts residents.”

(Docket Entry #

According to Filmore’s affidavit, he was the president of
Barracuda at all times relevant. (Docket Entry # 13-1, ¶ 2).
3

4

7-1, ¶ 7).

Furthermore, VSP “does not have any offices in

Massachusetts,” nor does it “employ any sales people in
Massachusetts.”

(Docket Entry # 7-1, ¶ 8).

$1,000,000 in 2017.

VSP’s sales totaled

(Docket Entry # 7-1, ¶ 6).

According to

the complaint, Von Stach is the “sole member of VSP.”
Entry # 1, ¶ 7).

(Docket

He is a Canadian citizen who resides in

Ontario, Canada and has never traveled to or visited
Massachusetts.

(Docket Entry # 1, ¶ 6) (Docket Entry # 7-1, ¶

2).
VSP-FL is a “Florida limited liability company” that
maintained a principal place of business in Clearwater, Florida
prior to September 11, 2015, when it was “involuntarily
dissolved . . . for failure to file its annual report.”
Entry # 1, ¶ 5).

(Docket

Walker, a Canadian citizen who maintains an

office in Grand Rapids, Michigan, was the sole member of VSP-FL
and is the “National Accounts Manager for VSP.”

(Docket Entry #

1, ¶¶ 8, 9).
VSP “designs, manufactures and sells environmentally
friendly generators that run on renewable energy.”
Entry # 7-1, ¶ 5).

(Docket

Typically, dealers “order generators from

VSP on behalf of third parties” or for their showroom.
Entry # 7-1, ¶ 9).

(Docket

Dealers often cannot pay VSP for the

generators until they have received payment from the thirdparty.

(Docket Entry # 7-1, ¶ 9).

5

Accordingly, it is standard

practice for VSP to invoice dealers for payment within 90 days
of receipt.

(Docket Entry # 7-1, ¶ 9).

In order to maintain this arrangement with dealers, “VSP
has a program where it sells its [dealer] invoices . . . to
outside parties at a (20%) discount from the face value of the
invoice.”

(Docket Entry # 7-1, ¶ 10).

To reach outside

parties, VSP advertises in national newspapers through “an
advertising broker who finds suitable locations for VSP’s
[advertisements] based on the most cost-effective advertising
rates.”

(Docket Entry # 7-1, ¶ 11).

These national newspapers

include USA Today, the Wall Street Journal, and the New York
Times.

(Docket Entry # 7-1, ¶ 11).

Since 2015, “VSP has run approximately twenty (20)
advertising campaigns” in six different newspapers, each
typically running for one week.

(Docket Entry # 7-1, ¶ 12).

During this time, VSP sold approximately $1,500,000 of invoices
and receivables to parties in different states.

(Docket Entry #

7-1, ¶ 12).
In September 2015, “VSP’s advertising broker recommended
that VSP run a national advertising campaign in the New York
Times, the Boston Globe, and the Los Angeles Times,” as these
newspapers would “provide national coverage” at the lowest
advertising rates due to a discount for advertisements placed in
all three newspapers.

(Docket Entry # 7-1, ¶ 13).

6

VSP did not

have a preference as to which newspapers it advertised in as
long as it could “obtain maximum national coverage” at “the most
cost-effective rate.”

(Docket Entry # 7-1, ¶ 13).

Although VSP

had previously advertised in the New York Times and the Los
Angeles Times, this was the “first and only time that VSP had
advertised in the Boston Globe.”

(Docket Entry # 7-1, ¶ 14).

The advertisement was placed in each of the aforementioned
newspapers for one week, soliciting investors “to purchase VSP’s
invoices and receivables at a 20% discount,” which were said to
be insured and “due within 90 days.”

(Docket Entry # 1, ¶ 15)

(Docket Entry # 7-1, ¶ 15).
On September 12, 2015, Filmore read the Boston Globe at his
home in Beverly.

(Docket Entry # 13-1, ¶ 3).

This was the

first time that Filmore became aware of VSP’s existence as a
company.

(Docket Entry # 13-1, ¶ 3).

Shortly thereafter,

Filmore “accessed the VSP website from [his] home computer” in
Massachusetts.

(Docket Entry # 13-1, ¶ 5).

In October 2015, Filmore called Von Stach from his home in
Massachusetts in response to the advertisement in the Boston
Globe.

(Docket Entry # 13-1, ¶ 6).4

On or about October 13,

2015, Von Stach contacted Filmore regarding the dealer invoices

According to his affidavit, Filmore recollects identifying his
“location as North of Boston . . . in [his] conversations with
[Von Stach] before October 13, 2015.” (Docket Entry # 13-1, ¶
8).
4

7

for that week.

(Docket Entry # 13-1, ¶ 9).

On or around

October 14, 2015, Von Stach represented to Filmore via email
“that VSP was selling its receivables at a 20% discount from
face value to fund manufacturing for new orders and that the
receivables were insured” and due within 90 days.
# 1, ¶ 17).
mails.”

(Docket Entry

Filmore initiated “[m]ost of the calls and e-

(Docket Entry # 7-1, ¶ 17).

Between this date and October 22, 2015, Filmore and Von
Stach “exchanged a few e-mails and phone calls regarding” the
invoices and receivables.

(Docket Entry # 7-1, ¶ 17).

According to the complaint, at no time during the communications
did Filmore disclose “that he was calling from . . . or located
in Massachusetts.”

(Docket Entry # 7-1, ¶ 17).

Filmore simply

informed Von Stach “that he was looking to invest $75,000” and
requested more information about the invoices and VSP’s program.
(Docket Entry # 7-1, ¶ 18).

“Von Stach promised a return [on

the invoices] within 90 days,” and stated that “[m]aking 20%
every 90 days is a very lucrative opportunity, that is actually
25% return on your money.”

(Docket Entry # 1, ¶ 18).

Von Stach

further “represented that the invoices were not consignment
sales and the dealers could not return the products.”
Entry # 1, ¶ 19).

(Docket

Additionally, he “provided references for

other investors who had purchased [VSP’s] receivables.”
Entry # 1, ¶ 21).

(Docket

Filmore was not advised of “any issues with

8

production, inventory or shipping such that VSP could not fulfil
the assigned invoices” at this time.5

(Docket Entry # 1, ¶ 20).

“On or around October 22, 2015, [] Filmore informed VSP
that he wanted to purchase an invoice from Pistolatum Inc.”
(“Pistolatum invoice”), “a [d]ealer located in Merritt Island,
Florida.”

(Docket Entry # 7-1, ¶ 19).

The invoice, worth

$99,882, was with VSP-FL, “VSP’s fully owned subsidiary . . .
which is now dissolved.”

(Docket Entry # 7-1, ¶ 20).

On or around October 22, 2015, Filmore wired $79,905.60
from a “bank account in Maryland, New York, or New Hampshire” to
VSP’s Michigan account.

(Docket Entry # 7-1, ¶ 21).

According

to Filmore’s affidavit, he supplied his address in Beverly,
Massachusetts prior to wiring the money, where he received both
a copy of the Pistolatum invoice and an insurance policy.
(Docket Entry # 13-1, ¶ 10) (Docket Entry # 13-4).

This sale to

Filmore was the only instance in which VSP sold its receivables
to a Massachusetts resident.

(Docket Entry # 7-1, ¶ 12).

The

parties did not execute a written contract regarding the payment
or the invoice.

(Docket Entry # 7-1, ¶ 21).

Upon receipt of the wire transfer, Von Stach requested that
Pistolatum “sign an assignment letter and an invoice agreeing to

5
Filmore was only notified of such issues “after Defendants
defaulted on assigning a new receivable to [him].” (Docket
Entry # 1, ¶ 20).

9

the assignment of the Invoice to [Filmore].”
1, ¶ 22).

(Docket Entry # 7-

At this time, Filmore requested that payment on the

invoice be mailed to “Barracuda’s Massachusetts address or by
wire to a Citibank account in New York for Barracuda’s Morgan
Stanley account in Baltimore, Maryland,” identifying no
preference for either.

(Docket Entry # 7-1, ¶ 22).6

Von Stach and Walker informed Filmore “that the VSP
products had shipped and that the receivables were due in 90
days.”

(Docket Entry # 1, ¶ 49).

VSP and VSP-FL’s shipment to

Pistolatum, however, “was rejected and/or acceptance was revoked
because it was shipped incomplete and damaged.”
1, ¶ 29).

(Docket Entry #

In December 2015, Pistolatum cancelled its order and

returned all VSP products that had been delivered.
Entry # 7-1, ¶ 23).

(Docket

Consequently, “Pistolatum did not pay the

Invoice to Mr. Filmore and/or Barracuda” as there was no
receivable.
23).

(Docket Entry # 1, ¶ 29) (Docket Entry # 7-1, ¶

Filmore requested a refund of his wire payment to VSP.

(Docket Entry # 7-1, ¶ 24).

VSP, however, had already spent the

payment in “VSP’s operations,” and on or about December 16,

6
According to Von Stach’s affidavit, “[t]his was the first time
that [he] learned that Mr. Filmore was located in Massachusetts
and was acting on behalf of a Massachusetts company.” (Docket
Entry # 7-1, ¶ 22). As previously explained, however,
plaintiff’s properly documented proffers are taken as true when
“determining the adequacy of the prima facie jurisdictional
showing.” Daynard, 290 F.3d at 51.

10

2015, Von Stach instead recommended that Filmore accept a new
invoice.
14).

(Docket Entry # 7-1, ¶ 24) (Docket Entry # 13-1, ¶

According to Von Stach’s affidavit, Filmore instead chose

to be added to VSP’s accounts payable, but “VSP has not yet had
the available cash to repay the Payment.”
¶ 25).

(Docket Entry # 7-1,

Filmore regularly e-mailed Von Stach regarding payment.

In a response to one of these emails, Von Stach informed Filmore
that VSP “was shifting to a new single and two unit receivable
program that may free up available cash flow.”

(Docket Entry #

7-1, ¶ 26).
In an effort to repay Filmore, Von Stach “offered to assign
Barracuda a [two] Unit Invoice to reduce the amount owed to
Barracuda if [Filmore] was willing to purchase an additional
[two] Unit Invoice.”

(Docket Entry # 7-1, ¶ 27).

accepted this plan.”

“Filmore

(Docket Entry # 7-1, ¶ 28).

On or about May 10, 2017, Barracuda, through Filmore, wired
$12,000 from its “bank account in New Hampshire, New York, or
Maryland” to VSP’s Michigan bank account for an invoice (Docket
Entry # 13-6) from Phillips Electrical (“Phillips invoice”).7
(Docket Entry # 1, ¶¶ 24, 25) (Docket Entry # 7-1, ¶ 28) (Docket

7
Filmore’s affidavit describes one invoice whereas Von Stach’s
affidavit describes “a 2 unit Invoice.” (Docket Entry # 7, ¶
28) (Docket Entry # 13-1, ¶ 18). The latter affidavit
presumably refers to the two generators in the invoice. (Docket
Entry # 13-6).

11

Entry # 13-1, ¶ 18).

Subsequently, Von Stach sent an

“assignment letter[] and [the] invoice[]” to Phillips Electrical
that informed the company that VSP had assigned the invoice “to
Barracuda and asked [the company] to pay Barracuda the full
amount of the invoice[] by mail or wire.”
¶ 28) (Docket Entry # 13-6).

(Docket Entry # 7-1,

Filmore received the Phillips

invoice in Massachusetts via United States mail.
# 13-1, ¶ 18).
invoice.

(Docket Entry

Neither Filmore nor VSP received payment on this

(Docket Entry # 7-1, ¶ 28) (Docket Entry # 13-1, ¶

18).
On May 12, 2017, Filmore wired an additional $12,000 to VSP
for an invoice from Buckhannon Motorsports (“Buckhannon
invoice”).
18).

(Docket Entry # 7-1, ¶ 29) (Docket Entry # 13-1, ¶

Again, subsequent to the wiring of funds, Von Stach sent a

“letter[] and invoice[]” to Buckhannon Motorsports that apprised
the company that VSP had assigned the invoice to Barracuda and
requested payment of the full amount of the invoices “to
Barracuda by mail or wire.”
Entry # 13-1, ¶ 18).

(Docket Entry # 7-1, ¶ 29) (Docket

Filmore never received a copy of the

Buckhannon invoice from VSP.

(Docket Entry # 13-1, ¶ 18).

Furthermore, neither VSP nor Filmore received payment on this
invoice.

(Docket Entry # 7-1, ¶ 29) (Docket Entry # 13-1, ¶

18).
DISCUSSION

12

Defendants move to dismiss all of the claims in the
complaint for lack of personal jurisdiction.

Defendants

maintain that this court lacks personal jurisdiction over them,
as they are not residents of Massachusetts and none of the
relevant clauses of the Massachusetts long-arm statute provides
jurisdiction.

(Docket Entry # 6).

“‘In determining whether a non-resident defendant is
subject to its jurisdiction, a federal court exercising
diversity jurisdiction “is 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)
(internal citations omitted).

“‘[A] federal court applies the

law of the forum state to resolve disputes’” as to whether it
may exercise personal jurisdiction.

Bearse v. Main Street

Investments, 170 F.Supp 2d 107, 111 (D. Mass. 2001) (citing Gray
v. O’Brien, 777 F.2d 864, 866 (1st Cir. 1985)).

“‘A district

court may exercise authority over a defendant by virtue of
either general or specific [personal] jurisdiction.’”

Daynard

v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d at
51 (quoting Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass’n,
142 F.3d 26, 34 (1st Cir. 1998)).

General jurisdiction exists

when a litigant has “engaged in ‘continuous and systematic
activity’ in the forum” state.

Daynard v. Ness, Motley,

Loadholt, Richardson & Poole, P.A., 290 F.3d at 51 (quoting

13

United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St.
Corp., 960 F.2d 1080, 1088 (1st Cir. 1992)).

Here, the facts

fail to suggest that defendants’ forum-related contacts were so
“continuous and systematic” to warrant the invocation of general
jurisdiction.
Plaintiffs therefore rely on specific jurisdiction as a
means to hale defendants into this court.

See Daynard v. Ness,

Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d at 51
(quoting Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass’n,
142 F.3d at 34 (“[i]n the absence of general jurisdiction, a
court’s power depends upon the existence of specific
jurisdiction”)).

Subject matter jurisdiction in this case is

based on diversity of citizenship under 28 U.S.C. § 1332.
(Docket Entry # 1).

The relevant federal statute does not

explicitly authorize service throughout the United States and
for this reason, sufficient contacts must exist to satisfy
chapter 223A, § 3, as well as the Due Process Clause of the
Constitution.

See Pettengill v. Curtis, 584 F.Supp.2d 348, 356

(D. Mass. 2008).
“A Massachusetts court may acquire personal jurisdiction
over a nonresident ‘when some basis for jurisdiction enumerated
in the statute has been established.’”

Intech, Inc. v. Triple

“C” Marine Salvage, Inc., 826 N.E.2d 194, 197 (Mass. 2005)
(quoting Good Hope Indus., Inc. v. Ryder Scott Co., 389 N.E.2d

14

76 (Mass. 1979)).

Plaintiff cites to sections (a) through (d)

of chapter 223A, § 3.

(Docket Entry # 13).

Chapter 223A, § 3,

in pertinent part, states:
A court may exercise personal jurisdiction over a person,
who acts directly or by an agent, as to a cause of action
in law or equity arising from the person’s (a) transacting
any business in this commonwealth; (b) contracting to
supply services or things in this commonwealth; (c) causing
tortious injury by an act or omission in this commonwealth;
[or] (d) causing tortious injury in this commonwealth by an
act or omission outside this commonwealth if he regularly
does or solicits business, or engages in any other
persistent course of conduct, or derives substantial
revenue from goods used or consumed or services rendered,
in this commonwealth.
Mass. Gen. Laws ch. 223A, § 3.

The term “person,” as defined in

section one of chapter 223A, includes corporations.

Mass. Gen.

Laws ch. 223A, § 1.
“‘For jurisdiction to exist under [chapter 223A,] § 3(a),
the facts must satisfy two requirements . . . defendant[s] must
have transacted business in Massachusetts, and the plaintiff[s’]
claim[s] must have arisen from the transaction of business by
the defendant.’”

Roberts v. Legendary Marine Sales, 857 N.E.2d

1089, 1091 (Mass. 2006) (quoting Tatro v. Manor Care, Inc., 625
N.E.2d 549, 551 (Mass. 1994)).

This clause of chapter 223A, §

3, “‘has been construed broadly.’”

Tatro v. Manor Care, Inc.,

625 N.E.2d at 551 (internal citations omitted).

In applying

chapter 223A, § 3(a), the court focuses on “whether the
defendant[s] attempted to participate in the commonwealth’s

15

economic life.”

United Elec., Radio & Mach. Workers of Am. v.

163 Pleasant St. Corp., 960 F.2d at 1087.

Defendants assert

that they only engaged in “isolated transactions . . . without
any purposeful intent to avail [themselves] of the laws of
Massachusetts.”

(Docket Entry # 7, p. 9).

In response,

plaintiffs argue that defendants’ advertisement in the Boston
Globe and intent to deliver an assigned receivable in
Massachusetts in combination with the two subsequent
transactions with plaintiffs in the spring of 2017 amount to
transacting business in Massachusetts for the purposes of
chapter 223A, § 3(a).

(Docket Entry # 13).

While chapter 223A, § 3(a), has been interpreted broadly,
the “‘transacting business’ test . . . is designed to identify
deliberate, as distinguished from fortuitous, contacts with the
forum by the nonresident party.”

Lyle Richards Int’l, Ltd. v.

Ashworth, Inc., 132 F.3d 111, 112 (1st Cir. 1997).

Here, the

contacts between defendants and the Commonwealth are
insufficient to assert jurisdiction under chapter 223A, § 3(a).
See Intech, Inc. v. Triple “C” Marine Salvage, Inc., 826 N.E.2d
at 198 (noting two advertisements in magazine distributed in
Massachusetts, two sales to Massachusetts buyer of boats located
in Florida, invoice for sale and bill of sale sent to
Massachusetts agent of Massachusetts buyer, and telephone calls
to Massachusetts to initiate sales insufficient to establish

16

that nonresident defendant transacted business in Massachusetts
under chapter 223A, § 3(a)) (relying on Droukas v. Divers
Training Academy, Inc., 376 N.E.2d 548 (Mass. 1978)).

Similar

to defendants’ contacts in Intech v. Triple “C” Marine Salvage,
Inc., defendants’ isolated advertisement in the Boston Globe and
subsequent transactions “had only a ‘slight effect on the
commerce of the Commonwealth’ and [were] ‘void of any purposeful
intent on the part of the defendant[s] to avail [themselves] of
the privilege of conducting activities within the forum State.’”
826 N.E.2d at 198 (quoting Droukas v. Divers Training Academy,
Inc., 376 N.E.2d at 548); see Droukas v. Divers Training
Academy, Inc., 376 N.E.2d at 551 (defendant’s placement of
advertisement in publication distributed in Massachusetts,
receipt of telephone call from Massachusetts buyer, sending
correspondence to plaintiff in Massachusetts confirming sale of
products, and shipment of the products to plaintiff in
Massachusetts deemed insufficient to establish jurisdiction
under chapter 223A, § 3(a)).
Turning to chapter 223A, § 3(b), the provision gives rise
to jurisdiction over nonresident defendants “with respect to a
cause of action arising out of [their] ‘contracting to supply
services or things in this [C]ommonwealth.’”

SCVNGR, Inc. v.

PUNCHH, Inc., 85 N.E.3d 50, 55 (Mass. 2017) (quoting chapter
223A, § 3(b)).

Defendants argue the oral agreement with

17

plaintiffs to sell dealer invoices and discounted receivables
does not qualify as a contract to supply goods or services in
Massachusetts under chapter 223A, § 3(b), as none of the dealers
are located in Massachusetts and none of the generators were
delivered in Massachusetts.

(Docket Entry # 7).

In response,

plaintiffs note that in the present case, the products were the
invoices and discounted receivables, which were “delivered to
residents of the Commonwealth directly.”

(Docket Entry # 13, p.

7).
Here, the only alleged contract was plaintiffs’ oral
agreement to purchase certain accounts receivable from
defendants in October 2015 and two related transactions in May
2017.

(Docket Entry # 1).

There is no factual allegation that

the contract included an agreement to specifically deliver or
supply the receivables to the Commonwealth.

(Docket Entry # 1).

Thus, chapter 223A, § 3(b), does not apply to the present case
because the facts do not evidence a “contract to supply”
invoices in Massachusetts.

See Droukas v. Divers Training

Academy, Inc., 376 N.E.2d at 553-554 (noting defendant did not
contract to supply things in Massachusetts under chapter 223A, §
3(b), where there is no specific agreement to deliver product in
the Commonwealth).

In Droukas, the products consisting of two

marine engines were shipped to Massachusetts by independent
carrier.

Id.

18

With respect to chapter 223A, § 3(c), for jurisdiction to
exist, defendants must have caused “tortious injury by an act or
omission in this commonwealth.”
3(c).

Mass. Gen. Laws ch. 223A, §

In support of their motion to dismiss, defendants argue

that chapter 223A, § 3(c), does not support the exercise of
personal jurisdiction in the case at bar because the only
alleged injury suffered by plaintiffs is a monetary loss, which
does not qualify as “tortious injury.”

(Docket Entry # 7).

In

opposition, plaintiffs contend that it is long settled that
allegations of fraud and unfair trade practices are sufficient
grounds for jurisdiction under the Massachusetts long-arm
statute and the allegations of the representations by defendants
are directly related to the alleged damages.

(Docket Entry #

13).
The First Circuit has held that “[w]here a defendant
knowingly sends into a state a false statement, intending that
it should there be relied upon to the injury of a resident of
that state, he has for jurisdictional purposes, acted within
that state.”

The Scuderi Group, LLC v. LGD Tech., LLC, 575

F.Supp.2d 312, 321 (D. Mass. 2008) (quoting Murphy v. ErwinWasey, Inc., 460 F.2d 661, 664 (1st Cir. 1972)).

The substance

of the complaint is contractual involving an oral contract to
purchase an invoice and receivable.
Marine Sales, 857 N.E.2d at 1092.

19

See Roberts v. Legendary

While under this standard,

defendants alleged misrepresentations suffice as action within
the state, the damages sought in the case at bar are “grounded
in breach of contract” and thus “do not constitute ‘tortious
injury’ as contemplated under [chapter 223A,] § 3(c).”

Id.

(holding plaintiff’s contention that without defendant’s
misrepresentations, plaintiff would not have purchased boat and
incurred expenses insufficient to exercise jurisdiction under
chapter 223A, § 3(c)).
Furthermore, under chapter 223A, § 3(d), a court may
exercise personal jurisdiction over a nonresident if the cause
of action arises from defendants cause of “tortious injury in
this commonwealth by an act or omission outside this
commonwealth if he regularly does or solicits business, or
engages in any other persistent course of conduct, or derives
substantial revenue from goods used or consumed or services
rendered, in this commonwealth.”
3(d).

Mass. Gen. Laws ch. 223A, §

Defendants argue that they do not regularly solicit or

conduct business in the state of Massachusetts.
7).

(Docket Entry #

Plaintiffs are the only residents of the Commonwealth who

have purchased either receivables or goods from VSP,
representing a small fraction of the revenue of VSP as a whole.
(Docket Entry # 7, p. 15).

In opposition, plaintiffs assert

that defendants’ transactions with three entities in
Massachusetts (the Boston Globe, Filmore, and Barracuda) and

20

maintenance of a website accessible in the Commonwealth suffices
to establish a persistent course of conduct.

(Docket Entry #

13).
As previously discussed, the allegations do not constitute
“‘tortious injury.’”
N.E.2d at 1092.

See Roberts v. Legendary Marine Sales, 857

Furthermore, this provision does not apply to

the case at bar because the facts do not suggest that defendants
regularly engaged in any conduct in Massachusetts, or that
defendants derive “‘substantial revenue’” from business
conducted in Massachusetts.

Keds Corp. v. Renee Int’l Trading

Corp., 888 F.2d 215, 219 (1st Cir. 1989).
Given the inapplicability of the pertinent provisions of
chapter 223A, § 3, in conferring personal jurisdiction over
defendants, this court need not discuss the constitutional
constraints on the exercise of jurisdiction under the statute.
See SCVNGR, Inc. v. PUNCHH, Inc., 85 N.E.3d at 55-56 (“[t]he
requirements of [chapter 223A, § 3,] may not be circumvented by
restricting the jurisdictional inquiry to due process
considerations”).

“The long-arm statute ‘asserts jurisdiction

over [defendants] to the constitutional limit only when some
basis for jurisdiction enumerated in the statute has been
established.”’

Id. at 55 (quoting Good Hope Indus., Inc. v.

Ryder Scott Co., 389 N.E.2d at 76); see Intech, Inc. v. Triple
“C” Marine Salvage, Inc., 826 N.E.2d at 197-198 (noting basis

21

for jurisdiction under long-arm statute must be established).
Whereas personal jurisdiction over defendants may exist in a
Michigan forum, this court does not have personal jurisdiction
over defendants under the Massachusetts long-arm statute,
chapter 223A, § 3.8
As a final matter, the docket fails to reflect a return of
service for either VSP-FL or Walker.

Absent a voluntary

dismissal, see Fed. R. Civ. P. 41, plaintiffs are instructed to
advise this court about the status of service for VSP-FL and
Walker on or before February 7, 2019.

See Fed. R. Civ. P. 4(m);

LR. 4.1.
CONCLUSION
In accordance with the foregoing discussion, defendants’
motion to dismiss (Docket Entry # 6) is ALLOWED.

/s/ Marianne B. Bowler
MARIANNE B. BOWLER
United States Magistrate Judge

8
The statute of limitations for Michigan’s Consumer Protection
Act, which provides for an attorney’s fee award, is six years.
See Mich. Comp. Laws § 445.911. The statute of limitations for
breach of contract and fraud in Michigan is also six years. See
Mich. Comp. Laws §§ 600.5807, 600.5813. This court expresses no
opinion as to whether Michigan or Massachusetts statute of
limitations or Michigan law applies in any refiled action.

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