Stacy v. Johnson 07-CV-051-SM 08/28/07
UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
David Stacv as Successor
in interest to the Conservator
Estate of David Stacv,
Plaintiffs
v. Civil No. 0 7-cv-51-SM
Opinion No. 2007 DNH 103
A. Rodman Johnson.
Defendants
O R D E R
David Stacy brings suit against A. Rodman Johnson, a Texas
attorney, seeking redress for alleged legal malpractice that
occurred in the creation of a guardianship over him. Stacy
asserts that Johnson, acting in concert with a New Hampshire
attorney, pursued an unwarranted and unnecessary guardianship
over him in Texas, despite an ongoing conflict of interest.
Johnson moves to dismiss, arguing that the court lacks personal
jurisdiction over him, and that venue in this district is
improper. See F e d . R. Civ. P. 12(b)(2) and 12(b)(3). Stacy
objects. For the reasons set forth below, Johnson's motion to
dismiss for lack of personal jurisdiction is granted.
The Legal Standard
When considering a motion to dismiss for lack of personal
jurisdiction under F e d . R. C i v . P. 12(b)(2), the court takes the
facts pleaded in the complaint as true, and construes them "in
the light most congenial to the plaintiff's jurisdictional
claim." Negron-Torres v. Verizon Commc'ns, Inc.. 478 F.3d 19, 23
(1st Cir. 2007) (citing Massachusetts Sch. of Law at Andover.
Inc. v. Am. Bar Ass'n.,
142 F.3d 26, 34 (1st Cir. 1998)). The
court also considers uncontradicted facts put forth by the
defendant, but does not "credit conclusory allegations or draw
farfetched inferences." I d . (citations and quotation marks
omitted).
Background
The relevant facts, as alleged in the amended complaint
(document no. 9) are as follows.
In May of 2001, Stacy and his adoptive mother created an
irrevocable trust for Stacy's benefit in exchange for Stacy's
promise to create a voluntary conservatorship in New Hampshire
and his naming Michel Brault as conservator. A Petition for
Conservatorship was filed in, and subsequently granted by, the
Carroll County Probate Court. Brault was appointed conservator,
and Donald Wyatt was hired to serve as his counsel. At the time
he was retained as counsel to the conservatorship, Wyatt also
represented Stacy individually, and had ongoing business
relationships with Brault, about which Stacy was unaware.
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In March of 2002, Stacy underwent surgery at a hospital in
Texas, during which time Wyatt, Brault, and Stacy's estranged
wife, Svetlana Stacy, successfully sought to impose a
guardianship over Stacy and his estate in the New Hampshire
Probate Court (Carroll County). The three subsequently traveled
to Texas to establish a guardianship in Texas as well, based upon
the New Hampshire guardianship. With Johnson as his sponsor,
Wyatt sought pro hac vice admission to the Texas court, with the
intent of establishing a Texas guardianship. The motion for pro
hac vice admission was denied, however, because the Texas court
found that Wyatt's prior simultaneous representation of Stacy,
Brault, and the conservatorship, disqualified him from
participating in the guardianship case as counsel.
Wyatt and Johnson then entered into a written agreement
under which Johnson agreed to pay Wyatt's fees as a "legal
consultant" in matters relating to the Texas guardianship
proceeding. The agreement provided that Wyatt would perform
legal research, prepare legal documents, and prepare witnesses to
give testimony in connection with the guardianship effort, while
Johnson served as counsel.
Brault resigned as conservator of the estate in 2003.
Deborah Stacy was appointed as his successor. In 2005, Judge
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James Patten of the Carroll County Probate Court imposed a
surcharge against Brault of approximately $1,000,000, and ordered
Wyatt to disgorge legal fees he had charged the conservator,
presumably based upon finding disqualifying conflicts of
interest.
Stacy now alleges that Johnson engaged in malpractice, to
his detriment, by agreeing to pursue and pursuing a guardianship
in Texas that he knew or should have known to be improper, and by
entering into a professional relationship with Wyatt when Johnson
knew or should have known that Wyatt was precluded from
participating in the case due to conflicts of interest. Based on
these allegations, Stacy filed suit in this court on February 22,
2007, asserting vicarious liability (Count I), breach of
fiduciary duty (Count II), and malicious prosecution (Count III).
Discussion
Johnson moves to dismiss the complaint for lack of personal
jurisdiction over him. Stacy counters that the agreement between
Wyatt and Johnson constituted a "joint venture," and this court
may exercise personal jurisdiction over Johnson based upon his
association with Wyatt, a joint venturer and a New Hampshire
resident.
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I. Personal Jurisdiction
When a defendant challenges personal jurisdiction, the
burden falls on the plaintiff "to demonstrate the existence of
every fact required to satisfy both the forum's long-arm statute
and the Due Process Clause of the Constitution." Negron-Torres.
478 F.3d at 24. Where, as here, the long-arm statute is
coextensive with the constitutional limits of due process, the
two inquiries become one, focusing solely on whether jurisdiction
comports with due process. See i d .; Computac. Inc. v. Dixie News
C o .. 124 N.H. 350, 355 (1983) (explaining that New Hampshire's
long-arm statute is "coextensive with constitutional
limitations").
Personal jurisdiction comes in two varieties: specific and
general. See Negron-Torres. 478 F.3d at 24. Key to both is the
existence of "minimum contacts" between the nonresident defendant
and the forum. Id.
A. General Personal Jurisdiction
A court may exercise general personal jurisdiction over a
defendant when "'the litigation is not directly founded on the
defendant's forum-based contacts, but the defendant has
nevertheless engaged in continuous and systematic activity,
unrelated to the suit, in the forum state.'" Negron-Torres. 478
5
F.3d at 25 (quoting 163 Pleasant St. Corp., 960 F.2d at 1088 (1st
Cir. 1992) ) .
Stacy has failed to establish that Johnson maintains a
continuous and systematic presence in New Hampshire. Nothing
presented shows that Johnson maintains a place of business in the
state, or is licensed to practice law here, or owns property or
transacts any business here, or that he has ever appeared as an
attorney in a New Hampshire court. Indeed, Johnson has not
visited the state since 1978. Accordingly, the court lacks
general personal jurisdiction over Johnson.
B. Specific Personal Jurisdiction
In contrast to general personal jurisdiction, specific
personal jurisdiction exists "■'where the cause of action arises
directly out of, or relates to, the defendant's forum-based
contacts.'" I d . at 24 (quoting United Elec., Radio & Mach.
Workers of Am. v. 163 Pleasant St. Corp.. 960 F.2d 1080, 1088-89
(1st Cir. 1992)). The Court of Appeals for this circuit has
explained that in considering whether a plaintiff has alleged
sufficient facts to support a finding of specific jurisdiction,
the court "■'divides the constitutional analysis into three
categories: relatedness, purposeful availment, and
reasonableness.'" I d . (quoting Flatten v. HG Berm. Exempted
6
L t d ., 437 F.3d 118, 135 (1st Cir. 2006)). "■'[AJn affirmative
finding on each of the three elements of the test is required to
support a finding of specific jurisdiction.''" Negron-Torres. 478
F.3d at 24-25 (quoting Phillips Exeter Acad, v. Howard Phillips
Fund.
196 F.3d 284, 288 (1st Cir. 1999)). The reasonableness
inquiry is considered in terms of certain "Gestalt factors."
Sawtelle v. Farrell.
70 F.3d 1381, 1389 (1st Cir. 1995).
The relatedness inquiry is "not an open door" and requires a
"material connection" between the defendant and the forum. Id.
at 25. A finding of relatedness requires that the plaintiff's
action arises directly "out of the specific contacts between the
defendant and the forum state." Sawtelle. 70 F.3d at 1389. Put
differently, for a finding of relatedness, the plaintiff's claim
must arise out of, or relate to the defendant's in-forum
activities. I d . (citing Ticketmaster-New York. Inc. v. Alioto.
26 F .3d 201, 206 (1st Cir. 1994)).
Stacy asserts that the legal consulting agreement between
Wyatt and Johnson constituted a joint venture under New Hampshire
law and, because this court has personal jurisdiction over one
participant in the joint venture - Wyatt - this court also may
exercise personal jurisdiction over any other member of the joint
venture, that is, over Johnson. That is, Stacy argues that the
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existence of the joint venture agreement between Johnson, a Texas
resident, and Wyatt, a New Hampshire resident, is itself
sufficient to establish relatedness for purposes of the
jurisdictional inquiry.
New Hampshire law defines a joint venture generally as "an
association of two or more persons formed to carry out a single
business enterprise for profit." Miami Subs Corp. v. Murray
Family Trust. 142 N.H. 501, 508 (1997) (citing 46 Am. J u r . 2d
Joint Ventures § 1 (1994)). The New Hampshire Supreme Court has
further explained that a "joint proprietary interest and a right
of mutual control over the subject-matter of the enterprise or
over the property engaged therein is essential." Glaser v.
Medford-Marlboro Knit Gaiter Co..
93 N.H. 95, 99 (1944).
Moreover, although not dispositive, the New Hampshire Supreme
Court has opined that "[wjhether there is an agreement between
the parties to share losses is an important . . . test" to
determine whether a relationship constitutes a joint venture.
Lefebvre v. Waldstein, 101 N.H 451, 455 (1958).
Under the agreement between Johnson and Wyatt, Johnson
assumed the exclusive responsibility to provide legal
representation to Brault in pursuit of a Texas guardianship over
Stacy, while Wyatt was to provide legal support services in
connection with that proceeding. Specifically, the contract
explained that Wyatt would provide
. . . ■'■'legal assistant" services to the extent this
[the guardianship] matter proceeds. Subject to my
[Johnson's] discretion and control, I request your
assistance in legal research, preparation of witnesses,
and the preparation of legal documents in furtherance
of my clients' objectives.
Def.'s Mot. Dismiss, Ex. C.
Although both Johnson and Wyatt undoubtedly intended to
benefit financially from the arrangement, it cannot be said that
Johnson and Wyatt were carrying out a business enterprise,
together, for profit. Wyatt was to provide ancillary support
services to Johnson, in connection with Johnson's legal
representation, in Texas, of a specific client. In return, Wyatt
was to receive an hourly fee, to be paid on a monthly basis.
There were no arrangements for sharing of profits or losses, and
no indicia of mutual control over the legal representation, or
any common proprietary interest. To the contrary, the agreement
provided that all of Wyatt's work was to be "[s]ubject to
[Johnson's] discretion and control." Simply put, the arrangement
between Johnson and Wyatt appears to be more like an independent
contractor relationship than it does a joint venture. Stacy's
joint venture argument, thus, does little to advance his
proposition that Johnson's allegedly improper conduct has a
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sufficient nexus with New Hampshire to warrant this court's
exercise of personal jurisdiction over Johnson. If there was a
"joint venture" at all, its purposes, and activities nearly
completely concerned, were directed to, and were carried out in
Texas, not New Hampshire.
Stacy also argues that jurisdiction in New Hampshire is
appropriate because all or substantially all of Wyatt's
guardianship work took place while he was physically in New
Hampshire, and because Johnson routinely sent his own bills to
Wyatt's office here for payment by the conservatorship. But the
allegedly improper conduct that forms the basis of Stacy's
complaint - namely, the improper or unethical pursuit of a Texas
guardianship over Stacy, and the formation of a relationship
between Wyatt and Johnson, notwithstanding Wyatt's professional
conflicts - all took place in Texas and all related to the Texas
proceeding. While it is true that the Johnson's bills were paid
by a New Hampshire conservatorship, from New Hampshire, the mere
fact that some effects of the allegedly improper conduct were
coincidentally felt in New Hampshire does not itself give rise to
personal jurisdiction over Johnson in this state. See Sawtelle,
70 F .3d at 1390-91.
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Although the court could end its inquiry here, see Negron-
Torres , 478 F.3d at 24-25 (all three elements of the personal
jurisdiction test must be satisfied for a finding that
jurisdiction is proper), the remaining two elements of the
personal jurisdiction test merit a brief discussion.
The second prong of the specific personal jurisdiction test
requires the court to consider whether the defendant's contacts
with the forum state "■'represent a purposeful availment of the
privilege of conducting activities in the forum state.'"
Sawtelle, 70 F.3d at 1389 (quoting 163 Pleasant St. Corp..
960
F.2d at 1089). Specifically, the court looks to whether the
defendant "engaged in any purposeful activity related to the
forum that would make the exercise of jurisdiction fair, just, or
reasonable." I d . at 1391 (quoting Rush v. Savchuk.
444 U.S. 320,
329 (1980)) (quotation marks omitted). "[T]he cornerstones upon
which the concept of purposeful availment rest are voluntariness
and foreseeability." I d . (citing Ticketmaster, 26 F.3d at 207).
Stacy argues that Johnson purposefully directed his
activities to New Hampshire by agreeing to represent a New
Hampshire conservator, and then subsequently engaging Wyatt, a
New Hampshire attorney, to perform work related to the
conservatorship. The law is clear, however, that neither the
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mere representation of an out-of-state client, nor the hiring of
local counsel are sufficient to establish purposeful availment.
See Sawtelle, 70 F.3d. at 1392.
Stacy relies on Johnson v. Shaines & McEachern. P.A.. 835 F.
Supp. 685 (D.N.H. 1993) in support of his proposition that
Johnson is subject to jurisdiction in New Hampshire because of
Wyatt's presence here. In Johnson, the court applied the
doctrine of partnership by estoppel, finding that a Massachusetts
firm could be subjected to New Hampshire jurisdiction because the
two firms had represented themselves as partners to the
plaintiff. Johnson.
835 F. Supp. at 689-90. Moreover, the court
found that the two firms had led the plaintiff to believe that
both firms would be working in concert on his case, and that the
plaintiff detrimentally relied on that representation. I d . at
690-91.
Stacy's reliance on Johnson is misplaced. For the reasons
given above, it is plain that Johnson and Wyatt did not enter
into a partnership arrangement, and nothing in the record
suggests that either Johnson or Wyatt held themselves out to
Brault as partners in New Hampshire, or that Brault ever relied
on any such representation. To the contrary, Brault undoubtedly
understood that Johnson was retained in Texas to pursue the Texas
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litigation. And, unlike the plaintiff in Johnson. Stacy has not
alleged that Brault or the conservatorship detrimentally relied
upon any representation of the existence of a partnership between
Johnson and Wyatt when his services were engaged.
Stacy also asserts that Johnson should have reasonably
foreseen being subjected to New Hampshire jurisdiction because he
submitted his bills to a New Hampshire conservator who was
required to account to the New Hampshire Probate Court for
expenditures made on Stacy's behalf. Although the probate court
can of course require Brault to appear in New Hampshire and
justify his expenditures, as conservator, it is doubtful that
Johnson, acting on his own behalf, would have to appear in a New
Hampshire court in support of bills submitted to Brault. Johnson
represented the conservator only with respect to the Texas
guardianship proceeding, which took place entirely in Texas,
before a Texas court. Johnson did not perform legal services in
New Hampshire, and had no involvement in the Stacy conservancy.
He performed work for the conservator, billed for that work, and,
had he not been paid, he could have sued here or in Texas, but
those circumstances do not subject him to suit here for the work
done in Texas. In light of these facts, it cannot be said that
Johnson could have reasonably foreseen being subjected to
personal jurisdiction in New Hampshire.
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Because the facts alleged in the complaint fall short of
establishing that Johnson voluntarily directed his conduct to New
Hampshire, or that he could have reasonably foreseen that he
would be subject to personal jurisdiction here, Stacy has failed
to satisfy the purposeful availment element of the specific
personal jurisdiction test.
The third and final element of the three-part specific
personal jurisdiction inquiry asks whether exercising personal
jurisdiction would be reasonable in light of various Gestalt
factors. See Sawtelle, 70 F.3d at 1394. The court considers
"(I) the defendant's burden of 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."
Id.
(quoting Burger King. 471 U.S. at 477). A weak showing on
relatedness and purposeful availment requires the defendant to
show less in terms of unreasonableness to defeat jurisdiction,
while a strong showing of reasonableness "may serve to fortify a
borderline showing of relatedness and purposefulness." Id.
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Stacy asserts that New Hampshire has an interest in having
this case litigated here because it involves the assets of a New
Hampshire estate, while Johnson says his slight contacts with New
Hampshire are overshadowed by his extensive contacts with Texas.
Johnson notes that he is licensed to practice law in Texas, where
he works as a solo practitioner, and generally represents Texas-
based clients. He does not routinely represent out-of-state
clients, and does not regularly appear in courts outside of
Texas. Finally, and perhaps most persuasively, all of the
alleged conduct giving rise to the allegations in this case
occurred in Texas. The allegedly improper guardianship
proceeding was brought before a Texas court, and the allegedly
improper agreement between Johnson and Wyatt was executed by
Johnson in Texas, shortly after a Texas court denied Wyatt's
motion for admission pro hac v i c e .
While the claims do have some slight and indirect
connections with New Hampshire, the totality of circumstances and
the nature of the events giving rise to Stacy's complaint simply
do not support a reasonableness finding in favor of New Hampshire
jurisdiction.
Because Stacy has failed to satisfy the relatedness and
purposeful availment tests, and because the Gestalt factors weigh
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heavily against adjudicating the case here, the court finds that
it lacks specific personal jurisdiction over Johnson.
Conclusion
As the court lacks personal jurisdiction, Johnson's motion
to dismiss (document no. 11) is hereby granted. Johnson's motion
to dismiss for improper venue (document no. 12) is denied as
moot. The Clerk of Court shall enter judgment in accordance with
this order and close the case.
SO ORDERED.
Steven J / McAuliffe
Chief Judge
August 28, 2 00 7
cc: Steven M. Latici, Esq.
Andrew M. Schneiderman, Esq.
David A. Grossbaum, Esq.
Kenneth C. Bartholomew, Esq.
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