STATE OF MAINE SUPERIOR COURT CIVIL ACTION CUMBERLAND, ss. DOCKET NO: CV-06-158
COAST TO COAST ENGINEERING SIERVICES,
Plaintiff * ORDER O N MOTION * TO DISMISS * STEIN ENGINEERS, INC., and * MICHAEL STEIN,, * * Defendant *
This case comes before the Court on Defendant Stein Engineers' motion to
dismiss for lack of personal jurisdiction.
BACKGROUND
Plaintiff's co~nplaintand the accompanying affidavits assert the following:
On or about October 21, 1996, Stein Engineers, a corporation formed under the
laws of Louisiana,. entered into a franchise agreement with franchisor Criterium,
a Maine corporation, to operate an engineering and building inspection business
in the Baton Rouge area of Louisiana. Stein became aware of Criterium through
an advertisement in a magazine and made the initial contact between the parties.
Before signing the franchise agreement, Mr. Stein, the owner of Stein Engineers,
attended an informational session for prospective franchisees in Maine.
Although Stein never conducted engineering or building inspection services in
Maine, Mr. Stein came to Maine in September 1996 for a week long training on
how to operate the franchise. He also attended Criterium's annual conference in Maine in Septembler 2003.'
In 1996, the parties entered into a franchise Agreement for a term of fifteen
years. The Agreement contains a forum selection clause whereby the parties
agreed that "any action commenced for the purpose of enforcing the terms and
provisions of this Agreement . . . shall be brought in the state and federal courts
located in Cumberland County, Maine." The Agreement also contains a
covenant not to compete stating that upon termination of the Agreement, Stein is
precluded from operating an engineering and building inspector business for
two years within the Baton Rouge area. The complaint alleges that Stein
terminated the Agreement on or about December 31, 2005, yet continues to
provide the services it provided as a franchisee in violation of the covenant not to
compete.
On March 13, 2006, Plaintiff filed a four-count complaint alleging breach of
contract (count I), recovery of monies owed (count 11), tortious interference with
a prospective advantageous business relationship (count 111), and declaratory
judgment (count IV). Criterium is seelung a preliminary and permanent
injunction to enforce the covenant not to compete in the Agreement thereby
enjoining Stein from providing engneering and building inspection services in
the Baton Rouge area. On April 6, 2006, Stein filed a motion to dismiss asserting
that the courts of Maine lack personal jurisdiction.
DISCUSSION
Maine's jurisdiction over nonresident defendants is controlled by the long
arm statute, 14 M.R.S.A. § 704-A, and the Due Process Clause of the Maine
I The cornpetin:%affidavits dispute whether or not Stein sent his employees to Maine for training. Constitution. Me. Const. art. I, 3 6-A; Murphy v. Keenan, 667 A.2d 591, 593 (Me.
1995). The extent of Maine jurisdiction is coextensive with that allowed by the
Due Process Clause of the United States Constitution. U.S. Const. amend. XIV, 3
1, Murphy, 667 A.2d at 593. The relevant provisions of Maine's long arm statute
state:
2. Causes of action. Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated in this section, thereby submits such person, and, if an individual, his personal representative, to the jurisdiction of the courts of h s State as to any cause of action arising from the doing of any such acts:
A. The transaction of any business within h s State;
14 M.R.S.A. 3 704-A(2).
Stein argues that because it has never conducted engineering services
within the State of Maine, it is therefore out of reach of the long arm statute.
However, it is undisputed that Stein made a business agreement with a Maine
business to establish a long-term out-of-state franchise and visited Maine several
times to further that business relationskup. The Court views these actions as
conducting business in Maine.
Turning to the due process analysis, the Law Court has determined that
due process is satisfied when three conditions are met: (1)Maine has a legitimate
interest in the subject matter of the litigation; (2) the defendant, by his or her
conduct, reasonably could have anticipated litigation in Maine; and (3) the
exercise of jurisdiction by Maine's courts comports with traditional notions of
fair play and substantial justice. Commerce Bank 13Trust Co. v. Dzuorman, 2004 ME
142, ¶ 14, 861 A.2d 662, 666. Where, as here, the hearing is nontestimonial, Criterium must make a prima facie showing that the first two conditions are
met;2 the burden then shifts to Stein to prove the negative of the h r d condition.
Electronic Media International v. Pioneer Communications of America, 586 A.2d 1256,
1259 (Me 1991).
1. Interest in the Subject Matter of the Litigation
Whether a legitimate state interest exists is a fact specific analysis that
goes beyond the state's interest in providing its citizens with a means of redress
against noncitizens. Commerce Bank and Trust Co. v.Dworman, 2004 ME 142 ¶ 15,
861 A.2d 662, 666. Stein argues vehemently that case law requires the cause of
action to occur in connection with forum activity for the state to have an interest.
This argument is more cut and dry when discussing torts. Here, however, in the
contractual context where a breach of contract can occur in an email, or over the
phone, the exact location of the breach is more difficult to ascertain.
In the contractual context, the Law Court has determined that Maine has
an interest in regulating and/or sanctioning "parties who 'reach out beyond one
state and create continuing relationshps and obligations with [Maine] citizens' . .
. for the consequences of their activities." Electronic Media International v.Pioneer Communications, 586 A.2d 1256,1259 (Me. 1991); see Burger King v.Xudzewicz, 471
2 Courts most commonly rule on a motion to dismiss for lack of personal jurisdiction prior to trial, without holding an evidentiary hearing. Dorf v. Complastik Corp., 1999 ME 133,4[ 12,735 A.2d 984,998. The plaintiff's showing in opposition to the motion "must be made on specific facts set forth in the record . . . ." Id., 9[ 13,1999 M E 133,735 A.2d at 988-89. "This means that [the] plaintiff 'must go beyond the pleadings and make affirmative proof."' Id. This showing may be made by affidavit or otherwise. Id. When "the court proceeds only upon the pleadings and affidavits of the parties, the plaintiff 'need only make a prima fade showing that jurisdiction exists,' and the plaintiff's written allegations of jurisdictional facts should be construed in its favor. Id. If the facts are undisputed, the court rules as a matter of law. Id. Although certain facts are in dispute, the facts relied upon by the Court are not in dispute. Accordingly, the Court will decide the motion by reference to the affidavits. U.S. 4 6 2 , 4 7 3 , 1 0 5 S. Ct.
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STATE OF MAINE SUPERIOR COURT CIVIL ACTION CUMBERLAND, ss. DOCKET NO: CV-06-158
COAST TO COAST ENGINEERING SIERVICES,
Plaintiff * ORDER O N MOTION * TO DISMISS * STEIN ENGINEERS, INC., and * MICHAEL STEIN,, * * Defendant *
This case comes before the Court on Defendant Stein Engineers' motion to
dismiss for lack of personal jurisdiction.
BACKGROUND
Plaintiff's co~nplaintand the accompanying affidavits assert the following:
On or about October 21, 1996, Stein Engineers, a corporation formed under the
laws of Louisiana,. entered into a franchise agreement with franchisor Criterium,
a Maine corporation, to operate an engineering and building inspection business
in the Baton Rouge area of Louisiana. Stein became aware of Criterium through
an advertisement in a magazine and made the initial contact between the parties.
Before signing the franchise agreement, Mr. Stein, the owner of Stein Engineers,
attended an informational session for prospective franchisees in Maine.
Although Stein never conducted engineering or building inspection services in
Maine, Mr. Stein came to Maine in September 1996 for a week long training on
how to operate the franchise. He also attended Criterium's annual conference in Maine in Septembler 2003.'
In 1996, the parties entered into a franchise Agreement for a term of fifteen
years. The Agreement contains a forum selection clause whereby the parties
agreed that "any action commenced for the purpose of enforcing the terms and
provisions of this Agreement . . . shall be brought in the state and federal courts
located in Cumberland County, Maine." The Agreement also contains a
covenant not to compete stating that upon termination of the Agreement, Stein is
precluded from operating an engineering and building inspector business for
two years within the Baton Rouge area. The complaint alleges that Stein
terminated the Agreement on or about December 31, 2005, yet continues to
provide the services it provided as a franchisee in violation of the covenant not to
compete.
On March 13, 2006, Plaintiff filed a four-count complaint alleging breach of
contract (count I), recovery of monies owed (count 11), tortious interference with
a prospective advantageous business relationship (count 111), and declaratory
judgment (count IV). Criterium is seelung a preliminary and permanent
injunction to enforce the covenant not to compete in the Agreement thereby
enjoining Stein from providing engneering and building inspection services in
the Baton Rouge area. On April 6, 2006, Stein filed a motion to dismiss asserting
that the courts of Maine lack personal jurisdiction.
DISCUSSION
Maine's jurisdiction over nonresident defendants is controlled by the long
arm statute, 14 M.R.S.A. § 704-A, and the Due Process Clause of the Maine
I The cornpetin:%affidavits dispute whether or not Stein sent his employees to Maine for training. Constitution. Me. Const. art. I, 3 6-A; Murphy v. Keenan, 667 A.2d 591, 593 (Me.
1995). The extent of Maine jurisdiction is coextensive with that allowed by the
Due Process Clause of the United States Constitution. U.S. Const. amend. XIV, 3
1, Murphy, 667 A.2d at 593. The relevant provisions of Maine's long arm statute
state:
2. Causes of action. Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated in this section, thereby submits such person, and, if an individual, his personal representative, to the jurisdiction of the courts of h s State as to any cause of action arising from the doing of any such acts:
A. The transaction of any business within h s State;
14 M.R.S.A. 3 704-A(2).
Stein argues that because it has never conducted engineering services
within the State of Maine, it is therefore out of reach of the long arm statute.
However, it is undisputed that Stein made a business agreement with a Maine
business to establish a long-term out-of-state franchise and visited Maine several
times to further that business relationskup. The Court views these actions as
conducting business in Maine.
Turning to the due process analysis, the Law Court has determined that
due process is satisfied when three conditions are met: (1)Maine has a legitimate
interest in the subject matter of the litigation; (2) the defendant, by his or her
conduct, reasonably could have anticipated litigation in Maine; and (3) the
exercise of jurisdiction by Maine's courts comports with traditional notions of
fair play and substantial justice. Commerce Bank 13Trust Co. v. Dzuorman, 2004 ME
142, ¶ 14, 861 A.2d 662, 666. Where, as here, the hearing is nontestimonial, Criterium must make a prima facie showing that the first two conditions are
met;2 the burden then shifts to Stein to prove the negative of the h r d condition.
Electronic Media International v. Pioneer Communications of America, 586 A.2d 1256,
1259 (Me 1991).
1. Interest in the Subject Matter of the Litigation
Whether a legitimate state interest exists is a fact specific analysis that
goes beyond the state's interest in providing its citizens with a means of redress
against noncitizens. Commerce Bank and Trust Co. v.Dworman, 2004 ME 142 ¶ 15,
861 A.2d 662, 666. Stein argues vehemently that case law requires the cause of
action to occur in connection with forum activity for the state to have an interest.
This argument is more cut and dry when discussing torts. Here, however, in the
contractual context where a breach of contract can occur in an email, or over the
phone, the exact location of the breach is more difficult to ascertain.
In the contractual context, the Law Court has determined that Maine has
an interest in regulating and/or sanctioning "parties who 'reach out beyond one
state and create continuing relationshps and obligations with [Maine] citizens' . .
. for the consequences of their activities." Electronic Media International v.Pioneer Communications, 586 A.2d 1256,1259 (Me. 1991); see Burger King v.Xudzewicz, 471
2 Courts most commonly rule on a motion to dismiss for lack of personal jurisdiction prior to trial, without holding an evidentiary hearing. Dorf v. Complastik Corp., 1999 ME 133,4[ 12,735 A.2d 984,998. The plaintiff's showing in opposition to the motion "must be made on specific facts set forth in the record . . . ." Id., 9[ 13,1999 M E 133,735 A.2d at 988-89. "This means that [the] plaintiff 'must go beyond the pleadings and make affirmative proof."' Id. This showing may be made by affidavit or otherwise. Id. When "the court proceeds only upon the pleadings and affidavits of the parties, the plaintiff 'need only make a prima fade showing that jurisdiction exists,' and the plaintiff's written allegations of jurisdictional facts should be construed in its favor. Id. If the facts are undisputed, the court rules as a matter of law. Id. Although certain facts are in dispute, the facts relied upon by the Court are not in dispute. Accordingly, the Court will decide the motion by reference to the affidavits. U.S. 4 6 2 , 4 7 3 , 1 0 5 S. Ct. 2174,85 L. Ed. 2d 528 (1985).~ Although a contract in and
of itself does not constitute "contact" for purposes of the due process analysis, a
continuing contractual obligation may support the exercise of jurisdiction if the
ongoing contact between the parties entails an expectation of conducting future
business. Murphy v. Keenan, 667 A.2d 591,595 (Me 1995). Continuing contact,
however, does not result solely from the unilateral activity of another party.
Interstate Food Processing Corp. v. Pellerito Foods, Inc., 622 A.2d 1189, 1192 (Me
1993).
In a case involving the one-time purchase of a boat by a Maine citizen
from a retailer in New Hampshire, the Law Court held that the warranty on the
purchase of the boat did not constitute a continuing contact for business
purposes in order to demonstrate personal jurisdiction. Murphy, 667 A.2d at
595.4 However, in a case involving a contract between a Maine business and a
Uchigan business to s h p potato products from Maine to hhchigan, the Law
Court found that a continuing obligation existed between the two businesses.
Interstate Food Processing Corp. v. Pellerito Foods, Inc., 622 A.2d 1189, 1192 (Me
In the instant case, the fact that the parties entered into a fifteen-year
franchise agreement demonstrates that Stein intended to maintain a continuing
3 The Burger King Court made clear that the mere existence of a contractual relationship between an out-of-state defendant and an in-state plaintiff does not suffice, in and of itself, to establish jurisdiction in the plaintiff's home state. See Id. at 478-79. Rather, "prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing . . . must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum." Id. at 479. 4 See Architectural Woodcrafi Co. v. Read, 464 A.2d 210, (Me. 1983) (The fact that the defendant, a California resident, ordered a staircase from the plaintiff, a Maine business, and communicated via interstate communication does not establish a basis for asserting jurisdiction over the nonresident defendant). obligation with Criterium. Contrary to the facts of Murphy, this was not a one-
time sale, but rather a long-term business relationshp that demonstrates an
expectation of conducting future business.
2. Anticipation of Litigation in Maine
To reasonably anticipate litigation in a particular jurisdiction, one must
purposefully avail oneself of the privilege of conducting activities within the
jurisdiction and benefit from the protection of its laws. Commerce Bank and Trust
Company v. Dworrnan, 2004 ME 142, ¶I6 861 A.2d at 667. In Interstate Food
Processing Corp., the Law Court found that the Michgan business actively
solicited business in Maine, exercised a degree of control over the Maine
business' performance, and maintained phone contact with the Maine business
regarding the contract and changes to be made. 622 A.2d at 1192. These
affirmative actions on the part of the Michigan business demonstrated an
ongoing contractual obligation that was not the result of unilateral action by the
Maine business. Id.
Similarly, in the instant case, Stein actively solicited the franchse
Agreement with Criterium, entered into a fifteen-year contract, paid franchise
royalties, participated in trainings and conferences in Maine, and maintained
correspondence with Criterium over the years. Furthermore, the parties
explicitly chose the Maine courts to enforce the terms of the Agreement. By its
conduct, Stein should have anticipated litigation in Maine.
3. Traditional Notions of Fair Play and Substantial Justice
Traditional notions of fair play and substantial justice require a
nonresident defendant to have minimum contacts with a forum state. Commerce
Bank and Trust Company v. Dworrnan, 2004 ME 142, ¶I6 861 A.2d at 667. "In h s analysis a court considers the nature and purpose of a defendant's contacts with
the forum state, the connection between the contacts and the cause of action, the
number of contacts, the interest of the forum state in the controversy, and the
convenience and fairness to both parties." Id.
While Stein's contacts with Maine may be few, "less extensive activity is
required where the cause of action arises out of or in connection with the
defendant's forum activity." Interstate Food Processing Corp., 622 A.2d at 1192.
Notwithstanding the fact that witnesses may be required to travel from
Louisiana, the Court does not find that litigating in Maine would be so gravely
difficult and inconvenient that it would be a severe disadvantage to Stein.
The entry is:
Defendant Stein Engneers, Inc.'s motion to dismiss f jurisdiction is DENIED.
DATE: CHRISTOPHER BRANSON ESQ PO BOX 9785 PORTLAND ME 04112
TIMOTHY BRYANT ESQ PO BOX 9546 PORTLAND ME 04112 -