Lyle Richards v. Ashworth, Inc.

• Court: Court of Appeals for the First Circuit
• Decided: December 22, 1997
• Docket: 97-1387
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT


No. 97-1387



                          LYLE RICHARDS INTERNATIONAL, LTD.,



                                Plaintiff, Appellant,



                                          v.



                                   ASHWORTH, INC.,



                                 Defendant, Appellee.



                                                     
                                 ____________________


APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                  [Hon. George A. O'Toole, Jr., U.S. District Judge]
                                                ___________________



                                                     
                                 ____________________



                                        Before



                                Stahl, Circuit Judge,
                                       _____________



                       Godbold* and Cyr, Senior Circuit Judges.
                                         _____________________


____________________


Michael J. Traft, with whom Carney & Bassil was on brief for
             ________________            _______________

        appellant.

             Toni G. Wolfman, with whom Foley, Hoag & Eliot LLP was on brief
             _______________            _______________________

        for appellee.


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                                  December 22, 1997

                                                     
                                 ____________________


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             *Of the Eleventh Circuit, sitting by designation.



CYR,  Senior Circuit  Judge.   Plaintiff  Lyle Richards
                    CYR,  Senior Circuit  Judge.
                          _____________________



          International, Ltd., a Massachusetts  corporation, appeals from a



          district court  judgment dismissing  its contract  action against



          Ashworth, Inc., a  Delaware corporation with its  principal place



          of business in California.  We affirm.  



                                          I
                                          I



                                      BACKGROUND
                                      BACKGROUND
                                      __________



                    In March 1994,  Ashworth hired a former  Lyle employee,



          Andrew Tarlow,  to direct  its  new golf  shoewear operations  in



          California.    Shortly  thereafter, without  direct  or  indirect



          solicitation from Ashworth, Lyle made  overtures, through Tarlow,



          to  serve as  Ashworth's purchasing  agent.   Over  the next  two



          months, Lyle  and Ashworth discussed  the matter by phone  and at



          meetings  in California  and  China.   At  no  time did  Ashworth



          advertise for or solicit a purchasing agent in Massachusetts.



                    Not  later than  July 1994,  Ashworth, through  Tarlow,



          proposed entering into a formal  written agreement with Lyle.  In



          due  course,  the  Agreement,  drafted  and  signed  by  Lyle  in



          Massachusetts, was mailed to California, where  Ashworth executed



          it  on August  5.   The Agreement  designated Lyle  as Ashworth's



          purchasing agent for  footwear manufactured in China  and Taiwan,



          but  required  Ashworth  to  undertake  no  specific  contractual



          responsibilities in Massachusetts.



                    Thereafter,  Ashworth  periodically  forwarded purchase



          orders  to Lyle in  Massachusetts, which Lyle  transmitted to the



          appropriate Chinese or Taiwanese factory.   Ashworth communicated


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with Lyle  in Massachusetts two  or three times a  week regarding



          ongoing contract performance, and from time to time placed orders



          with  shoe-component suppliers which were instructed to bill Lyle



          directly.   In  addition, during  the  term of  the Agreement  an



          Ashworth   representative   attended   three   trade   shows   in



          Massachusetts, accompanied on two occasions by a Lyle employee.



                    The Agreement  prescribed  a  one-year  term.    Absent



          written notice of  termination from either party  at least ninety



          days prior to its anniversary date, the Agreement renewed  itself



          automatically.   In August 1995, Ashworth provided written notice



          of termination to Lyle, dated April 19, 1995.



                    Thereafter,  Lyle  filed  suit  against  Ashworth in  a



          Massachusetts  superior court,  alleging  breach of  contract and



          unfair trade  practices under Mass. Gen. Laws  ch. 93A,    2, 11,



          claiming that the termination notice had been back-dated to April



          1995  to conceal its untimeliness under the Agreement.  Following



          its  removal,  see  28  U.S.C.       1332(a)  &  1441(a),  and  a
                         ___



          nonevidentiary  hearing, the  action was  dismissed  for lack  of



          personal jurisdiction pursuant to Federal Rule of Civil Procedure



          12(b)(2).



                                          II
                                          II



                                     DISCUSSION1
                                     DISCUSSION
                                     __________

                              
          ____________________



               1We review  de novo.  Nowak v. Tak  How Invs., Ltd., 94 F.3d
                           __ ____   _____    ____________________

          708, 712 (1st  Cir. 1996), cert. denied, 117 S.  Ct. 1333 (1997).
                                     _____ ______

          Since  the  district  court  resolved  the  jurisdictional  issue

          without an  evidentiary  hearing, "we  draw  the facts  from  the

          pleadings  and  the  parties'  supplementary  filings,  including

          affidavits,  taking facts affirmatively  alleged by  plaintiff as

          true and construing disputed facts  in the light most  hospitable



                                          3



A.   The Breach of Contract Claim
          A.   The Breach of Contract Claim
               ____________________________



                    In  a  diversity  case, personal  jurisdiction  over  a



          nonresident defendant is constrained both by the long-arm statute



          of the forum state and the  Due Process Clause of the  Fourteenth



          Amendment.   See Ticketmaster-New York,  Inc. v. Alioto,  26 F.3d
                       ___ ____________________________    ______



          201, 204 (1st Cir. 1994).  Massachusetts law permits Commonwealth



          courts to assert  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  .  .  . transacting  any  business  in  this
                                       ___________  ___  ________  __  ____



          commonwealth . . . ."  Mass. Gen. Laws ch. 223A,   3(a) (emphasis
          ____________



          added).



                    The  "transacting business" test  under section 3(a) is



          designed   to   identify   deliberate,  as   distinguished   from



          fortuitous, contacts  with the  forum by  the nonresident  party,



          see, e.g., Good  Hope Indus., Inc. v. Ryder Scott Co., 389 N.E.2d
          ___  ____  _______________________    _______________



          76, 82  (Mass. 1979),  with a view  to determining  whether "'the



          possible  need to  invoke  the benefits  and  protections of  the



          forum's  laws was reasonably foreseeable . .  . .'"  Id. (quoting
                                                               ___



          Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 496 (5th Cir.
          ________________________    ________



          1974)).   Often, the  "transacting business" test  is importantly



          informed  by ascertaining whether the nonresident party initiated



          or  solicited the  business transaction  in  Massachusetts.   For



          instance, the  Massachusetts Supreme  Judicial Court  ("SJC") has



          held  that  a  California   corporation  transacted  business  in

                              
          ____________________



          to plaintiff[,]" but without crediting "conclusory allegations or

          draw[ing] farfetched inferences."  Ticketmaster-New York, Inc. v.
                                             ___________________________

          Alioto, 26 F.3d 201, 203 (1st Cir. 1994).
          ______



                                          4



Massachusetts by systematically  advertising its California hotel



          in Massachusetts.  See Tatro v. Manor Care, Inc., 625 N.E.2d 549,
                             ___ _____    ________________



          551-52 (Mass. 1994); see also Hahn v. Vermont Law Sch.,  698 F.2d
                               ___ ____ ____    ________________



          48,  51  (1st  Cir.  1983)  (nonresident  law  school  transacted



          business  by  sending  application for  admission  and  notice of



          acceptance  to plaintiff  in  Massachusetts); New  Hampshire Ins.
                                                        ___________________



          Guar. Ass'n v. Markem Corp.,  676 N.E.2d 809, 812-13 (Mass. 1997)
          ___________    ____________



          (nonresident insured did not transact business by mailing premium



          payments  to  Massachusetts,  since  Massachusetts-based  insurer



          solicited insurance business in New Hampshire).



                    An  Ashworth  affidavit      attesting  that  Lyle  had



          proposed, in March  1994, to serve as Ashworth's purchasing agent
                       _____  ____



              went  unopposed by  Lyle.    Instead,  Lyle relied  upon  the



          inapposite fact  that it was Ashworth which suggested, during the



          summer  of  1994,  that   the  precise  terms  of   the  business
          ______  __  ____



          relationship previously proposed by Lyle be reduced to writing.
                       __________



                    Although any effect a nonresident defendant's  activity



          may  have  had upon  commerce  in  Massachusetts  is also  to  be



          considered in determining  whether it transacted business  in the



          Commonwealth, see Droukas  v. Divers Training Academy,  Inc., 376
                        ___ _______     ______________________________



          N.E.2d 548, 551  n.5 (Mass. 1978), the purely incidental contacts



          involved  here were  insufficient  to  support  an  assertion  of



          personal  jurisdiction over Ashworth.  See, e.g., Whittaker Corp.
                                                 ___  ____  _______________



          v. United  Aircraft Corp.,  482 F.2d 1079,  1085 (1st  Cir. 1973)
             ______________________



          (finding  defendant's contacts  with Massachusetts  insufficient,



          and   thus  no  personal   jurisdiction,  where  there   was  "no


5



requirement in any of the  agreements that performance take place
          ___________



          in  Massachusetts") (emphasis added);   New Hampshire  Ins. Guar.
                                                  _________________________



          Ass'n v.  Markem Corp., 676  N.E.2d 809, 812 (Mass.  1997) ("That
          _____     ____________



          [plaintiff] then decided to conduct  some administration . . . in
                                               ____



          Massachusetts . . . cannot be the basis for personal jurisdiction



          against [defendant] where [defendant] reasonably assumed it would



          be doing  business with [plaintiff]  in New Hampshire and  did in



          fact  conduct most  of  its  business .  .  . there.")  (emphasis
                        ____



          added).  See also Nichols Assocs., Inc. v. Starr, 341 N.E.2d 909,
                   ___ ____ _____________________    _____



          912 (Mass. App. Ct. 1976) (no significant involvement in commerce



          of  Massachusetts,  and  thus  no  personal  jurisdiction,  where



          nonresident  defendant's  "contact [was]  limited  to the  .  . .



          acceptance  of services  which  the  plaintiff  simply  chose  to
                                                                  _____



          perform in Massachusetts.") (emphasis added).



                    For  one  thing,  most performance  required  from Lyle



          under the  Agreement was  to be  rendered outside  Massachusetts.
                                                    _______



          The   Agreement  did   not  even   require   that  the   internal



          administrative   functions   actually   conducted   by  Lyle   in



          Massachusetts   be  performed  there,   such  as   arranging  for



          merchandise  shipments from  the  Chinese-Taiwanese suppliers  to



          Ashworth in California, receiving price quotes or product samples



          from the  Asian  factories, or  reporting to  Ashworth on  market



          conditions and the availability of merchandise.



                    Nor does the Agreement indicate that Lyle either needed



          or  intended to perform its "quality control" responsibilities in



          Massachusetts.      Rather,   most   of   its  core   contractual


6



responsibilities relating  to the inspection of merchandise would



          have had to  have been performed in China or  Taiwan, rather than



          Massachusetts.  Thus, its performance of various attendant chores



          in  Massachusetts  was   incidental  to  the  formation   of  the



          Agreement.  See Nichols Assocs., Inc., 341 N.E.2d at 912.2
                      ___ _____________________



                    Finally,  Lyle  notes,  Ashworth  attended three  trade



          shows  in Massachusetts,  accompanied by  a  Lyle employee  on at



          least two occasions, and Lyle performed two contract functions in
                                        



          Massachusetts:  designing golf shoes and purchasing various golf-



          shoe components and the materials  with which to package them for



          shipment  to Asia.    Nevertheless,  as  these  initiatives  were



          undertaken  unilaterally by the  respective parties,  even though



          neither  was   responsible  for  their   performance  under   the



          Agreement,  this  attempt to  assert  personal jurisdiction  over



          Ashworth is unavailing since chapter 223A requires that the cause



          of action have "aris[en] from  [Ashworth's] . . . transacting any
                          ________ ____   __________



          business in [Massachusetts] . . . ."  Mass. Gen. Laws ch. 223A,  



          3(a) (emphasis added).  We explain briefly.



                    The  "arising from"  clause in  chapter 223A  is to  be



          generously construed in favor of asserting personal jurisdiction,



                              
          ____________________



               2The  contention   that  Ashworth  transacted   business  in

          Massachusetts  by mailing  its  termination  notice  to  Lyle  in

          Massachusetts  is  flawed  as well,  since  Ashworth  cannot have

          solicited business by terminating the business relationship.  Nor
          _________             ___________

          was  the Agreement  executed by  Ashworth  in Massachusetts,  see
                                                                        ___

          Carlson  Corp. v.  University  of Vermont,  402  N.E.2d 483,  485
          ______________     ______________________

          (Mass.  1980) (defendant  transacted  business in  Massachusetts,

          where it  signed the  contract), but in  California where  it had

          been   forwarded  after   having  been   executed   by  Lyle   in

          Massachusetts, supra p. 2.
                         _____



                                          7



by  applying the  following "but  for" causation  test:   Did the



          defendant's contacts with the  Commonwealth constitute "the first



          step  in  a train  of  events  that  result[ed] in  the  personal



          injury."   Tatro, 625  N.E.2d at  553.   The  plaintiff in  Tatro
                     _____                                            _____



          almost   certainly  would  not   have  selected  the  defendant's



          California hotel  but for  the advertisements  the defendant  had
                            ___ ___



          placed in various Massachusetts media.   Lyle, on the other hand,



          does  not contend  that  component  purchases,  shoe  design,  or



          attendance   at   trade   shows  comprised   any   part   of  the



          responsibilities of either party under the Agreement.  



                    Since  the  extra-contractual  activities  unilaterally



          undertaken  by  the  respective  parties  in  Massachusetts  were



          extraneous to the formation of the Agreement, see Hahn v. Vermont
                                                        ___ ____    _______



          Law Sch.,  698 F.2d 48,  51 (1st Cir. 1983)  (holding, pre-Tatro:
          ________                                                   _____



          "we have no doubt that  [the 'arising from' requirement] has been



          satisfied when the  cause of action is  for an alleged breach  of



          contract  and the  business transacted  was  instrumental in  the
                                                       ____________ __  ___



          formation of the  contract.") (emphasis added), those  activities
          _________ __ ___  ________



          did  not constitute a  "but for" cause for  the alleged breach of



          contract, see Tatro, 625 N.E. 2d at 553.
                    ___ _____



          B.   The Unfair Trade Practices
          B.   The Unfair Trade Practices
               __________________________

               Claim Under Chapter 93A
               Claim Under Chapter 93A
               _______________________



                    Finally,  Lyle  contends,  since  Chapter  223A  grants



          jurisdiction over  "a cause  of action   .  . .  arising from  [a



          defendant's] . . . causing tortious injury by  an act or omission



          in [Massachusetts] . .  . [,]" Mass. Gen. Laws ch.  223A,   3(c),



          the federal  district court possessed personal  jurisdiction over



                                          8



Ashworth in  relation to the  unfair trade practices  claim under



          Mass. Gen. Laws  ch. 93A.  For present purposes  we shall assume,



          without deciding, that a Chapter 93A violation would constitute a



          "tortious  injury" under Chapter  223A.  Cf.  Burtner v. Burnham,
                                                   ___  _______    _______



          430 N.E.2d 1233, 1237 (Mass. App. Ct. 1982) ("Whether a violation



          of . . . chapter [93A] constitutes a 'tortious injury' within the



          meaning of c. 223A,   3(c) may be open to some doubt.").



                    Lyle  alleges that  Ashworth attempted  to  conceal the



          tardiness of  its nonrenewal  notice by  backdating its  untimely



          termination letter to Lyle, see supra  p. 3, and that the alleged
                                      ___ _____



          deception  was designed to prevent Lyle  from pursuing a contract



          action for wrongful  termination of the  Agreement.  Assuming  as



          much,  we nonetheless conclude  that Lyle  cannot prevail  on its



          Chapter 93A claim.



                    Chapter 93A,  section 11,  provides that "[a]ny  person



          who  engages  in the  conduct of  any trade  or commerce  and who
                                                                    ___ ___



          suffers  any loss of  money or property,  real or personal,  as a
          _______  ___ ____ __  _____ __ ________



          result of the use  or employment by another person who engages in



          any  trade or commerce  of an unfair method  of competition or an



          unfair or  deceptive act or  practice . .  . may  . . .  bring an



          action in the superior court . . . ." (emphasis added).  Thus, in



          order  to  state  a  chapter  93A claim,  Lyle  was  required  to



          demonstrate a loss  of money or property.  Yet it alleged no such



          loss.   Instead, it asserted  a breach  of contract by  virtue of



          Ashworth's failure  to provide  timely notice  of termination  as



          required  by  the Agreement.    In  addition, Lyle  alleged  that


9



Ashworth violated chapter 93A by engaging in the deceptive act of



          backdating  the  notice  of  termination.    As  to   the  latter



          allegation,  however,  Lyle  claimed no  injury  apart  from that
                                                   ______



          caused  by the alleged  breach of  contract.   Consequently, Lyle



          failed to allege a "loss of  money or property . . . as  a result



          of [Ashworth's]  use or employment .  . . of [a] .  . . deceptive



          act . . . [,]" as required by chapter 93A, section 11.   Finally,



          a  breach-of-contract claim,  without more,  cannot  be converted



          into a  tort claim.   See Redgrave v. Boston  Symphony Orchestra,
                                ___ ________    ___________________________



          Inc., 557 F. Supp. 230, 238 (D. Mass. 1983).
          ____



                    Affirmed.
                    ________


10