Stacy v. Johnson

2007 DNH 103

• Court: District Court, D. New Hampshire
• Decided: August 28, 2007
• Docket: 07-CV-051-SM
• Status: Published

Opinion

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.

2 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

3 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.

4 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

7 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

9 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.

10 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

11 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

12 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.

13 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.

14 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

15 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.