Boat Dealers' Alliance, Inc., Respondent, vs. Stephen E. Nagin, et al., Appellants.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-178

 

Boat Dealers' Alliance, Inc.,
Respondent,
 
vs.
 
Stephen E. Nagin, et al.,
Appellants.

 

Filed August 31, 2004

Affirmed

Minge, Judge

 

Hennepin County District Court

File No. CT 03-8329

 

 

Richard J. Nygaard, John J. Wackman, Peter Gray, Rider Bennett, LLP, 333 South Seventh Street, Suite 2000, Minneapolis, MN 55402 (for respondent)

 

Mathew M. Meyer, Thomas J. Shroyer, Moss & Barnett, P.A., 4800 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402-4129 (for appellants)

 

            Considered and decided by Minge, Presiding Judge; Harten, Judge; and Lansing, Judge.

U N P U B L I S H E D  O P I N I O N

 

MINGE, Judge

 

A Florida attorney and his law firm appeal the denial of their motion to dismiss for lack of jurisdiction, arguing that the district court erred in finding sufficient contacts to warrant jurisdiction.  We affirm. 

FACTS

 

In 1995, Patrick Manion organized the Boat Dealers' Alliance, Inc. (BDA) as a cooperative of boat dealers for the purpose of negotiating with manufacturers and obtaining purchase discounts on behalf of its members.  Manion approached a Florida attorney, Stephen Nagin, to discuss his idea, and Nagin did the legal work to establish BDA as a Florida corporation with its principal place of business in St. Cloud, Minnesota.  At the time, Nagin was an attorney with the law firm of Herzfeld & Rubin, P.C., but left and joined Litchford & Christopher, P.A. in May 1996.  In August 1997, Nagin co-founded Nagin, Gallop & Figueredo, P.A. (NGF).  After BDA's incorporation, Nagin became its registered agent and general counsel. 

            In 1996 and 1997, BDA negotiated an agreement with Outboard Marine Corporation (OMC), which provided for BDA to receive preferential prices or rebates on purchases of OMC products for BDA members.  Nagin drafted the contract, which specifically provided that the contract would be governed by Minnesota law.  Though BDA intended the contract to provide for a five-year term, Nagin drafted the following provision:

A.  This Agreement shall be in full force and effect for an initial period of not less than five (5) years from the "anniversary date" of:

 

                                                                        July 1, 1997

 

B.  Either party may terminate without cause if, not less than ninety (90) days prior to the anniversary date, written notice is provided as set forth in Section 23 of this Agreement.

 

The parties signed the agreement in September 1997.  Three months later, in December 1997, OMC gave BDA notice of its termination of the agreement.

            Nagin, on behalf of BDA, filed suit in the United States District Court for the District of Minnesota to enforce the contract against OMC.  Although Nagin was not admitted to the practice of law in Minnesota, he was admitted pro hac vice to the U.S. District Court for the District of Minnesota to represent BDA.  The district court granted summary judgment in favor of OMC, finding that the provision in question allowed OMC to terminate the agreement 90 days prior to July 1 for each year of the contract.  Nagin also represented BDA in its subsequent appeal to the Eighth Circuit, which affirmed the district court's decision.

            In October 1998, NGF sent a letter to BDA offices in Minnesota outlining its plan to represent BDA in a second lawsuit against OMC, alleging that OMC had committed breaches of the contract after the commencement of BDA's first action.  Nagin's offer was accepted, and the second lawsuit was filed in November 1998.  Nagin was again admitted pro hac vice to represent BDA in Minnesota. 

            In February 1999, BDA terminated Manion as Executive Director and moved its principal place of business to Connecticut.

            On May 14, 2003, BDA filed this action against Nagin and NGF, alleging attorney malpractice/negligence and breach of fiduciary duty.  Nagin and NGF (collectively "appellants") moved to dismiss based on claims that Minnesota lacked personal jurisdiction.  The district court denied appellants' motion in January 2004, and this appeal follows.

D E C I S I O N

I.

The existence of personal jurisdiction is a question of law reviewed de novo.  Marshall v. Inn on Madeline Island, 610 N.W.2d 670, 673 (Minn. App. 2000).  The plaintiff, or the party asserting that personal jurisdiction exists, "bears the burden of proving a prima facie case supporting jurisdiction."  Hardrives, Inc. v. City of LaCrosse, 307 Minn. 290, 293, 240 N.W.2d 814, 816 (1976).  On appellate review, the plaintiff's alleged facts, including facts set forth in the complaint and other supporting documents, are taken as true, even though the defendant may dispute contacts alleged by the plaintiff.  S.B. Schmidt Paper Co. v. A to Z Paper Co., 452 N.W.2d 485, 487 (Minn. App. 1990).

Minnesota courts can exercise personal jurisdiction over a nonresident if two criteria are met: (1) the requirements of Minnesota's long-arm statute must be satisfied; and (2) minimum contacts must exist between the defendant and Minnesota to satisfy due process.  See Minn. Stat. § 543.19 (2002) (Minnesota's long-arm statute); Rostad v. On-Deck, Inc., 372 N.W.2d 717, 719 (Minn. 1985) (stating defendant must have minimum contacts with Minnesota before personal jurisdiction will attach).  The long-arm statute and the federal Due Process Clause are co-extensive: if the personal jurisdiction requirements of the federal constitution are met, the requirements of the long-arm statute are also met.  Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411 (Minn. 1992).  Therefore, "Minnesota courts may simply apply the federal case law."  Id.

The Due Process Clause of the United States Constitution requires that a defendant have "minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945) (quotation omitted).  There must be "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum [s]tate, thus invoking the benefits and protections of its laws."  Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240 (1958).  The defendant must reasonably anticipate the possibility of being haled into the state's courts.  World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567 (1980).

Jurisdiction may be either specific or general.  Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8, 9, 104 S. Ct. 1868, 1872 n.8, 9 (1984) (comparing specific and general jurisdiction).  General jurisdiction exists when a defendant has "continuous and systematic" contacts with the forum state.  Id. at 415-16, 104 S. Ct. at 1872-73.  Specific jurisdiction, as alleged here, exists when the cause of action arises out of or is related to the defendant's contacts with the forum state.  Id. at 414 n.8, 104 S. Ct. at 1872 n.8.  The minimum-contacts inquiry for specific jurisdiction focuses on the "relationship among the defendant, the forum, and the litigation."  Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775, 104 S. Ct. 1473, 1478 (1984) (quotation omitted).  Specific jurisdiction can exist as the result of a single contact with the forum if the cause of action arose out of that contact.  See McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223, 78 S. Ct. 199, 201 (1957).   

Minnesota courts consistently use a five-factor test to determine whether the exercise of personal jurisdiction satisfies due-process requirements:

(1) The quantity of the contacts with the forum state,

(2) The nature and quality of the contacts,

(3) The source and connection of the cause of action with these contacts,

(4) The interest of the state providing a forum,

(5) The convenience of the parties.

 

Vikse v. Flaby, 316 N.W.2d 276, 282 (Minn. 1982).  Minnesota has deemed the first three factors primary, while the factors of state interest and convenience of the parties require less consideration.  Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904, 907 (Minn. 1983).  "[I]n doubtful cases, courts should lean toward finding jurisdiction."  Nat'l City Bank of Minneapolis v. Ceresota Mill Ltd. P'ship, 488 N.W.2d 248, 252 (Minn. 1992).  We consider each of these factors in turn.

A.  Quantity of Contacts

Appellants argue that Nagin had insufficient minimum contacts with Minnesota to conclude that he purposefully availed himself of the privilege of conducting activities in Minnesota such that he submitted himself to personal jurisdiction in this state.  Here, the district court found that "between May 3, 1996 and August 1, 1997 [there were] 115 telephone contacts and 37 written communications between Nagin and [Manion and/or BDA when Manion and BDA were in] Minnesota."  The court also noted that Nagin was a 10% owner of BDA preferred stock and entitled to dividends and that Nagin traveled to Minnesota during negotiations of the OMC contract to discuss billing issues.

Appellants concede that the district court presented the contacts accurately, but argue that the court erred in finding that the contacts included a telephone call among Nagin, Manion, and another BDA employee to discuss details of the OMC contract.  Appellants contend that there is no evidence in the record that Manion was in Minnesota when the call was made.  Thus, this particular communication cannot be counted as connecting Nagin to Minnesota.   Respondent argues that because Manion lived in Minnesota and worked at BDA's Minnesota office, it was reasonable for the district court to assume the call established a connection to Minnesota.   However reasonable the assumption may be, there does not appear to be evidence in the record indicating Manion's whereabouts during this conversation.  But even absent this one phone call, there still remain ample contacts in the record between Nagin and Minnesota.

B. Nature and Quality of Contacts

 

In evaluating the nature and quality of the contacts, a court must determine whether the defendant purposefully availed himself of the benefits and protection of Minnesota law.  Dent-Air, 332 N.W.2d at 907.  A court must evaluate the parties' "prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing."  Burger King Corp., 471 U.S. 462, 479, 105   S. Ct. 2174, 2185 (1985).  The question is whether the defendant had fair warning of being sued in Minnesota.  Real Props., Inc. v. Mission Ins. Co., 427 N.W.2d 665, 668 (Minn. 1988) (quotation omitted).

First, appellants argue that merely providing legal services to a Minnesota resident and negotiating a contract on behalf of a Minnesota based business does not provide requisite contacts between appellants and Minnesota.  Minnesota courts exercise personal jurisdiction over nonresidents based on a single transaction only when the nonresident initiates the contact with the Minnesota resident and takes some action that induced the resident to enter into the transaction.  TRWL Fin. Establishment v. Select Int'l, Inc., 527 N.W.2d 573, 577 (Minn. App. 1995).  A contract between parties of different states does not, by itself, establish sufficient minimum contacts such that jurisdiction may be exercised in either party's home state.  Burger King Corp., 471 U.S. at 478, 105 S. Ct. at 2185.  But when a contract claim has a substantial connection with the forum state, specific jurisdiction exists.  McGee, 355 U.S. at 223, 78 S. Ct. at 201. 

Appellants cite extensively to Nat'l City Bank of Minneapolis v. Ceresota Mill Ltd. P'ship, 488 N.W.2d 248 (Minn. 1992), arguing that this case is distinguishable.  In Nat'l City Bank of Minneapolis, the attorney had numerous contacts with the state and had visited Minnesota four times for business meetings, and the subject of the challenged legal advice concerned a property in Minnesota.  Id. at 254.  The court determined that, although the state interest was limited, the exercise of jurisdiction would promote the convenience of the parties and efficient use of judicial resources.  Id.  Appellants contend that this case is wholly different because Nat'l City Bank of Minneapolis presented a clear connection between the contract and Minnesota that does not exist here, as the contract there dealt with Minnesota property.  See id. at 250.

Appellants are correct to the extent that drafting the OMC document alone does not constitute sufficient contacts, especially when, as here, Nagin did not initiate or solicit Manion or BDA.  But it is significant that the OMC agreement, as drafted by Nagin acting as general counsel, acknowledges that BDA is a Florida corporation "having its place of business [in] . . . St. Cloud, Minnesota."  Furthermore, the agreement dictates that its provisions "shall be construed and interpreted in accordance with the laws of the State of Minnesota."  We acknowledge that a choice-of-law clause alone is not sufficient to sustain specific jurisdiction.  Dent-Air, 332 N.W.2d at 908.  But in looking to the nature and quality of contacts as a whole, we find it incongruous to allow Nagin, as general counsel and part owner of a company, to draft an agreement, the terms of which purposefully avail the parties of and bind them to Minnesota law, but then allow him to avoid jurisdiction of the Minnesota courts when sued over the alleged negligent drafting of the agreement.  This is not a case when appellants were merely "brought into contact [with Minnesota] incidentally though the unilateral activity" of BDA.  Id.  at 907. 

Next, appellants argue that the district court erred in finding that Nagin's contacts with Minnesota also arose through his "intimate personal involvement with BDA as an owner and general counsel."  The court found that "Nagin did not simply represent an out-of-state client with the normal incidents of representation.  Rather, Nagin availed himself of the benefits of Minnesota law by combining his representation with his becoming a 10% owner of, and general counsel for, a corporation with headquarters and its executive director in Minnesota."  Appellants argue that this conclusion is flawed because it focuses on Nagin's contacts with BDA and not the forum.  But Nagin received 10% ownership of BDA as part of his compensation for representation.  His "intimate personal involvement" as part owner of BDA is not, as appellants suggest, neatly compartmentalized from his representation in the OMC contract drafting.  Rather, because Nagin obtained part ownership for his representation, Nagin's contacts with BDA, and in turn BDA's contacts with Minnesota, are relevant.  See Nat'l City Bank of Minneapolis, 488 N.W.2d at 790-91 (finding specific jurisdiction over a California law firm given the law firm's "intimate" business and legal relationship with the client and where the law firm "was involved profitably" with respect to its representation.)

We find appellants' remaining arguments similarly unpersuasive.  Appellants argue that the contacts are not sufficient to warrant personal jurisdiction.  These contacts include particular telephone calls and a business trip to Minnesota by Nagin.  But the due-process analysis requires the court to view relevant contacts as a whole, and not individually.  Further, appellants also argue that the court erred in finding that the individual contacts were related to the underlying claim and that it ignored appellants' contrary evidence.  But on review, the factual allegations in plaintiff's complaint and other supporting documents are taken as true, even though the defendant may dispute them.  S.B. Schmidt Paper, 452 N.W.2d at 487.  Therefore, we do not consider appellant's contrary evidence.

C. Nexus Between the Cause of Action and the Contacts

 

Next, appellants argue that the district court erred in considering contacts that went beyond the drafting of the OMC agreement.  Specific jurisdiction "requires a nexus between the defendant's contacts with the forum state and the subject matter" of the plaintiff's claims.  Zumbro, Inc. v. Cal. Natural Prods., 861 F. Supp. 773, 779 (D. Minn. 1994).  Appellants argue that the court may only consider those contacts underlying the specific cause of action in respondent's complaint attorney malpractice and breach of fiduciary duty based on negligent drafting of the OMC agreement.  Therefore, appellants assert that Nagin's admission pro hac vice in the state of Minnesota and judicial proceedings subsequent to the Nagin's drafting of the agreement are irrelevant to the jurisdictional analysis.

The district court concluded that to "single out only those specific contacts that relate to the drafting of a specific clause in a specific document drafted for the client . . . would amount to a futile metaphysical dissection."  The court concluded that, to do so, would "lead to an unreasonable result, since out-of-state law firms with substantial contacts with Minnesota would be able to escape jurisdiction by relying on this exact argument."

We agree.  The suit against OMC was a direct result of the alleged negligent drafting by Nagin.  It is precisely the same contract provisions at issue in both this suit and the suit against OMC.  Here, Nagin represented BDA in its suit against OMC and was admitted pro hac vice to the United States District Court for the District of Minnesota.  In connection with that suit, appellants drafted pleadings alleging that "a substantial part of the events or omissions giving rise to [BDA's claims under the OMC contract] occurred in the District of Minnesota."  We cannot say that the suit arising out of appellants' alleged negligent drafting was "unrelated" to respondent's current cause of action. 

D. Minnesota's Interest in Providing a Forum and the Convenience of the Parties

 

The last two factors are less significant.  Dent-Air, 332 N.W.2d at 907. "A [s]tate generally has a manifest interest in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors."  Burger King, 471 U.S. at 473, 105   S. Ct. at 2182 (quotation omitted).  We note that Minnesota does not have a manifest interest in seeing this case litigated here.  BDA's Minnesota office has since moved to Connecticut and Manion, a Minnesota resident, is no longer BDA's Executive Director.  Additionally, the members of BDA and retailers do not appear to have a special connection to Minnesota.  Therefore, this factor appears to favor appellants.

Finally, "modern transportation and communication have made it much less burdensome for a party sued to defend himself in [another s]tate."  McGee, 355 U.S. at 223, 78 S. Ct. at 201.  Still, neither party to this appeal is a resident of Minnesota, and it appears that the bulk of potential witnesses reside outside this forum.  This factor also weighs in favor of appellants.

Although the results from the five factors are not unanimous, the test supports the district court's finding of specific personal jurisdiction.

II.

 

Appellants argue that, because the district court did not distinguish between those contacts attributable to Nagin and those attributable to NGF, this court must find that NGF is also not subject to specific personal jurisdiction in Minnesota.  Appellants cite no independent legal authority that supports a different result for NGF.  Because appellants' arguments as to NGF are the same as those made for Nagin and because the preceding analysis supports specific personal jurisdiction over Nagin, we conclude that there was no error in finding jurisdiction over Nagin's law firm, NGF.

            Affirmed.