Adams v. Adams

• Decision Date: 31 March 2010
• Docket Number: No. 09-1443.,09-1443.
• Citation: 601 F.3d 1
• Parties: Bernard L. ADAMS, Plaintiff, Appellee, v. Lee B. ADAMS, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

601 F.3d 1

Bernard L. ADAMS, Plaintiff, Appellee,
v.
Lee B. ADAMS, Defendant, Appellant.

No. 09-1443.

United States Court of Appeals, First Circuit.

Heard December 8, 2009.

Decided March 31, 2010.

601 F.3d 2

Christopher A. Duggan with whom H. Reed Witherby and Smith & Duggan LLP were on brief for appellant.

Stephen G. Howard with whom Gregory R. Youman and K & L Gates LLP were on brief for appellee.

Before LYNCH, Chief Judge, TORRUELLA and STAHL, Circuit Judges.

STAHL, Circuit Judge.

This case arises from a dispute over a promissory note (the "Note") executed on September 8, 1988, by a son, Lee B. Adams ("Lee"), in favor of his father, Bernard L. Adams ("Bernard"). On May 16, 2008, Bernard filed suit in the federal district court of Massachusetts, seeking enforcement of the terms of the Note. Lee filed a motion to dismiss the complaint for lack of personal jurisdiction, and the district court denied the motion without hearing or explanation. Bernard subsequently filed a motion for summary judgment. Lee renewed his arguments that the District of Massachusetts lacked jurisdiction over him, but the court granted summary judgment in favor of Bernard, specifically affirming its prior ruling on the jurisdictional issue, and Lee appealed.

We reverse on the ground that the district court lacked personal jurisdiction over Lee.

I. Facts and Background

The circumstances which gave rise to the Note are disputed by the parties. Lee claims that shortly after he moved to Texas in 1988 with his then-wife Cynthia Adams, his parents, Bernard and Mary Jeanne Adams, promised to give him funds to help him purchase a home in Texas as an additional wedding present. Lee asserts that in reliance on that promise, he and Cynthia optioned a vacant lot in Frisco, Texas, on which they constructed a home.

According to Lee, Bernard phoned him on or about September 8, 1988, and told him that his accountant had advised that Lee needed to sign a promissory note for the funds his parents had agreed to give him in order for Bernard to minimize taxes on the transfer. Lee claims that Bernard told him that if Lee executed the Note, Bernard would not enforce it.

Bernard disputes what he calls the "`additional wedding present' assertion," claiming that the $110,000 transfer of funds from himself to Lee was intended to be a loan and not a gift and that the Note was executed in consideration of the loan.

Bernard does not dispute, however, that the Note came into being after he required, via telephone conference, that Lee sign such a document before the funds would be delivered. Bernard also does not dispute that he initiated the phone call to Lee, who was located in Texas at the time.

After that conversation, on September 8, 1988, Lee received the Note in Texas and executed it under seal.¹ The Note, in its entirety, provides:

601 F.3d 3

FOR VALUE RECEIVED ($110,000 CASH), Mr. Lee Adams of Frisco, Texas promises to pay to Mr. Bernard Adams of Boston, Massachusetts the sum of $110,000 plus accrued interest at an annual rate of 8%. This sum having been advanced to Mr. Lee Adams exclusively for use in funding the construction of his home. Interest will accrue beginning June 1, 1988. No payments of interest or principal are due until January 1, 1989, at which time the note and accrued interest will be due upon demand.

This note shall be binding upon Mr. Lee Adams and his heirs, executors and assigns and shall inure to the benefit of Mr. Bernard Adams and his heirs, executors and assigns.

WITNESS the execution hereof as an instrument under seal as of this 8 day of September, 1988.

Bernard subsequently transferred $110,000 of his personal funds from a Massachusetts bank to Lee's account in Texas. It appears that the signed Note was not then returned to Bernard.² In fact, Bernard has never produced the original of the Note. The copy of the Note which appears in the record shows a facsimile transmission header indicating that it was faxed on June 20, 2003, by Geary Porter, a Texas law firm, apparently to either Bernard or his law firm, although the record does not so reflect. This copy was produced by Bernard's lawyers when Lee was deposed in connection with Bernard's divorce case.

At the time the Note was executed, Lee was a resident of Texas, and he has been a Texas resident since that time. Bernard was a resident of Massachusetts when he transferred the $110,000 to Lee.³ Bernard asserts that he has been continuously domiciled in Massachusetts since 1953.⁴

In addition to the facts pertaining specifically to this transaction, Bernard has offered evidence of Lee's more general contacts with Massachusetts.⁵ But as

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Bernard has not attempted to assert the existence of general jurisdiction over Lee, and the additional contacts he cites are not related to the Note on which he bases this cause of action, we do not consider these sporadic contacts in our analysis

II. Standard of Review

When a court's personal jurisdiction over a defendant is contested, the plaintiff has the ultimate burden of showing by a preponderance of the evidence that jurisdiction exists. Ealing Corp. v. Harrods Ltd., 790 F.2d 978, 979 & n. 1 (1st Cir.1986). A district court "may choose from among several methods to determine whether the plaintiff has met his burden." Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir.2007) (quoting Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50-51 (1st Cir.2002)) (internal quotations omitted). Here, because the district court did not hold an evidentiary hearing before ruling on the jurisdictional question, we would normally assume that the court had employed the prima facie method. See Phillips v. Prairie Eye Center, 530 F.3d 22, 26 & n. 2 (1st Cir.2008) (citing Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 146 (1st Cir.1995)). But the case then proceeded to summary judgment, at which time Lee again challenged the court's jurisdiction. In granting summary judgment in favor of Bernard, the district court implicitly found that Bernard had demonstrated jurisdiction by a preponderance of the evidence.

In finding that two cases which Lee raised did not alter its previous decision on the jurisdictional question, the court added:

In this case, Defendant Lee negotiated the Note over the phone with Plaintiff, whom Defendant knew was located in, and a resident of, Massachusetts. Additionally, Defendant executed the Note knowing that the $110,000 he received was from a Massachusetts resident. Finally, the funds were disbursed through a Massachusetts bank.

Adams v. Adams, No.08-10828-JLT, slip op. at 10-11 (D.Mass. Mar. 4, 2009). Thus, despite the lack of an evidentiary hearing, it appears that the court evaluated the parties' submissions and determined that Bernard had shown by a preponderance of the evidence that the court had personal jurisdiction over Lee.⁶

We review the court's factual findings for clear error, but our review of the court's legal conclusions as to whether its

601 F.3d 5

findings support the existence of personal jurisdiction is always non-deferential and plenary. Foster-Miller, Inc., 46 F.3d at 147-48

III. Discussion

The only factual findings which the district court appears to have made regarding the jurisdictional issue were: (1) Lee negotiated the Note over the phone with Bernard;⁷ (2) Lee knew that Bernard was located in,⁸ and a resident of, Massachusetts; (3) Lee executed the Note knowing that the $110,000 he received was from a Massachusetts resident; and (4) the funds were disbursed through a Massachusetts bank.

Even if we assume the truth of these findings, apart from that discussed in note 8, and accept all other evidence offered by Bernard,⁹ we hold that Bernard has not demonstrated the existence of personal jurisdiction by a preponderance of the evidence. Bernard grounds his claim of specific personal jurisdiction over Lee in the Massachusetts long-arm statute, Mass. Gen. Laws ch. 223A, § 3. Specifically, Bernard argues that the long-arm statute authorizes jurisdiction over Lee because Lee met the "transacting any business in the commonwealth" requirement of 223A, § 3(a). "We proceed directly to the constitutional analysis, because the Supreme Judicial Court of Massachusetts has interpreted the state's long-arm statute as an assertion of jurisdiction over the person to the limits allowed by the Constitution of the United States." Phillips, 530 F.3d at 26 (internal quotations omitted).

In order for Massachusetts to exercise personal jurisdiction over Lee, an out-of-state defendant, the Due Process Clause requires that Lee have sufficient minimum contacts with the state, such that "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, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). When determining whether specific jurisdiction exists, we have broken the minimum contacts analysis into three categories —relatedness, purposeful availment, and reasonableness:

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's in-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and

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