Sawtelle v. Farrell

Decision Date13 September 1995
Docket NumberNo. 95-1501,95-1501
Citation70 F.3d 1381
PartiesArthur F. SAWTELLE, etc., et al., Plaintiffs, Appellants, v. George E. FARRELL, et al., Defendants, Appellees. . Heard
CourtU.S. Court of Appeals — First Circuit

Stanley M. Brown, Manchester, NH, with whom Mark A. Abramson and Abramson, Reis, Brown & Dugan, were on brief, for appellants.

Joseph M. Kerrigan, Nashua, NH, with whom Timothy G. Kerrigan and Hamblett & Kerrigan, P.A., were on brief, for appellees George E. Farrell and Speiser, Krause, Madole & Lear.

Joel S. Perwin, Miami, FL, with whom Paul R. Kfoury and Kfoury & Elliott, P.A., Bedford, NH, were on brief, for appellees Michael S. Olin and Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin, P.A.

Before SELYA and STAHL, Circuit Judges, and GORTON, * District Judge.

GORTON, District Judge.

New Hampshire residents, Arthur and Judith Sawtelle (the "Sawtelles"), filed a legal malpractice action in the United States District Court for the District of New Hampshire to recover damages sustained as a result of the alleged negligence of two attorneys and their law firms with respect to litigation in the State of Florida. None of the defendant-attorneys resides in New Hampshire, nor is any one of them licensed to practice law there. The defendants moved to dismiss the complaint for lack of specific in personam jurisdiction and the district court allowed the motion. Plaintiffs filed the present appeal. We affirm.

I. Standard of Review

When reviewing a district court's ruling on a motion to dismiss an action for failure to make a prima facie showing of personal jurisdiction over a defendant, the appellate court draws the facts from the pleadings and the parties' supplementary filings, including affidavits, taking facts affirmatively alleged by the plaintiff as true and viewing disputed facts in the light most favorable to plaintiff. Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir.1994); Kowalski v. Doherty, Wallace, Pillsbury & Murphy, 787 F.2d 7, 9 (1st Cir.1986). 1 In so doing, however, "we do not credit conclusory allegations or draw farfetched inferences." Ticketmaster, 26 F.3d at 203. Because the district court makes a legal determination when applying the prima facie standard, review by this Court is de novo (nondeferential). Boit v. Gar-Tec Products, Inc., 967 F.2d 671, 675 (1st Cir.1992).

II. Background

On May 21, 1989, the plaintiffs' son, Corey, was killed when the aircraft he was flying, as a pilot under instruction, was struck over the New Hampshire-Vermont border by an aircraft from Florida. Several months later, the Sawtelles contacted an attorney in New Hampshire to discuss the filing of a wrongful death suit on behalf of their son's estate. The local attorney referred plaintiffs to the California-based law firm of Speiser, Krause, Madole & Cook, presumably because of the firm's reputation for expertise in aircraft litigation. 2

In March 1990, an attorney at the California firm, which is not a party to this litigation, sent duplicate originals of a retainer agreement, which had already been executed on behalf of the firm, to the Sawtelles in New Hampshire. The retainer agreement included a provision granting the firm a lien upon any sum received in the plaintiffs' cause of action. The Sawtelles signed the agreement and returned an executed original to the California firm, which then transferred the case to its Washington, D.C. (now Rosslyn, Virginia) affiliate, the defendant Speiser, Krause, Madole & Lear ("the Speiser firm").

The case was assigned to defendant, George E. Farrell ("Farrell"), a Virginia resident and an attorney with the Speiser firm. Mr. Farrell is not licensed to practice law in New Hampshire. Although Farrell never personally met the plaintiffs, he sent at least fifteen letters to them in New Hampshire and spoke to them by telephone on numerous occasions during the representation. Among the topics addressed in those communications was Farrell's recommendation that Florida was the most advantageous forum for the wrongful death claim.

To assist as local counsel in Florida, Farrell engaged the Florida law firm, defendant, Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin, P.A. ("the Podhurst firm"). Defendant Michael S. Olin ("Olin"), a Florida resident and a member of the Podhurst firm, handled the Sawtelles' claims. He is licensed to practice law in Florida, but not in New Hampshire. Like Farrell, Olin never personally met the Sawtelles but did send numerous letters to them in New Hampshire and participated in several telephone conversations with them concerning his legal representation.

In March 1991, Attorney Olin filed a wrongful death action on behalf of the Sawtelles in the Broward County Judicial Circuit Court in Florida. The complaint for the estate was signed on behalf of the Speiser firm and the Podhurst firm. In July 1991, negotiations with the defendants in the underlying wrongful death claim resulted in a settlement offer of $155,000. By letter dated August 7, 1991, and in response to plaintiffs' concerns regarding the sufficiency of the settlement, Attorney Farrell told the Sawtelles that "[he] believe[ed] it [was] in [their] best interest to accept the settlement." Plaintiffs allege that Olin, too, advised them, by telephone, that the settlement was in their best interest. The Sawtelles ultimately accepted the settlement offer.

Olin later became concerned about the disbursement of settlement funds to Corey Sawtelle's brother Jason, who was a minor at the time. To determine his obligations under New Hampshire law, Olin contacted an attorney in New Hampshire for advice regarding the distribution of the funds. Having obtained such advice, Attorney Olin finally disbursed the settlement funds in December 1991.

The Sawtelles subsequently learned that: 1) the estate of Ronald Brown, Corey's flight instructor who had also died in the crash, had filed a wrongful death suit in Florida; 2) the action had been consolidated with the case brought by Corey's estate; and 3) the instructor's claim had been settled for $500,000. That discovery prompted the Sawtelles to file the present legal malpractice action against defendants in federal district court in New Hampshire.

The Sawtelles' malpractice claims allege that the defendants negligently negotiated an inadequate settlement of the wrongful death claim of their son's estate. Among the alleged shortcomings in defendants' performance were the failures: 1) to take depositions; 2) to obtain an economist's projection of their son's lost earning capacity; and 3) to consult liability experts or engage in significant investigative efforts. The Sawtelles further allege that defendants negligently directed settlement advice into New Hampshire (by telephone and mail), causing them to rely on that advice and thereby suffer economic loss in New Hampshire.

The defendants moved to dismiss for lack of personal jurisdiction. The motion was granted by the district court on April 28, 1995, and this appeal followed.

III. Analysis

When a court's jurisdiction is contested, the plaintiff bears the burden of proving that jurisdiction lies in the forum state. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936); Dalmau Rodriguez v. Hughes Aircraft Co., 781 F.2d 9, 10 (1st Cir.1986). In determining whether a non-resident defendant is subject to its jurisdiction, a federal court exercising diversity jurisdiction "is the functional equivalent of a state court sitting in the forum state." Ticketmaster, 26 F.3d at 204; see also General Contracting & Trading Co. v. Interpole, Inc., 940 F.2d 20, 23 n. 4 (1st Cir.1991). The court must, therefore, find sufficient contacts between the defendant and the forum to satisfy both that state's long-arm statute and the Fourteenth Amendment's Due Process clause. See Ticketmaster, 26 F.3d at 204; United Electrical Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1086 (1st Cir.1992) ("Pleasant St. I "); Hahn v. Vermont Law School, 698 F.2d 48, 51 (1st Cir.1983). 3 We explore these requirements seriatim.

A. The New Hampshire Long-Arm Statute

It is well established in diversity cases that "the district court's personal jurisdiction over a nonresident defendant is governed by the forum's long-arm statute." Goldman, Antonetti, Ferraiuoli, Axtmayer & Hertell v. Medfit Int'l, Inc., 982 F.2d 686, 690 (1st Cir.1993) (quoting Pizarro v. Hoteles Concorde Int'l, C.A., 907 F.2d 1256, 1258 (1st Cir.1990)). In the case at bar, the group of defendants includes two individuals, a professional association and a partnership. Accordingly, we must consider the New Hampshire long-arm statutes applicable to each of these defendants.

The New Hampshire long-arm statute applicable to the individual defendants, Olin and Farrell, is N.H.Rev.Stat.Ann. ("RSA") 510:4, I (Supp.1994), which permits the exercise of personal jurisdiction over a defendant who "transacts any business within [the] state" or "commits a tortious act within [the] state." In Estabrook v. Wetmore, 129 N.H. 520, 523, 529 A.2d 956 (1987), the Supreme Court of New Hampshire interpreted the latter phrase to include situations where a defendant's out-of-state activity results in an injury within New Hampshire. The Sawtelles exhaustively argue that their claims against the individual defendants satisfy each of the possible bases for personal jurisdiction. Not surprisingly, defendants disagree.

We need not dwell on this issue. The New Hampshire long-arm statute applicable to individuals has been interpreted to afford jurisdiction over foreign defendants "to the full extent that the statutory language and due process will allow." Phelps v. Kingston, 130 N.H. 166, 171, 536 A.2d 740 (1987). As recognized by the court below, when a state's long-arm statute is coextensive with the outer limits of due process, the court's attention properly turns...

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