Fore, LLC v. Benoit

• Full Citation: Fore, LLC v. Benoit, Civil Action CV-09-547 (Me. Super. Nov 08, 2013)
• Decision Date: 08 November 2013
• Docket Number: Civil Action CV-09-547
• Parties: FORE, LLC, Plaintiff v. WILLAIM BENOIT and BENOIT ASSOCIATES, Defendants
• Court: Maine Superior Court

FORE, LLC, Plaintiff v. WILLAIM BENOIT and BENOIT ASSOCIATES, Defendants

Civil Action No. CV-09-547

Superior Court of Maine, Cumberland

November 8, 2013

ORDER ON DEFENDANTS' MOTION TO DISMISS

Nancy Mills, Justice Superior Court

The defendants filed a motion to dismiss for lack of personal jurisdiction pursuant to M.R. Civ. P. 12(b)(2). For the following reasons, the motion is granted.

BACKGROUND

Plaintiff Fore, LLC (Fore) is a Maine limited liability company and its managing members, Robert Adam and Judith Adam, are residents of Maine. (Adam Aff. ¶ 3.) Defendant William Benoit is a certified public accountant who resides in Brockton Massachusetts. (Benoit Aff. ¶¶ 2-3.) Mr. Benoit is the managing partner of Defendant Benoit & Associates, LLC (Benoit Associates), ^[1] which has its office in Brockton. (Id. ¶ 3.)

Neither Mr. Benoit nor Benoit Associates has an office, post office box, or business address in Maine. (Id.) Neither defendant has ever been licensed, registered, or authorized to do business in Maine. (Id. ¶ 9.) Mr. Benoit and Benoit Associates have never provided accounting services to a business existing under the laws of Maine or solicited business from any person, firm, or entity located in Maine. (Benoit aff. ¶¶ 10-11.)

In 2003, Fore entered into negotiations with Rivermeadow Management, LLC (Rivermeadow), a New Hampshire limited liability company, to purchase the Rivermeadow Golf Course (the golf course) in Westbrook, Maine. (Adam Aff. & 4.) Fore, through its managing member, Robert Adam, reviewed Rivermeadow's tax returns from 1999 to 2002. (Id. ¶ 5.) Mr. Benoit was the accountant for Rivermeadow and provided bookkeeping and accounting for the golf course. (Benoit Aff. ¶ 13.) According to Rivermeadow's tax returns, Rivermeadow does business entirely within Maine. (Pl.'s Exs. 1-3.) Mr. Benoit's accounting services were performed at his office in Massachusetts. (Benoit Aff. ¶15.)

Subsequent to the purchase, Fore alleges that it determined that the financial information for the golf course was significantly different than reflected in the tax returns provided by Mr. Benoit. (Compl. ¶¶ 22-24; Adam Aff. ¶¶ 7, 9-10.) Fore brought a successful claim against RJ Golf, LLC in 2008, alleging fraud in connection with the sale.^[2] (Benoit Aff. ¶¶ 23-24.) During the course of the 2008 litigation, ^[3] Fore learned that Mr. Benoit allegedly prepared fraudulent tax returns, increased the amount of cash flow, and hid certain expenses from the years prior to 2003. (Compl. ¶¶ 30-40.) Mr. Benoit told Mr. Adam that the tax returns were accurate and that they reflected the financial condition of the golf course. (Adam Aff. ¶ 6.) Mr. Adam cannot remember whether he contacted Mr. Benoit or whether Mr. Benoit called him to discuss the tax returns prior to closing. (Id.) Mr. Benoit recalls that Mr. Adam placed the call. (Benoit Aff. ¶ 20.) Fore filed a complaint with this court against Mr. Benoit and Benoit Associates and alleges fraud, misrepresentation, and fraudulent concealment.

DISCUSSION

I. Standard of Review

Courts commonly rule on motions to dismiss for lack of personal jurisdiction prior to trial without resort to an evidentiary hearing. Dorf v. Complastik Corp., 1999 ME 133, 113, 735 A.2d 984, 988. A plaintiff opposing such a motion must base that opposition "on specific facts set forth in the record . . . ." Id. (quotations omitted). "This means that [the] plaintiff must go beyond the pleadings and make affirmative proof." Id. (quotations omitted). "This showing may be made by affidavit or otherwise." Id. When the court decides a motion to dismiss for lack of personal jurisdiction on the pleadings and affidavits of the parties, the plaintiff is required only to make a prima facie showing that the court has jurisdiction. Id., ¶ 14, 735 A.2d at 988-89. The plaintiff's written allegations of jurisdictional facts are construed in its favor. Id., ¶14, 735 A.2d at 989. "When, however, the facts relating to personal jurisdiction are so intertwined with the facts relating to the merits of the case, that it would be difficult to decide jurisdiction prior to a full trial on the merits, a court may be forced to postpone resolving the issue of jurisdiction until trial." Id., ¶ 15, 735 A.2d at 989.

II. Personal Turisdiction

Maine's long-arm statute authorizes jurisdiction over nonresidents with "certain significant minimal contacts with this State ... to the fullest extent permitted by the due process clause of the United States Constitution, 14^th amendment." 14 M.R.S.A. § 704-A(l).^[4] The Law Court has interpreted this statute in light of the due process clause as requiring the following three elements before Maine's courts may assert personal jurisdiction over a nonresident defendant: "(1) Maine [must] have a legitimate interest in the subject matter of this litigation; (2) the defendant, by his conduct, reasonably could have anticipated litigation in Maine; and (3) the exercise of jurisdiction by Maine's courts comports with traditional notions of fair play and substantial justice." Murphy v. Keenan, 667 A.2d 591, 593 (Me. 1995). A plaintiff has the burden of satisfying the first two elements. Id. at 594. If a plaintiff meets its burden, the defendant must show that jurisdiction would not "comport with traditional notions of fair play and substantial justice." Id.

A. Legitimate Interest in this Litigation

"Maine certainly has an interest in providing its citizens with a means of redress against nonresidents, " Interstate Food Processing Corp. v. Pellerito Foods, Inc., 622 A.2d 1189, 1192 (Me. 1993), but "an interest beyond mere citizenry is necessary" for Maine to assert jurisdiction over a nonresident defendant. Murphy, 667 A.2d at 594. Fore asserts that Maine has a legitimate interest in providing a forum for its citizens when an out-of-state defendant allegedly fraudulently causes injury within the state. Pl.'s Mem. at 5; see Bickford v. Onslow Mem'l Hosp. Found., Inc., 2004 ME 111, ¶11, 855 A.2d 1150, 1155 (holding that Maine has a legitimate interest in allowing residents a forum when out-of-state creditors refuse to correct false credit reports); Suttie v. Sloan Sales, Inc., 1998 ME 121, ¶ 5, 711 A.2d 1285, 1286 (holding that "Maine has a legitimate interest in protecting its citizens from fraudulent employment practices and providing its citizens with a means of redress against nonresidents"); 14 M.R.S. § 704-A(2)(B).

In this case, Maine arguably has a legitimate interest in the litigation as one of its citizen companies, Fore, alegedly suffered economic consequences in Maine from Mr. Benoit's alleged fraudulent conduct. See, e.g., Me. Helicopters, Inc. v. Lance Aviation, Inc., 563 F.Supp.2d 292, 296 (D. Me. 2008) (citing Bickford, 2004 ME 111, ¶11, 855 A.2d at 1155).^[5] The golf course that is the subject of the dispute is located in Maine, Fore is a Maine limited liability company, and Fore's managing members are residents of Maine. Maine has a legitimate interest in protecting its citizens and industries from fraud.

B. Reasonable Anticipation of Litigation

Although Fore met its burden on the first part of the test, to reasonably anticipate litigation, due process demands that "one must purposefully avail oneself of the privilege of conducting activities within the jurisdiction and benefit from the protection of its laws." Commerce Bank & Trust Co. v. Dworman, 2004 ME 142, ¶ 16, 861 A.2d 662, 667. Such purposeful availment constitutes sufficient "minimum contacts" for a defendant to "have reasonably anticipated being haled into court in Maine." Boit v. Gar-Tec Products, Inc., 967 F.2d 671, 681 (1^st Cir. 1992). "A defendant's activities are sufficient to establish minimum contacts when (1) the activities of the defendant have been directed at the forum's residents; (2) the defendant deliberately engages in significant activities in the forum; or (3) the defendant creates continuing obligations between itself and residents of the forum." Cavers v. Houston McLane Co., Inc., 2008 ME 164, ¶ 24, 958 A.2d 905, 911; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985) ("contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State.'") (emphasis in original).

In Harriman v. Demoulas Supermarkets, Inc., the Law Court explained that a defendant must not be "unfairly surprised" by being brought to court and discussed the second prong of the test:

Whether the requisite minimum contacts are found "will vary with the quality and nature of the defendant's activity, ... it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Burger King, 471 U.S. at 471-74 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958). When a defendant "purposefully directs his activities at residents of a forum" by "deliberately engaging in significant activities" in that forum or by "creating continuing obligations between himself and residents" of the forum, that requirement is met. [(quoting Burger King v. Rudzewicz, 471 U.S. at 472-76)].

Harriman v. Demoulas Supermarkets, Inc., 518 A.2d 1035, 1037 (Me. 1986).

Based on the parties' affidavits, Fore has not established that Mr. Benoit could reasonably anticipate litigation in Maine. First, Mr. Benoit did not direct his activities at Mr. Adam or Fore. Mr. Benoit's contact with Maine was one or more phone call with Mr. Adam. (Adam Aff. ¶ 6; Benoit Aff ¶ 20.) Mr. Adam "cannot recall whether I called Mr. Benoit, or he contacted me, but I believe he called me." (Adam Aff. ¶ 6.) Mr. Benoit recalled that Mr. Adam placed the call. (Benoit Aff. ¶ 20.) It is...