Fortune Laurel, LLC v. High Liner Foods (USA), Inc.
| Decision Date | 08 May 2020 |
| Docket Number | No. 2019-0307,2019-0307 |
| Citation | 238 A.3d 1113,173 N.H. 240 |
| Parties | FORTUNE LAUREL, LLC v. HIGH LINER FOODS (USA), INCORPORATED, Trustee & a. |
| Court | New Hampshire Supreme Court |
Hage Hodes, P.A., of Manchester (Jamie N. Hage and Katherine E. Hedges on the brief, and Ms. Hedges orally), for the plaintiff.
Devine, Millimet & Branch, Professional Association, of Manchester (William F. Gramer on the brief), and SLN Law, LLC, of Sharon, Massachusetts (Emily E. Smith-Lee on the brief and orally), for the YOK defendants.
High Liner Foods (USA), Incorporated, trustee defendant, filed no brief.
Yunnan New Ocean Aquatic Product Science and Technology Group Co., Ltd., Yunnan Ocean King Fisheries Co., Ltd., Yunnan Honghao Fisheries Co., Ltd., and U.S. Ocean Star Trade Co., Ltd. (YOK defendants) appeal an order of the Superior Court (Delker, J.) maintaining an attachment of funds held by High Liner Foods (USA), Inc. (High Liner USA), the trustee defendant. The YOK defendants argue that the trial court erred by maintaining quasi in rem jurisdiction over the attached funds despite concluding that it lacked personal jurisdiction over them in the underlying action. We affirm because the trial court's limited exercise of jurisdiction over the attached funds comports with due process requirements.
The trial court's orders set forth the following relevant facts. In 2012, Fortune Laurel, LLC, a Massachusetts company, entered into contracts with the YOK defendants to broker the sale of fish processed by the YOK defendants to companies in the United States and Canada. One such company was located in Massachusetts, which was subsequently acquired by a Canadian company named High Liner Foods, Inc. (Canada) (High Liner Canada). Thereafter, High Liner Canada rebranded its corporate acquisition High Liner Foods (USA) and moved it to Portsmouth in 2014. The arrangement operated as follows. High Liner USA solicited fish from High Liner Canada, which procured the fish from international sellers, including the YOK defendants. The YOK defendants shipped the fish to High Liner USA in Massachusetts or Virginia, where High Liner USA inspected the fish and, if satisfactory, distributed it across the United States. Upon High Liner USA's acceptance of the fish, the YOK defendants invoiced High Liner USA and the invoice was paid by High Liner Canada, which then invoiced High Liner USA. The YOK defendants shipped fish to High Liner USA "[w]ith some regularity." Fortune Laurel received a commission from the YOK defendants based upon the amount of fish sold. Fortune Laurel also purchased fish from the YOK defendants for resale to a Massachusetts company.
After the written contract between Fortune Laurel and the YOK defendants expired, the YOK defendants continued to use Fortune Laurel to broker its sales with High Liner USA until 2017, when "the YOK defendants decided to exclude [Fortune Laurel] from the relationship." In December 2017, Fortune Laurel sued the YOK defendants in New Hampshire, alleging two counts of breach of contract and violations of the New Hampshire Consumer Protection statute. Fortune Laurel claimed that the YOK defendants failed to pay its commissions in 2017, improperly caused High Liner Canada to revoke its access to High Liner's online tracking system, sold it fish for resale in Massachusetts that failed to meet applicable standards, and made fraudulent insurance claims that have negatively affected its business. Fortune Laurel sought damages, attorney's fees, and costs exceeding $600,000. Contemporaneously with its complaint, Fortune Laurel filed a petition for an ex parte attachment of funds that High Liner USA owes the YOK defendants as payment for fish shipments. According to the YOK defendants, Fortune Laurel sought to attach a sum exceeding $500,000. The trial court granted the attachment.
The YOK defendants moved to dismiss the suit for lack of personal jurisdiction. The trial court found that several of Fortune Laurel's claims were "wholly unrelated" to New Hampshire and thus that "dismissal for lack of personal jurisdiction was appropriate." With regards to the claim that the YOK defendants breached their contract with Fortune Laurel by failing to pay commissions on shipments in 2017, the trial court noted that "the YOK defendants’ contact with New Hampshire was the prerequisite to the breach at issue," because the breach concerned transactions between the YOK defendants and High Liner USA in New Hampshire. However, it concluded that it would be neither in the interest of judicial economy nor fair to require the YOK defendants to litigate claims in both New Hampshire and Massachusetts when the majority of the conduct at issue occurred in Massachusetts and New Hampshire lacked a strong interest in adjudicating the single claim. Accordingly, the trial court concluded that exercising personal jurisdiction over the YOK defendants "would be inconsistent with notions of fair play and substantial justice." Fortune Laurel thereafter filed a "substantially similar" lawsuit against the YOK defendants in Massachusetts.1
Nonetheless, the trial court ruled that it could continue to exercise quasi in rem jurisdiction over the attached funds. It noted the difference in magnitude between exercising jurisdiction over the merits of the case and exercising jurisdiction over the attached funds. It also found credible Fortune Laurel's argument that the YOK defendants’ "location in China severely limits [Fortune Laurel's] ability to obtain a remedy in this case" in the event Fortune Laurel prevails in the Commonwealth. The trial court concluded that due process allowed it to "temporarily freeze" the YOK defendants’ assets by maintaining the attachment "while the merits of the underlying lawsuit are adjudicated" in Massachusetts. High Liner USA moved for reconsideration, the trial court denied its motion and the YOK defendants filed this appeal.
The plaintiff bears the burden of demonstrating facts sufficient to establish jurisdiction. Continental Biomass Indus. v. Env't Mach. Co., 152 N.H. 325, 327, 876 A.2d 247 (2005). The plaintiff need make only a prima facie showing of jurisdictional facts to defeat a defendant's motion to dismiss. See State v. N. Atlantic Ref. Ltd., 160 N.H. 275, 280, 999 A.2d 396 (2010). Under the prima facie standard, the plaintiff must proffer evidence which, if credited, is sufficient to support findings of all facts essential to jurisdiction. See id. Because the trial court held an evidentiary hearing on the YOK defendants’ motion to dismiss and Fortune Laurel's attachment petition, we will defer to the trial court's factual findings drawn from the testimony at the hearing, unless they are unsupported by the record or clearly erroneous. See Boit v. Gar-Tec Products, Inc., 967 F.2d 671, 678 (1st Cir. 1992) ; see also N. Atlantic Ref., 160 N.H. at 280, 999 A.2d 396. However, because the exercise of jurisdiction implicates the Fourteenth Amendment to the United States Constitution, we review de novo the trial court's legal conclusion as to whether its findings support the exercise of jurisdiction. See Boit, 967 F.2d at 678 ; see also State v. Dupont, 155 N.H. 644, 645, 931 A.2d 583 (2007).
As an initial matter, Fortune Laurel asserts that the trial court's order is not a final decision on the merits, and, therefore, our review of the trial court's decision is inappropriate. See Sup. Ct. R. 3, 7. We conclude that, in order to reach the YOK defendants’ due process claim, we will treat their appeal as a properly filed interlocutory appeal and waive the procedural requirements of Supreme Court Rule 8. See Sup. Ct. R. 1 ; In re Brittany S., 147 N.H. 489, 490, 792 A.2d 384 (2002) ; see also Mosier v. Kinley, 142 N.H. 415, 424, 702 A.2d 803 (1997) ().
Turning to the merits, the YOK defendants argue that the trial court's exercise of jurisdiction contravenes due process standards established by the United States Supreme Court. They contend that the trial court's conclusion that it has jurisdiction over the attached funds is irreconcilable with its conclusion that it does not have personal jurisdiction in the underlying action. We disagree.
"A state court's assertion of jurisdiction exposes defendants to the State's coercive power, and is therefore subject to review for compatibility with the Fourteenth Amendment's Due Process Clause." Goodyear Dunlop Tires Operations, S. A. v. Brown, 564 U.S. 915, 918, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011). A court may exercise personal jurisdiction over a defendant, consistent with due process, if the defendant has "certain minimum contacts with [the state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Internat. Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quotation omitted); see Continental Biomass, 152 N.H. at 329, 876 A.2d 247. In Shaffer v. Heitner, 433 U.S. 186, 208-09, 212, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), the Court expanded the application of the International Shoe test, holding that "all assertions of state-court jurisdiction," including the exercise of quasi in rem jurisdiction, "must be evaluated according to the standards set forth in International Shoe and its progeny."
One type of quasi in rem jurisdiction exists where "the plaintiff seeks to apply what he concedes to be the property of the defendant to the satisfaction of a claim against him." Continental Biomass, 152 N.H. at 328, 876 A.2d 247 (quotation omitted). In such a case, "the court's jurisdiction over the defendant's property is invoked through attachment ... or a similar procedure." Id. ; see Office Depot Inc. v. Zuccarini, 596 F.3d 696, 699 (9th Cir. 2010) (...
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