Lung v. Yachts Intern., Ltd, 96-00186 ACK.
| Citation | 980 F.Supp. 1362 |
| Decision Date | 03 July 1997 |
| Docket Number | No. 96-00186 ACK.,96-00186 ACK. |
| Parties | David Y.F. LUNG and Ruth C. Lung, Plaintiffs, v. YACHTS INTERNATIONAL, LTD et al., Defendants. |
| Court | U.S. District Court — District of Hawaii |
Richard Paul McClellan, III, Honolulu, HI, Edward J.S.F. Smith, Honolulu, HI, Matthew S.K. Pyun, Jr., for Plaintiffs.
Diane D. Hasert, Damon Key Bocken Leong Kupchak, Honolulu, HI, Anne S. Mason, Mason & Associates, P.A., Clearwater, FL, for Defendants.
ORDER GRANTING DEFENDANTS' MOTION TO TRANSFER THE CASE
This case arises out of David and Ruth Lung's ("Plaintiffs") purchase of a Moorings Lagoon 4200, a pleasure yacht ("yacht"), on December 28, 1994 for $375,000. Plaintiffs claim that the yacht has significant and material deviations from the 1991 Boat of the Year Moorings Lagoon 4200 they believed they were purchasing.
As a result of the yacht's alleged shortcomings, the Plaintiffs in their latest complaint1 have sued: (1) Mariner International Travel, Inc., a Delaware Corporation, (2) The Moorings, Ltd., a British Virgin Islands Corporation, (3) Moorings U.S. Yacht Services, Inc., a corporation of unknown origin, (4) Moorings International, Inc., another corporation of unknown origin, (5) Jean F. Larroux, Jr., a citizen of the State of Delaware who is responsible for the purchase and sale of yachts for Yachts International, Ltd., (6) Katy Buckner, a sales representative for Mariner International Travel, Inc., (7) Mariner International Travel, Inc., (8) Yachts International, Ltd. and (9) various Doe Defendants (collectively referred to as "Defendants"). In their complaint, Plaintiffs allege seven different causes of action: (1) fraud, (2) failure of condition precedent, (3) breach of contract, (4) tortious breach of contract, (5) intentional misrepresentation, (6) negligent misrepresentation, and (7) unfair and deceptive business practices.
On August 22, 1996, Defendants filed a motion to dismiss the complaint based on the Court's lack of personal jurisdiction, or in the alternative, a motion to transfer venue. On December 4, 1996, Plaintiffs filed their opposition to which the Defendants replied on June 12, 1997.
On June 23, 1997, the Court held a hearing on the matter.
Whether a party is subject to personal jurisdiction in a federal court action based on diversity is determined by reference to the laws of the state in which the federal court sits. Thos. P. Gonzalez Corp., 614 F.2d at 1250. Where a defendant challenges personal jurisdiction in a motion to dismiss, the plaintiff "must make only a prima facie showing of jurisdictional facts through the submitted materials in order to avoid defendant's motion to dismiss." Data Disc, Inc. v. Systems Tech. Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir.1977). The plaintiff, however, must eventually establish jurisdiction by a preponderance of the evidence either at a pretrial evidentiary hearing or at trial. Id. In scrutinizing a motion to dismiss based upon lack of personal jurisdiction, the court looks to the uncontroverted allegations of the complaint, affidavits and depositions. Pure, Ltd. v. Shasta Beverages, Inc., 691 F.Supp. 1274, 1277 (D.Haw.1988).
For this Court to exercise personal jurisdiction over the Defendants, Defendants must have sufficient contacts with the state as to fulfill Hawaii's long-arm statute and the Due Process Clause. See generally Sher v. Johnson, 911 F.2d 1357, 1360 (9th Cir.1990).
Hawaii's long-arm statute, Haw.Rev. Stat. § 634-35, has been interpreted to allow jurisdiction over non-resident defendants "to the extent permissible by the Due Process Clause of the Fourteenth Amendment." Cowan v. First Insurance Company, 61 Haw. 644, 649, 608 P.2d 394 (1980). The ability of the Court to exercise personal jurisdiction over the Defendants, therefore, depends solely on the Constitution.
The Due Process Clause requires that the Defendants have "certain minimum contacts with [Hawaii] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). In applying these abstract principles, courts have created two different tests for determining jurisdiction. The first is general jurisdiction which allows a person to be sued in a state even if the cause of action is wholly unrelated to the defendant's connection to the state. Due to its broad nature, general jurisdiction can only be established when a "defendant's activities in the state are `substantial' or `continuous and systematic.'" Sher, 911 F.2d at 1360. Plaintiffs do not claim that any Defendants fulfill the rigorous strictures required for the exercise of general jurisdiction.
The second method for exercising jurisdiction — specific jurisdiction — is less demanding requiring only "minimum contacts" with the forum state. Burger King v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183-84, 85 L.Ed.2d 528 (1985). In an effort to clarify the "minimum contacts" standard, the Ninth Circuit has created a three-part test:
(A) some action must be taken whereby defendant purposefully avails himself or herself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of the forum's laws;
(B) the claim must arise out of or result from defendant's forum related activities; and
(C) [the] exercise of jurisdiction must be reasonable
Sher, 911 F.2d at 1361. Using these factors, the Court will examine whether it has specific jurisdiction over Defendants, taking as true Plaintiffs' allegations. Id.
In determining whether there has been "purposeful availment," the Ninth Circuit "distinguish[es] contract from tort actions." Roth v. Garcia Marquez, 942 F.2d 617, 621 (9th Cir.1991); see also Alvarez v. Aircraft Modular Products, Inc., 949 F.Supp. 1470, 1475 (D.Hawai'i.1996). In tort cases, "[t]he three elements of purposeful availment ... are: (1) intentional action; (2) aimed at the forum state; and (3) causing harm that the defendant should have anticipated would be suffered in the forum state." Ziegler v. Indian River County, 64 F.3d 470 (9th Cir.1995). "In the contract context, however, Burger King specifically noted that the existence of a contract with a resident of the forum state is insufficient by itself to create personal jurisdiction over the nonresident." Roth v. Garcia Marquez, 942 F.2d 617, 621 (9th Cir.1991). Instead, only "parties who `reach beyond one state and create continuing relationships and obligations with citizens of another state' are subject to regulation and sanction in the other State for the consequences of their activities." Id. This case contains causes of action sounding in both tort and contract. Thus, the Court will analyze the facts of the case under both standards.2
Plaintiffs claim that the Defendants committed fraud and intentional misrepresentation in selling the yacht. Defendants deny it. The Ninth Circuit has held that "conflicts between the facts contained in the parties' affidavits must be resolved in [Plaintiffs'] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists." AT & T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996). Resolving the factual disputes in favor of the Plaintiffs, the Court finds that Plaintiffs have established a prima facie case that Defendants committed an intentional act.
A closer question is whether the alleged fraud was aimed at the forum state. According to the Plaintiffs, however, Defendants sent numerous solicitations to Plaintiffs' Hawaii address concerning "details of [the] equipment, use, [and] charter management contracts" that constitute the fraud alleged. See Plaintiffs' Opposition, Affidavit of Lung, ¶ 15. Plaintiffs also allege that Defendants made "countless telephone calls" in December, 1994 to Hawaii concerning the "specifications of the Moorings' Lagoon 4200 yacht." Id. at ¶ 16. These two allegations together fulfill Plaintiffs' prima facie burden that Defendants' tort was aimed at the forum state.
Similarly, these allegations also fulfill the third element: that the Defendants should have anticipated that their alleged fraud would cause harm in the forum state. Plaintiffs are citizens of Hawaii. Perpetuating fraud against them will foreseeably cause them harm. Any harm they suffer will be suffered in Hawaii, as well as at the site of the vessel. Accordingly, the Court finds that Plaintiffs have established, under the Ninth Circuit test for torts, a prima facie case of purposeful availment.
As stated above, the test for purposeful availment in contract actions is more demanding requiring "continuing relationships and obligations with citizens of another state." Roth v. Garcia Marquez, 942 F.2d 617, 621 (9th Cir.1991). Nevertheless, construing the facts most favorably to the Plaintiff, Defendants have purposefully availed themselves of Hawaii.
Plaintiffs purchased a monohull yacht from Defendants in 1988. Since then, Defendants have "regularly" sent promotional materials to Plaintiffs' home address in Hawaii. See Plaintiffs' Opposition, Lung Affidavit, ¶ 12. In 1994, Defendants sent a solicitation concerning the yacht at issue here. Id. at ¶ 14. Plaintiffs expressed an interest in the yacht. Thereafter, Defendants sent "several bulk mailings" to the Hawaii address and made countless telephone calls concerning the sale of the yacht. During this active solicitation, Plaintiffs allegedly informed Defendants that if the yacht was purchased, its "homeport" would be Kaneohe, Hawaii.
The yacht was transferred on December 28, 1994. The purchase agreement refers to Plaintiffs as Hawaii residents. On the same day, the parties also entered into a "Yacht Management Agreement" that created detailed...
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