Northern Laminate Sales Inc. v. Matthews

• Decision Date: 07 March 2003
• Docket Number: No. CIV. 02-251-JM.,CIV. 02-251-JM.
• Parties: NORTHERN LAMINATE SALES, INC. v. James F. MATTHEWS
• Court: U.S. District Court — District of New Hampshire

249 F.Supp.2d 130

NORTHERN LAMINATE SALES, INC. v. James F. MATTHEWS

No. CIV. 02-251-JM.

United States District Court, D. New Hampshire.

March 7, 2003.

Lawrence M. Edelman, Pierce Atwood, Portsmouth, NH, for Plaintiff.

Paul B. Kleinman, Bouchard & Kleinman, Hampton, NH, for Defendant.

ORDER

MUIRHEAD, United States Magistrate Judge.

In its Complaint, the Plaintiff, Northern Laminate Sales, Inc. ("NLS"), alleges that the Defendant, James F. Matthews, violated provisions of N.H. RSA 545-A, the Uniform Fraudulent Transfer Act, and N.H. RSA 358-A:1, et seq., which prohibits unfair or deceptive acts or practices. Among the forms of relief sought, Plaintiff asks the Court to pierce the corporate veils of American Board Companies, Inc. ("ABC") and Mateo Electronics Group, Inc. ("Mateo") to render Matthews personally liable for $244,040.64, an amount that ABC owes Plaintiff pursuant to a settlement agreement executed at the conclusion of a prior litigation in this Court. Before the Court for consideration is Defendant's Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Rule 12(b)(2) and to Dismiss Plaintiffs RSA 358-A Claim Pursuant to Rule 12(b)(6). For the reasons set for herein, Defendant's motion to dismiss is granted because the Court finds that it does not have personal jurisdiction over Matthews.

STANDARD OF REVIEW

Since the Defendant has contested this Court's personal jurisdiction over him, the Court must determine whether the Plaintiff has shown that sufficient facts exist to support the Court's exercise of jurisdiction over the Defendant under the New Hampshire long-arm statute and the Due Process Clause of the Fourteenth Amendment to the Constitution. See Lyle Richards Int'l, Ltd. v. Ashworth, Inc., 132 F.3d 111, 112 (1st Cir.1997); Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir.1995); Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 204 (1st Cir. 1994). In ruling on a motion to dismiss under Rule 12(b)(2), the court need not hold an evidentiary hearing to determine the jurisdictional facts. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 45 (1st Cir.2002); Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145 (1st Cir. 1995); Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675-676 (1st Cir. 1992). I accept the Plaintiffs evidentiary proffers as true for the purpose of determining the adequacy of the prima facie jurisdictional showing. See Daynard, 290 F.3d at 45. Accordingly, I draw the facts from the pleadings and filings, including affidavits, taking the facts affirmatively alleged by the Plaintiff as true and construing disputed facts in the light most hospitable to the Plaintiff. Lyle Richards, 132 F.3d at 112 n. 1. I do not, however, credit conclusory allegations or draw farfetched inferences. See Ticketmaster-New York, 26 F.3d at 203. I also consider the facts alleged by Defendant to the extent that they are uncontradicted. Daynard, 290 F.3d at 51. Applying this standard, the factual background is set forth in the next section.

BACKGROUND

I. Relevant Parties

NLS is incorporated in the State of New Hampshire with a principal place of business in Atkinson, New Hampshire. It furnishes laminate components for printed circuit boards. Matthews is an individual who resides in Binghamton, New York. At all relevant times, Matthews was an officer, director and the sole and controlling shareholder of ABC and Mateo. ABC was incorporated in the State of New York in 1987. Mateo, an electronics manufacturer, was incorporated in the State of Delaware in 1996. Plaintiff alleges that Mateo operated in combination with a number of affiliates, including ABC, and that Mateo exercised control over those affiliates.¹

II. Plaintiffs Relationship with ABC and Mateo

Plaintiff contracted with ABC for the sale of laminate components. Plaintiff alleges that during the year 2000, ABC placed hundreds of orders for products to be shipped F.O.B. NLS's Atkinson, New Hampshire Facility.² By letter dated September 1, 2000, Miles Russell, NLS's President, wrote to Matthews expressing concern about the lack of timely and regular payments for product that NLS shipped to ABC. See App. to NLS's Verified Objection to Mot. to Dismiss ("App.") at Tab 6. Plaintiff sent a copy of that letter to Larry Davis ("Davis"), Secretary and Treasurer of ABC and Mateo.

Plaintiff alleges that Matthews delegated the responsibility for responding to the September 1st letter to Davis. In a deposition held after the instant lawsuit was filed, Matthews testified that he had no recollection of ever receiving the September 1st letter.³ App. at Tab 15, pp. 29-30. Both Matthews and Davis testified, however, that Matthews delegated the responsibility for handling matters such as those set forth in Russell's September 1, 2000 letter to Davis. See App. at Tab 1, pp. 143-145, and Tab 15, pp. 29-30. Davis testified that he did not discuss the letter with Matthews, and that he took it upon himself to respond. App. at Tab 1, pp. 143-144.

On September 14, 2000, Russell met with Davis in Vestal, New York to discuss Plaintiffs concerns. Plaintiff alleges that Davis made the following representations at that meeting: (1) Mateo was committed to supporting ABC; (2) Mateo would guaranty ABC's payment obligations; (3) ABC's payment delinquencies were not cash-flow related, but rather were occasioned by logistical problems; (4) Mateo and its affiliates, on a consolidated basis, were profitable; (5) Mateo and its affiliates, on a consolidated basis, were in a good financial position; (6) Mateo and its affiliates, on a consolidated basis, were growing rapidly; (7) Davis would provide consolidated financial statements to NLS within a few weeks of the meeting. See Compl. at 112-13, Verified Objection to Def.'s Mot. to Dismiss ("Objection") at 3-4, and App. at Tab 7. During his deposition, Davis denied having made any of the foregoing representations with the exception of stating that Mateo was committed to supporting ABC, and that he would provide financial statements to NLS.App. at Tab 15, pp. 161-163. Davis admits that he did not send NLS any financial statements. In a letter to Russell dated September 22, 2000, Davis wrote:

I enjoyed meeting with you last week and I feel that NLS and ABC can continue a mutually successful partnership. This letter serves as my commitment to meet your payment terms and I have instructed our staff to remit to you each Friday payment for all invoices 53 days and older. Also I assure you that the Mateo Electronics Group, Inc. stands behind this commitment and all confirmed obligations of ABC to NLS. As I mentioned if there is ever an issue with payment, simply send me an e-mail

App. at Tab 8.

Plaintiff contends that Davis willfully concealed and misrepresented Mateo's and ABC's financial condition from September 14, 2000 on for the purpose of inducing Plaintiff to extend unwarranted credit to Plaintiffs detriment. According to Plaintiff, contrary to Davis' representation, Mateo and its affiliates, on a consolidated basis, were not profitable. On a consolidated basis, Mateo and its affiliates lost $29,877,669 in the year 2000. See App. at Tabs 3^ (Exhibits 3, 11 to Davis' Deposition).⁴ During 1999, Mateo and its affiliates lost $9,652,115. Id. Contrary to Davis' alleged representation, Mateo and its affiliates, on a consolidated basis, were not in a good financial position. Id. Rather, Mateo's and its affiliates' then current liabilities vastly exceeded their then current assets during the years 1999 and 2000. Id. In 1999, the liabilities of Mateo and its affiliates were $155,688,503 while its assets were $138,718,302. Id. In 2000, the liabilities of Mateo and its affiliates were $104,247,445 while its assets were $81,088,211. Id. Contrary to Davis' alleged representation, Mateo and its affiliates, on a consolidated basis, were not rapidly growing, but rather were in decline. Id. Plaintiff alleges that Davis made each representation with knowledge of its falsity or with conscious indifference to its truth. And Plaintiff alleges that it reasonably and justifiably relied upon Davis' representations to its detriment. Between the September 14, 2000 meeting between Davis and Russell and November 2, 2000, ABC's total indebtedness to Plaintiff grew from $337,445.60 to $669,941.47.

On October 31, 2000, Russell sent an email to Davis in which he wrote:

During our [September 14th] meeting you had asked me to Email you anytime we had problems with payments.

Currently, we have not seen a check in three weeks and the last check we did receive has been returned to [NLS] with a `return to maker' marking (our agreement calls for a weekly check paying all invoices 53 days old or older). Currently $215,717.57 is due through next Monday, including the amount of the check that has been returned.

Your [Accounts Payable] staff has indicated that Mateo has encountered a problem with your [Line of Credit] facility and that this problem should be cleared up by the end of the week.

I would appreciate an update on this situation.

Also, Larry, I have not yet received the financial statements that you agreed to forward following our [September 14th] meeting.

Compl. If 17. On November 1, 2000, Davis sent a reply to Russell's e-mail:

I apologize for not responding sooner. About two weeks ago, our Bank Group disallowed a substantial receivable, which backed us into an over advance. They began returning checks and to date have only allowed us to fund payroll. We are working very hard to correct this situation through difficult circumstances. We are working with a consulting group to get our banking relationship back on track. We will try to keep you informed as to the availability of funding and payments. I assure you this situation was totally unexpected and we are doing everything posible (sic) to protect our suppliers.

Compl. at ¶ 18. On November 10, 2000, Russell sent another e-mail to Davis in which he ...