Salisbury Cove Associates v. Indcon Design (1995)

• Decision Date: 27 June 2002
• Docket Number: No. Civ. 01-211-BC.,Civ. 01-211-BC.
• Citation: 211 F.Supp.2d 184
• Parties: SALISBURY COVE ASSOCIATES, INC., d/b/a Atlantic Brewing Company, Plaintiff, v. INDCON DESIGN (1995), LTD., Northern Brew Systems, Darryl Gaudreau, Barrie Miller, Brad Miller, Laurence D.T. Johnson, and Milton, Johnson, Defendants.
• Court: U.S. District Court — District of Maine

211 F.Supp.2d 184

SALISBURY COVE ASSOCIATES, INC., d/b/a Atlantic Brewing Company, Plaintiff, v. INDCON DESIGN (1995), LTD., Northern Brew Systems, Darryl Gaudreau, Barrie Miller, Brad Miller, Laurence D.T. Johnson, and Milton, Johnson, Defendants.

No. Civ. 01-211-BC.

United States District Court, D. Maine.

June 27, 2002.

COPYRIGHT MATERIAL OMITTED

Daniel A. Pileggi, Roy, Beardsley, Williams & Granger, LLC, Ellsworth, ME, for Salisbury Cove Associates Inc, dba Atlantic Brewing Company, plaintiff.

John B. Lucy, Richardson, Whitman, Large & Badger, Bangor, ME, for Laurence DT Johnson, Milton Johnson, defendants.

ORDER AFFIRMING THE RECOMMENDED DECISION OF THE MAGISTRATE JUDGE

GENE CARTER, District Judge.

The United States Magistrate Judge having filed with the Court on May 23, 2002, with copies to counsel, her Recommended Decision on Defendants Johnson and Milton, Johnson's Motion to Dismiss (Docket No. 11); and Plaintiff having filed its objection thereto on June 4, 2002, (Docket No. 12), to which objection Defendants Johnson and Milton, Johnson filed their response on June 17, 2002 (Docket No. 13); and this Court having reviewed and considered the Magistrate Judge's Recommended Decision, together with the entire record; and this Court having made a de novo determination of all matters adjudicated by the Magistrate Judge's Recommended Decision, and concurring with the recommendations of the United States Magistrate Judge for the reasons set forth in her Recommended Decision, it is ORDERED as follows:

(1) Plaintiff's objection is hereby DENIED¹ (2) The Recommended Decision of the Magistrate Judge is hereby AFFIRMED;

(3) The Motion to Dismiss Counts VII and VIII against Defendants Johnson and Milton, Johnson for lack of personal jurisdiction and improper venue is hereby GRANTED.

RECOMMENDED DECISION ON DEFENDANTS JOHNSON AND MILTON, JOHNSON'S MOTION TO DISMISS

KRAVCHUK, United States Magistrate Judge.

Plaintiff Salisbury Cove Associates, Inc., d/b/a Atlantic Brewing Company, (hereinafter "Atlantic") brought the present action against defendants after a failed business transaction. Atlantic's complaint states two causes of action against defendants Laurence D.T. Johnson and his firm Milton, Johnson for a breach of fiduciary duty (Count VII) and legal malpractice (Count VIII) rising from Johnson's role as an escrow agent in the business transaction between Atlantic and other defendants. (Docket No. 1.) Before the Court is Johnson and Milton, Johnson's Motion to Dismiss both counts pursuant to Federal Rules of Civil Procedure 12(b)(2) and (3) for lack of personal jurisdiction and improper venue. (Docket No. 2.) I recommend that the Court GRANT the motion to dismiss Counts VII and VIII against Johnson and Milton, Johnson for lack of personal jurisdiction and improper venue.

Rule 12(b)(2) and (3) Standards of Review

When facing a motion to dismiss for lack of personal jurisdiction under Fed. R.Civ.P. 12(b)(2), the plaintiff bears the burden of establishing that jurisdiction is proper. United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir.2001). When an evidentiary hearing is not held to determine whether personal jurisdiction exists, the plaintiff must make a prima facie showing of jurisdiction, rather than the preponderance of doubt standard, by "citing to specific evidence in the record that, `if credited, is enough to support findings of all facts essential to personal jurisdiction.'" Snell v. Bob Fisher Enter., Inc., 115 F.Supp.2d 17, 20 (D.Me.2000) (quoting Boit v. Gar-Tec Products, 967 F.2d 671, 675 (1st Cir.1992)). "To defeat a motion to dismiss when the court uses this method the plaintiff must make the showing as to every fact required to satisfy `both the forum's long-arm statute and the due process clause of the Constitution.'" Boit, 967 F.2d at 675. In so doing, the plaintiff must make affirmative proof beyond the pleadings. Id. (citations omitted). When determining whether the plaintiff has made the requisite prima facie showing, the court considers the pleadings, affidavits, and exhibits filed by the parties. Id. For the purposes of such a review, plaintiff's properly supported proffers of evidence are accepted as true and disputed facts are viewed in a light favorable to the plaintiff, however unsupported allegations in the pleadings need not be credited. Id.

A motion to dismiss based on improper venue under Fed.R.Civ.P. 12(b)(3) triggers a burden on the plaintiff to demonstrate that it has brought the action in a permissible forum. Cordis Corp. v. Cardiac Pacemakers, 599 F.2d 1085, 1086 (1st Cir.1979). The procedural analysis applied in determining a challenge of venue follows the procedure for analysis employed in a motion under Rule 12(b)(2). Global Health Alternatives, Inc. v. Ellon U.S.A., Inc., 1999 WL 33117099, *1 (D.Me.1999) (citing M.K.C. Equip. Co. v. M.A.I.L. Code Inc., 843 F.Supp. 679, 682-83 (D.Kan. 1994)).

Background

The following facts are taken from the complaint and plaintiff's filed affidavit.¹ The plaintiff, Atlantic, is a Maine brewing company that brews, bottles, and distributes malt beverage products in Maine. (Compl.¶ 1.) In search of a machine that would bottle its beverages, Atlantic learned that Northern Brew Systems ("NBS") could provide a bottling machine fitting its needs. (Maffucci Aff. ("Aff.") ¶ 3.) NBS is a sole proprietorship located in British Columbia, Canada that sells and distributes industrial equipment for manufacturers and bottlers of malt beverage products. (Compl.¶ 5.) Preliminary discussions ensued between NBS and Atlantic in the fall of 1999 and resulted in NBS's proposal to have a bottling machine built by Indcon Design, Ltd. ("Indcon"), a company in Canada. (Id. ¶¶ 2, 13-14; Aff. ¶ 4.) On December 17, 1999, Atlantic, NBS, and Indcon agreed upon the terms of the purchase. (Compl.¶¶ 14-16.)

At some point, defendants Johnson and Milton, Johnson became involved in the transaction. Johnson is an attorney licensed to practice law in British Columbia, Canada and has a principal place of business in British Columbia. (Id. ¶ 7.) His law firm, Milton, Johnson, consists of barristers, solicitors, and mediators and also has its principal place of business in British Columbia. (Id. ¶ 8.) As a result of Atlantic's apprehension in sending payments to Canada for a machine that had not yet been created, NBS in October of 1999, introduced the idea of having its attorney, Johnson, act as a mediator in the business transaction. (Aff.¶ 6.) When NBS solicited Johnson's services in Canada, Johnson quoted a fee of $600 CDN. (Id. ¶ 7.) NBS offered to pay Johnson's fee. (Id.) On November 24, 1999, NBS sent Atlantic an "agreement in principle contract" and in an accompanying letter stated that Johnson requested the agreement to make sure the parties agreed upon the terms of the contract before he drew up the paperwork. (Id. ¶ 8, Ex. 2.) Atlantic remained apprehensive about sending payments for the machine, thus NBS in December, 1999, outlined a schedule of three payments in a Letter of Agreement with the third payment to be held in trust by Johnson until the machine is proven to operate as specified. (Id. ¶¶ 9-10.) During the next few months Atlantic refrained from paying the second installment. (Id. ¶ 13.) NBS continued to assert that Johnson should be involved in the transaction. (Id.) By the end of March 2000, Atlantic reluctantly accepted NBS's proposal of having Johnson hold the money in escrow. (Id. ¶ 14.) NBS then informed Atlantic that Johnson would prepare an escrow/trust agreement. (Id. ¶ 16.)

The first direct communication between Johnson and Atlantic was an April 7, 2000, letter sent by facsimile in which Johnson confirmed his undertaking to hold the funds in trust and explained the manner in which payment from the escrow funds would be made. (Compl. ¶ 21; Aff. ¶ 18, Ex. 6.) Johnson sent Atlantic a second facsimile a few days later, on April 13, consisting of a copy of the Agreement stating, in part, that Johnson would hold the third payment in trust until Atlantic confirmed that it was satisfied with the machine. (Aff.¶ 19, Ex. 7.) Atlantic signed the Agreement on April 13, 2000, and sent it back to Johnson. (Id.) Due to delays in production, business relations between Indcon, NBS, and Atlantic began to deteriorate during April and May of 2000, resulting in a slight change to the original Agreement. (Id. ¶¶ 20, 22.) On June 1, 2000, Johnson sent a letter to Atlantic by facsimile confirming this amendment to the Agreement which called for Johnson to hold both the second and the third payment in trust. (Id. ¶ 23, Ex. 11.)

Relying upon Indcon's representation that completion of the machine was imminent, Atlantic tendered the second and third payments due under the Amended Agreement to Milton, Johnson, on June 1, 2000, to be held in escrow. (Compl.¶ 22.) Atlantic obtained the two drafts from a Maine bank as Johnson requested and sent them to Johnson in Canada where he held them in trust. (Aff.¶ 24.) Atlantic enclosed a letter requesting Johnson to send a freight confirmation showing that Indcon had shipped the machine, as the shipping of the machine was the condition for Johnson's release of the second draft. (Id.) On June 7, 2000, Johnson responded by facsimile stating that the machine was shipped. (Id. ¶ 26, Ex. 14.) Subsequently, Johnson released the second draft to NBS. (Id. ¶ 28.) There is no dispute regarding the release of this payment.

After Atlantic received the machine on June 8, 2000, it had nothing but problems with it. (Compl.¶ 25.) Although Indcon was repeatedly informed by Atlantic that there were many defects and deficiencies in the machine, Indcon sent a letter to Milton, Johnson on July 11, 2000, falsely stating that the "start-up" for Atlantic's bottling system "was completed on June 28, 2000." (Id. ¶¶ 26-27.) According to the complaint, Indcon intentionally misled Milton, Johnson in order to wrongfully obtain the...