Seward v. Richards
| Decision Date | 08 September 2021 |
| Docket Number | No. 2020-0259,2020-0259 |
| Citation | 174 N.H. 401,265 A.3d 9 |
| Parties | Christine SEWARD v. Charles RICHARDS & a. |
| Court | New Hampshire Supreme Court |
Law Office of David N. Cole, of Lyme (David N. Cole on the brief) and Myers Associates, PLLC, of Lebanon (Howard B. Myers on the brief and orally), for the plaintiff.
Hughes Atwood & Mullaly, PLLC, of Lebanon (John R. Hughes, III on the brief) and Buckley & Zopf, of Claremont (Melvin T. Diep orally), for the defendants.
Three defendants, Charles Richards, Chairman's View, Inc. (Chairman's View), and CoreValue Holdings, LLC (CoreValue), appeal an order of the Superior Court (MacLeod, J.) denying their motion to dismiss, for lack of personal jurisdiction, this action brought by the plaintiff, Christine Seward. Two additional defendants, Consulting Software System, LLC (CSS) and George Sandmann, were not parties to the motion to dismiss and are not parties to this appeal. We affirm.
The plaintiff brought the instant action against Richards, Chairman's View, CoreValue (collectively, for purposes of this opinion, "the defendants"), CSS, and Sandmann for claims related to the transfer of a patent. The plaintiff's complaint alleges the following jurisdictional facts. The plaintiff resides in Hanover. Chairman's View is a Delaware corporation that is registered with the New Hampshire Secretary of State to do business in New Hampshire as a foreign corporation. Its principal office is located in White River Junction, Vermont. CoreValue is a Nevada limited liability company that is registered to do business in Vermont and has the same principal office address in White River Junction as Chairman's View. Richards resides in Norwich, Vermont, and is the president, sole director, and majority shareholder of Chairman's View and is the managing member, and either the sole or majority member, of CoreValue.
The complaint further alleges the following. Chairman's View develops software for business and commercial applications. In 2016, when Chairman's View applied for a certificate of authority to do business in New Hampshire, it maintained a physical address in Lebanon, New Hampshire. The plaintiff is a former employee of Chairman's View.
On December 31, 2014, the plaintiff loaned Chairman's View $312,500 at Richard's request. Chairman's View executed a demand promissory note in that amount, with interest, to the plaintiff. On September 30, 2015, again at Richard's request, the plaintiff loaned Chairman's View an additional $58,000 and Chairman's View executed another demand promissory note with the same terms as the first.
On April 29, 2016, the plaintiff made a formal demand for payment on both notes, as Chairman's View had made no payments of principal or interest as of that date. Chairman's View failed to honor the demands, constituting an event of default on both notes. After meeting to discuss the defaults, the plaintiff and Chairman's View executed a blanket security agreement on July 5, 2016 (the Security Agreement). To secure the payment of both notes, the Security Agreement pledged all of Chairman's View's assets, including, but not limited to, "computer programs, patents and patent applicators, software, licenses," and all proceeds from the sale of those assets. The pledged assets included U.S. Patent No 960727842 for proprietary software (the Patent), which, the complaint alleges, on "knowledge and belief, ... constitutes Chairman's View's nearly only—but significantly valuable—asset."
The Security Agreement, a copy of which was appended to the complaint, identified an address in West Lebanon as Chairman's View's principal place of business and required Chairman's View to "keep the Collateral free from any lien, security interest or encumbrance" and "defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to" the plaintiff. It also provided: "This Security Agreement and all rights and obligations hereunder, including matters of construction, validity and performance, shall be governed by the laws of the State of New Hampshire." The plaintiff perfected her security interest on July 5, 2016.
Due to continued nonpayment, the plaintiff filed suit in superior court in late July 2016 to collect on the notes (the First Lawsuit). On August 18, 2017, the superior court entered judgment for the plaintiff in the First Lawsuit. The plaintiff filed a motion for post-judgment attachment on Chairman's View's assets on November 1, 2017, and a renewed motion to attach the Patent on February 3, 2018.
The complaint at issue here recounts a series of events during and after the pendency of the First Lawsuit through which the defendants, along with CSS and Sandmann, allegedly "engaged in a joint scheme to deliberately avoid paying [the plaintiff's] judgment, circumvent her security interest in the Patent, and abscond with the proceeds of license fees and sales that are rightfully [the plaintiff's]." Specifically, the complaint alleges that in November 2016, Richards organized CoreValue and, approximately five weeks later, Sandmann incorporated CSS. At some point during the timeline relevant to this action, Sandmann had become employed by Chairman's View. He subsequently became vice president and, finally, in 2016, president.
On October 2, 2017, after the judgment in the First Lawsuit had become final and without the plaintiff's knowledge or consent, Chairman's View recorded an assignment of the Patent to CoreValue in the United States Patent and Trademark Office. As the Patent was Chairman's View's only significant asset, its assignment to CoreValue essentially rendered Chairman's View insolvent. At approximately the same time, CoreValue licensed the Patent to CSS, in return for which "Sandmann agreed to give up all of his ownership in Chairman's View."
On April 24, 2018, the superior court granted the plaintiff permission to attach the Patent, but, as detailed above, the Patent had already been assigned to CoreValue. The complaint alleges that Richards and CoreValue continue to receive license fees, and that they, as well as Sandmann and CSS, continue to receive revenue from marketing the software covered by the Patent "despite [the plaintiff's] security interest in the Patent's proceeds and, accordingly, her priority interest in and to those revenues and license fees." Based on these factual allegations, the complaint alleged claims for breach of contract, enforcement of a security interest, fraudulent transfer, consumer fraud, civil conspiracy, and piercing the corporate veil.
The defendants moved to dismiss on the ground that the court lacked personal jurisdiction over them. The plaintiff objected. Following a non-evidentiary hearing, the court denied the motion. The court noted that the plaintiff had not argued that the court had general personal jurisdiction over the defendants, and, therefore, the court limited its analysis to specific jurisdiction. It concluded that all requirements for such jurisdiction were met and ruled that "exercising specific jurisdiction in this case is consistent with notions of fair play and substantial justice."
On appeal, the defendants argue that the trial court erred in finding that: (1) the plaintiff pled specific jurisdiction or facts to support specific jurisdiction as to them; and (2) "specific jurisdiction over [the defendants] is consistent with notions of fair play and substantial justice."
"Our standard of review for rulings on motions to dismiss for lack of personal jurisdiction varies according to the case's procedural posture." Kimball Union Academy v. Genovesi, 165 N.H. 132, 136, 70 A.3d 435 (2013). "When, as in this case, the trial court rules upon the motion without holding an evidentiary hearing, the trial court employs a prima facie standard, and we review the trial court's decision de novo." Id. (quotation omitted). Under the prima facie standard, the inquiry is "whether the plaintiff has proffered evidence which, if credited, is sufficient to support findings of all facts essential to personal jurisdiction." Id. (quotation omitted). "The plaintiff ordinarily cannot rest upon the pleadings, but is obliged to adduce evidence of specific facts." Id. (quotation and brackets omitted). "Both the trial court and we, when undertaking de novo review, must accept the plaintiff's (properly documented) proffers as true for the purpose of determining the adequacy of the prima facie jurisdictional showing." Id. (quotation omitted). "The plaintiff's evidentiary proffers must be construed in the light most congenial to the plaintiff's jurisdictional claim and facts put forward by the defendant may be considered only if they are uncontradicted by the plaintiff's submissions." Id. (quotations and brackets omitted).
"Determining whether a court may exercise personal jurisdiction over a [defendant] contemplates a two-part analysis." N.H. Bank Comm'r v. Sweeney, 167 N.H. 27, 32, 104 A.3d 171 (2014). Id. (quotation omitted). To the extent that any of the defendants’ arguments could be interpreted as contending that the long-arm statute's requirements are not met in this case, we decline to address those arguments given the defendants’ acknowledgement that "[b]ecause New Hampshire's [long-arm statute], RSA 510:4, authorizes a court to exercise personal jurisdiction to the extent permissible under the Due Process Clause, the analysis depends upon due process." See RSA 510:4, I (2010); Sweeney, 167 N.H. at 32, 104 A.3d 171 ().
"Under the Federal Due Process Clause, a court may exercise personal jurisdiction over a non-resident defendant if the defendant has minimum contacts with the forum, such that the maintenance of the suit does not offend traditional notions of...
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