Yeransian v. Willkie Farr & Gallagher LLP

• Decision Date: 01 May 2020
• Docket Number: No. S-19-320.,S-19-320.
• Parties: Thomas YERANSIAN , in his capacity as the representative of certain contingent value rights under the Contingent Value Rights Agreement dated October 15, 2010, appellant, v. WILLKIE FARR & GALLAGHER LLP , appellee.
• Court: Nebraska Supreme Court

305 Neb. 693

942 N.W.2d 226

Thomas YERANSIAN , in his capacity as the representative of certain contingent value rights under the Contingent Value Rights Agreement dated October 15, 2010, appellant,

v. WILLKIE FARR & GALLAGHER LLP , appellee.

No. S-19-320.

Supreme Court of Nebraska.

Filed May 1, 2020

James D. Sherrets, Diana J. Vogt, and James L. Schneider, of Sherrets, Bruno & Vogt, L.L.C., Omaha, for appellant.

Steven D. Davidson, of Baird Holm, L.L.P., Omaha, for appellee.

Heavican , C.J., Cassel , Stacy , Funke , Papik , and Freudenberg , JJ.

Funke , J. Thomas Yeransian appeals the district court’s order dismissing his complaint against the law firm of Willkie Farr & Gallagher LLP (Willkie). Willkie had represented Aspen Holdings, Inc. (Aspen), in 2009 and 2010, when Aspen merged with and was acquired by Markel Corporation (Markel). Yeransian, as a representative of Aspen’s former shareholders, brought suit against Willkie to obtain the Aspen attorney-client file for the former shareholders’ dispute with Markel over payments from the merger. The district court found Willkie did not have the requisite minimal contacts with Nebraska for the court to have personal jurisdiction over it. Alternatively, the court found that Yeransian failed to present a claim upon which relief can be granted because Willkie had represented Aspen, and not its shareholders, and that Markel, as the surviving entity, was entitled to control of the file. Yeransian challenges both grounds. For the reasons set forth herein, we affirm.

BACKGROUND

Willkie is an international law firm with its principal place of business in New York, New York. Willkie does not have a Nebraska office.

In 2009 and 2010, Willkie represented Aspen, a Delaware corporation with its principal place of doing business in Nebraska, in Aspen’s merger with Markel, a Virginia corporation. At the time of the merger and now, some of Aspen’s shareholders reside in Nebraska. For the purpose of this representation, Willkie and Aspen entered into an engagement letter whereby Willkie stated that the client would be "Aspen Holdings, Inc.," and explained that "[t]his engagement does not create an attorney-client relationship with any related persons or entities, such as parents, subsidiaries, affiliates, employees, officers, directors, shareholders or partners."

In July 2010, Aspen and Markel agreed to the terms of the merger and executed an "Agreement and Plan of Merger" (Merger Agreement). In October 2010, Aspen and Markel also executed a "Contingent Value Rights Agreement" (CVR Agreement). Pursuant to the Merger Agreement, the merger transaction closed later in 2010. Under both the CVR Agreement and the Merger Agreement, the parties elected to have Delaware law govern.

Under the CVR Agreement, each share of Aspen’s common stock and option was converted into the right to receive, among other compensation, certain contingent payments. This right had an initial principle value which was to be subjected to adjustment depending on factors set out by the CVR Agreement. Markel was periodically required to provide the holders of certain CVR rights (CVR Holders) certain information relevant to this changing value. The CVR Agreement designated a representative to act on behalf of the CVR Holders (Holder Representative), including granting this representative the authority to enforce any claim against Markel arising under the CVR Agreement. When Markel was required to provide any notice under the CVR Agreement to the CVR Holders, the agreement specified that such notice be sent to the Holder Representative "with a copy (which shall not constitute notice)" sent to Willkie.

Yeransian alleges he is the current Holder Representative. In September 2016, on behalf of the CVR Holders, Yeransian filed suit against Markel in the U.S. District Court for the District of Delaware. In the suit, Yeransian alleged that Markel violated its obligations under the CVR Agreement and sought payment of the unpaid benefits. Yeransian claimed that there were ambiguities in the CVR Agreement and requested Willkie’s attorney-client file with Aspen to aid in resolution of the ambiguities. Upon request, however, Willkie refused to provide the file, citing attorney-client privilege.

In July 2018, Yeransian initiated the instant action in the district court for Douglas County, Nebraska, by filing a complaint against Willkie to acquire its Aspen file. The complaint’s claims included the following: (1) Willkie breached its contract for representation of Aspen, (2) Willkie breached its fiduciary duty to the CVR Holders under the CVR Agreement, and (3) restitution should be ordered for costs associated with the return of the file. Yeransian alleged that the Nebraska district court is a proper venue for these claims because Aspen’s principal place of business was in Omaha, Nebraska; Willkie represented Aspen in 2009 and 2010 during the merger and in connection with the CVR Agreement; Willkie maintained regular contact with Aspen officers and employees in Douglas County in furtherance of this representation; and a substantial number of the CVR Holders continue to reside in Nebraska.

Willkie filed a motion to dismiss for lack of personal jurisdiction or, in the alternative, for failure to state a claim for which relief can be granted. Willkie claimed Markel is the rightful possessor of this file, because Willkie represented Aspen, not its shareholders, and Markel absorbed Aspen in the 2010 merger. Willkie asserted Markel acquired all property, rights, privileges, powers, and franchises of Aspen, including Willkie’s Aspen file on the merger. Accordingly, Willkie argued Yeransian should submit its request for the file to Markel.

The district court granted Willkie’s motion and dismissed Yeransian’s claims. First, the court found Yeransian’s complaint failed to allege Willkie had the requisite minimum contacts with the State of Nebraska and that, as such, the court did not have personal jurisdiction over Willkie. The court disagreed that Willkie’s representation of Aspen could be used as a basis for personal jurisdiction, explaining that any contacts which may have arisen in 2009 and 2010 have long ceased before any cause of action arose based on Willkie’s declining to provide Yeransian the file. Additionally, the court held that those potential contacts with the State existed between Willkie and Aspen as a corporate entity and not Aspen’s individual shareholders. Even if there was personal jurisdiction, the court found Yeransian’s complaint also failed to state a claim upon which relief could be granted because Willkie’s client was Aspen and not Aspen’s shareholders, which meant Markel, as the surviving entity, was the rightful owner of the file.

ASSIGNMENTS OF ERROR

Yeransian assigns, restated, that the district court erred in (1) finding the court lacked personal jurisdiction over Willkie, (2) denying an initial discovery request on the issue of personal jurisdiction, (3) implying that Yeransian lacked standing, and (4) finding Yeransian failed to state a claim upon which relief can be granted.

STANDARD OF REVIEW

A district court’s grant of a motion to dismiss on the pleadings is reviewed de novo, accepting the allegations in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party.¹ Similarly, an appellate court examines the question of whether the nonmoving party has established a prima facie case of personal jurisdiction de novo.²

Generally, the control of discovery is a matter for judicial discretion, and decisions regarding discovery will be upheld on appeal in the absence of an abuse of discretion.³ An abuse of discretion occurs when a trial court’s decision is based upon reasons that are untenable or unreasonable or if its action is clearly against justice or conscience, reason, and evidence.⁴

ANALYSIS

PERSONAL JURISDICTION

Personal jurisdiction is the power of a tribunal to subject and bind a particular entity to its decisions.⁵ Before a court can exercise personal jurisdiction over a nonresident defendant, the court must determine, first, whether the long-arm statute is satisfied and, second, whether minimum contacts exist between the defendant and the forum state for personal jurisdiction over the defendant without offending due process.⁶

Nebraska’s long-arm statute extends Nebraska’s jurisdiction over nonresidents having any contact with or maintaining any relation to this state as far as the U.S. Constitution permits.⁷ It was the intention of the Legislature to provide for the broadest allowable jurisdiction over nonresidents under Nebraska’s long-arm statute.⁸ When, as here, a state construes its long-arm statute to confer jurisdiction to the fullest extent constitutionally permitted, the inquiry collapses into the single question of whether jurisdiction comports with due process.⁹ Therefore, the issue is whether Willkie had sufficient minimum contacts with Nebraska so that the exercise of personal jurisdiction would not offend the traditional notions of fair play and substantial justice.¹⁰

To constitute sufficient minimum contacts, a defendant’s conduct and connection with the forum state must be such that he or she should reasonably anticipate being haled into court there.¹¹ In analyzing personal jurisdiction, we consider the quality and type of the defendant’s activities and determine whether the nonresident defendant’s actions create substantial connections with the forum state, resulting in the defendant’s purposeful availment of the forum state’s benefits and protections.¹²

A court exercises two types of personal jurisdiction depending upon the facts and circumstances of the case: general personal jurisdiction or specific personal jurisdiction.¹³ General personal jurisdiction arises where a defendant’s affiliations with a state are so continuous and systematic as to render the defendant essentially at home in the forum state.¹⁴ Specific personal...