Masselli & Lane PC v. Miller & Schuh, P.A. ( 2000 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MASSELLI & LANE, PC, a Virginia
corporation,
Plaintiff-Appellant,
v.
MILLER & SCHUH, PA, a Florida
corporation,
Defendant-Appellee.
and
LARRY D. BROWN, an individual
No. 99-2440
resident of the State of Georgia;
ARKCO UNDERWRITERS,
INCORPORATED, a terminated Florida
corporation Suggestion of
Bankruptcy filed 9/23/98; AANCO
UNDERWRITERS, INCORPORATED, a
terminated Florida corporation
Suggestion of Bankruptcy filed
10/1/98,
Defendants.
Appeal from the United States District Court
for the District of Virginia, at Alexandria.
T. S. Ellis, III, District Judge.
(CA-98-864-A)
Argued: May 3, 2000
Decided: May 30, 2000
Before WIDENER and MOTZ, Circuit Judges,
and Frank W. BULLOCK, Jr., United States District Judge
for the Middle District of North Carolina,
sitting by designation.
Remanded by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: David Charles Masselli, MASSELLI & LANE, P.C.,
Arlington, Virginia, for Appellant. Teri Louise DiGiulian, BEDZOW,
KORN, BROWN, MILLER & ZEMEL, P.A., Aventura, Florida, for
Appellee. ON BRIEF: William C. Lane, MASSELLI & LANE, P.C.,
Arlington, Virginia, for Appellant.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
A Virginia law firm, Masselli & Lane, P.C. (M&L), brought this
action based on diversity of citizenship alleging inter alia that a Flor-
ida law firm, Miller & Schuh, P.A., was liable to M&L for breach of
contract, quantum meruit, fraud, and tortious interference with con-
tract. The district court granted Miller & Schuh's motion to dismiss
for lack of personal jurisdiction. For the reasons that follow, we
remand for further findings.
I.
In a prior proceeding that forms the basis for the instant case the
International Insurance Company sued a number of persons in Florida
seeking a declaratory judgment that its decision not to provide an
insurance defense to them was valid. Miller & Schuh represented two
business entities named as defendants in that action--Aanco Under-
writers and Arkco Underwriters; Larry Brown was the president of
both of these entities (but he was not named in his individual capacity
2
in the International action). The other defendants included Charles
Amos, the Estate of Joan Amos, and John Fessenden.
In the past, Brown had retained the legal services of M&L for mat-
ters related to other business ventures. Based on this previous rela-
tionship, Brown initially urged M&L to assist Amos in his criminal
appeal. Later, Brown urged M&L to represent Amos and his wife's
estate in the International action, and he agreed to sign a conflict-of-
interest waiver because Amos's interests in that litigation were poten-
tially divergent from those of Aanco and Arkco. Brown then negoti-
ated a fee agreement with M&L for its representation of Aanco and
Arkco as well, indicating to M&L that he had discharged Miller &
Schuh.
Brown's conduct triggered a series of discussions and other inter-
actions between Miller & Schuh and Brown, M&L and Brown, and
between the two law firms in order to sort out the legal effect of the
various agreements entered into by Brown on behalf of Aanco and
Arkco and to discuss the conflict-of-interest questions posed by
M&L's representation of certain parties to the International lawsuit.
These interactions ultimately resulted in the execution of a Pooling
Agreement, which established how any recovery, through settlement
with or judgment against International, would be shared among the
defendants. The Pooling Agreement also specified that attorneys' fees
were controlled by each law firm's separate fee agreements with its
clients--M&L with Amos and Fessenden, and Miller & Schuh with
Aanco and Arkco.
M&L maintains that "[d]uring the period from January 1, 1998
through June 8, 1998, [it] received numerous phone calls, faxes and
letters at [the firm's] office in Virginia from the principals at Miller
& Schuh." M&L also contends that four letters sent by Miller &
Schuh to M&L establish the minimum contacts necessary to conclude
that Miller & Schuh purposefully availed itself of the benefits and
privileges of transacting business in Virginia.
II.
A plaintiff must prove the grounds for personal jurisdiction by a
preponderance of the evidence. See, e.g., Mylan Labs., Inc. v. Akzo,
3
N.V., 2 F.3d 56, 60 (4th Cir. 1993) (citing Combs v. Bakker, 886 F.2d
673, 676 (4th Cir. 1989)). "If the existence of jurisdiction turns on
disputed factual questions the court may resolve the challenge on the
basis of a separate evidentiary hearing," Combs, 886 F.2d at 676,
"[y]et when, as here, the district court decides a pretrial personal juris-
diction dismissal motion without an evidentiary hearing, the plaintiff
need prove only a prima facie case of personal jurisdiction." Mylan
Labs., 2 F.3d at 60. The pleadings, affidavits, and other supporting
documents presented to the court are construed in the light most
favorable to plaintiff, drawing all inferences and resolving all factual
disputes in its favor. Id. In doing so, however, the court need not
"credit conclusory allegations or draw farfetched inferences."
Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir.
1994). The district court's application of the law to these facts is
reviewed de novo. Mylan Labs., 2 F.3d at 60.
A two-pronged analysis is used in determining issues of personal
jurisdiction. A court must first determine whether the forum state's
long-arm statute confers jurisdiction over the non-resident defendant.
See Mylan Labs., 2 F.3d at 60. Assuming the requirements of the
forum state's long-arm statute have been satisfied, the court must next
determine whether the exercise of personal jurisdiction over the non-
resident defendant comports with due process. Id. The Virginia
Supreme Court has interpreted the long-arm statute to confer jurisdic-
tion "over nonresidents who engage in some purposeful activity in
Virginia, to the extent permissible under the Due Process Clause of
the Constitution of the United States." Nan Ya Plastics Corp. U.S.A.
v. DeSantis, 377 S.E.2d 388, 391 (Va. 1989). Thus, the statutory and
constitutional inquires merge, see Owens-Illinois, Inc. v. Rapid Am.
Corp. (In re Celotex Corp.), 124 F.3d 619, 628 (4th Cir. 1997), and
we focus on the nonresident defendant's contacts with the forum
state.
"In Burger King Corp. v. Rudzewicz, [471 U.S. 462 (1985),] the
Supreme Court reaffirmed the general rule that specific jurisdiction
requires a showing by the plaintiff that (1) the nonresident defendant
has purposefully established significant (i.e. , not `random, fortuitous
or attenuated') contact with the forum state; and (2) the plaintiff's
cause of action arises out of or is related to the defendant's forum
contacts. If the plaintiff can make that showing, the defendant will
4
have the burden of showing, from the balance of interest factors, that
the state's exercise of specific jurisdiction would be unfair." 16
Moore's Federal Practice § 108.42[1] (3d ed. 1999).
III.
Masselli & Lane asserts two bases for its claim that a federal court
in Virginia has personal jurisdiction over Miller & Schuh in this case.
Initially, M&L relies on the first provision of Virginia's long-arm
statute, which provides that "[a] court may exercise personal jurisdic-
tion over a person, who acts directly or by an agent, as to a cause of
action arising from the person's . . . [t]ransacting any business in [Vir-
ginia]." Va. Code Ann. § 8.01-328.1(1) (Michie 1992 & Supp. 1999).
M&L correctly asserts that Virginia's long-arm statute is "a single act
statute," i.e., one business transaction in Virginia may be sufficient as
a basis for personal jurisdiction, even if substantially all contract obli-
gations are performed outside of the state. See Superfos Investments
Ltd. v. FirstMiss Fertilizer, Inc., 774 F. Supp. 393, 397 (E.D. Va.
1991) (citing I.T. Sales, Inc. v. Dry, 278 S.E.2d 789 (Va. 1981); John
G. Kolbe, Inc. v. Chromodern Chair Co., 180 S.E.2d 664, 667 (Va.
1971)). M&L contends that the negotiation and implementation of the
Pooling Agreement constitute Miller & Schuh's "purposeful activity"
of transacting business in Virginia.
If personal jurisdiction is allegedly based on a single contact, the
factors commonly examined by courts to determine whether business
has indeed been transacted within the state include: (1) where the con-
tracting and negotiations occurred; (2) who initiated the contact; (3)
the extent of the communication; and (4) where the contractual obli-
gations were to be performed. See, e.g., Affinity Memory & Micro,
Inc. v. K & Q Enters., 20 F. Supp. 2d 948, 952 (E.D. Va. 1998). Uni-
lateral activity by the plaintiff or third parties cannot satisfy the mini-
mum contacts requirement. See Burger King, 471 U.S. at 474 (citing
Hanson v. Denckla, 357 U.S. 235, 253 (1958)). The crucial inquiry
involves whether the contacts suggest that the nonresident defendant
purposefully availed himself "of the privilege of conducting activities
within the forum State, thus invoking the benefits and protections of
its laws." Hanson, 357 U.S. at 253 (citing International Shoe, 326
U.S. at 319); see also Burger King, 471 U.S. at 476. When a case
5
involves legal representation by an out-of-state law firm, courts
emphasize the importance of the second factor--who initiated the
contact. See Sawtelle v. Farrell, 70 F.3d 1381 (1st cir. 1995); English
& Smith v. Metzger, 901 F.3d 36 (4th Cir. 1990); Austad Co. v. Pen-
nie & Edmonds, 823 F.2d 223 (8th Cir. 1987).
The parties disagree as to some facts and, more importantly, as to
what inferences can properly be drawn from the facts. Critically, they
disagree as to who initiated contact, the extent and nature of commu-
nications between them, what the Pooling Agreement requires, and
where and by whom obligations under that Agreement were per-
formed. Unfortunately, the district court did not issue a written opin-
ion or render any oral findings of fact on these issues. We remand so
that the district judge can do so.
The district court also failed to explain its rejection of M&L's
alternative argument. That argument is based on the portion of Vir-
ginia's long-arm statute that provides for personal jurisdiction when
an individual "acts directly or by an agent . . . [c]ausing tortious injury
in [Virginia] by an act or omission outside[Virginia] if he regularly
does or solicits business, or engages in any other persistent course of
conduct, or derives substantial revenue from goods used or consumed
or services rendered, in [Virginia]." Va. Code Ann. § 8.01-328.1(4)n
(Michie 1992 & Supp. 1999).
M&L contends that Miller & Schuh engaged in a "persistent course
of conduct" through its ongoing communication with M&L, the shar-
ing of files, and joint authorship of pleadings and motions, and that
when Aanco and Arkco's settlement funds from the International
action were paid into Miller & Schuh's trust account and disbursed,
Miller & Schuh committed tortious interference with M&L's rights
under the Pooling Agreement. Neither party devotes much attention
to this argument, and the district court made no findings as to why
these activities do not constitute a "persistent course of conduct" sub-
jecting Miller & Schuh to personal jurisdiction in Virginia. M&L
maintains that Miller & Schuh were able to settle with International
on behalf of Aanco and Arkco based in large measure on the work
performed by M&L in preparation for trial. If these allegations are
true, Miller & Schuh may have "derive[d] substantial revenue from
. . . [legal] services rendered in Virginia." To be sure, Miller & Schuh
6
counters these contentions. The district court undoubtedly concluded
that Miller & Schuh's evidence was more compelling, but the court's
lack of findings makes our review of this conclusion difficult.
Accordingly, we also remand this issue to the district court for appro-
priate findings.
IV.
In sum, without in any way intimating our views on the merits, we
remand the case to the district court for further proceedings consistent
with this opinion.
REMANDED
7