Opinion
SUPERIOR COURT CIVIL ACTION DOCKET NO. CV-14-157
04-22-2015
KELLEY ANN O'SHEA, Plaintiff, v. KATHLEEN M. O'SHEA, BRIAN CONNOR O'SHEA, JOHN J. O'SHEA III, and KILLYBEGS, LLC, Defendants.
ATTORNEYS FOR PLAINTIFF: BRIAN CHAMPION LIBBY O'BRIEN KINGSLEY & CHAMPION LLC 62 PORTLAND RD UNIT 17 KENNEBUNK ME 04043 JEFFREY W DUNCAN DUNCAN LAW P C P O BOX 7896 JUPITER FL 33468-7896 ATTORNEYS FOR DEFENDANTS: JOHN JC, KATHLEEN M & BRIAN CONNOR OSHEA GEORGE DILWORTH JEANA M MCCORMICK DRUMMOND WOODSUM 84 MARGINAL WAY SUITE 600 PORTLAND ME 04101 ATTORNEY FOR DEFENDANT: KILLYBEGS LLC ANDRE G DUCHETTE TAYLOR MCCORMACK & FRAME 30 MILK STREET 5TH FLOOR PORTLAND ME 04101
STATE OF MAINE
YORK, ss.
ORDER
I. Background
Plaintiff Kelley Ann O'Shea ("Kelley" or "the plaintiff") brings this action against Kathleen M. O'Shea, Brian Connor O'Shea, and John J. O'Shea III (collectively "the individual defendants"), as well as Killybegs, LLC, a foreign LLC organized under the laws of Texas. At issue, in part, is the O'Shea family vacation home at 168 Kings Highway, Kennebunkport, Maine ("the vacation property").
This is not the first lawsuit involving the parties. Kelley previously filed a suit in Texas state court against her late mother, Rita O'Shea ("Rita") alleging that she misused assets from a trust formed from the estate of John O'Shea Jr., who was Kelley's father and Rita's husband. The case went to trial and was affirmed by a panel of the Court of Appeals of Texas. Duncan v. O'Shea, 2012 Tex. App. LEXIS 6494, 23, 2012 WL 3192774 (Tex. App. Amarillo Aug. 7, 2012). Although the court addressed Rita's income from the vacation property, there was no substantive adjudication as to rights in the property. After the Texas litigation commenced, Rita formed Killybegs, LLC ("Killybegs") and conveyed the vacation property to Killybegs. (Compl. ¶¶ 30-32.) The plaintiff alleges this transfer violated the trust and was made in an effort to shield assets from a potential judgment in the litigation. Rita died in 2013. The defendants are all named as Directors of Killybegs and have assumed control of managing the vacation property. (Compl. ¶¶ 53, 65, 68; Ex. H.) In this capacity, the defendants have entered contracts to maintain the property, paid bills, and visited Maine on several occasions. (Pl.'s Ex. A-1.)
The plaintiff's complaint in this case brings nine counts related to the transfer of the vacation property and management of Killybegs, including multiple counts for breach of fiduciary duty, breach of contract, fraud, conversion, and a claim under the fraudulent transfers act, 14 M.R.S. § 3575. The complaint requests that the court impose a constructive trust and award punitive damages. Before the court are Killybegs's and the individual defendants' motions to dismiss for improper venue, lack of personal jurisdiction, and forum non conveniens. Killybegs also moves separately to dismiss Counts I, II, III, V, VI, VII, and IX. (Def. Killbegs Mot. Dismiss 8-10.)
II. Discussion
A. Venue
The general venue statute provides:
Personal and transitory actions . . . shall be brought, when the parties live in the State, in the county where any plaintiff or defendant lives; and when no plaintiff lives in the State, in the county where any defendant lives; or in either case any such action may be brought in the county where the cause of action took place.14 M.R.S. § 501. The defendants argue that because none of the parties are Maine residents, venue is improper in this court. The plaintiffs respond that venue is appropriate under Section 501 "where the cause of action took place." There is, however, an added qualification: Section 501 requires either the plaintiff or the defendant reside in Maine. See Gaeth v. Deacon, 2009 ME 9, ¶ 17, 964 A.2d 621. While "[t]he general venue statutes are silent as to the venue of personal transitory actions where neither the plaintiff nor the defendant is a resident of Maine," this does not mean nonresidents have no available venue. 2 Harvey, Maine Civil Practice § 0:20 at 67 (3d ed. 2011). Rather, actions between nonresidents may be maintained in the county where the defendant can be found and served with process. Id. Foreign corporations and LLCs may be served at a "place of business of the corporation within the state." M.R. Civ. P. 4(d)(9)(a). Under another applicable venue statute, a corporation "may sue and be sued in the county in which they have an established place of business." 14 M.R.S. § 505. Because the LLC owns and the individual defendants operate the vacation property in Kennebunkport, venue is proper in York County.
Ultimately, the defendants object to personal jurisdiction and the convenience of litigating this matter in Maine. See Estate of Hoch v. Stifel, 2011 ME 24, ¶ 30, 16 A.3d 137 (setting aside defendant's venue challenge as a personal jurisdiction challenge and declining to address venue separately). The court considers personal jurisdiction and forum non conveniens in turn.
B. Personal Jurisdiction
Maine conducts a two-step analysis to determine whether exercise of personal jurisdiction over a defendant is proper. The court first applies the state long-arm statute, then determines whether exercising jurisdiction comports with due process. Stifel, 2011 ME 24, ¶¶ 22-25, 16 A.3d 137.
Under Maine's long-arm statute, a defendant submits to the jurisdiction of the courts if the cause of action arises from "[t]he transaction of any business within this State" or "[t]he ownership, use or possession of any real estate situated in this State." 14 M.R.S. § 704-A(2)(A), (C). Maine exercises jurisdiction to the maximum extent permitted by due process. Id. "Due process is satisfied when: (1) Maine has a legitimate interest in the subject matter of the litigation; (2) the defendant, by his or her conduct, reasonably could have anticipated litigation in Maine; and (3) the exercise of jurisdiction by Maine's courts comports with traditional notions of fair play and substantial justice." Stifel, 2011 ME 24, ¶ 25, 16 A.3d 137. The plaintiff must make a prima facie showing on the first two prongs and the defendant bears the burden on the third prong. The court construes the alleged facts in the plaintiff's favor. Fore v. Benoit, 2012 ME 1, ¶ 10, 34 A.3d 1125.
The individual defendants argue that personal jurisdiction is lacking because their only contact with Maine is membership in Killybegs, and Killybegs's only contact is ownership of the vacation property. According to the defendants, the plaintiff's case concerns events that occurred in Texas involving a Texas trust and citizens of Texas, California, and Florida. The defendants maintain they could not have reasonably anticipated litigation in Maine and therefore asserting personal jurisdiction would contravene due process. (Def.'s Mot. Dismiss 5-7.)
The long-arm statute is met. The defendants are members of Killybegs and Killybegs owns and rents the vacation property. Ownership of real property is sufficient to support jurisdiction under the long-arm statute. 14 M.R.S. § 704-A(2)(A); Hawley v. Murphy, 1999 ME 127, ¶ 6, 736 A.2d 268. By operating an LLC that rents property and enters contracts in Maine, the defendants have also transacted business in the state. 14 M.R.S. § 704-A(2)(C); Cavers v. Houston McLane Co., 2008 ME 164, ¶ 16, 958 A.2d 905 (negotiating a single employment contract with a Maine resident sufficient to meet "transacting business" standard). The individual defendants have sufficient contacts with Maine through Killybegs such that assertion of personal jurisdiction as to the LLC also extends to each of them. Not all of the plaintiff's claims encompass the individual defendants' contacts with Maine. Rita, now deceased, created the LLC and made the allegedly wrongful transfer to Killybegs. Since that time, however, the plaintiff alleges the individual defendants have entered contracts to maintain and rent the property, mismanaged the LLC, and have denied the plaintiff income from the property that would otherwise be realized from trust distributions. This is sufficiently related to Maine to support specific jurisdiction. See Fore, 2012 ME 1, ¶¶ 14-15, 34 A.3d 1125 (holding personal jurisdiction proper where nonresident defendant never physically present in Maine and entered a single transaction with a Maine resident); see also Nowak v. Tak How Investments, Ltd., 94 F.3d 708, 716 (1st Cir. 1996) (holding specific jurisdiction established where there was a "meaningful link" between the defendant's contacts with the forum state and the plaintiff's cause of action).
The individual defendants do not raise this argument, but the "fiduciary shield doctrine," which protects members of a corporate entity from being subject to personal jurisdiction through a business entity, has not been adopted in Maine or embraced by local federal courts. See RF Techs. Corp. v. Applied Microwave Techs., Inc., 369 F. Supp. 2d 24, 32 (D. Me. 2005). Even if applied, the individual defendants have more significant contacts with Maine than mere membership.
Having found specific jurisdiction, the court need not address the plaintiff's contention that Maine has general jurisdiction over the defendants. The defendants' contacts are likely not sufficiently continuous and systematic to support general jurisdiction. Reed & Reed, Inc. v. George R. Cairns & Sons, Inc., 519 F. Supp. 2d 148, 153 (D. Me. 2007).
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Turning to the due process analysis, the court considers Maine's interest in the litigation, whether a suit was foreseeable to the defendants, and whether asserting jurisdiction would comport with traditional notions of fair play and substantial justice. Cavers, 2008 ME 164, ¶ 18, 958 A.2d 905.
First, Maine has a strong interest in adjudicating claims related to real property located within the state. See Commerce Bank & Trust Co. v. Dworman, 2004 ME 142, ¶ 15, 861 A.2d 662. Second, litigation was foreseeable to the defendants. At issue here, in part, is ownership of the vacation property and whether the LLC has been properly managed. (Compl. 5-6.) The individual defendants emphasize that the operation and management of Killybegs has occurred primarily in Texas, but they do not deny that they have entered Maine to maintain the property. (Def.'s Mot. Dismiss 5-7.) By operating the LLC, visiting Maine multiple times, and generating revenue from renting the vacation property, the defendants have clearly "purposefully availed" themselves of "the privilege of conducting activities within [Maine], thus invoking the benefits and protections of its laws." Murphy v. Keenan, 667 A.2d 591, 594 (Me. 1995) (citation and internal quotation marks omitted). The prospect of being haled into a Maine court was or should have been reasonably foreseeable to the defendants.
Lastly, the defendants fail to show that the exercise of personal jurisdiction would offend traditional notions of fair play and substantial justice. Despite the defendants' representations about the location of witnesses and evidence, the defendants have not established this suit would be "so gravely difficult and inconvenient" that they would be at a "severe disadvantage in comparison" to the plaintiff. Caluri v. Rypkema, 570 A.2d 830, 833 (Me. 1990) (citations omitted). The defendants' contacts with Maine were not "random, fortuitous, or attenuated" and in any event constitute the type of "less extensive activity . . . required where the cause of action arises out of or in connection with the defendant's forum-related activity." Id. As noted, the plaintiff's causes of action are largely related to the defendants' primary contact with Maine: management, control, and rental of the vacation property. The individual defendants' remaining arguments go to the merits of the case, and are not appropriate at this juncture. (Def's Reply Pl.'s Opp. Mot. Dismiss 3-6.) Viewing the facts alleged in the light most favorable to the plaintiff, the exercise of personal jurisdiction comports with due process. See Foreside Common Dev. Corp. v. Bleisch, 463 A.2d 767, 769 (Me. 1983) (negotiating purchase and sale agreement for Maine real estate, scheduling a closing, and opening and closing a bank account sufficient to meet due process requirements).
The defendants stress the fact that neither they nor the plaintiff are Maine residents and even if personal jurisdiction exists, this court should not decide the controversy. The "usual rule" is that "Maine courts are open to anyone, resident or nonresident, to bring transitory actions against any defendant within the jurisdiction of the Maine courts, subject only to the rule of forum non conveniens." Tyson v. Whitaker & Son, Inc., 407 A.2d 1, 3 n.5 (Me. 1979). The court next addresses forum non conveniens.
C. Forum Non Conveniens
Where jurisdiction is proper, the doctrine of forum non conveniens allows a court discretion to nonetheless dismiss the case. "Dismissal must be predicated upon the trial court's initial determination that dismissal will further the ends of justice and promote convenience of the suit for all parties." MacLeod v. MacLeod, 383 A.2d 39, 41 (Me. 1978). To that end, an available and alternative forum "is essential before a Maine court can dismiss a case under the doctrine of forum non conveniens." Corning v. Corning, 563 A.2d 379, 380 (Me. 1989).
Maine has adopted the factors enunciated by the Supreme Court in conducting a forum non conveniens analysis. These include (1) the private interest of the litigant; (2) ease of access to sources of proof; (3) availability of witnesses; (4) practical hurdles to conducting the trial in Maine, including cost and time constraints; (5) enforceability of a judgment; (6) obstacles and advantages to a fair trial; (7) availability of an alternative forum; and (8) the public interest. MacLeod, 383 A.2d at 42 (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)). Although the plaintiff may not elect to file suit in an inconvenient forum in order to "vex, harass, or oppress" the defendant, the plaintiff's choice of forum "should rarely be disturbed" unless the equities weigh strongly in the defendant's favor. Id.
The defendants are correct to point out that the plaintiff's case largely concerns persons, events, and evidence outside the State of Maine. Yet forum non conveniens is not available simply because the matter could be litigated more conveniently in another forum. Rather, in order to dismiss under the doctrine, the court must find (1) that an alternative forum exists for the plaintiff to press her claim and (2) that the equities weigh strongly toward dismissal. MacLeod, 383 A.2d at 42.
The defendants accuse the plaintiff of forum shopping because the statute of limitations has run in Texas. Indeed, regardless of what law applies to the plaintiff's substantive claims, if the suit remains here, Maine's statute of limitations controls. Johanson v. Dunnington, 2001 ME 169, ¶ 6, 785 A.2d 1244 ("Under traditional choice of law rules, the forum state generally applies its own statute of limitations to a cause of action, even though it may apply the substantive law of another state.") In Texas, breach of fiduciary duty, breach of contract, and fraud claims all have a four-year statute of limitations. Tex. Civ. Prac. & Rem. Code § 16.004 (Lexis 2013). Although the statute begins to run at the time of the breach or relevant act, Texas recognizes the "discovery rule" exception. Pitman v. Lightfoot, 937 S.W.2d 496, 510 (Tex. App. 1996). The discovery rule tolls the statute until the plaintiff learns of the breach or relevant act, provided the plaintiff was not previously unaware as a result of negligence or lack of diligence. Id.
In addition to possible statute of limitations problems, the plaintiff contends that a Texas court lacks the power to reform or cancel a deed for property located in Maine. See Kelly Oil Co. v. Svetlik, 975 S.W.2d 762, 764 (Tex. App. 1998) ("[I]t is well-settled . . . that Texas courts have no power or jurisdiction to adjudicate title to interests in real property located in another state.") The court later qualified that rule: "Texas courts may, however, compel a party over whom it has jurisdiction to execute a conveyance of a real property interest situated in another state." Id. In the Kelly Oil case, the Texas court concluded jurisdiction was lacking because the plaintiff could not establish title to the property. The court distinguished an action for breach of contract or conversion whereby the court could adjudicate the obligations of the parlies and order the appropriate relief, including ordering a party within the court's jurisdiction to convey real property. Id.
The Kelly Oil case appears to indicate that a Texas court could order the relief the plaintiff seeks. There is no genuine ambiguity as to title: the vacation property either belongs to the trust, as the plaintiff claims, or remains under control of the LLC. The issue is whether the transfer to Killybegs was proper and the consequences that flow from the management of the property by the defendants. The plaintiff asserts that breaches of contract, fiduciary duty, and conversion by the defendants have deprived her of income from the property. Because a Texas court could compel Killybegs to transfer the property to the trust (which was also formed in Texas), this case seemingly falls into the latter category of cases in which a Texas court would have jurisdiction. See Kelly Oil, 975 S.W.2d at 764. The plaintiff could thus pursue her claims in Texas and a judgment would be entitled to full faith and credit in Maine. U.S. Const. art. IV, § 1.
Nonetheless, there is no guarantee a Texas court would apply the discovery rule to toll the statute of limitations or interpret the Kelley Oil case in the same manner. This does not meet the threshold requirement that an alternative forum must be available "before a Maine court can dismiss a case under the doctrine of forum non conveniens." Corning, 563 A.2d at 380. Even if dismissal would "promote the convenience of the suit," the convenience must be for "all parties" and ultimately serve the interests of justice. MacLeod, 383 A.2d at 41. Absent compelling equities in favor of the defendants, the plaintiff's choice of forum ought not be disturbed. Id. at 42. Dismissal for forum non conviens is inappropriate in this case.
D. Killybegs's Motion to Dismiss Counts I, II, III, V, VI, VII, and IX
Under M.R. Civ. P. 12(b)(6), the court views "the facts alleged in the complaint as if they were admitted." Ramsey v. Baxter Title Co., 2012 ME 113, ¶ 2, 54 A.3d 710. The court will grant the motion only "when it appears beyond a doubt that the plaintiff is not entitled to relief under any set of facts that he might prove in support of his claim." Doe v. Graham, 2009 ME 88, ¶ 2, 977 A.2d 391.
Killybegs argues Counts I, II, III, and V do not name Killybegs as a defendant. The court cannot dismiss these counts as to Killybegs because the plaintiff has not named Killybegs as a defendant. The plaintiff's complaint clearly states those counts apply to the other defendants. The court acknowledges Killybegs's reading of the complaint.
As to Count VI, Killybegs argues that a conversion action cannot be maintained where the property converted is real property. (Def. Killybegs Mot. Dismiss 9.) Killybegs construes this count too narrowly; in addition to wrongfully obtaining title to the vacation property, the plaintiff alleges the defendants have converted trust funds and rental proceeds to maintain and operate the property. (Compl. ¶¶ 166-173.) These money proceeds may be the subject of a conversion action. Horton & McGehee, Maine Civil Remedies § 18-4 at 357 (4th ed. 2004).
Killybegs argues Count VII fails to state a claim under Section 3575 of the Maine Fradulent Transfer Act. Section 3575 defines a fraudulent transfer as follows:
A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation . . . with actual intent to hinder, delay or defraud any creditor of the debtor.14 M.R.S. § 3575. As alleged in the complaint, Rita transferred the vacation property to Killybegs in an effort to avoid creditors. Killybegs argues that the statute only contemplates claims against a debtor, who in this case was Rita. Killybegs, as transferee, lacked the necessary intent to hinder, delay, or defraud creditors. (Def. Killybegs Mot. Dismiss 9.) Killybegs does not assert the defense that the vacation property was transferred in good faith and for reasonably equivalent value. See 14 M.R.S. § 3579 (2)(B) (transferee subject to judgment under the Act unless transferee took as a bona fide purchaser). As a result, Killybegs may still be liable as transferee. Count VII states a claim against Killybegs.
Lastly, Killybegs moves to dismiss Count IX for punitive damages, arguing the plaintiff has not alleged ill-will or actual malice necessary to support a punitive damages award. The plaintiff alleges Killybegs acted "with actual or implied malice" and points to the various fraudulent transactions to which the LLC was a party. (Compl. ¶¶ 197-202.) The plaintiff allegations, if true, state a claim for punitive damages as a matter of law. Bratton v. McDonough, 2014 ME 64, ¶ 25, 91 A.3d 1050.
III. Conclusion
The court concludes venue is proper, Maine has personal jurisdiction over the defendants, and because the court is not satisfied Texas is a viable alternative forum, the court declines to dismiss the action pursuant to the doctrine of forum non conveniens. Killybegs's motion to dismiss Counts I, II, III, V, VI, VII, and IX is denied. The entry shall be: The defendants' motions to dismiss are hereby DENIED. SO ORDERED. DATE: April 22 , 2015
/s/_________
John O'Neil, Jr.
Justice, Superior Court
ATTORNEYS FOR PLAINTIFF:
BRIAN CHAMPION
LIBBY O'BRIEN KINGSLEY & CHAMPION LLC
62 PORTLAND RD UNIT 17
KENNEBUNK ME 04043
JEFFREY W DUNCAN
DUNCAN LAW P C
P O BOX 7896
JUPITER FL 33468-7896
ATTORNEYS FOR DEFENDANTS: JOHN JC, KATHLEEN M & BRIAN CONNOR
OSHEA
GEORGE DILWORTH
JEANA M MCCORMICK
DRUMMOND WOODSUM
84 MARGINAL WAY SUITE 600
PORTLAND ME 04101
ATTORNEY FOR DEFENDANT: KILLYBEGS LLC
ANDRE G DUCHETTE
TAYLOR MCCORMACK & FRAME
30 MILK STREET 5TH FLOOR
PORTLAND ME 04101