Opinion
Case No. 00-4187-DES.
January 22, 2001.
MEMORANDUM AND ORDER
This matter is before the court on defendant Francis J. Carroll Jr.'s Motion to Dismiss, or Alternatively, to Transfer (Doc. 5). The motion is brought pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure and seeks dismissal for a lack of personal jurisdiction. Plaintiffs have filed a Response (Doc. 7) and defendant has filed a Reply (Doc. 9). In this action, the plaintiffs are asserting a legal malpractice claim against their former attorneys, Messrs. Oliver and Carroll. The action was originally filed on October 12, 2000, in the District Court of Shawnee County, Kansas. Defendants subsequently filed a Notice of Removal (Doc. 1). On January 18, 2001, the court entered an Order (Doc. 12) dismissing with prejudice all claims brought against defendant David S. Oliver. In light of the following analysis, the court finds that it lacks personal jurisdiction over defendant.
• FACTUAL BACKGROUND
Plaintiffs, husband and wife, are residents of Kansas. Defendant is a licensed attorney residing in Florida. Defendant practices with the firm of Boehm, Brown, Seacrest Fischer, P.A., which has its only offices in Florida. Defendant is not licensed to practice in Kansas, and his affidavit alleges that he has never physically visited Kansas.
In the summer of 1996, plaintiffs, acting through their Kansas attorney, wrote a letter to a member of defendant's firm seeking Florida counsel to represent plaintiffs in some pending Florida litigation. Through subsequent telephone conversations and correspondences, defendant's firm agreed to represent plaintiffs in the litigation. Mr. Paul executed, in Kansas, a document entitled "Authority to Represent and Hourly Fee Agreement."
The Florida litigation in question involved plaintiffs' past participation in a Florida corporation entitled Dunes Management. Until 1994, Mr. and Mrs. Paul each had an ownership interest in the corporation. The remaining two shareholders of Dunes Management were E.V. Lacour and his wife, Gail Lacour. The plaintiffs were also partners in a Florida partnership, Boardwalk Inn Venture ("BIV"). Once again, the remaining partners of BIV were E.V. and Gail Lacour. The pending litigation concerned two separately filed lawsuits. Both cases arose from the operation of a Holiday Inn hotel in Daytona Beach, Florida, which was owned by BIV and managed by Dunes Management. In both cases, Dunes Management was named as a defendant and the plaintiffs were sued in their individual capacities.
In 1994, the plaintiffs transferred total ownership and control of the Holiday Inn to the Lacours. As part of that transaction, the Lacours supposedly agreed to indemnify the plaintiffs and hold them harmless from all further claims regarding their past ownership in the hotel. This agreement was the foundation for the protracted litigation for which plaintiffs sought Florida counsel. Through the course of this litigation, plaintiffs apparently paid sizeable sums to settle disputes in regards to the operation of the hotel. Plaintiffs assert that by 1998, the only legal issues left unresolved were between themselves and the Lacours. On the eve of trial, the parties settled.
In their petition, plaintiffs' seek monetary damages for defendant's alleged legal malpractice. Additionally, plaintiffs seek declaratory relief regarding monies allegedly owed to the defendants for said legal services. Defendant argues that this court lacks jurisdiction over his person and should dismiss, or in the alternative, transfer the case to a court that has proper personal jurisdiction.
• STANDARD OF REVIEW
In opposing a motion to dismiss for lack of personal jurisdiction filed before trial, a plaintiff need only make a prima facie showing and may rely on the "well plead facts" of the complaint. See Federal Deposit Ins. Corp. v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir. 1992). See also Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). In a diversity action, a federal district court determines whether it has personal jurisdiction over a nonresident defendant under the law of the forum state. See Rambo v. American S. Ins. Co., 839 F.2d 1415, 1416 (10th Cir. 1988); Yarbrough v. Elmer Bunker Assocs., 669 F.2d 614, 616 (10th Cir. 1982). An analysis of personal jurisdiction, therefore, has two components. First, the defendant's conduct must satisfy the requirements for personal jurisdiction embodied in the forum state's long-arm statute. Kansas' long-arm is found at Kansas Statutes Annotated § 60-308(b). Second, the court's application of personal jurisdiction must comport with the requirements of due process. See Equifax Servs., Inc. v. Hitz, 905 F.2d 1355, 1357 (10th Cir. 1990).
The Tenth Circuit has stated that "these inquiries are essentially the same, because '[t]he Kansas long-arm statute is liberally construed to assert personal jurisdiction over nonresident defendants to the full extent permitted by the due process clause of the Fourteenth Amendment to the U.S. Constitution.'" Id. (quoting Volt Delta Res., Inc. v. Devine, 740 P.2d 1089, 1092 (Kan. 1987)). Because of this similarity, the court will proceed in its analysis directly to the constitutional issue. See, e.g., OMI Holdings, Inc. v. Royal Ins. Co., 149 F.3d 1086, 1090 (10th Cir. 1998) ("Because the Kansas long-arm statute is constructed liberally so as to allow jurisdiction to the full extent permitted by the due process clause, we proceed directly to the constitutional issue.") (citation and quotation marks omitted); Wempe v. Sunrise Med. HHG, Inc., 61 F. Supp.2d 1165, 1167-68 (D.Kan. 1999) (same).
• DISCUSSION
• Removal Constitutes Waiver
As a preliminary matter, plaintiffs argue that because defendant removed this action from state to federal court, he has voluntarily submitted to the court's jurisdiction. While it is true that a defendant may waive his/her right to personal jurisdiction, simply removing a case to federal court does not operate as a waiver. See Morris Co. v. Skandinavia Ins. Co., 279 U.S. 405, 409 (1929); Cantor Fitzgerald, L.P. v. Peaslee, 88 F.3d 152, 157 n. 4 (2d Cir. 1996). After removing an action, a defendant who "has not answered . . . shall . . . present the other defenses or objections available under [the Federal Rules of Civil Procedure]." Fed.R.Civ.P. 81(c). Defendant has properly presented his dismissal action in his first responsive pleading in accordance with Rule 12. See Fed.R.Civ.P. 12(h)(1).
• Due Process
The touchstone of this constitutional inquiry is whether the nonresident defendant purposefully established "minimum contacts" with the forum state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985); International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); Federated Rural Elec. Ins. Corp. v. Kootenai Elec. Coop., 17 F.3d 1302, 1305 (10th Cir. 1994). This standard of minimum contacts may be satisfied in two ways. First, a court may exercise general jurisdiction. A court will have general jurisdiction over a party when the party's acts in the forum are of a "continuous and systematic" nature. Application to Enforce Admin. Subpoenas Duces Tecum of the SEC v. Knowles, 87 F.3d 413, 418 (10th Cir. 1996). Second, a court may exercise specific jurisdiction if a defendant has "purposefully directed" his activities toward the forum and the litigation results from alleged injuries that arise out of or relate to those activities. See Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 456 (10th Cir. 1996).
Although the plaintiffs identify both jurisdictional concepts in their response, they do not specifically identify which theory they are proceeding under. However, the arguments actually made by the plaintiffs and refuted by defendant clearly indicate that plaintiffs are attempting to demonstrate that the court should exercise specific jurisdiction.
In considering the applicability of specific jurisdiction, the court is guided by a two-prong analysis. In OMI Holdings, the Tenth Circuit summarized this inquiry:
First, we must determine whether the defendant has such minimum contacts with the forum state "that he should reasonably anticipate being haled into court there." World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 559. Within this inquiry we must determine whether the defendant purposefully directed its activities at residents of the forum, Burger King, 471 U.S. at 472, 105 S.Ct. 2174 and whether the plaintiff's claim arises out of or results from "actions by the defendant himself that create a substantial connection with the forum state." Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102, 109, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (internal quotations omitted). Second, if the defendant's actions create sufficient minimum contacts, we must then consider whether the exercise of personal jurisdiction over the defendant offends "traditional notions of fair play and substantial justice." Id. at 113, 107 S.Ct. 1026. This latter inquiry requires a determination of whether a district court's exercise of personal jurisdiction over a defendant with minimum contacts is "reasonable" in light of the circumstances surrounding the case. See id.149 F.3d at 1091. The two phases of the inquiry are interrelated, so that "depending of the strength of the defendant's contacts with the forum state, the reasonableness component of the constitutional test may have a greater or lesser effect on the outcome of the due process inquiry." Id. (citation and quotations marks omitted).
The Tenth Circuit has also perpetuated a similar three-phase inquiry when analyzing specific jurisdiction. The test was first formulated by the Ninth Circuit in Data Disc, Inc. v. Systems Tech. Assocs., Inc., 557 F.2d 1280, 1287 (9th Cir. 1977), and first cited by the Tenth in Rambo v. American S. Ins. Co., 839 F.2d 1415 (10th Cir. 1988). The test provides:
(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws.
(2) The claim must be one which arises out of or results from the defendant's forum-related activities.
(3) Exercise of jurisdiction must be reasonable.
Id. at 1419, n. 6. Although the inquiry adopts a different organizational structure, the general analysis is equivalent to the traditional dual phased inquiry.
Defendant asserts that his contacts with Kansas are insufficient to confer personal jurisdiction. In particular, he argues that he has not purposefully availed himself of the benefits of Kansas law. In support he provides the court with the following facts: (1) he has never been licensed to practice law in Kansas; (2) he has never physically been to Kansas; (3) he has never solicited or actively sought out clients in Kansas; (4) plaintiffs took the first step in seeking out his services in Florida; (5) the agreement to represent the plaintiffs contemplated specific legal work that was only to be done in Florida; (6) none of the legal work performed by defendant was within Kansas; and (7) all personal contact with the plaintiffs took place in Florida. Defendant asserts that his only connection to Kansas is the fortuitous residence of his clients. See Continental American Corp. v. First Nat'l Bank, No. 93-1415, 1994 WL 326771, at *3 (D.Kan. June 22, 1994) ("Jurisdiction cannot rest on the mere fortuity of the plaintiff's residence.").
Defendant directs the court's attention to Judge O'Connor's opinion in Biederman v. Schnaeder, Harrison, Siegal Lewis, 765 F. Supp. 1057 (D.Kan. 1991). In Biederman, the plaintiffs, a Kansas resident and Missouri corporation with its principal place of business in Kansas, sued a Pennsylvania law firm over a fee dispute. The plaintiffs had retained the defendant firm expressly to defend lawsuits brought against them in North Carolina and Pennsylvania. To support personal jurisdiction in Kansas, the plaintiffs relied upon the following facts: defendant made one trip to Kansas to review and copy documents; defendant traveled to Kansas to attend plaintiff's depositions; defendant mailed letters and placed phone calls to Kansas; and one plaintiff mailed checks to defendant from his Kansas office on accounts drawn by Kansas banks. Id. at 1060. Considering these facts, Judge O'Connor found that exercising jurisdiction over the defendant would violate due process. Id. at 1060-61. The court stated:
First, the court finds that since the instant cause of action arose out of defendant's representation of a Kansas resident in litigation taking place in other forums, the exercise of jurisdiction would be neither fair nor reasonable. See Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (1976). Second, the court cannot find any indication from the alleged contacts that the defendant "purposefully avail[ed] [itself] of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Hanson v. Denkla, 357 U.S. 235, 253 (1958).Biederman, 765 F. Supp. at 1060. See also Austad Co. v. Pennie Edmonds, 823 F.2d 223 (8th Cir. 1987) (finding out-of-state attorney's contacts with forum were insufficient to confer personal jurisdiction); Worthington v. Small, 46 F. Supp.2d 1126, 1133 (D.Kan. 1999) (finding out-of-state attorney's contacts with Kansas were insufficient to confer personal jurisdiction).
Acknowledging that more then a mere attorney-client relationship may be needed to impose jurisdiction on an out-of-state attorney, plaintiffs assert that the nature of defendant's contacts with Kansas demonstrate that he had a complex and intimate professional relationship with his Kansas clients. According to plaintiffs, defendant considered the plaintiffs a major client, and he therefore performed a multitude of legal work for them over a period of several years. Therefore, the contacts defendant had indicate a course of conduct deliberately directed at availing himself of the benefits of on-going relationship with Kansas residents. See Burger King, 471 U.S. at 475 ("Thus where the defendant . . . has created continuing obligations between himself and residents of the forum, he manifestly has availed himself of the privilege of conducting business there. . . .") (citation and quotation marks omitted).
Plaintiffs describe defendant's contacts as follows:
Mr. Carroll also contacted Plaintiff's counsel in Kansas and provided reams of records, correspondence, legal authority, legal advice; telephone calls; facsimiles'[sic]; notices; pleadings; and other correspondence. These contacts were continuous and ongoing. They covered a period of the years of 1996; 1997; 1998; 1999 and 2000 and so many issues as to be unable to even estimate.
. . . .
. . . The record reflects a factual scenario . . . which involve [sic] numerous issues including but not limited to:
• Defense of the Pauls against the Holiday Inn claim;
• Cross claims against the LaCours on the two written indemnities;
• Third party actions against the new owners of the hotel who incorporated the two indemnities into their purchase contract.
• Defense of the GIAC leasing claim which the LaCours also hadn't paid.
• Response to other demands from LaCour creditors.
• Advice as to future actions against the LaCours attorneys; as to malicious prosecution cases; as to libel and slander cases in Florida and Kansas; as to ethical complaints; as to IRS and Bankruptcy issues; as to all issues involved in the litigation, claims, cross claims and third party claims.
• Preparing motions, pleading and answers to Interrogatories and other discovery and sending it into Kansas for the Pauls to finalize in Kansas.
• Providing advice to the Pauls for Kansas and other states' witnesses.
• Providing advice for the Atlanta, Georgia mediation and appearing for the California deposition.
(Pls.' Resp. at 4; 12).
In support of this position, plaintiffs direct the court to Trinity Industry, Inc. v. Myers Assocs., Ltd., 41 F.3d 229 (5th Cir. 1995). In Trinity, the plaintiff, a Delaware corporation with its principle place of business in Texas, brought suit in Texas against its former attorneys. The defendants, Illinois licensed attorneys, moved to dismiss for lack of personal jurisdiction. In reversing the case, the Fifth Circuit held that the out-of-state attorneys had sufficiently availed themselves of the privilege of doing business in Texas. The court noted the following contacts between defendants and Texas: defendants considered plaintiff a major client; defendants represented the Texas-based company over the course of eight years; the legal representation required regular mail and electronic communication; defendants physically visited with their clients in Texas; over a three year period, defendants appeared pro hac vice for plaintiff in Texas; and plaintiff sent payment for services from Texas. Id. at 231. The Trinity court concluded that due to the defendants' intense relationship with their Texas client, they had deliberately availed themselves of the benefits of Texas and could not now use the Due Process Clause as a territorial shield. Id. (quoting Burger King, 471 U.S. at 474).
Plaintiffs urge the court to adopt the rationale espoused by the Fifth Circuit. However, the court finds the Trinity case to be distinguishable from the present situation. First, in the case at bar, defendant never performed legal work within the putative forum. Instead, defendant's representation was squarely focused on the plaintiffs' out-of-state litigation. In Trinity, however, the defendants personally defended the plaintiff in a suit filed in the forum. Second, in Trinity, the defendants actually appeared before a forum court. By appearing pro hac vice, the defendants were conditionally admitted to practice law in Texas. The present plaintiffs do not allege that the defendant ever practiced law in Kansas. Because of these factual distinctions, the court finds Trinity to be unpersuasive.
The Trinity opinion does, however, elucidate the concept of foreseeability within the "purposeful availment" doctrine. Unlike the case at bar, the defendants in Trinity had expended energy and resources directly into the forum. These contacts significantly raised the foreseeability of them "`being haled into court there.'" Burger King, 471 U.S. at 474 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). The present defendant, on the other hand, has expended no resources into Kansas. The foreseeability of him being brought before a Kansas court is premised solely on the location of his clients, not his purposeful activities directed at the forum.
Finding that defendant's contacts with Kansas were limited to telephone calls, correspondences, facsimiles, billings, and other peripheral contacts related to his representation of plaintiffs' interests in Florida and considering the reasoning of Biederman, Worthington, and Austad, the court finds that defendant's contacts with Kansas are insufficient for the exercise of personal jurisdiction.
Because the court has concluded that defendant did not purposefully establish minimum contacts with Kansas, the second prong of the due process analysis need only be briefly examined. Several factors are to be considered in this analysis of "fair play and substantial justice": (1) the burden on defendant in litigating in the forum; (2) the forum State's interest in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversies; and (5) the shared interest of the several States in furthering fundamental substantive social policies. Burger King, 471 U.S. at 477 (quoting World-Wide Volkswagen, 444 U.S. at 292). The court has considered all of the above factors and finds no reason so compelling as to outweigh the court's earlier finding that defendant lacks the requisite contacts with Kansas. See id. (opining that the above considerations may "serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required").
C. Transfer
Having found that it would be inappropriate for the court to exercise personal jurisdiction over defendant, the court may transfer the case to another district pursuant to 28 U.S.C. § 1631. Defendant is a resident of Daytona Beach, Florida, which lies within the Middle District of Florida. Accordingly, the court denies defendant's motion to dismiss plaintiffs' complaint, and instead the court transfers plaintiffs' case to the United States District Court for the Middle District of Florida pursuant to § 1631.
IT IS THEREFORE BY THIS COURT ORDERED that defendant's Motion to Dismiss, or Alternatively, to Transfer (Doc. 5) is granted in part and denied in part. The motion to dismiss is denied, and the case is hereby transferred to the United States District Court for the Middle District of Florida.