Opinion
CIVIL ACTION No. 01-2532
February 22, 2002
MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
Plaintiff HTI Voice Solutions, Inc. ("HTI"), a Delaware corporation with its principal place of business in Marlborough, Massachusetts, brought this action against Telephone Credit Union of New Hampshire ("TCU"), a credit union located in Manchester, New Hampshire, claiming breach of contract, quantum meruit, unfair and deceptive practices, breach of the covenant of good faith and fair dealing, and misrepresentation. TCU moves to dismiss for lack of personal jurisdiction, pursuant to Mass.R.Civ.P. 12(b)(2). For the following reasons, the motion is denied.
FINDINGS OF FACT
After consideration of the affidavits and other materials submitted, and for purposes of this motion only, I make the following findings of fact. See Heins v. Wilhelm Loh Wetzlar Optical Machinery GMBH Co. KG., 26 Mass. App. Ct. 14, 17 (1988); see also Good Hope Industries, Inc. v. Ryder Scott Company, 378 Mass. 1, 3 (1979) ("[f]acing a motion to dismiss under Mass.R.Civ.P. 12(b)(2), the plaintiffs bear the burden of establishing sufficient facts on which to predicate jurisdiction over the defendant").
HTI is a business solutions provider offering a variety of services including developing, maintaining, installing and licensing internet software. Beginning in January 2000, the parties discussed entering into an agreement whereby HTI would design, install, maintain, and license hardware and software to TCU for an internet banking system. On March 3, 2000, these discussions resulted in several contracts. Pursuant to those contracts (collectively the "Contract"), TCU agreed to pay HTI approximately $146,000 in three installments: 50% upon the signing of the Contract, 40% upon installation of the system, and 10% upon acceptance of the system. On March 10, 2000, TCU paid the first installment of $72,997.
HTI installed the hardware on August 25, 2000; by December 8, 2000, it had substantially completed installation of the software. HTI alleges that on December 23, 2000, Michael L'Ecuyer, a senior vice president at TCU, stated that TCU would pay the remainder of the fee once the system was "live," i.e., operational. The system "went live" on January 8, 2001. HTI further alleges that TCU subsequently prevented it from monitoring the website, and improperly conditioned payment on HTI's delivery of the system's source code, a requirement not found in the contract.
The affidavits and record establish that TCU's representatives engaged in the following contacts in or affecting Massachusetts:
1. On or about March 10, 2000, in accordance with the Contract, TCU mailed a check for $72,997 from its office in New Hampshire to HTI's office in Massachusetts.
2. In late March or early April 2000, the parties conducted a "kick-off" meeting at HTI's office in Massachusetts. Present were several TCU representatives.
3. Thereafter, both parties initiated and conducted telephone meetings from their respective offices on a weekly basis, and regularly corresponded by e-mail (at times daily), regarding the project. These communications continued until at least August 2000, which means that there were some twenty telephone conversations and upwards of one hundred e-mails, a significant number of which were initiated by TCU.
4. In June or July, 2000, Jeffrey Benson, TCU's Vice President of Information Systems, and Nathan Saller, Director of Marketing, met with HTI representatives at HTI's office in Massachusetts to discuss the project.
5. Following HTI's August 25, 2000 installation of the project hardware at TCU's offices, TCU opened a secure telephone line to HTI's Massachusetts office, and granted HTI secure access to TCU's web site from HTI's office. Using that access, HTI, from its Massachusetts office, loaded the software onto TCU's platform, tested and modified the software, and brought the product on-line. On January 12, 2001, after the product became operational, TCU blocked HTI's secure access.
6. The Contract provides that it is subject to, and governed by, Massachusetts law.
DISCUSSION
A plaintiff facing a motion to dismiss under Mass.R.Civ.P. 12(b)(2) must establish a proper basis for personal jurisdiction. To satisfy that burden, the plaintiff must show (1) that the assertion of jurisdiction is authorized under the Massachusetts long-arm statute, and (2) that, if authorized, "the exercise of jurisdiction under State law [is] consistent with basic due process requirements mandated by the United States Constitution. . . ." Good Hope Industries, Inc., supra 378 Mass. at 5-6.
A. The Massachusetts Long-Arm Statute
Under G.L. c. 223A, § 3(a), "[a] court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action in law or equity arising from the person's (a) transacting any business in [Massachusetts]. . . ."
The 'transacting any business' clause [in § 3] has been construed broadly," Tatro v. Manor Care, Inc., 416 Mass. 763, 767 (1994), and "applies to any purposeful acts by an individual, whether personal, private, or commercial." Ross v. Ross, 371 Mass. 439, 441 (1976). While "an isolated transaction without commercial consequences in Massachusetts" may be insufficient to establish jurisdiction, deliberate, non-fortuitous contacts "such that 'the possible need to invoke the benefits and protections of the forum's laws was reasonably foreseeable, if not foreseen, rather than a surprise,'" are sufficient.Good Hope Industries, Inc. , 378 Mass. at 9, 11, citing Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 496 (5th Cir. 1974).
TCU contends that HTI solicited TCU's business, and that TCU's conduct, and the significant contacts between the parties, occurred outside Massachusetts; therefore, TCU argues, it did not engage in a business transaction in Massachusetts. It is clear, however, that "actual physical presence [is] not required as a basis for jurisdiction."Good Hope Industries, Inc., 378 Mass. at 10. "Similarly nondispositive is the fact that the plaintiffs made the initial solicitations with respect to these transactions." Id. at 11.
The Court concludes that TCU's contacts in or with Massachusetts are sufficient to satisfy the transacting business prong of the Massachusetts long-arm statute. Following signing of the Contract, TCU mailed a check for $72,997 into Massachusetts; participated in two meetings at HTI in Massachusetts to discuss the project; initiated or participated in scores of telephone calls and e-mails with HTI in Massachusetts regarding the progress of the project; established a secure telephone web access line for HTI, with the intention that HTI use that access from its Massachusetts office to load, from Massachusetts, the software it had developed for TCU under the Contract, and thereafter to test and modify that software; and ultimately blocked that access, allegedly in breach of the contract. Compare Bond Leather Co, Inc. v. Q.T. Shoe Mfg. Co., Inc., 764 F.2d 928, 932 (1st. Cir. 1985) (defendant's mailing four letters to plaintiff in Massachusetts, and receiving at least one telephone call from plaintiff, in the course of negotiating the guaranty in question, sufficient to satisfy G.L. c. 223A, § 3(a)); Good Hope Industries, Inc. , 378 Mass. at 6 (jurisdiction based upon defendant's sending periodic appraisal reports to plaintiff in Massachusetts, frequent initiation of telephone communications with plaintiff in Massachusetts, mailing monthly invoices to plaintiff in Massachusetts, and accepting checks drawn on plaintiff's Massachusetts bank accounts). This is not a case where defendant's contacts were solely "in the nature of affirming a contract and making payments through the mail." "Automatic" Sprinkler Corp. of America v. Seneca Foods Corp., 361 Mass. 441, 445 (1972).
General Laws c. 223A, § 3 (a), also requires the plaintiff to demonstrate that its claims "aris[e] from" the defendant's transaction of business in Massachusetts. The Supreme Judicial Court has interpreted this language as establishing a "but for" test, under which "a claim arises from a defendant's transaction of business in the forum State if the claim was made possible by, or lies in the wake of, the transaction of business in the forum State." Tatro, 416 Mass. at 770-771; see also Conn. Nat'l Bank v. Hoover Treated Wood Products, Inc., 37 Mass. App. Ct. 231, 234-235 (1994). Moreover, it is sufficient if the cause of action arises "in part" by virtue of the defendant's transaction of business in Massachusetts. See Good Hope Industries, Inc. , 378 Mass. at 7.
Here, HTI's claim for breach of contract and related claims "lie in the wake of" TCU's meetings, telephone calls, and other purposeful contacts with HTI in Massachusetts, all of which contributed to the performance of the Contract for which HTI now seeks payment. HTI's claims, therefore, arise out of TCU's transaction of business in Massachusetts.
Plaintiff relies heavily on Digital Equipment Corp. v. AltaVista Technology, Inc., 960 F. Supp. 456 (D.Mass. 1997). In AltaVista, the court ruled that personal jurisdiction was demonstrated where the cause of action (breach of a trademark agreement wherein plaintiff purchased the "AltaVista" trademark, then licensed it back to defendant for limited purposes) arose out of what the court concluded (for the purposes of preliminary injunctive relief) was the defendant's unauthorized use of the "AltaVista" trademark on defendant's website. That decision is not particularly helpful in analyzing this case, where plaintiff's claims arose independently of, or at least incidentally to, defendant's use of the web site which plaintiff designed and installed. Because the Court determines that it has personal jurisdiction under traditional analysis, it need not consider whether defendant also subjected itself to jurisdiction through its post-breach use on the internet (specifically, targeting potential Massachusetts customers in July 2001) of software for which it had not paid.
B. Due Process
The Court must next determine whether the exercise of personal jurisdiction would satisfy the constitutional due process requirement of "minimum contacts" in the forum state. See Tatro, 416 Mass. at 772-773;Ross, 371 Mass. at 441. The Court may assert personal jurisdiction where the defendant has such minimum contacts with the forum state that the lawsuit does not offend "'traditional notions of fair play and justice.'"Good Hope Industries, Inc. , 378 Mass. at 7, quoting International Shoe Co. v. Washington, 326 U.S. 310 (1945). To satisfy this standard, the defendant must have "'purposefully [availed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Good Hope Industries, Inc. , 378 Mass. at 7, quoting Hanson v. Denckla, 357 U.S. 235 (1958). Where the "defendant's contacts with the forum were deliberate and not fortuitous, [such that the defendant could reasonably foresee] 'the possible need to invoke the benefits and protections of the forum's laws,'" the plaintiff has met its burden. Good Hope Industries, Inc., 378 Mass. at 11.
Here, HTI has established that: TCU entered into a contractual agreement under which the parties agreed to be governed by the laws of Massachusetts; TCU representatives made at least two visits to HTI's headquarters in Massachusetts to discuss the progress of the work; HTI's performance under the contract lasted for at least ten months, during which the parties communicated between Massachusetts and New Hampshire by telephone and email; TCU agreed that a significant portion of the software installation and monitoring would be initiated from HTI's headquarters in Massachusetts (accomplished via a secure telephone line opened by TCU); and TCU sent funds into Massachusetts in the form of a check made out to HTI. In addition, the distance between Manchester, New Hampshire and Cambridge, Massachusetts is not such that litigating the matter in Massachusetts poses a degree of hardship that "would rise to the level of constitutional violation." Id. at 12. On these facts, HTI meets the "minimum contacts" test.
ORDER
For the reasons stated above, defendant's motion to dismiss is DENIED __________________________ Stephen E. Neel Justice of the Superior Court
DATE: February 22, 2002