Gauvin v. Balarsky, et al. CV-97-352-M 06/26/98 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Dorothy Gauvin, Executrix of the Will of Robert L. Sullivan, Plaintiff

v. Civil No. 97-352-M

Colleen Sullivan Balarsky, General Electric Savings and Security Trust, Defendants

O R D E R

Plaintiff Dorothy Gauvin, the executrix of the estate of

Robert L. Sullivan and the decedent's aunt, claims that

Sullivan's former wife, Colleen Sullivan Balarsky, improperly

obtained some $300,000.00 in estate assets held in Sullivan's

employee benefit plan, the General Electric Savings and Security

Trust ("the trust"). Gauvin asserts state law claims against

Balarsky for unjust enrichment, conversion, tortious interference

with contractual relations, and fraud. She asserts claims

against the trust for breach of contract and violation of the

Employee Retirement Income Security Act of 1974, as amended,

et seg. (ERISA). The trust filed cross-claims

against Balarsky asserting violation of ERISA and a federal

common law claim for restitution based on unjust enrichment.

Balarsky moves to dismiss Gauvin's and the trust's claims against

her for lack of personal jurisdiction.

BACKGROUND During their marriage, Sullivan, Balarsky, and their

daughter lived in California, where Sullivan was employed by

General Electric Company. Sullivan participated in the GE

Savings and Security Program, an employee benefit plan governed

by ERISA. The Sullivans separated in 1988 and thereafter began

divorce proceedings.

On January 24, 1992, five months before his divorce from

Balarsky was finalized, Sullivan executed a will that excluded

Balarsky from inheriting any part of his estate. In June of 1992

the marriage was formally dissolved by order of a California

court, and the marital assets were distributed according to the

terms of a divorce settlement agreement. Under the terms of the

settlement agreement, Sullivan was awarded legal title to all

assets in his GE plan, and Balarsky expressly waived any legal

title to those assets. Nevertheless, the agreement also awarded

Balarsky the right to receive a portion, egual to her community

property interest, of Sullivan's plan assets. Although Sullivan

named Balarsky as his beneficiary under the plan in 1984, in 1992

he made his estate the beneficiary of all his plan assets.

Sullivan died on August 6, 1996. Gauvin, a New Hampshire

citizen, was appointed executrix of his estate by the Strafford

County (New Hampshire) Probate Court. Gauvin contacted GE

sometime before August 14, 1996, to inform it of Sullivan's

death.1 On September 27, 1996, Gauvin, through counsel, wrote to

1 All contacts with GE mentioned herein were with the Survivor Support Services office in Schenectady, New York.

2 GE to request that the retirement benefits due Sullivan be paid

to his estate, except for that portion payable by Sullivan to

Balarsky under the terms of the divorce settlement agreement.

However, Balarsky had already written to GE, erroneously

informing the plan that Sullivan left no will, that his daughter

was his sole heir, and that Balarsky was entitled to a portion of

Sullivan's GE "Pension, Profit Sharing and Savings Plans" under

the divorce settlement agreement. In addition, Balarsky

represented that she was acting as her daughter's guardian, who

was entitled to the remaining plan benefits, in requesting

payment. Balarsky enclosed part of the marital settlement

agreement, which explained her community property interest in

Sullivan's plan assets, but did not send the page that made it

clear Sullivan had been awarded complete legal title to his plan

assets.

On September 11, 1996, Gauvin's counsel wrote to Balarsky,

who was residing in Texas, to inform her of Sullivan's will and

Gauvin's status as executrix.2 The letter also asked that

Balarsky refrain from interfering with any assets of the estate

without first obtaining permission from the Strafford County

Probate Court. Despite that notice, Balarsky never informed GE

that she had erroneously represented that Sullivan left no will.

Instead, she continued to demand payment of the ERISA plan funds

held on Sullivan's behalf by the trust.

2 Balarsky was a resident of Texas during the fall of 1996, but she is now a resident of California.

3 Gauvin's counsel again wrote to GE, on October 23, 1996, and

on November 20, 1996, to inquire about Sullivan's benefits. In

December, GE responded that the value of Sullivan's interest in

the ERISA plan was $307,290.71, and that amount would be paid to

the beneficiary of record. Later that month, the trust paid

Balarsky the entire balance of Sullivan's interest in the ERISA

plan (according to GE, the sum was $348,454.06), notwithstanding

the fact that Sullivan had named his estate as beneficiary.

After paying Balarsky, the trust discovered its apparent

error and demanded that Balarsky return the funds. Meanwhile,

Gauvin demanded that the trust pay the estate the full amount of

Sullivan's plan benefits. The trust refused, pending repayment

by Balarsky.

DISCUSSION

When a defendant moves to dismiss for lack of personal

jurisdiction, plaintiff bears the burden of proving jurisdiction.

Sawtelle v. Farrell,

(1st Cir. 1995). A

plaintiff may employ a "prima facie" method of proof where, as

here, issues of credibility are not seriously in dispute.

Foster-Miller, Inc. v. Babcock & Wilcox Canada,

, 145-

46 (1st Cir. 1995); Bolt v. Gar-Tec Prods., Inc.,

(1st Cir. 1992).

To make a prima facie showing, plaintiff must go beyond the

pleadings and "adduce evidence of specific facts." Foster-

Miller ,

. The court draws "the facts from the

4 pleadings and the parties' supplementary filings, including

affidavits, taking facts affirmatively alleged by plaintiff as

true and construing disputed facts in the light most hospitable

to plaintiff." Ticketmaster-New York, Inc. v. Alioto,

(1st Cir. 1994). In this case, subject matter

jurisdiction over Gauvin's (state law) claims against Balarsky is

premised on diversity of citizenship (

) while

jurisdiction over the trust's cross-claims is based on federal

guestion jurisdiction (

) and ERISA (

(e) and (f)) .

I. PERSONAL JURISDICTION - GAUVIN'S STATE LAW CLAIMS

A. The New Hampshire Long-Arm Statute

In a diversity case, the district court's power to assert

personal jurisdiction over a nonresident defendant is limited by

the forum state's long-arm statute and the Due Process Clause of

the Fourteenth Amendment. Sawtelle, 7 0 F.3d at 1387. New

Hampshire's long-arm statute permits the exercise of personal

jurisdiction over a nonresident defendant who "in person or

through an agent . . . commits a tortious act within the state

. . . ."

, I (1983).

The New Hampshire Supreme Court has interpreted the statute

to authorize assertion of personal jurisdiction over nonresident

tortfeasors to the full extent allowed by the Due Process Clause.

Phelps v. Kingston,

,

(1987) .

"[W]hen a state's long-arm statute is coextensive with the outer

5 limits of due process, the court's attention properly turns to

the issue of whether the exercise of personal jurisdiction

comports with federal constitutional standards." Sawtelle,

. Thus, the constitutional inquiry alone determines

whether this court may properly assert personal jurisdiction over

defendant in this case.

B. The Due Process Clause

In order for the assertion of personal jurisdiction to

comply with the tenets of due process, certain "minimum contacts"

must exist between the defendant and the forum state. Sawtelle,

(quoting International Shoe Co. v. State of

Washington,

(1945)). This Circuit employs a three-

part test to determine whether sufficient contacts exist to

support the exercise of specific3 personal jurisdiction:

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's in­ state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.

3 Plaintiff's jurisdictional showing varies depending upon whether the plaintiff asserts jurisdiction under a theory of "general" or "specific" jurisdiction. See Ticketmaster,

n.3 (citing Donatelli v. National Hockey League,

(1st Cir. 1990)). Here, as in Ticketmaster, "plaintiff's case stands or falls on a theory of specific jurisdiction."

6 United Electrical Workers v. 163 Pleasant Street Corp,

, 1089 (1st Cir. 1992). Application of this tripartite test

is fact sensitive — so much so that the task of " [d]ivining

personal jurisdiction is 'more an art than a science.1" Sawtelle,

(quoting Ticketmaster,

) .4

1. Relatedness

Under the tripartite formula, the court must first consider

whether plaintiff's claims arise out of, or relate to,

defendant's in-forum activities. See Ticketmaster-New York,

. The requirement "focuses on the nexus between the

defendant's contacts and the plaintiff's cause of action."

Plaintiff's cause of action "must directly arise out of the

specific contacts between the defendant and the forum state."

Sawtelle,

.

Balarsky's contact with New Hampshire was indirect and

minimal. She lived in Texas during the fall of 1996 when she

contacted GE's Survivor Support and Services office in

Schenectady, New York, to inquire about Sullivan's plan assets,

and sent excerpts from their divorce settlement agreement to New

York to show (allegedly fraudulently) that she was entitled to

4 At each of the three steps, the court must analyze the contacts attributable to each individual defendant. Sawtelle,

. See also Rush v. Savchuk,

(1980) ("The requirements of International Shoe . . . must be met as to each defendant over whom a . . . court exercises jurisdiction.").

7 Sullivan's assets.5 Gauvin's counsel sent a letter from New

Hampshire to Balarsky in Texas informing her that Sullivan's will

was being probated in New Hampshire. Balarsky's counsel sent a

letter from California to Gauvin's counsel in New Hampshire about

Balarsky's interest in the probate of the will. In November,

Balarsky completed a Distribution Election Form for Sullivan's

plan assets which she sent from Texas to GE in New York. The

trust sent Sullivan's plan assets to Balarsky in Texas.

None of Balarsky's allegedly tortious conduct occurred in

New Hampshire.6 Balarsky had minimal contact with New Hampshire

and Sullivan's estate related to her competing claim to

Sullivan's GE plan assets, and that consisted of only incidental

correspondence.

Gauvin's causes of action and her suit against Balarsky,

arise from Balarsky's contacts with GE in New York and her

successful efforts to obtain Sullivan's plan assets. If the

trust had denied Balarsky's claim to the plan assets and had

5 The trust lists its business address as being in Connecticut, although all communication seems to have been with GE's Survivor Support and Services office in Schenectady, New York.

6 Gauvin alleges that Balarsky tortiously converted the plan assets, interfered with the estate's contractual relations with the trust, was unjustly enriched, and fraudulently induced the trust to pay her Sullivan's plan assets. None of the activity alleged to comprise each tort occurred in New Hampshire. See, e.g., E.J. Caron Enterprises, Inc. v. State Operating Co.,

(1935) (conversion); Barrows v. Boles,

(1996) (tortious interference with contractual relations);Pella Windows and Doors, Inc. v. Faraci,

(1990) (unjust enrichment); Snow v. American Morgan Horse Ass'n , Inc.,

(1996) (fraud). instead paid the funds to Sullivan's estate, Gauvin would not

have any of her present claims against Balarsky. Thus, Gauvin's

causes of action really arose in New York, where Balarsky

communicated with the trust and where she successfully obtained

Sullivan's plan assets.

Gauvin and the trust argue that the relatedness reguirement

is nevertheless satisfied because Balarsky's allegedly tortious

conduct outside the state forseeably caused harm in New

Hampshire. See, e.g.. Gray v. St. Martin's Press, Inc.,

(D.N.H. 1996). This so-called "effects test" is

more appropriately considered in the context of the second

factor, purposeful availment.

2. Purposeful Availment

To satisfy the second part of the jurisdictional test, a

plaintiff must show that the defendant's contacts with the forum

represent "a purposeful availment of the privilege of conducting

activities in the forum state." Sawtelle,

. "The

function of the purposeful availment reguirement is to assure

that personal jurisdiction is not premised solely upon a

defendant's 'random, isolated, or fortuitous1 contacts with the

forum state."

(guoting Keeton, 465 U.S. at 774).

The First Circuit has identified "two cornerstones of

purposeful availment": Ticketmaster,

. The first

is foreseeability: "defendant's 'conduct and connection with the

forum State [must be] such that he should reasonably anticipate being haled into court there.'"

(quoting World-Wide

Volkswagen Corp. v. Woodson,

(1980)). The

second is voluntariness: "Jurisdiction may not rest on the

'unilateral activity of another party or a third person.1"

at 207-08 (quoting Burger King Corp. v. Rudzewicz,

(1985)).

Gauvin and the trust rely on the "effects test" described in

Calder v. Jones,

(1984) to satisfy the purposeful

availment requirement (as well as the "relatedness" factor) for

jurisdiction. The Calder "effects test" may be cautiously

applied outside the context of defamation actions as part of a

more general analysis of a defendant's intentional contact with

the forum. See, e.g., Allred v. Moore & Peterson,

(5th Cir. 1997), cert, denied,

(1998);

Gutierrez v. Givens,

(S.D. Gal., April 3,

1998); Singing River Hosp. Svs. v. Swenson,

(S.D. Miss., Jan. 14, 1998). See also Noonan v. Winston,

(1st Cir. 1998) (noting Calder effects test

appropriately applied in a defamation case to determine

purposeful availment).

Defendants in Calder wrote and edited an allegedly

defamatory article in Florida about a professional entertainer

who lived and worked in California. Finding that a California

court could exercise jurisdiction over the defendants, the Court

reasoned that defendants had been charged with an intentional

tort, defamation, expressly aimed at California and that

10 defendants knew the brunt of the plaintiff's injury would be felt

in California, where she lived and worked and where the

defendants' paper had its largest circulation. Calder,

8 9-90.

In contrast, on the record presented here, Balarsky's

actions were aimed at Sullivan's plan assets, controlled by GE in

Schenectady, New York, and the trust, in Connecticut. If

Balarsky believed she was legitimately entitled to Sullivan's

plan assets, her actions were not intended to harm the estate in

New Hampshire or anywhere else. If, as alleged, Balarsky

intentionally misrepresented her entitlement to the plan assets,

knowing that the estate was the proper recipient, she still aimed

her tortious conduct at the trust not the estate (i.e. seeking to

defraud the trust — the estate's claim would not seem to be

affected by the Trust's falling for a fraud scheme perpetrated by

Balarsky). Thus, justifiably or not, the trust (not Balarsky)

has caused any harm the estate suffered, by refusing to pay

Sullivan's plan assets to his estate. The effect of Balarsky's

actions harmed the trust, if the trust is indeed obligated to pay

the estate, so that any harm Balarsky has caused was aimed at and

was felt primarily in New York. See Sawtelle,

(communications in New Hampshire ancillary to defendant's legal

malpractice that occurred outside of New Hampshire.)

Accordingly, the court finds that Gauvin has not shown that

the litigation is sufficiently related to Balarsky's contact with

New Hampshire, or that Balarsky purposefully availed herself of

11 the opportunity to conduct activities in New Hampshire in a

manner sufficient to support personal jurisdiction over her in

New Hampshire. Even if Gauvin had been able to make a weak

showing at the first two steps of the tripartite test, which she

has not done, the exercise of personal jurisdiction would then

have to be fortified by an especially strong showing of

reasonableness under the Gestalt factors. See Sawtelle,

. The record here does not support the conclusion that

personal jurisdiction would be reasonable in New Hampshire.

3. The Gestalt Factors

"In constitutional terms, the jurisdictional inguiry is not

a mechanical exercise. The Court has long insisted that concepts

of reasonableness must inform a properly performed minimum

contacts analysis." Ticketmaster,

. This

consideration involves "a panoply of other factors which bear

upon the fairness of subjecting a nonresident to the authority of

a foreign tribunal."

The Supreme Court has identified five

such factors:

(1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.

(citing Burger King,

). The first factor, the

burden of appearing imposed on defendant Balarsky, has particular

significance here. The burden of summoning a California resident

12 to defend herself in New Hampshire presents an obvious and

substantial burden. See Ticketmaster-New York,

.

Regarding the second factor. New Hampshire's adjudicatory

interest in this matter is minimal at best. Here, Balarsky's

efforts to obtain Sullivan's plan assets occurred entirely

outside of New Hampshire, and therefore this factor weighs

against the exercise of jurisdiction. See Sawtelle,

. This is so particularly in light of the fact that the

estate's claim against the trust is not weakened by Balarsky's

alleged fraud elsewhere.

Unlike the first two factors, the third factor, the

plaintiff's interest in obtaining convenient relief, supports the

exercise of jurisdiction here because, obviously, the most

convenient location for the estate and its executrix is her place

of residence. New Hampshire.

However, the fourth factor, the administration of justice,

weighs against Gauvin. Gauvin argues that dismissing the claims

against Balarsky will have the effect of splitting the case

because the action will proceed against the trust in this forum,

while Gauvin may bring a second action against Balarsky in a

different forum. While that may be true, Gauvin can avoid dual

actions by seeking to bring the entire action in a more suitable

forum or transfer the case against the trust for joinder with any

suit brought against Balarsky.

13 Finally, under the fifth factor, neither party has raised a

policy argument significant enough to sway the court in either

direction. This factor offers support to neither side.

The Gestalt factors weigh against the exercise of personal

jurisdiction when considered in their totality — this record

hardly presents the "especially strong" showing of reasonableness

necessary to fortify a weak showing on the first two

reguirements. Since the minimum reguirements necessary to

satisfy due process have not been met, the court finds that it

lacks personal jurisdiction over Balarsky with respect to

Gauvin's state law claims based on diversity jurisdiction.

II. THE TRUST'S ERISA CLAIMS

Personal jurisdiction for purposes of claims based on

federal guestion jurisdiction is constrained by the reguirements

of service of process found in Federal Rule of Civil Procedure 4.

See Lorelei Corp. v. County of Guadalupe,

(1st

Cir. 1991). Service is limited to the territorial boundaries of

the court's forum state unless a federal statute provides

otherwise. Fed. R. Civ. P. 4 (k)(1)(D);Lorelei Corp.,

. ERISA provides for nationwide service of process.

(e)(2); see also Cripps v. Life Ins. Co. of North

America,

(9th Cir. 1992). Under a statute

providing for nationwide service, such as the ERISA provision, a

court may exercise personal jurisdiction over any defendant

having minimum contacts with the United States. Id.; United

14 Elec., Radio and Mach. Workers v. 163 Pleasant St. Corp.,

, 1086 (1st Cir. 1992); cf. Bellaire Gen. Hosp. v. Blue

Cross Blue Shield,

(5th Cir. 1996) (same

holding but expressing reservations about constitutionality of

nationwide service). As Balarsky does not contest that she had

sufficient minimum contacts with the United States to satisfy due

process reguirements for nationwide service, this court may

exercise personal jurisdiction over her with respect to the

trust's ERISA claims.7

Although the parties have not raised (or briefed) the

possibility, federal guestion jurisdiction under ERISA permitting

personal jurisdiction over Balarsky might also suggest

supplemental personal jurisdiction for Gauvin's state law claims

against Balarsky. See, e.g.. Rice v. Nova Biomedical Corp.,

(7th Cir. 1994); Busch v. Buchman, Buchman &

O'Brien, Law Firm,

(5th Cir. 1994); IUE AFL-

CIO Pension Fund v. Herrmann,

(2d Cir.

1993); Anderson v. Century Products,

(D.N.H

1996); but see Junqquist v. Sheikh Sultan Bin Khalifa Al Nahvan,

115 F .3d 1020, 1033 n.12 (D.C. Cir. 1997) (

(a)

pertains to subject matter not personal jurisdiction); Debrecen!

7 The trust's federal common law claim for restitution alleging that Balarsky is unjustly enriched by Sullivan's plan assets (see, e.g.. Cell v. Trustees of Pipefitters Local 537 Pension Plan,

(D. Mass. 1997)) presumably is premised on federal guestion jurisdiction. It is not clear whether service, and therefore personal jurisdiction, is nationwide, as provided by ERISA, or is limited to the boundaries of the forum state. Fed. R. Civ. P. 4 (k).

15 v. Bru-Jell Leasing Corp.,

(D. Mass. 1989)

(pendent jurisdiction will not confer personal jurisdiction).

However, even if supplemental personal jurisdiction would be

available through the trust's cross-claims, the court also notes,

without prompting from the parties, that venue in this district

is not appropriate under ERISA.

The ERISA provision for nationwide service of process begins

by setting forth the reguirements of venue. The whole clause

reads:

Where an action under this subchapter is brought in a district court of the United States, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be served in any other district where a defendant resides or may be found.

29 U.S.C.A § 1132(e)(2). Venue for the trust's ERISA claims

against Balarsky would be proper where the plan is administered

(probably New York or Connecticut), where the breach took place

(also probably New York or Connecticut, or possibly Texas), or

where the defendant resides (California) or "may be found" (at

least California and Texas). Only if Balarsky "may be found" in

New Hampshire would the claims against her find proper venue

here.

A defendant "may be found" for purposes of the statute in

any district where the plaintiff may obtain personal

jurisdiction, that is, where a defendant meets the minimum

contacts/due process reguirements for personal jurisdiction. See

Varsic v. United States District Court,

, 248-49 (9th

Cir. 1979); accord National Pension Fund v. Wakefield Indus.,

16 Inc.,

, 1257 (D.C. Cir. 1983); Seitz v. Board of

Trustees of N.Y. Teamsters Pension Fund,

, 102

(S.D.N.Y. 1997); Board of Trustees v. McD Metals, Inc.,

(E.D. Va. 1997); McFarland v. Yegen,

(D.N.H. 1988). As was discussed and decided above,

Balarsky lacks sufficient minimum contacts with New Hampshire to

support the exercise of personal jurisdiction over her in this

district. Thus, although the court has personal jurisdiction,

venue is not proper in New Hampshire for the trust's ERISA

claims.

III. RESOLUTION

This court lacks personal jurisdiction over Balarsky with

respect to Gauvin's claims against her. While personal

jurisdiction exists for the trust's ERISA claims, venue is not

proper in New Hampshire. Gauvin's claims against the trust are

unaffected by the present motion to dismiss.

Given this mixed result, the court proposes to transfer the

entire case, if the parties agree, to a district where it could

have been brought originally, which would most likely be an

appropriate district in Texas, New York, or California. The

parties may respond to the court's proposal by filing a joint

stipulation for transfer of the entire case to a particular

district, or by filing other appropriate responses to the

proposal within thirty days of the date of this order. If the

parties cannot agree to the proposed transfer, the court will

17 dismiss Gauvin's claims against Balarsky for want of personal

jurisdiction over her, transfer the trust's ERISA claims to an

appropriate district (as agreed by the parties or as decided by

the court), and retain Gauvin's claims against the trust in this

district.

Before the case, or part of the case, is transferred to

another district, however, the court urges the parties to

seriously discuss and consider settlement. On the present

record, there seems to be little dispute that the trust wrongly

paid Balarsky and that it is independently obligated to pay the

estate. The trust's claim against Balarsky also seems

straightforward - Balarsky does not seem to have been entitled to

receive Sullivan's plan assets from the trust and probably should

not benefit from the trust's apparent error. However, Balarsky

may well be entitled to her community property share of

Sullivan's plan assets from the estate, and her daughter is also

likely to receive the same money from the estate. Rather than

continue to deplete the estate's assets, Balarsky's personal

funds, and funds of the trust properly belonging to all

beneficiaries, by incurring additional attorneys' fees and other

expenses associated with litigation, all parties could benefit

from a mutually acceptable settlement that would appropriately

allocate the disputed funds.

CONCLUSION

18 For the foregoing reasons, the court grants in part

defendant's motion to dismiss for lack of personal jurisdiction

(document no. 7). The parties have thirty (30) days from the

date of this order to respond to the court's proposed transfer.

SO ORDERED.

Steven J. McAuliffe United States District Judge

June 26, 1998

cc: James H. Schulte, Esg. Vincent A. Wenners, Jr., Esg. William D. Pandolph, Esg.

19