Adam v . Hensley CV-07-338-JL 05/16/08 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Richard L. Adam

v. Civil N o . 07-338-JL Opinion N o .

Thomas A . Hensley, Esq.

MEMORANDUM AND ORDER

New Hampshire resident Richard Adam, proceeding pro s e ,

brought this legal malpractice claim against Thomas A . Hensley,

Esq., a Massachusetts resident, for damages allegedly arising

from his legal representation of Adam in Hawaii. Adam invokes

the jurisdiction of the court under

(diversity

of citizenship). Hensley, also appearing pro s e , has moved to

dismiss the complaint on various grounds.

Oral argument on the motion was held on May 1 4 , 2008. As

more fully set forth below, the motion to dismiss is granted

because: (1) the court lacks personal jurisdiction over the

defendant, (2) venue is improper in this district, and (3) the

court lacks subject matter jurisdiction. The court therefore

does not reach Hensley’s remaining arguments for dismissal.1

1 This court is authorized “to choose among threshold grounds for denying audience to [this] case on the merits.” I. APPLICABLE LEGAL STANDARD

When ruling on a motion to dismiss on these grounds, the

court must treat all facts pled in the complaint as true and draw

all reasonable inferences in favor of the non-moving party. See

Viqueira v . First Bank,

2 , 16 (1st Cir. 1998) (subject

matter jurisdiction); Negron-Torres v . Verizon Communs., Inc.,

9 , 23 (1st Cir. 2007) (personal jurisdiction); Home

Ins. C o . v . Thomas Indus., Inc.,

, 1355 (11th Cir.

1990) (venue). Although it is the defendant who has moved to

dismiss, the plaintiff has the burden of establishing subject

matter jurisdiction, Stewart v . Tupperware Corp.,

(1st Cir. 2004), personal jurisdiction over the defendant,

Negron-Torres,

3 , and proper venue in this court,

Ferrofluidics Corp. v . Advanced Vacuum Components, Inc.,

(D.N.H. 1992).

II. BACKGROUND

Between January 2000 and March 2002, Hensley represented

Adam in a series of cases, both civil and criminal, in Hawaiian

courts. Not licensed to practice law in Hawaii, Hensley sought

and obtained pro hac vice admission through Attorney Alfred

Ruhrgas A.G. v . Marathon Oil Co.,

(1999).

2 Lerma. Among other cases, Hensley and Lerma represented Adam in

a state court civil claim against the insurers of real estate he

owned in Hawaii, namely the Hawaii Property Insurance Association

(“Hawaii Property”) and the Island Insurance Company. The

factual background of that action, which underlies the legal

malpractice claim now before this court, was thoroughly but

succinctly described by the United States District Court for the

District of Hawaii:

On October 1 , 1998, Adam’s house in Milolii on the Big Island of Hawaii burned to the ground . . . Adam has litigated issues surrounding the . . . fire in both federal and state courts for the last seven and a half years . . . .

Adam maintained fire insurance on his Milolii residence with [Hawaii Property], with the policy being serviced by Island Insurance . . . On October 2 , 1998, the day following the fire, Adam filed a claim under the policy . . . .

Though Island Insurance has never issued Adam a formal denial of his claim, it has consistently stated that it will not cover Adam for the loss from the fire and it continues to maintain that Adam started the fire himself.

On July 2 7 , 1999, . . . Adam filed an Amended Complaint in [state court in] Hawaii alleging that [Hawaii Property] and Island Insurance wrongfully denied him coverage under the insurance policy . . . . On May 2 , 2001, the [state court] dismissed Adam’s suit . . . for failure to file a pretrial statement. Adam did not appeal this ruling and took no

3 further action to pursue his rights under the contract in state court.

Adam v . Hawaii Prop. Ins. Ass’n, N o . 05-304-JMS/BMK, U.S. Dist.

LEXIS 25249, at *2-*4 (D. Haw. Jan. 1 2 , 2006).

According to Adam, he allowed the insurance claim to be

dismissed due to Hensley’s and Lerma’s insistence that the

assigned judge was biased against their case, but only because

Hensley had advised him--albeit erroneously--that the statute of

limitations on his claim was six years, leaving him ample time to

pursue the case at a later date. Several years later, however,

now proceeding pro s e :

Adam [re-filed the claim] against [Hawaii Property] and Island Insurance in Federal District Court for the District of New Hampshire. Adam claim[ed] that he [was] entitled to recover for the loss of his home under the insurance policy and that the defendants engaged in bad faith and fraud in denying his claims . . . . Adam also contend[ed] that the defendants conspired with Lerma, his local counsel in his state court action, to mislead Adam about the statute of limitations that applied to his claim.

. . . [T]he defendants again moved for dismissal, or in the alternative, for a transfer of venue to the District of Hawaii. The New Hampshire District Court concluded that it lacked personal jurisdiction over the defendants and transferred the case to the District of Hawaii.

4

at *5-*8. In Hawaii, the district court granted summary

judgment for the defendants on statute of limitations grounds.

Id. at 34-35. Adam appealed the summary judgment order to the

U.S. Court of Appeals for the Ninth Circuit, which affirmed.

Adam v . Haw. Prop. Ins. Co., N o . 06-15779, slip op. at 3 (9th

Cir. Aug. 1 3 , 2007) (unpublished disposition).

Adam then filed this action seeking damages for the loss he

attributes to Hensley’s negligent legal representation in the

Hawaii state court action. Hensley has moved to dismiss the

complaint, asserting: (1) lack of subject matter jurisdiction,

(2) lack of personal jurisdiction, (3) improper venue,

(4) failure to state a claim upon which relief can be granted,

and (5) failure to join an indispensable party. Fed. R. Civ. P.

12(b)(1)-(3), (6)-(7).

III. ANALYSIS

A. Personal jurisdiction

As noted supra Parti I , when a defendant challenges personal

jurisdiction, it is the plaintiff’s burden to establish that

jurisdiction exists. Negron-Torres,

3 . While the

court must liberally construe claims of jurisdiction in the

plaintiff’s complaint, the plaintiff may not rest on unsupported

allegations in the pleadings and must set forth specific facts

5 which establish jurisdiction. Foster-Miller, Inc. v . Babcock &

Wilcox, Can.,

(1st Cir. 1995).

In the seminal case of International Shoe C o . v . Washington,

the Supreme Court held that “due process requires only that in

order to subject a defendant to a judgment in personam . . . he

have certain minimum contacts with [the forum state] such that

the maintenance of the suit does not offend traditional notions

of fair play and substantial justice.”

(1945).

In short, due process requires a court to determine whether a

defendant “should reasonably anticipate being haled into court

[in a foreign state].” World-Wide Volkswagen Corp. v . Woodson,

(1980).

A court can “exercise authority over a defendant by virtue

of either general or specific [personal] jurisdiction.” Mass.

Sch. of Law v . ABA,

6 , 34 (1st Cir. 1998). General

jurisdiction exists over a defendant who has maintained

“continuous and systematic” contacts with the forum state, even

if that activity is unrelated to the suit. Helicopteros

Nacionales de Colombia, S.A. v . Hall,

(1984); see also Negron-Torres,

5 . Here, Adam’s

unsupported allegation that Hensley--a Massachusetts resident not

licensed to practice law in New Hampshire--does business in New

Hampshire and is admitted “pro hac vice in New Hampshire on a

6 regular basis” (Compl. ¶ 2 ) fails to establish “continuous and

systematic” activity in New Hampshire.

Unlike general jurisdiction, specific jurisdiction exists

“where the cause of action arises directly out o f , or relates t o ,

the defendant’s forum-based contacts.” Negron-Torres,

. 2 First Circuit precedent requires that this court divide

the specific jurisdiction inquiry into three categories: (1)

relatedness; (2) purposeful availment, and (3) reasonableness.

Platten v . HG Bermuda Exempted Ltd.,

(1st Cir.

2006). The court must make “[a]n affirmative finding on each of

the three elements . . . to support a finding of specific

jurisdiction.” Phillips Exeter Acad. v . Howard Phillips Fund,

Inc.,

(1st Cir. 1999).

To satisfy the relatedness requirement, “the claim

underlying the litigation must directly arise out o f , or relate

t o , the defendant’s forum-state activities.” Foster-Miller,

. The defendant’s in-state conduct must be “viewed

2 Generally, the exercise of specific jurisdiction over a defendant must b e : (1) authorized by the state long-arm statute, and (2) compatible with the due process requirements of the United States Constitution. Harlow v . Children's Hosp.,

0 , 57 (1st Cir. 2005). This is a singular inquiry as the New Hampshire long-arm statute, N.H. Rev. Stat. Ann. 510:4, is co- extensive with the federal constitutional limits of due process. Jet Wine & Spirits, Inc. v . Bacardi & Co.,

(1st Cir. 2002).

7 through the prism of plaintiffs’ legal malpractice claim.”

Sawtelle v . Farrell,

(1st Cir. 1995). Here,

Adam cites two specific instances of contact between Hensley and

New Hampshire: (1) a letter Hensley mailed to Adam in New

Hampshire requesting a signature (Compl. Ex. E ) , and (2) a fax

sent to Hensley by a New Hampshire attorney stating “Received the

following in today’s mail. Have not spoken with Richard this

week.” (Compl. Ex. D ) , and ( 2 ) . In addition to these specific

instances cited by Adam, Hensley admitted at the hearing that he

had been admitted to the New Hampshire bar pro hac vice on an

unrelated matter in 1995.3 Of these limited contacts, however,

none relate to Adam’s claim that Hensley provided negligent legal

representation. Hensley’s legal malpractice, if any, occurred in

Hawaii, and possibly Massachusetts,4 when he allegedly convinced

Adam to dismiss his claim based on an incorrect understanding of

the applicable statute of limitations. While it may be true that

Adam suffered in New Hampshire the effects of Hensley’s

negligence in another state, the in-state effect of a defendant’s

out-of-state conduct does not itself confer personal

3 Hensley represented a different client through a criminal trial and the appeal of that conviction. 4 Adam stated at the hearing that whenever he met with Hensley away from Hawaii it occurred at Hensley’s office in Massachusetts, and not in New Hampshire.

8 jurisdiction. See Burger King Corp. v . Rudzewicz,

(1985); Phillips Exeter,

.

“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.” Daynard v . Ness, Motley,

Loadholt, Richardson & Poole, P.A.,

2 , 61 (1st Cir.

2002). “The focus in this second requirement is on voluntariness

and foreseeability.” N . Laminate Sales, Inc. v . Davis,

4 , 25 (1st Cir. 2005). The First Circuit has expressly decided

that “[t]he mere existence of an attorney-client relationship,

unaccompanied by other sufficient contacts with the forum, does

not confer personal jurisdiction over the non-resident in the

forum state; more is required.” Sawtelle,

.

Here, Hensley’s conduct in New Hampshire did not reflect a

voluntary decision to avail himself of the privilege of doing

business in the state. Rather, it reflects the fact that Hensley

had to communicate with a client who happened to live in New

Hampshire.

In addition to relatedness and purposeful availment, the

exercise of jurisdiction over a defendant must be reasonable.

See Ticketmaster-New York v . Alioto,

(1st Cir.

9 1994). Reasonableness requires the consideration of five

“gestalt factors”: (1) defendant’s burden to appear, (2) forum

state’s interest in adjudicating the dispute, (3) 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. See

Burger King,

. The reasonableness inquiry

operates on a sliding scale that depends on the strength of the

plaintiff’s showing of relatedness and purposeful availment.

Sawtelle,

. Where the plaintiff has made a weak

showing on relatedness and purposeful availment, the gestalt

factors may tip the balance against the exercise of personal

jurisdiction. See Nowak v . Tak How Invs.,

(1st

Cir. 1996).

Here, although litigating the case in New Hampshire would be

more convenient for Adam, and the burden on Hensley to appear in

New Hampshire does not appear to be great, there is little

judicial or sovereign interest in resolving the matter here.

Also, the legal malpractice claim does not require the

application of New Hampshire law, La Plante v . Am. Honda Motor

Co.,

(1994), and the allegedly negligent legal

representation occurred in Hawaii, thereby making it likely that

10 at least some of the key witnesses, including Alfred Lerma,

reside outside of New Hampshire. On balance, the gestalt factors

do not weigh in favor of finding jurisdiction. Given the weak

showing Adam has made on the first two elements, relatedness and

purposeful availment, the gestalt factors tip the balance against

exercising jurisdiction in this case.

As the court cannot exercise general or specific

jurisdiction over Hensley, his motion to dismiss on that basis is

granted.

B. Venue

The federal venue statute applicable to cases based on

diversity provides, in pertinent part:

A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.

(a) (2006). Where a case has been filed in the

wrong federal court, the court “shall dismiss, or if it be in the

interest of justice, transfer such case to any district or

division in which it could have been brought.”

1406(a) (2006). As stated supra Parti I , when a defendant

challenges venue, the burden falls on the plaintiff to

demonstrate proper venue. See Ferrofluidics Corp. v . Advanced

Vacuum Components, Inc.,

(D.N.H. 1992).

Hensley is a resident of Massachusetts. Thus, venue in the

District of New Hampshire cannot be grounded on

(a)(1), which would lay venue in the District of

Massachusetts. Under § 1391(a)(2), when considering where a

“substantial part of the events or omissions giving rise to the

claim occurred,” the court looks “not to a single ‘triggering

event’ prompting the action, but to the entire sequence of events

underlying the claim.” Uffner v . La Reunion Francaise, S.A.,

8 , 42 (1st Cir. 2001). Here, virtually all of the events

giving rise to Adam’s legal malpractice claim occurred in Hawaii.

The underlying insurance action was litigated in Hawaii, and

Hensley spent a considerable amount of time in Hawaii

representing Adam, during which the alleged legal malpractice

occurred. Thus, venue in New Hampshire is not properly grounded

on § 1391 (a)(2), which calls for venue in the District of

Hawaii. Because venue in the District of Massachusetts and the

District of Hawaii are both proper under §§ 1391(a)(1) and

1391(a)(2), venue in the District of New Hampshire cannot be

grounded on

(a)(3).

12 Because venue is not proper in the District of New

Hampshire, Hensley’s motion to dismiss for improper venue is

granted. See

.

C. Subject matter jurisdiction

Hensley also challenges the court’s diversity jurisdiction,

under Fed. R. Civ. P. 12(b)(1) based on Adam’s failure to allege

the required amount in controversy.

(A) (2006).

When the “amount in controversy” requirement is challenged, the

party seeking to invoke the court’s jurisdiction bears the burden

of establishing that subject matter jurisdiction exists, supra

part I ; Stewart v . Tupperware Corp.,

, and must

“alleg[e] with sufficient particularity facts indicating that it

is not a legal certainty that the claim involves less than the

jurisdictional amount.” Spielman v . Genzyme Corp.,

, 5

(1st Cir. 2001). The court “must construe the complaint

liberally, treating all well-pleaded facts as true and drawing

all reasonable inferences in favor of the plaintiffs.” Viqueira,

6 . This “does not mean, however, that a court must

(or should) accept every allegation made by the complainant,”

United States v . AVX Corp.,

(1st Cir. 1992),

and the plaintiff “may not rest merely on unsupported conclusions

13 or interpretations of law.” Murphy v . United States,

(1st Cir. 1995).

As a general proposition, “[t]he rule governing dismissal

for want of jurisdiction in cases brought in the federal court is

that, unless the law gives a different rule, the sum claimed by

the plaintiff controls if the claim is apparently made in good

faith.” S t . Paul Mercury Indem. C o . v . Red Cab Co.,

(1938); see Spielman,

. Importantly,

however, in determining the amount in controversy in a suit over

insurance coverage, unless the validity of the entire policy is

at issue, “the jurisdictional amount in controversy is measured

by the value of the underlying claim--not the face amount of the

policy.” 14B Charles Alan Wright et a l . , Federal Practice and

Procedure § 3710, at 264 (3d ed. 1998); see also Friedman v . N.Y.

Life Ins. Co.,

(11th Cir. 2005); Hartford

Ins. Group v . Lou-Con Inc.,

(5th Cir. 2002);

Budget Rent-A-Car v . Higashiguchi,

(9th Cir. 1997);

Employers Mut. Cas. C o . v . Parking Towing Co., N o . 07-0684,

, at *2 (S.D. Ala. Dec. 2 7 , 2007) ("a high policy limit

does not establish a large amount in controversy for the simple

reason that the underlying plaintiff's claim may be for far less

than the policy limit"); Kelly v . Gen. Star Nat’l Indem. Co., N o .

07-1143,

, at *2 (M.D. Fla. Oct. 1 6 , 2007); Daigle

14 v . State Farm Ins. Co., N o . 06-8264,

, at *1 (E.D.

La. Jan. 1 1 , 2007).

Here, ignoring this rule, Adam argues that the amount in

controversy is the face value of the fire insurance policy at

issue, or $125,000. He additionally argues that the home

destroyed by the fire “was worth $500,000” and the land “sold for

$400,000.” Nowhere in the record, however, has Adam presented

any evidence of his actual loss (or a claim for damages) under

the policy.5 He has therefore failed to carry his burden to show

that it is not a legal certainty that the claim involves less

than $75,000. See, Locklear, 742 F. Supp. at 680 (generally,

where plaintiff has not pled specific amount in claim for

damages, court may not speculate as to what damages may b e ) . As

Adam has failed to properly allege the jurisdictional amount, the

court lacks subject matter jurisdiction and Hensley’s motion to

dismiss is granted on that basis as well. See Martins v . Empire

Indem. Ins. Co., N o . 08-60004,

, *5

5 The purported market value of Adam’s land, as opposed to the house structure, is irrelevant to the court’s analysis where he has made no specific claim for damages. See Locklear v . State Farm Mut. Auto. Ins. Co.,

(S.D. Ga. 1989) (court cannot speculate as to damages where plaintiff has failed to plead a specific amount). Further, at oral argument, Adam reminded the court that he had submitted a photograph of the house with his objection. The court has examined the photo, and finds that it does not establish the requisite value or amount loss.

15 (S.D. Fla. Mar. 2 1 , 2008) (ruling that “the sole evidence

provided by Defendant, i.e., the policy limits for Plaintiff’s

insurance policy, does not meet Defendant’s burden of

establishing that the jurisdictional amount in controversy has

been met.”).

CONCLUSION

Based on the arguments and evidence advanced in the parties’

pleadings and at the motion hearing, Hensley’s motion to dismiss

is granted on the following grounds: (1) the court lacks

personal jurisdiction over the defendant, (2) venue is improper

in this federal district, and (3) the court lacks subject matter

jurisdiction. The court does not reach the remaining arguments

for dismissal. All other pending motions are dismissed as moot.

The Clerk shall enter judgment accordingly and close the case.

SO ORDERED.

/g J^W6*t&_ Joseph N. Laplante United States District Judge

Date: May 1 6 , 2008

cc: Richard L. Adam, pro se Thomas A . Hensley, Esq.

16