Lyle Richards v. Ashworth, Inc.

USCA1 Opinion









UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT


No. 97-1387

LYLE RICHARDS INTERNATIONAL, LTD.,

Plaintiff, Appellant,

v.

ASHWORTH, INC.,

Defendant, Appellee.

____________________


APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. George A. O'Toole, Jr., U.S. District Judge] ___________________

____________________

Before

Stahl, Circuit Judge, _____________

Godbold* and Cyr, Senior Circuit Judges. _____________________


____________________



Michael J. Traft, with whom Carney & Bassil was on brief for ________________ _______________
appellant.
Toni G. Wolfman, with whom Foley, Hoag & Eliot LLP was on brief _______________ _______________________
for appellee.


____________________

December 22, 1997
____________________



____________________

*Of the Eleventh Circuit, sitting by designation.












CYR, Senior Circuit Judge. Plaintiff Lyle Richards CYR, Senior Circuit Judge. _____________________

International, Ltd., a Massachusetts corporation, appeals from a

district court judgment dismissing its contract action against

Ashworth, Inc., a Delaware corporation with its principal place

of business in California. We affirm.

I I

BACKGROUND BACKGROUND __________

In March 1994, Ashworth hired a former Lyle employee,

Andrew Tarlow, to direct its new golf shoewear operations in

California. Shortly thereafter, without direct or indirect

solicitation from Ashworth, Lyle made overtures, through Tarlow,

to serve as Ashworth's purchasing agent. Over the next two

months, Lyle and Ashworth discussed the matter by phone and at

meetings in California and China. At no time did Ashworth

advertise for or solicit a purchasing agent in Massachusetts.

Not later than July 1994, Ashworth, through Tarlow,

proposed entering into a formal written agreement with Lyle. In

due course, the Agreement, drafted and signed by Lyle in

Massachusetts, was mailed to California, where Ashworth executed

it on August 5. The Agreement designated Lyle as Ashworth's

purchasing agent for footwear manufactured in China and Taiwan,

but required Ashworth to undertake no specific contractual

responsibilities in Massachusetts.

Thereafter, Ashworth periodically forwarded purchase

orders to Lyle in Massachusetts, which Lyle transmitted to the

appropriate Chinese or Taiwanese factory. Ashworth communicated


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with Lyle in Massachusetts two or three times a week regarding

ongoing contract performance, and from time to time placed orders

with shoe-component suppliers which were instructed to bill Lyle

directly. In addition, during the term of the Agreement an

Ashworth representative attended three trade shows in

Massachusetts, accompanied on two occasions by a Lyle employee.

The Agreement prescribed a one-year term. Absent

written notice of termination from either party at least ninety

days prior to its anniversary date, the Agreement renewed itself

automatically. In August 1995, Ashworth provided written notice

of termination to Lyle, dated April 19, 1995.

Thereafter, Lyle filed suit against Ashworth in a

Massachusetts superior court, alleging breach of contract and

unfair trade practices under Mass. Gen. Laws ch. 93A, 2, 11,

claiming that the termination notice had been back-dated to April

1995 to conceal its untimeliness under the Agreement. Following

its removal, see 28 U.S.C. 1332(a) & 1441(a), and a ___

nonevidentiary hearing, the action was dismissed for lack of

personal jurisdiction pursuant to Federal Rule of Civil Procedure

12(b)(2).

II II

DISCUSSION1 DISCUSSION __________
____________________

1We review de novo. Nowak v. Tak How Invs., Ltd., 94 F.3d __ ____ _____ ____________________
708, 712 (1st Cir. 1996), cert. denied, 117 S. Ct. 1333 (1997). _____ ______
Since the district court resolved the jurisdictional issue
without an evidentiary hearing, "we draw the facts from the
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

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A. The Breach of Contract Claim A. The Breach of Contract Claim ____________________________

In a diversity case, personal jurisdiction over a

nonresident defendant is constrained both by the long-arm statute

of the forum state and the Due Process Clause of the Fourteenth

Amendment. See Ticketmaster-New York, Inc. v. Alioto, 26 F.3d ___ ____________________________ ______

201, 204 (1st Cir. 1994). Massachusetts law permits Commonwealth

courts to assert 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 . . . transacting any business in this ___________ ___ ________ __ ____

commonwealth . . . ." Mass. Gen. Laws ch. 223A, 3(a) (emphasis ____________

added).

The "transacting business" test under section 3(a) is

designed to identify deliberate, as distinguished from

fortuitous, contacts with the forum by the nonresident party,

see, e.g., Good Hope Indus., Inc. v. Ryder Scott Co., 389 N.E.2d ___ ____ _______________________ _______________

76, 82 (Mass. 1979), with a view to determining whether "'the

possible need to invoke the benefits and protections of the

forum's laws was reasonably foreseeable . . . .'" Id. (quoting ___

Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 496 (5th Cir. ________________________ ________

1974)). Often, the "transacting business" test is importantly

informed by ascertaining whether the nonresident party initiated

or solicited the business transaction in Massachusetts. For

instance, the Massachusetts Supreme Judicial Court ("SJC") has

held that a California corporation transacted business in
____________________

to plaintiff[,]" but without crediting "conclusory allegations or
draw[ing] farfetched inferences." Ticketmaster-New York, Inc. v. ___________________________
Alioto, 26 F.3d 201, 203 (1st Cir. 1994). ______

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Massachusetts by systematically advertising its California hotel

in Massachusetts. See Tatro v. Manor Care, Inc., 625 N.E.2d 549, ___ _____ ________________

551-52 (Mass. 1994); see also Hahn v. Vermont Law Sch., 698 F.2d ___ ____ ____ ________________

48, 51 (1st Cir. 1983) (nonresident law school transacted

business by sending application for admission and notice of

acceptance to plaintiff in Massachusetts); New Hampshire Ins. ___________________

Guar. Ass'n v. Markem Corp., 676 N.E.2d 809, 812-13 (Mass. 1997) ___________ ____________

(nonresident insured did not transact business by mailing premium

payments to Massachusetts, since Massachusetts-based insurer

solicited insurance business in New Hampshire).

An Ashworth affidavit attesting that Lyle had

proposed, in March 1994, to serve as Ashworth's purchasing agent _____ ____

went unopposed by Lyle. Instead, Lyle relied upon the

inapposite fact that it was Ashworth which suggested, during the

summer of 1994, that the precise terms of the business ______ __ ____

relationship previously proposed by Lyle be reduced to writing. __________

Although any effect a nonresident defendant's activity

may have had upon commerce in Massachusetts is also to be

considered in determining whether it transacted business in the

Commonwealth, see Droukas v. Divers Training Academy, Inc., 376 ___ _______ ______________________________

N.E.2d 548, 551 n.5 (Mass. 1978), the purely incidental contacts

involved here were insufficient to support an assertion of

personal jurisdiction over Ashworth. See, e.g., Whittaker Corp. ___ ____ _______________

v. United Aircraft Corp., 482 F.2d 1079, 1085 (1st Cir. 1973) ______________________

(finding defendant's contacts with Massachusetts insufficient,

and thus no personal jurisdiction, where there was "no


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requirement in any of the agreements that performance take place ___________

in Massachusetts") (emphasis added); New Hampshire Ins. Guar. _________________________

Ass'n v. Markem Corp., 676 N.E.2d 809, 812 (Mass. 1997) ("That _____ ____________

[plaintiff] then decided to conduct some administration . . . in ____

Massachusetts . . . cannot be the basis for personal jurisdiction

against [defendant] where [defendant] reasonably assumed it would

be doing business with [plaintiff] in New Hampshire and did in

fact conduct most of its business . . . there.") (emphasis ____

added). See also Nichols Assocs., Inc. v. Starr, 341 N.E.2d 909, ___ ____ _____________________ _____

912 (Mass. App. Ct. 1976) (no significant involvement in commerce

of Massachusetts, and thus no personal jurisdiction, where

nonresident defendant's "contact [was] limited to the . . .

acceptance of services which the plaintiff simply chose to _____

perform in Massachusetts.") (emphasis added).

For one thing, most performance required from Lyle

under the Agreement was to be rendered outside Massachusetts. _______

The Agreement did not even require that the internal

administrative functions actually conducted by Lyle in

Massachusetts be performed there, such as arranging for

merchandise shipments from the Chinese-Taiwanese suppliers to

Ashworth in California, receiving price quotes or product samples

from the Asian factories, or reporting to Ashworth on market

conditions and the availability of merchandise.

Nor does the Agreement indicate that Lyle either needed

or intended to perform its "quality control" responsibilities in

Massachusetts. Rather, most of its core contractual


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responsibilities relating to the inspection of merchandise would

have had to have been performed in China or Taiwan, rather than

Massachusetts. Thus, its performance of various attendant chores

in Massachusetts was incidental to the formation of the

Agreement. See Nichols Assocs., Inc., 341 N.E.2d at 912.2 ___ _____________________

Finally, Lyle notes, Ashworth attended three trade

shows in Massachusetts, accompanied by a Lyle employee on at

least two occasions, and Lyle performed two contract functions in

Massachusetts: designing golf shoes and purchasing various golf-

shoe components and the materials with which to package them for

shipment to Asia. Nevertheless, as these initiatives were

undertaken unilaterally by the respective parties, even though

neither was responsible for their performance under the

Agreement, this attempt to assert personal jurisdiction over

Ashworth is unavailing since chapter 223A requires that the cause

of action have "aris[en] from [Ashworth's] . . . transacting any ________ ____ __________

business in [Massachusetts] . . . ." Mass. Gen. Laws ch. 223A,

3(a) (emphasis added). We explain briefly.

The "arising from" clause in chapter 223A is to be

generously construed in favor of asserting personal jurisdiction,

____________________

2The contention that Ashworth transacted business in
Massachusetts by mailing its termination notice to Lyle in
Massachusetts is flawed as well, since Ashworth cannot have
solicited business by terminating the business relationship. Nor _________ ___________
was the Agreement executed by Ashworth in Massachusetts, see ___
Carlson Corp. v. University of Vermont, 402 N.E.2d 483, 485 ______________ ______________________
(Mass. 1980) (defendant transacted business in Massachusetts,
where it signed the contract), but in California where it had
been forwarded after having been executed by Lyle in
Massachusetts, supra p. 2. _____

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by applying the following "but for" causation test: Did the

defendant's contacts with the Commonwealth constitute "the first

step in a train of events that result[ed] in the personal

injury." Tatro, 625 N.E.2d at 553. The plaintiff in Tatro _____ _____

almost certainly would not have selected the defendant's

California hotel but for the advertisements the defendant had ___ ___

placed in various Massachusetts media. Lyle, on the other hand,

does not contend that component purchases, shoe design, or

attendance at trade shows comprised any part of the

responsibilities of either party under the Agreement.

Since the extra-contractual activities unilaterally

undertaken by the respective parties in Massachusetts were

extraneous to the formation of the Agreement, see Hahn v. Vermont ___ ____ _______

Law Sch., 698 F.2d 48, 51 (1st Cir. 1983) (holding, pre-Tatro: ________ _____

"we have no doubt that [the 'arising from' requirement] has been

satisfied when the cause of action is for an alleged breach of

contract and the business transacted was instrumental in the ____________ __ ___

formation of the contract.") (emphasis added), those activities _________ __ ___ ________

did not constitute a "but for" cause for the alleged breach of

contract, see Tatro, 625 N.E. 2d at 553. ___ _____

B. The Unfair Trade Practices B. The Unfair Trade Practices __________________________
Claim Under Chapter 93A Claim Under Chapter 93A _______________________

Finally, Lyle contends, since Chapter 223A grants

jurisdiction over "a cause of action . . . arising from [a

defendant's] . . . causing tortious injury by an act or omission

in [Massachusetts] . . . [,]" Mass. Gen. Laws ch. 223A, 3(c),

the federal district court possessed personal jurisdiction over

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Ashworth in relation to the unfair trade practices claim under

Mass. Gen. Laws ch. 93A. For present purposes we shall assume,

without deciding, that a Chapter 93A violation would constitute a

"tortious injury" under Chapter 223A. Cf. Burtner v. Burnham, ___ _______ _______

430 N.E.2d 1233, 1237 (Mass. App. Ct. 1982) ("Whether a violation

of . . . chapter [93A] constitutes a 'tortious injury' within the

meaning of c. 223A, 3(c) may be open to some doubt.").

Lyle alleges that Ashworth attempted to conceal the

tardiness of its nonrenewal notice by backdating its untimely

termination letter to Lyle, see supra p. 3, and that the alleged ___ _____

deception was designed to prevent Lyle from pursuing a contract

action for wrongful termination of the Agreement. Assuming as

much, we nonetheless conclude that Lyle cannot prevail on its

Chapter 93A claim.

Chapter 93A, section 11, provides that "[a]ny person

who engages in the conduct of any trade or commerce and who ___ ___

suffers any loss of money or property, real or personal, as a _______ ___ ____ __ _____ __ ________

result of the use or employment by another person who engages in

any trade or commerce of an unfair method of competition or an

unfair or deceptive act or practice . . . may . . . bring an

action in the superior court . . . ." (emphasis added). Thus, in

order to state a chapter 93A claim, Lyle was required to

demonstrate a loss of money or property. Yet it alleged no such

loss. Instead, it asserted a breach of contract by virtue of

Ashworth's failure to provide timely notice of termination as

required by the Agreement. In addition, Lyle alleged that


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Ashworth violated chapter 93A by engaging in the deceptive act of

backdating the notice of termination. As to the latter

allegation, however, Lyle claimed no injury apart from that ______

caused by the alleged breach of contract. Consequently, Lyle

failed to allege a "loss of money or property . . . as a result

of [Ashworth's] use or employment . . . of [a] . . . deceptive

act . . . [,]" as required by chapter 93A, section 11. Finally,

a breach-of-contract claim, without more, cannot be converted

into a tort claim. See Redgrave v. Boston Symphony Orchestra, ___ ________ ___________________________

Inc., 557 F. Supp. 230, 238 (D. Mass. 1983). ____

Affirmed. ________
































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