United States Court of Appeals
For the First Circuit
No. 10-2329
LUIS A. CARRERAS AND
TOMMY O. HABIBE-VARGAS,
Plaintiffs, Appellants,
v.
PMG COLLINS, LLC AND
INTERNATIONAL SALES GROUP, L.L.C.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Daniel R. Domínguez, U.S. District Judge]
Before
Boudin, Selya and Dyk,*
Circuit Judges.
Richard Schell-Asad and Troncoso Schell & Bobonis on brief for
appellants.
Daniel F. Blonsky and Coffey Burlington on brief for appellee
PMG Collins, LLC.
Edward W. Hill and Pirillo Hill Gonzalez & Sanchez, P.S.C. on
brief for appellee International Sales Group, L.L.C.
November 10, 2011
*
Of the Federal Circuit, sitting by designation.
SELYA, Circuit Judge. After two planned sales of Florida
real estate cratered, the erstwhile purchasers sued in Puerto
Rico's federal district court for the return of earnest payments.
The court dismissed their action for want of jurisdiction over the
defendants (the developer and its general sales representative).
The plaintiffs appeal. Based on the incomplete record before us,
we cannot determine whether personal jurisdiction exists.
Accordingly, we vacate the judgment below and remand for further
development of the record.
I. BACKGROUND
A brief introduction to the characters and plot suffices
to set the stage for the jurisdictional analysis. In October of
2005, plaintiff-appellant Tommy O. Habibe-Vargas (Habibe), a
citizen and resident of Puerto Rico, contracted with defendant-
appellee PMG Collins, LLC (Collins), a Florida corporation, to
purchase a unit in a condominium complex (MEI) to be built in
Miami, Florida. Another Florida corporation, defendant-appellee
International Sales Group, L.L.C. (ISG), sold the unit for Collins.
Habibe agreed to pay an up-front deposit of earnest money equal to
twenty percent of the purchase price, part of which he tendered
prior to signing the purchase agreement. The balance of the
purchase price was due at closing.
Several months later, plaintiff-appellant Luis A.
Carreras, a citizen and resident of Puerto Rico, similarly agreed
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to purchase a unit in the MEI complex. Once again, ISG acted for
Collins. Carreras, like Habibe, tendered a portion of the purchase
price as an earnest deposit and signed a written purchase agreement
that provided for payment of the balance of the purchase price at
closing.
Construction of the MEI complex proceeded. As the
scheduled closings approached in late 2008, a financial crisis
enveloped the nation's credit markets, and the two would-be
purchasers found themselves unable to obtain mortgage financing.
The closing dates came and went, no further money changed hands,
and Collins terminated the agreements for non-performance while
retaining the earnest payments.
The plaintiffs repaired to the United States District
Court for the District of Puerto Rico and sued both Collins and ISG
for the return of their deposits. The defendants moved to dismiss,
arguing that the district court lacked in personam jurisdiction and
that, in all events, Puerto Rico was an inappropriate venue. The
court permitted discovery limited to jurisdictional facts and,
based on the developed record, concluded that neither defendant had
contacts with Puerto Rico sufficient to permit the exercise of
jurisdiction. This timely appeal followed.
II. ANALYSIS
It is common ground that a court is without authority to
adjudicate a transitory cause of action if it lacks personal
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jurisdiction over the defendant. See, e.g., United States v. Swiss
Am. Bank, Ltd., 191 F.3d 30, 35 (1st Cir. 1999). Personal
jurisdiction comes in two distinct analytic strains: general and
specific. Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142
F.3d 26, 34 (1st Cir. 1998). Although the plaintiffs pressed both
of these theories in the court below, they have premised their
appeal solely on an assertion of specific jurisdiction. We limit
our discussion accordingly.
A federal court may assert specific jurisdiction over a
defendant only if doing so comports with both the forum's long-arm
statute and the Due Process Clause of the United States
Constitution. See Barrett v. Lombardi, 239 F.3d 23, 26 (1st Cir.
2001). Here, the two modes of analysis merge into one because the
reach of Puerto Rico's long-arm statute is coextensive with the
reach of the Due Process Clause. See Negrón-Torres v. Verizon
Commc'ns, Inc., 478 F.3d 19, 24 (1st Cir. 2007). For ease in
exposition, we frame our analysis in constitutional terms.
The due process inquiry turns on whether the dispute sub
judice is adequately related to a significant set of contacts
between the defendant and the forum. Phillips Exeter Acad. v.
Howard Phillips Fund, Inc., 196 F.3d 284, 288 (1st Cir. 1999); see
Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). There are
a number of procedural paths that an inquiring court can traverse
when exploring this question. See Foster-Miller, Inc. v. Babcock
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& Wilcox Can., 46 F.3d 138, 145-46 (1st Cir. 1995) (limning
available options). The choice depends on when and how the issue
is broached. The court below chose to employ the prima facie
standard, and the parties do not question that choice. We review
the district court's application of the prima facie standard de
novo. Barrett, 239 F.3d at 27.
To satisfy the prima facie standard in a specific
jurisdiction case, a plaintiff may not rest on mere allegations
but, rather, must submit competent evidence showing sufficient
dispute-related contacts between the defendant and the forum. Id.
at 26; Foster-Miller, 46 F.3d at 145. The court, in turn, must
view this evidence, together with any evidence proffered by the
defendant, in the light most favorable to the plaintiff and draw
all reasonable inferences therefrom in the plaintiff's favor.
Mass. Sch. of Law, 142 F.3d at 34. A court need not, however,
credit bald allegations or unsupported conclusions. Id.
Read in the required light, the record shows that Maria-
Laura Rainer, a Florida-based employee of ISG, telephoned the
plaintiffs in Puerto Rico and offered to sell each of them an MEI
unit.1 But the evidence is undisputed that the initial contact
between Rainer and the plaintiffs was not unsolicited marketing.
1
The defendants have presented evidence suggesting that it
was the plaintiffs who first contacted Rainer. For present
purposes, however, we accept arguendo the plaintiffs' testimony
that Rainer made the first contact.
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Instead, the plaintiffs were referred to Rainer by a real estate
broker in Puerto Rico named Lillybeth Rosario Medina (Rosario).
Rosario had met Rainer in 2003 when Rosario was considering a real
estate purchase in Florida. Since that time, Rainer had kept in
touch with Rosario by periodically sending her ISG listings via e-
mail. It was Rosario who put Habibe in contact with Rainer.
Habibe later referred Carreras to Rainer because Carreras was also
interested in purchasing a unit at MEI. In return for referring
Habibe (and indirectly referring Carreras), ISG paid finder's fees
to Rosario.
During the initial telephone calls between Rainer and the
plaintiffs, Rainer limned the prices of the MEI units and the terms
of sale, and the plaintiffs agreed in principle to purchase the
units. Rainer subsequently called each plaintiff in Puerto Rico to
request a tender of the agreed-upon earnest money. These payments
were sent to and received in Florida. Rainer then prepared the
purchase agreements in Florida and mailed them to Habibe and
Carreras, respectively. Each plaintiff received and signed his
agreement in Puerto Rico and mailed it back to Florida.
There are a few other facts in the record that arguably
pertain to these transactions. First, in October of 2007, while
visiting Puerto Rico, Rainer provided Carreras with an update on
the progress of the MEI construction. Second, Rainer, on one
occasion, tried to sell an MEI unit to Carreras's brother.
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More peripherally, the record contains evidence that ISG
advertised the MEI complex in "American Way," a magazine available
on American Airlines flights worldwide, including flights to and
from Puerto Rico. Further, the MEI complex was featured in an
article published in "Caras," a magazine distributed in Puerto
Rico. Notably, the "Caras" article was unsolicited press coverage,
not a paid puff piece.
The plaintiffs also list a number of contacts between ISG
and Puerto Rico that bear no relation to the failed transactions.
This list includes evidence that an ISG affiliate opened an office
in Puerto Rico to market a local project; that ISG made occasional
sales to other residents of Puerto Rico; that ISG representatives
periodically called the plaintiffs (and other Puerto Rico
residents) in an effort to market properties other than the MEI
complex; and that Rainer made presentations in Puerto Rico in
October of 2007 (well after both of the purchase agreements at
issue had been signed, sealed, and delivered) regarding MEI and ISG
properties in Panama and New Orleans.
Most of the contacts between the defendants and Puerto
Rico described above are plainly insufficient to vest the district
court with specific jurisdiction over this matter. Nevertheless,
there are two contacts (the listings that Rainer periodically e-
mailed to Rosario and ISG's relationship with Rosario) on which the
record is poorly developed. Depending on what the facts actually
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are, these contacts, either singly or in combination, might support
a finding of specific jurisdiction. But we cannot tell: neither
the parties nor the district court focused on them, and such a
focus is essential to an assessment of their significance.
As a general matter, the inquiry into specific
jurisdiction comprises three questions. First, the court must ask
whether the asserted causes of action arise from or relate to the
defendant's contacts with the forum. Phillips Exeter, 196 F.3d at
288. Second, the court must consider whether the defendant
purposefully availed itself of the protections of the forum's laws
by means of those contacts, such that the defendant could
reasonably foresee being haled into the forum's courts. Id.
Third, the court must consider whether an exercise of jurisdiction
is consistent with principles of justice and fair play. Id.
Specific jurisdiction lies only if all of these queries are
susceptible to affirmative answers. See Ticketmaster-N.Y., Inc. v.
Alioto, 26 F.3d 201, 206 (1st Cir. 1994).
In the case at hand, the asserted causes of action sound
in contract. Thus, the relatedness inquiry hinges on whether the
defendants' contacts were instrumental in either the formation or
breach of the agreements in question. Adelson v. Hananel, 652 F.3d
75, 81 (1st Cir. 2011); Phillips Exeter, 196 F.3d at 289.
Most of the contacts between the defendants and Puerto
Rico had absolutely no bearing on the formation or breach of the
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purchase agreements at issue and thus are immaterial to a claim of
specific jurisdiction. To begin, we reject the plaintiffs'
importunings that the "Caras" article and the "American Way"
advertisements support a finding of specific jurisdiction. The
"Caras" article was published in November 2006, several months
after the second of the two purchase agreements was signed. The
initial "American Way" advertisement debuted at an even later date.
It is self-evident that publications appearing after a contract has
been executed can have no material effect on its formation. Cf.
Harlow v. Children's Hosp., 432 F.3d 50, 61-62 (1st Cir. 2005)
(holding that contacts occurring after tort cause of action has
accrued generally are irrelevant to specific jurisdiction
analysis). By the same token, there is no evidence that these
publications played the slightest part in any subsequent breach of
the purchase agreements.
Like the magazine pieces, Rainer's construction update
occurred after the execution of the purchase agreements. It had no
discernable effect on either the formation or the breach of those
agreements. Similarly, the supposed effort to sell a unit to
Carreras's brother had nothing to do with either the formation or
breach of the relevant contracts. Many of the remaining contacts
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described by the plaintiffs are so far removed from the asserted
causes of action that they do not warrant discussion.2
Only a few of the contacts between the defendants and
Puerto Rico fit within the relatedness inquiry. These include
Rainer's telephone calls to Habibe and Carreras offering the
condominium units for sale; the calls requesting tender of the
earnest payments; the mailing of the purchase agreements to Puerto
Rico for signature; and ISG's relationship with Rosario. Each of
these contacts played a direct role in the formation of the
purchase agreements at issue and is thus "related" to the dispute.
There is another contact that is potentially related to
the present dispute on which the record is largely silent: the ISG
listings that were periodically e-mailed from Rainer to Rosario.
Specifically, it is unclear from the record where Rosario was when
she received these listings3 and, in any event, whether they played
any role in the referrals of (and subsequent purchases by) Habibe
2
To be sure, some of these contacts — such as the subsequent
opening of an office in Puerto Rico by ISG — might be relevant to
a claim of general jurisdiction. See, e.g., Tuazon v. R.J.
Reynolds Tobacco Co., 433 F.3d 1163, 1173-74 (9th Cir. 2006)
(holding that general jurisdiction lies where defendant maintains
office in forum and does extensive business there); 4 Charles A.
Wright & Arthur R. Miller, Federal Practice and Procedure § 1067.5
(3d ed. 2002) (listing marketing in forum and maintenance of office
there as factors relevant to general jurisdiction inquiry). Here,
however, the plaintiffs have not pursued the claim of general
jurisdiction on appeal.
3
The record is unclear as to whether Rosario even lived in
Puerto Rico during the relevant time frame.
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and Carreras. Common sense would suggest that Rosario made her
referrals in part because she had learned of the available MEI
units from the listings that she received. Nevertheless, an
ambiguous snippet of the record suggests that the referrals may
have occurred solely because Habibe had asked Rosario for the name
of the agent (Rainer) whom Rosario had used in conjunction with her
own real estate purchase in Florida. The unanswered questions
concerning these listings may affect the jurisdictional outcome.
We turn next to the "purposeful availment" inquiry. The
baseline rule is that a defendant is subject to jurisdiction only
when it "purposefully avails itself of the privilege of conducting
activities within the forum State, thus invoking the benefits and
protections of its laws." J. McIntyre Mach., Ltd. v. Nicastro, 131
S. Ct. 2780, 2787 (2011) (plurality op.). Purposeful availment
represents a rough quid pro quo: when a defendant deliberately
targets its behavior toward the society or economy of a particular
forum, the forum should have the power to subject the defendant to
judgment regarding that behavior. Id. at 2787-88. By focusing on
the defendant's intentions, the purposeful availment standard
ensures that a defendant will not be subjected to personal
jurisdiction based on "random, fortuitous, or attenuated contacts."
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (quotation
marks omitted). For specific jurisdiction to attach, the forum-
related contacts must be of such a nature that the defendant can
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reasonably foresee being haled into court there. See Foster-
Miller, 46 F.3d at 144.
The purposeful availment standard eliminates most of the
contacts that had passed through the relatedness screen. For
example, when Rainer called the plaintiffs to offer the condominium
units for sale, ISG did not intentionally invoke the protections of
Puerto Rico's laws. We recognize that targeted marketing to
customers in a forum may give rise to specific jurisdiction over a
dispute involving a transaction that results from that marketing.
See, e.g., uBid, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 427-33
(7th Cir. 2010). Here, however, nothing in the record suggests
that Rainer's initial calls to Habibe and Carreras were part of a
broad marketing effort. To the contrary, Rainer had been informed
that Habibe was interested in purchasing an MEI unit and wanted to
speak with an ISG representative. Habibe then told Rainer that
Carreras, too, was interested. Rainer thus was not fishing for
customers in an undifferentiated pool but was simply contacting
people who had asked to be contacted. A company does not subject
itself to jurisdiction in a forum simply by following up with forum
residents who, without prior solicitation, have expressed an
interest in purchasing the company's product. Cf. Harlow, 432 F.3d
at 62-63 (holding that accepting unsolicited referrals from doctors
in forum does not subject hospital to suit there).
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Nor can ISG's act of mailing the purchase agreements to
Puerto Rico support a claim of specific jurisdiction. We
previously have held that a party who — like ISG — merely mails a
contract into a forum for signature after its terms have been
negotiated cannot reasonably foresee being sued there. See
Phillips v. Prairie Eye Ctr., 530 F.3d 22, 29 (1st Cir. 2008). By
like token, the defendants did not intentionally avail themselves
of the benefits of doing business in Puerto Rico merely by calling
residents of Puerto Rico to request the tender of a previously
negotiated deposit. See Moncrief Oil Int'l Inc. v. OAO Gazprom,
481 F.3d 309, 312 (5th Cir. 2007) (holding that the "exchange of
communications in the course of developing and carrying out a
contract" does not qualify as purposeful availment).
This leaves only two items. First, if ISG sent listings
to Rosario knowing that she was in Puerto Rico, that fact might
bear on purposeful availment. See supra p. 10. Second, and more
broadly, the nature of the relationship between ISG and Rosario may
determine the purposeful availment question. If Rosario served as
ISG's agent in Puerto Rico in connection with the Habibe and
Carreras purchases, then ISG (and presumably Collins as well) would
likely be subject to personal jurisdiction there. See United
Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960
F.2d 1080, 1090 (1st Cir. 1992) (explaining that "the contacts of
a corporation's agent can subject the corporation to personal
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jurisdiction"). But the record is hopelessly murky on the matter
of agency. On the one hand, the relevant purchase agreements, as
well as the co-brokerage agreements between ISG and Rosario,
sometimes refer to the latter as an "agent." This suggests that
Rosario was the agent for someone, perhaps ISG. On the other hand,
the parties' use of the term "agent" is erratic; and at any rate,
their use of that term is not a talisman that creates an agency
relationship. See Restatement (Third) of Agency § 1.02 (2006). An
agency relationship would exist only if ISG had manifested its
assent to have Rosario act on its behalf and subject to its
control. See id. § 1.01. On this scumbled record, we are unable
to determine whether such a manifestation occurred.
Because the answer to this question may well be
jurisdictionally dispositive, we think that the fairest course is
to vacate the judgment and remand for a determination of whether an
agency relationship existed between ISG and Rosario; and, if so,
whether that agency relationship supports the plaintiffs' claim of
specific jurisdiction.4 At the same time, the district court
should determine whether the e-mailed listings are related to the
dispute sub judice and whether Rainer knew that Rosario was in
4
The agency analysis need consider only whether Rosario
served as ISG's agent for the purpose of aiding the formation
and/or closing of the plaintiffs' purchase agreements. An agency
relationship between Rosario and ISG in a different context would
not be related to the present dispute and, thus, could not support
a claim of specific jurisdiction.
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Puerto Rico when she sent them. The inquiry into these e-mails
should focus on the time period prior to the Habibe and Carreras
referrals.
III. CONCLUSION
We summarize succinctly. On this record, the answer to
the jurisdictional question is uncertain. The determination as to
whether or not specific jurisdiction exists cannot appropriately be
made without further factual development regarding the listings
that were e-mailed from Rainer to Rosario and the relationship
between Rosario and ISG. Thus, we vacate the judgment of the
district court and remand for further proceedings consistent with
this opinion.
On remand, the only issues that are open for adjudication
are (a) whether after further development of the facts specific
jurisdiction exists; and (b) whether the defendants' alternative
prayer for a transfer of venue should be granted. The district
court may decide these questions in whichever order it chooses.5
We take no view as to the existence of specific jurisdiction or as
to the propriety of a change in venue. The district court, in its
sound discretion, may decide to what extent further discovery is
desirable and how best to conduct future proceedings.
5
If the district court decides that a transfer of venue is
appropriate, then it may eschew a decision on the issue of specific
jurisdiction. See Leroy v. Great W. United Corp., 443 U.S. 173,
180-81 (1979).
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We add a coda. It is, of course, the plaintiffs' burden
to adduce facts that support a finding of jurisdiction. But this
is the rare case in which neither the parties nor the district
court have honed in on the dispositive jurisdictional issues.
Given these omissions, remanding for further proceedings seems to
us the wisest approach. We caution, however, that our opinion
should not be read as automatically providing plaintiffs with an
instant replay should they fail to carry their burden of proving
jurisdiction in the district court.
Vacated and remanded. All parties shall bear their own costs.
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