[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 04-12890 August 23, 2005
THOMAS K. KAHN
________________________
CLERK
D. C. Docket No. 03-02356-CV-T-30-MSS
HORIZON AGGRESSIVE GROWTH, L.P.,
a Delaware limited partnership,
Plaintiff-Appellant,
versus
ROTHSTEIN-KASS, P.A.,
a New Jersey professional corporation,
ROTHSTEIN KASS & COMPANY, P.C.,
a California professional corporation,
ROTHSTEIN, KASS & COMPANY, CERTIFIED PUBLIC
ACCOUNTANTS, P.C.,
a New York professional corporation,
JOHN DOES, 1-40,
MARC J. WOLF,
Defendants-Appellees.
GILBERT H. DAVIS,
SIMS MOSS KLINE & DAVIS, LLP,
a Georgia limited liability partnership,
Defendants.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(August 23, 2005)
Before EDMONDSON, Chief Judge, BIRCH and COX, Circuit Judges.
BIRCH, Circuit Judge:
This appeal requires us to address whether Florida’s Long-Arm statute, F LA.
S TAT. ch. 48.193, permits the assertion of in personam jurisdiction over an out-of-
state auditing company that, in the negotiation of contracts and in the rendition of
services from its out-of-state office, telephonically contacted a Florida-based
partnership and electronically accessed its computer files. The district court found
that Defendants-appellees Rothstein Kass & Co., P.C. and related entities1 neither
were “doing business in Florida” nor committed a tortious act in Florida as defined
by the Long-Arm statute, and therefore dismissed the action against Kass for lack
of jurisdiction. Because the allegations in the complaint that Kass made
misrepresentations in its telephonic communications with Plaintiff-appellant
1
The Defendants-appellees in this appeal include: Rothstein Kass & Co., P.C. (“Kass
California”), a California corporation, Rothstein-Kass, P.A. (“Kass New Jersey”), a New Jersey
corporation, Rothstein, Kass & Co. Certified Public Accountants, P.C. (“Kass New York”), a
New York corporation, and Marc Wolf, a California resident. Unless otherwise noted, they will
be collectively referred to as “Kass” in this opinion.
2
Horizon Aggressive Growth, L.P. (“Horizon”) were sufficient to support
jurisdiction under Florida’s Long-Arm statute, we REVERSE the district court’s
order and REMAND for further proceedings.
I. BACKGROUND 2
Horizon was established in 1998 as a private investment fund partnership
that invested in publicly traded securities. The initial partnership offering
documents provided that the fund would be managed by a general partner, Horizon
Capital Management, Inc., which in turn would delegate fund management
responsibilities to a portfolio manager. The 1998 partnership offering
memorandum stated that Norman L. Yu & Company, Inc. (“Yu & Company”)
would be retained as the portfolio manager of the fund. The memorandum
explained that Yu & Company was managed by Norman Yu, who had developed
his proprietary Six Key Stock Selection System and would implement this system
in managing the fund. In addition, the partnership offering memorandum provided
that the fund would be audited annually by independent certified public
accountants.
2
Because this appeal comes to us in the procedural posture of the district court’s grant of
a motion to dismiss for lack of jurisdiction, our recitation of the facts is derived from the
allegations in the complaint, which we accept as true to the extent they are uncontroverted by
Kass’s affidavits. See Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 255 (11th Cir. 1996).
Where the complaint and Kass’s affidavits conflict, we construed all reasonable inferences in
favor of Horizon. See id.
3
In 2000, pursuant to a March 1999 engagement letter signed between
Horizon and Wolf while Wolf was working for an accounting firm that was later
acquired by Kass California, Kass was called upon to audit Horizon’s 1999 year-
end financial statements. Wolf, then acting as a principal at Kass California,
directed and oversaw the 1999 audit of Horizon. In 2000, Kass California entered
into a second engagement with Horizon in which Kass was retained to perform
audits of Horizon’s performance calculations and reporting. Finally, in 2001,
Horizon again engaged Kass California to conduct an audit of Horizon’s 2000
year-end financial condition. It is undisputed that all of the accounting services
rendered by Kass in connection with these various audits were performed by Kass
employees in California.
In addition to these agreements between Kass and Horizon for the rendition
of independent accounting services, however, Horizon alleged in its complaint that
Kass represented that it would perform a more substantial role in serving the
investment fund. The complaint noted that Paul A. Henley, CEO of Horizon
Capital, Inc. and the progenitor of the Horizon partnership, expressed his view
“[a]t the outset” that Horizon did not have the “back office services and systems
necessary” to monitor Yu & Company’s performance and compliance with its Six
Key system. R1-2 at 20, ¶ 58. To address this concern, prior to contracting with
4
Horizon, Wolf allegedly “affirmatively represented to Horizon that Kass would
‘watch Norman [Yu], Mark [Yu], and the Yu Company . . . . [,] would provide the
‘back office services and systems’ for monitoring the Yu Company . . . . [, and]
would serve as the watchdog for the partners and Horizon.” Id. at 21, ¶ 59.
According to the complaint, Kass offered to perform these back office services
from its offices outside of Florida by: (1) accessing, monitoring, and managing
Horizon’s Florida-based accounting system and electronic files through the internet
and the computer program Quickbooks; and (2) communicating with Horizon
officials in Florida about its findings via telephone, faxes, e-mail, and regular mail.
See id. at 21, ¶ 61. In his deposition, Wolf confirmed that Kass had represented to
Horizon that back office services would be part of the services performed by Kass.
See R2-35 at 114. Horizon alleged that it relied on Wolf’s representations and
operated with the understanding that Kass would perform the back office
monitoring and watchdog functions. See R1-2 at 22, ¶ 63.
After Horizon’s portfolio sustained substantial losses under the management
of Yu & Company, Horizon filed suit against Kass in Florida state court.3 In its
3
Kass subsequently removed the action to federal court. In addition to filing its
complaint in Florida, Horizon also filed similar suits in state courts in California and Georgia.
According to the parties, Kass is no longer involved in the Georgia action because Horizon
voluntarily dismissed its claims against Kass in the Georgia suit. Kass remains a party, however,
in the California action, which has been stayed pending the outcome of an appeal in a separate,
but related, California action.
5
complaint, Horizon alleged, inter alia, that Kass California and Wolf:4 (1)
committed professional negligence for their failure to perform back office
monitoring and compliance services; (2) breached fiduciary duties they owed to
Horizon by failing to perform the services they agreed to perform; (3) engaged in
constructive fraud by making representations to Horizon with the intent to deceive
and defraud and then failing to perform on their representations; and (4) breached a
written contract by failing to act as an independent auditor and by neglecting to
monitor Yu & Company. Kass responded by moving for the Florida action to be
dismissed on the grounds that the assertion of personal jurisdiction was
inappropriate under both the Florida Long-Arm statute and a due process analysis.
After conducting a hearing on Kass’s motion, the district court dismissed the
claims against Kass because Horizon’s allegations did not support the assertion of
jurisdiction under Florida’s Long-Arm statute, F LA. S TAT. ch. 48.193.5
On appeal, Horizon argues that the district court erred in finding that
4
The complaint joined Kass New Jersey and Kass New York as codefendants on the
theory that Kass California and Wolf operated as agents and alter egos of Kass New Jersey and
Kass New York. See R1-2 at 5, ¶ 18. In addition, Kass sued the law firm and one of its partners
that drafted the initial partnership offering documents. The district court severed these law firm
defendants from the instant action and transferred the claims against them to federal court in
Georgia. See R2-53 at 1-2, 6. Horizon does not dispute this part of the district court’s order on
appeal.
5
Because the district court concluded the Long-Arm statute was not satisfied, the court
declined to analyze whether the assertion of jurisdiction comported with due process.
6
personal jurisdiction was lacking. Specifically, Horizon argues that: (1) Kass was
“doing business” as defined in the Long-Arm statute because its electronic access
to Horizon’s files and its remote management of Horizon’s accounting systems
allowed Kass employees to perform services as if they were at Horizon’s Florida
offices; and (2) Kass committed a tortious act in Florida by virtue of alleged
misrepresentations made by Kass to Horizon which caused injury to Horizon in
Florida. We will address each argument in turn.
II. DISCUSSION
“We review the district court’s dismissal for lack of personal jurisdiction de
novo.” Meier ex rel. Meier v. Sun Int’l Hotels, Ltd., 288 F.3d 1264, 1268 (11th
Cir. 2002). Our analysis of the propriety of the assertion of personal jurisdiction is
a two-step inquiry. “First, we determine whether the exercise of jurisdiction is
appropriate under the forum state’s long-arm statute.” Mut. Serv. Ins. Co. v. Frit
Indus., Inc., 358 F.3d 1312, 1319 (11th Cir. 2004). “Second, we examine whether
the exercise of personal jurisdiction over the defendant would violate the Due
Process Clause of the Fourteenth Amendment to the United States Constitution,
which requires that the defendant have minimum contacts with the forum state and
that the exercise of jurisdiction over the defendant does not offend ‘traditional
notions of fair play and substantial justice.’” Id. (quoting Int’l Shoe Co. v.
7
Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945)).
Florida’s Long-Arm statute provides that:
(1) Any person, whether or not a citizen or resident of this state, who
personally or through an agent does any of the acts enumerated in this
subsection thereby submits himself or herself . . . to the jurisdiction of
the courts of this state for any cause of action arising from the doing
of any of the following acts:
(a) Operating, conducting, engaging in, or carrying on a
business or business venture in this state or having an office or
agency in this state.
(b) Committing a tortious act within this state.
F LA. S TAT. ch. 48.193(1).6 Because the construction and application of the Florida
Long-Arm statute is a question of Florida law, we are required to construe the
Long-Arm provisions as would the Florida Supreme Court. See Madara v. Hall,
916 F.2d 1510, 1514 (11th Cir. 1990).
A. “Conducting Business” in Florida
“In order to establish that a defendant is ‘carrying on business’ for the
purposes of the long-arm statute, the activities of the defendant must be considered
collectively and show a general course of business activity in the state for
pecuniary benefit.” Future Tech. Today, Inc. v. OSF Healthcare Sys., 218 F.3d
6
In addition to these provisions relating to the assertion of specific jurisdiction, the
Long-Arm statute also provides for general jurisdiction where “[a] defendant . . . is engaged in
substantial and not isolated activity within [Florida].” Id. ch. 48.193(2). The district court
found, and the parties do not dispute on appeal, that Kass’s activities in Florida would not trigger
the general jurisdiction provisions of the Long-Arm statute.
8
1247, 1249 (11th Cir. 2000) (per curiam). Factors relevant, but not dispositive, to
this analysis include the presence and operation of an office in Florida, see Milberg
Factors, Inc. v. Greenbaum, 585 So. 2d 1089, 1091 (Fla. Dist. Ct. App. 1991), the
possession and maintenance of a license to do business in Florida, see Hobbs v.
Don Mealey Chevrolet, Inc., 642 So. 2d 1149, 1153 (Fla. Dist. Ct. App. 1994), the
number of Florida clients served, see Milberg Factors, Inc., 585 So. 2d at 1091, and
the percentage of overall revenue gleaned from Florida clients, see id.; Sculptchair,
Inc. v. Century Arts, Ltd., 94 F.3d 623, 628 (11th Cir. 1996).
Based on this precedent, we reject Horizon’s argument that the assertion of
jurisdiction was proper because Kass was doing business in Florida as defined by
F LA. S TAT. ch. 48.193(1)(a). It is undisputed that neither Kass California nor Wolf
maintained a Florida office or were licensed to conduct business in Florida.
Horizon admitted that Kass performed all its work for Horizon out of its California
offices. While Kass made telephonic and electronic communications from its
California offices into Florida, these communications cannot constitute
“conducting business” in Florida. See Sculptchair, Inc., 94 F.3d at 628 (finding
that making telephone calls from Canada into Florida did not amount to
“conducting business” in Florida). Moreover, the fact that Kass rendered in
California professional services for the benefit of a Florida citizen was insufficient
9
by itself to trigger the provisions of the Florida Long-Arm statute. See Carlyle v.
Palm Beach Polo Holdings, Inc., 842 So. 2d 1013, 1016 (Fla. Dist. Ct. App. 2003)
(finding allegations that Michigan-based attorney gave legal advice on Michigan
law to a Florida client which was used in ancillary Florida litigation insufficient to
satisfy F LA. S TAT. ch. 48.193(1)(a)). In addition, Horizon admitted that Kass
California had six Florida clients which accounted for, at most, less than five
percent of Kass California’s gross revenue. Accordingly, based on the factors
relevant to a determination of jurisdiction under F LA. S TAT. ch. 48.193(1)(a), the
record does not support the contention that Kass California was engaging in a
general course of business activity in Florida.
Additionally, we reject Horizon’s suggestion that the assertion of
jurisdiction was appropriate because Kass’s ability to electronically access
Horizon’s Florida-based computer files allowed Kass to perform services as if it
was in Florida. The Long-Arm provision requires that a defendant conduct
business in Florida, and therefore conducting business from a California office as if
in Florida is insufficient under the plain text of the statute. Moreover, Horizon’s
contention that a company’s physical location “is rendered irrelevant in this
electronic age,” Appellant’s Br. at 30, belies the fact that state territorial
boundaries remain relevant to jurisdictional inquiries. See Burnham v. Superior
10
Court, 495 U.S. 604, 609-610, 110 S. Ct. 2105, 2109-2110 (1990) (citing Pennoyer
v. Neff, 95 U.S. 714, 722 (1878)). Accordingly, while the advances of the
electronic age have undoubtedly facilitated the practice of interstate and global
commerce, they cannot nullify the explicit requirements of the Florida Long-Arm
statute. Because Kass physically performed all its work from its California offices,
it cannot be argued that its remote access to Horizon’s files constituted “conducting
business” in Florida as defined in F LA. S TAT. ch. 48.193(1)(a).
B. Committing Tortious Act in Florida
The Florida Long-Arm statute also provides for the assertion of jurisdiction
over an out-of-state defendant who commits a tortious act in Florida. F LA. S TAT.
ch. 48.193(1)(b). Florida courts construing this provision have noted that the
alleged tortfeasor’s “physical presence [in Florida] is not required.” Wendt v.
Horowitz, 822 So. 2d 1252, 1260 (Fla. 2002). Rather, jurisdiction may be found in
certain instances where an out-of-state defendant commits a tort that produces an
injury in Florida. See id.7 For example, allegations about an out-of-state
defendant’s “telephonic, electronic, or written communications into Florida” are
sufficient to trigger jurisdiction under the Long-Arm statute provided, however,
7
See Korman v. Kent, 821 So. 2d 408, 411 (Fla. Dist. Ct. App. 2002) (noting that Wendt
cannot be construed to grant jurisdiction under FLA . STAT . ch. 48.193(1)(b) in every situation
where a tort was completed out-of-state but caused injury in Florida).
11
that the cause of action arises from those communications. Id.; see Acquadro v.
Bergeron, 851 So. 2d 665, 671 (Fla. 2003) (finding jurisdiction under F LA. S TAT.
ch. 48.193(1)(b) where an out-of-state defendant allegedly defamed a Florida
resident during a phone call made into Florida). Accordingly, there must be some
“connexity” that exists between the out-of-state communications and the cause of
action such that the cause of action “would depend upon proof of either the
existence or the content of any of the communications . . . into Florida.” Carlyle,
842 So. 2d at 1017.
Based on this precedent, we find that Horizon made sufficient allegations in
its complaint that Kass committed a tortious act in Florida as defined by F LA.
S TAT. ch. 48.193(1)(b). The district court noted that the general gravamen of the
complaint was that Kass allegedly was negligent in failing to perform certain
duties, and therefore jurisdiction was lacking under ch. 48.193(1)(b) because the
complaint did not allege that any out-of-state communications into Florida were
themselves tortious. Our review of the complaint, however, reveals otherwise.
After stating that Henley expressed concern about the limitations of Horizon to
perform oversight and back office functions, Horizon alleged in its complaint that
Wolf, in communications from his California office to Horizon, affirmatively
represented that he, and subsequently Kass, would monitor Yu & Company and
12
perform back office services for Horizon. See R1-2 at 21, ¶ 59. In Count III of its
complaint, after reincorporating the allegations in paragraph 59, Horizon alleged
that these communications were issued “with intent to deceive and defraud
Horizon,” id. at 55, ¶ 148, and therefore constituted constructive fraud, an
intentional tort in Florida, see Alex Hofrichter, P.A. v. Zuckerman & Venditti,
P.A., 710 So. 2d 127, 130 (Fla. Dist. Ct. App. 1998). While Kass argues that it
made no such representations to Horizon, Horizon met its burden to rebut Kass’s
denials by offering proof from Wolf’s deposition which indicated that Kass had
discussed back office services with Henley. See Acquadro, 851 So.2d at 671
(noting that the plaintiff has the burden to offer further evidence to support the
allegations in the complaint after the defendant sufficiently challenges by affidavits
the allegations supporting jurisdiction in the complaint). Accordingly, regardless
of the veracity of Kass’s denials on the merits, we conclude that Horizon had
satisfied its burden to establish jurisdiction under F LA. S TAT. ch. 48.193(1)(b). See
Future Tech. Today, Inc., 218 F.3d at 1250 (finding allegations sufficient for
jurisdiction but declining to consider the merits of the controversy).
III. CONCLUSION
In this appeal, we were called upon to consider the reach of the Florida
Long-Arm statute, F LA. S TAT. ch. 48.193. Based on our review of the complaint
13
and supporting materials submitted by the parties, we have concluded that
Horizon had alleged sufficient facts to sustain the assertion of jurisdiction under
F LA. S TAT. ch. 48.193(1)(b). Accordingly, the district court’s grant of Kass’s
motion to dismiss is REVERSED. Because the district court found jurisdiction
lacking under the Long-Arm statute, and therefore declined to consider whether the
assertion of jurisdiction was consistent with the Due Process Clause of the
Fourteenth Amendment, we REMAND for further consideration of whether the
assertion of jurisdiction over Kass California and Wolf in Florida would violate
due process. In addition, provided the district court finds due process is not
violated by the assertion of jurisdiction over Kass California and Wolf, we direct
the district court to consider on remand Kass’s argument that jurisdiction cannot be
maintained over Kass New Jersey and Kass New York pursuant to Horizon’s alter
ego theory. Compare R1-2 at 5, ¶ 18 (alleging in the complaint that Kass
California operated as an agent and alter ego for Kass New Jersey and Kass New
York), with R1-11 at 5, ¶ 14 (refuting alter ego allegations by affidavit). Finally,
we note that the district court is not precluded from considering on remand any
change of venue motion that may be subsequently filed. See Insurance Co. of N.
Am. v. Ozean/Stinnes-Linien, 367 F.2d 224, 226-227 (5th Cir. 1966) (noting that a
district court may entertain a 28 U.S.C. § 1404 change of venue motion after a
14
motion to dismiss for lack of jurisdiction is denied).8 REVERSED and
REMANDED.
8
We note that Kass limited its formal motion to dismiss to jurisdictional grounds, see
generally R1-9, but argued alternatively in the memorandum of law accompanying the motion to
dismiss that the claims against Kass should be transferred to federal court in California pursuant
to 28 U.S.C. § 1404, see R1-10 at 22-26. The district court declined to address § 1404
arguments because it dismissed the case for lack of jurisdiction. However, nothing in this
opinion should be construed to preclude the district court from considering a § 1404 motion if
filed on remand.
15