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.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]
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Before
Stahl, Circuit Judge,
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Godbold* and Cyr, Senior Circuit Judges.
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Michael J. Traft, with whom Carney & Bassil was on brief for
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appellant.
Toni G. Wolfman, with whom Foley, Hoag & Eliot LLP was on brief
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for appellee.
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December 22, 1997
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*Of the Eleventh Circuit, sitting by designation.
CYR, Senior Circuit Judge. Plaintiff Lyle Richards
CYR, Senior Circuit Judge.
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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
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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
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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
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1We review de novo. Nowak v. Tak How Invs., Ltd., 94 F.3d
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708, 712 (1st Cir. 1996), cert. denied, 117 S. Ct. 1333 (1997).
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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
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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
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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
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commonwealth . . . ." Mass. Gen. Laws ch. 223A, 3(a) (emphasis
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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
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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
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Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 496 (5th Cir.
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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
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to plaintiff[,]" but without crediting "conclusory allegations or
draw[ing] farfetched inferences." Ticketmaster-New York, Inc. v.
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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,
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551-52 (Mass. 1994); see also Hahn v. Vermont Law Sch., 698 F.2d
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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.
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Guar. Ass'n v. Markem Corp., 676 N.E.2d 809, 812-13 (Mass. 1997)
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(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
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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
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relationship previously proposed by Lyle be reduced to writing.
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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
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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.
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v. United Aircraft Corp., 482 F.2d 1079, 1085 (1st Cir. 1973)
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(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
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in Massachusetts") (emphasis added); New Hampshire Ins. Guar.
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Ass'n v. Markem Corp., 676 N.E.2d 809, 812 (Mass. 1997) ("That
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[plaintiff] then decided to conduct some administration . . . in
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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
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added). See also Nichols Assocs., Inc. v. Starr, 341 N.E.2d 909,
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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
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perform in Massachusetts.") (emphasis added).
For one thing, most performance required from Lyle
under the Agreement was to be rendered outside Massachusetts.
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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
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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
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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,
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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
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was the Agreement executed by Ashworth in Massachusetts, see
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Carlson Corp. v. University of Vermont, 402 N.E.2d 483, 485
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(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
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almost certainly would not have selected the defendant's
California hotel but for the advertisements the defendant had
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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
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Law Sch., 698 F.2d 48, 51 (1st Cir. 1983) (holding, pre-Tatro:
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"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
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formation of the contract.") (emphasis added), those activities
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did not constitute a "but for" cause for the alleged breach of
contract, see Tatro, 625 N.E.2d at 553.
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B. The Unfair Trade Practices
B. The Unfair Trade Practices
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Claim Under Chapter 93A
Claim Under Chapter 93A
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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,
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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
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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
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suffers any loss of money or property, real or personal, as a
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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
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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,
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Inc., 557 F. Supp. 230, 238 (D. Mass. 1983).
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Affirmed.
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