Fortune Laurel, LLC v. High Liner Foods (USA), Incorporated, Trustee ( 2020 )

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Rockingham
No. 2019-0307
FORTUNE LAUREL, LLC
v.
HIGH LINER FOODS (USA), INCORPORATED, TRUSTEE & a.
Argued: March 4, 2020
Opinion Issued: May 8, 2020
Hage Hodes, P.A., of Manchester (Jamie N. Hage and Katherine E.
Hedges on the brief, and Ms. Hedges orally), for the plaintiff.
Devine, Millimet & Branch, Professional Association, of Manchester
(William F. Gramer on the brief), and SLN Law, LLC, of Sharon, Massachusetts
(Emily E. Smith-Lee on the brief and orally), for the YOK defendants.
High Liner Foods (USA), Incorporated, trustee defendant, filed no brief.
DONOVAN, J. Yunnan New Ocean Aquatic Product Science and
Technology Group Co., Ltd., Yunnan Ocean King Fisheries Co., Ltd., Yunnan
Honghao Fisheries Co., Ltd., and U.S. Ocean Star Trade Co., Ltd. (YOK
defendants) appeal an order of the Superior Court (Delker, J.) maintaining an
attachment of funds held by High Liner Foods (USA), Inc. (High Liner USA), the
trustee defendant. The YOK defendants argue that the trial court erred by
maintaining quasi in rem jurisdiction over the attached funds despite
concluding that it lacked personal jurisdiction over them in the underlying
action. We affirm because the trial court’s limited exercise of jurisdiction over
the attached funds comports with due process requirements.
I. Facts
The trial court’s orders set forth the following relevant facts. In 2012,
Fortune Laurel, LLC, a Massachusetts company, entered into contracts with
the YOK defendants to broker the sale of fish processed by the YOK defendants
to companies in the United States and Canada. One such company was
located in Massachusetts, which was subsequently acquired by a Canadian
company named High Liner Foods, Inc. (Canada) (High Liner Canada).
Thereafter, High Liner Canada rebranded its corporate acquisition High Liner
Foods (USA) and moved it to Portsmouth in 2014. The arrangement operated
as follows. High Liner USA solicited fish from High Liner Canada, which
procured the fish from international sellers, including the YOK defendants.
The YOK defendants shipped the fish to High Liner USA in Massachusetts or
Virginia, where High Liner USA inspected the fish and, if satisfactory,
distributed it across the United States. Upon High Liner USA’s acceptance of
the fish, the YOK defendants invoiced High Liner USA and the invoice was paid
by High Liner Canada, which then invoiced High Liner USA. The YOK
defendants shipped fish to High Liner USA “[w]ith some regularity.” Fortune
Laurel received a commission from the YOK defendants based upon the
amount of fish sold. Fortune Laurel also purchased fish from the YOK
defendants for resale to a Massachusetts company.
After the written contract between Fortune Laurel and the YOK
defendants expired, the YOK defendants continued to use Fortune Laurel to
broker its sales with High Liner USA until 2017, when “the YOK defendants
decided to exclude [Fortune Laurel] from the relationship.” In December 2017,
Fortune Laurel sued the YOK defendants in New Hampshire, alleging two
counts of breach of contract and violations of the New Hampshire Consumer
Protection statute. Fortune Laurel claimed that the YOK defendants failed to
pay its commissions in 2017, improperly caused High Liner Canada to revoke
its access to High Liner’s online tracking system, sold it fish for resale in
Massachusetts that failed to meet applicable standards, and made fraudulent
insurance claims that have negatively affected its business. Fortune Laurel
sought damages, attorney’s fees, and costs exceeding $600,000.
Contemporaneously with its complaint, Fortune Laurel filed a petition for an ex
parte attachment of funds that High Liner USA owes the YOK defendants as
payment for fish shipments. According to the YOK defendants, Fortune Laurel
sought to attach a sum exceeding $500,000. The trial court granted the
attachment.
2
The YOK defendants moved to dismiss the suit for lack of personal
jurisdiction. The trial court found that several of Fortune Laurel’s claims were
“wholly unrelated” to New Hampshire and thus that “dismissal for lack of
personal jurisdiction was appropriate.” With regards to the claim that the YOK
defendants breached their contract with Fortune Laurel by failing to pay
commissions on shipments in 2017, the trial court noted that “the YOK
defendants’ contact with New Hampshire was the prerequisite to the breach at
issue,” because the breach concerned transactions between the YOK
defendants and High Liner USA in New Hampshire. However, it concluded that
it would be neither in the interest of judicial economy nor fair to require the
YOK defendants to litigate claims in both New Hampshire and Massachusetts
when the majority of the conduct at issue occurred in Massachusetts and New
Hampshire lacked a strong interest in adjudicating the single claim.
Accordingly, the trial court concluded that exercising personal jurisdiction over
the YOK defendants “would be inconsistent with notions of fair play and
substantial justice.” Fortune Laurel thereafter filed a “substantially similar”
lawsuit against the YOK defendants in Massachusetts.1
Nonetheless, the trial court ruled that it could continue to exercise quasi
in rem jurisdiction over the attached funds. It noted the difference in
magnitude between exercising jurisdiction over the merits of the case and
exercising jurisdiction over the attached funds. It also found credible Fortune
Laurel’s argument that the YOK defendants’ “location in China severely limits
[Fortune Laurel’s] ability to obtain a remedy in this case” in the event Fortune
Laurel prevails in the Commonwealth. The trial court concluded that due
process allowed it to “temporarily freeze” the YOK defendants’ assets by
maintaining the attachment “while the merits of the underlying lawsuit are
adjudicated” in Massachusetts. High Liner USA moved for reconsideration, the
trial court denied its motion and the YOK defendants filed this appeal.
II. Standard of Review
The plaintiff bears the burden of demonstrating facts sufficient to
establish jurisdiction. Continental Biomass Indus. v. Env’t Mach. Co., 152
N.H. 325, 327 (2005). The plaintiff need make only a prima facie showing of
jurisdictional facts to defeat a defendant’s motion to dismiss. See State v. N.
Atlantic Ref. Ltd., 160 N.H. 275, 280 (2010). Under the prima facie standard,
the plaintiff must proffer evidence which, if credited, is sufficient to support
findings of all facts essential to jurisdiction. See id. Because the trial court
held an evidentiary hearing on the YOK defendants’ motion to dismiss and
Fortune Laurel’s attachment petition, we will defer to the trial court’s factual
findings drawn from the testimony at the hearing, unless they are unsupported
by the record or clearly erroneous. See Boit v. Gar-Tec Products, Inc., 967 F.2d
671, 678 (1st Cir. 1992); see also N. Atlantic Ref., 160 N.H. at 280. However,
1
No party has appealed the trial court’s order dismissing Fortune Laurel’s substantive action.
3
because the exercise of jurisdiction implicates the Fourteenth Amendment to
the United States Constitution, we review de novo the trial court’s legal
conclusion as to whether its findings support the exercise of jurisdiction. See
Boit, 967 F.2d at 678; see also State v. Dupont, 155 N.H. 644, 645 (2007).
III. Analysis
As an initial matter, Fortune Laurel asserts that the trial court’s order is
not a final decision on the merits, and, therefore, our review of the trial court’s
decision is inappropriate. See Sup. Ct. R. 3, 7. We conclude that, in order to
reach the YOK defendants’ due process claim, we will treat their appeal as a
properly filed interlocutory appeal and waive the procedural requirements of
Supreme Court Rule 8. See Sup. Ct. R. 1; In re Brittany S., 147 N.H. 489, 490
(2002); see also Mosier v. Kinley, 142 N.H. 415, 424 (1997) (“[I]t would be
unfair to force a defendant to expend the time and resources necessary to
mount a defense on the merits if the court has no personal jurisdiction over the
defendant.”).
Turning to the merits, the YOK defendants argue that the trial court’s
exercise of jurisdiction contravenes due process standards established by the
United States Supreme Court. They contend that the trial court’s conclusion
that it has jurisdiction over the attached funds is irreconcilable with its
conclusion that it does not have personal jurisdiction in the underlying action.
We disagree.
“A state court’s assertion of jurisdiction exposes defendants to the State’s
coercive power, and is therefore subject to review for compatibility with the
Fourteenth Amendment’s Due Process Clause.” Goodyear Dunlop Tires
Operations, S. A. v. Brown, 564 U.S. 915, 918 (2011). A court may exercise
personal jurisdiction over a defendant, consistent with due process, if the
defendant has “certain minimum contacts with [the state] such that the
maintenance of the suit does not offend traditional notions of fair play and
substantial justice.” Internat. Shoe Co. v. Washington, 326 U.S. 310, 316
(1945) (quotation omitted); see Continental Biomass, 152 N.H. at 329. In
Shaffer v. Heitner, 433 U.S. 186, 208-09, 212 (1977), the Court expanded the
application of the International Shoe test, holding that “all assertions of state-
court jurisdiction,” including the exercise of quasi in rem jurisdiction, “must be
evaluated according to the standards set forth in International Shoe and its
progeny.”
One type of quasi in rem jurisdiction exists where “the plaintiff seeks to
apply what he concedes to be the property of the defendant to the satisfaction
of a claim against him.” Continental Biomass, 152 N.H. at 328 (quotation
omitted). In such a case, “the court’s jurisdiction over the defendant’s property
is invoked through attachment . . . or a similar procedure.” Id.; see Office
Depot Inc. v. Zuccarini, 596 F.3d 696, 699 (9th Cir. 2010) (explaining that this
4
type of quasi in rem jurisdiction “is used to establish the ownership of property
in a dispute unrelated to the property” and is sometimes called “attachment
jurisdiction” (quotation omitted)). We observe that, although quasi in rem
jurisdiction is typically asserted as a justification for a court to entertain the
merits of claims against a defendant, here it is asserted for the narrow purpose
of attaching the defendants’ funds while the merits are litigated elsewhere. Cf.
Continental Biomass, 152 N.H. at 328-29. Thus, the property of the YOK
defendants is subjected to New Hampshire’s jurisdiction, not to require the
YOK defendants to litigate the merits of Fortune Laurel’s claims, but for the
limited purpose of addressing issues that may arise from the attachment of
their funds here.
The Shaffer Court contemplated a situation similar to the one now before
us. It observed that, to prevent a defendant from avoiding “payment of his
obligations by the expedient of removing his assets to a place where he is not
subject to” personal jurisdiction, “a State in which property is located should
have jurisdiction to attach that property . . . as security for a judgment being
sought in a forum where the litigation can be maintained consistently with
International Shoe.” Shaffer, 433 U.S. at 210 (quotation omitted). This
observation “evidence[s] an acknowledgment that there is a distinction between
jurisdiction to adjudicate the underlying merits of the controversy” and
jurisdiction to attach property while the underlying merits are litigated
elsewhere. Carolina Power & Light Co. v. Uranex, 451 F. Supp. 1044, 1048
(N.D. Cal. 1977); see 4A Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 1072, at 311 (2002) (noting that there is a “qualitative
difference between attachment jurisdiction and in personam jurisdiction” such
that “[a]rguably fair play and substantial justice requires fewer contacts
between the defendant and the forum to enforce a judgment that is limited by
the value of the attached property than it requires to enforce a full in personam
judgment against him”). Accordingly, courts in other jurisdictions have held
that a court without personal jurisdiction over a defendant may nonetheless
attach the defendant’s property pending the resolution of the underlying claim
in another jurisdiction. See, e.g., Uranex, 451 F. Supp. at 1047-48; Barclays
Bank, S.A. v. Tsakos, 543 A.2d 802, 805-06 (D.C. App. 1988).
In Uranex, 451 F. Supp. at 1045-46, for example, the United States
District Court for the Northern District of California concluded that it lacked
personal jurisdiction over a French company. However, it also concluded that
it could attach the company’s assets located in California while the plaintiffs
filed suit elsewhere. Id. at 1048-49. The court reasoned that when
the facts show that the presence of [the] defendant’s property
within the state is not merely fortuitous, and that the attaching
jurisdiction is not an inconvenient arena for [the] defendant to
litigate the limited issues arising from the attachment, assumption
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of limited jurisdiction to issue the attachment pending litigation in
another forum would be constitutionally permissible.
Id. at 1048. Although the attached assets in Uranex were unrelated to the
underlying dispute, the federal district court found that the assets were the
only assets the defendant possessed in the United States, it was unlikely that
the defendant would bring such assets into the United States in the future, and
the assets were a product of the company’s business relationship with another
company headquartered in California. Id. at 1048-49. Thus, the court found
that California was “not an exceptional or inconvenient forum for” the
defendant to litigate issues pertaining to the attached funds. Id. at 1049.
Similarly, in Tsakos, 543 A.2d at 803, 805-06, the District of Columbia
Court of Appeals cast doubt on whether a court in the District could assert
personal jurisdiction over the defendants, a family of Greek citizens who lived
in France at the time, based solely upon their contacts with the District that
existed prior to the events giving rise to the plaintiff’s claims. However, the
court held that the trial court could attach an apartment owned by the
defendants and located in the District while the merits of the claims were
adjudicated in Europe. Id. The court noted the plaintiff’s allegation that the
defendants would attempt to remove the property from the District by sale, and
found that the defendants’ previous residence, the husband’s previous
maintenance of an office, and their ownership of an apartment in the District
provided sufficient contacts to impose upon the defendants “any steps
necessary to deal with issues arising from the attachment.” Id. at 805-06
(footnote omitted).
We agree with the rationale supporting the attachment of property in the
foregoing cases. In appropriate circumstances, a court may exercise
jurisdiction over a defendant’s assets by means of attachment despite the
court’s lack of personal jurisdiction over the defendant. “[T]he relationship
among the defendant, the forum, and the litigation” is “the central concern of
the inquiry into” whether a state can assert jurisdiction. Shaffer, 433 U.S. at
204; see Continental Biomass, 152 N.H. at 329. The analysis of that
relationship, and thus the due process limits on a court’s exercise of
jurisdiction, may be different when the litigation concerns attached funds that
secure a potential judgment resulting from litigation pending in another
jurisdiction as opposed to the substantive merits of the underlying claims. See
Shaffer, 433 U.S. at 210; Uranex, 451 F. Supp. at 1048; see also Cameco
Industries, Inc. v. Mayatrac, S.A., 789 F. Supp. 200, 201, 203 (D. Md. 1992)
(observing that the application of the International Shoe standard to a
defendant’s contacts with a forum can confer on a court jurisdiction to attach
but not personal jurisdiction). Pursuant to Shaffer’s holding that “all
assertions of state-court jurisdiction must be evaluated according to the
standards set forth in International Shoe and its progeny,” Shaffer, 433 U.S. at
212, the trial court properly exercised jurisdiction over the attached funds if
6
“the maintenance of the suit does not offend traditional notions of fair play and
substantial justice,” Internat. Shoe, 326 U.S. at 316 (quotation omitted). See
Cameco, 789 F. Supp. at 203.
We have previously set forth a three-pronged analysis to determine
whether a court in New Hampshire may exercise quasi in rem jurisdiction
consistent with the International Shoe standard. See Continental Biomass,
152 N.H. at 329. We consider whether: (1) the defendants’ contacts with New
Hampshire relate to the cause of action; (2) the defendants have purposefully
availed themselves of the protections of New Hampshire law; and (3) it would be
fair and reasonable to require the defendants to defend the suit in New
Hampshire.2 Id. Applying this analysis, we conclude that the trial court’s
exercise of jurisdiction over the attached funds is consistent with due process.
As to the first prong, the YOK defendants have some, although limited,
contact with New Hampshire, which relates to the cause of action, i.e., the
attachment of their funds. The YOK defendants maintain a business
relationship — initially brokered by Fortune Laurel in 2012 — with High Liner
USA, which became a New Hampshire company in 2014. The attached funds
are a product of this relationship. We therefore agree with the trial court that
the presence of the funds in New Hampshire is not merely fortuitous, but
rather “the funds are located here because of the YOK defendants’ choice to do
business with a company headquartered in” New Hampshire. See Uranex, 451
F. Supp. at 1048-49 (weighing that “the presence of the debt [derives]
necessarily from the dealings between” the defendant and a California company
in favor of exercising jurisdiction in California).
Similarly, with regard to the second prong, we agree with the trial court’s
conclusion that the YOK defendants have “continuously and purposefully
availed themselves of New Hampshire law, as the funds attached are derivative
of a relationship with a company operating under the laws of the State of New
Hampshire.” See Fellows v. Colburn, 162 N.H. 685, 694 (2011) (explaining that
purposeful availment requires that the defendants’ contacts with New
Hampshire result from their deliberate actions and that the nature of the
contacts are such that it is foreseeable to be called into court in the state to
account for those contacts).
Pursuant to the third prong, we consider: (1) the burden on the
defendants; (2) New Hampshire’s interest in adjudicating the dispute; (3) the
plaintiff’s interest in obtaining convenient and effective relief; (4) the interstate
judicial system’s interest in obtaining the most effective resolution of
controversies; and (5) the shared interest of the several states in furthering
fundamental substantive social policies. N. Atlantic Ref., 160 N.H. at 285-86.
2
Although in Continental Biomass, 152 N.H. at 329, we also described a distinct, two-pronged
jurisdictional analysis, we applied the three-pronged analysis outlined above. Accordingly, we will
apply the three-pronged analysis here.
7
We have recognized that these factors “sometimes serve to establish the
reasonableness of jurisdiction upon a lesser showing of minimum contacts
than would otherwise be required.” Id. at 286.
In a context similar to the one now before us, the Uranex Court reasoned
that “the application of notions of ‘fair play and substantial justice’ include
consideration of both the jeopardy to [the] plaintiff’s ultimate recovery and the
limited nature of the jurisdiction sought.” Uranex, 451 F. Supp. at 1048; see
Internat. Shoe, 326 U.S. at 317 (noting that due process “demands may be met
by such contacts of the corporation with the state of the forum as make it
reasonable . . . to require the corporation to defend the particular suit which is
brought there”) (emphasis added)). Subjecting the YOK defendants to litigation
in New Hampshire regarding “the limited issues arising from the attachment,”
Uranex, 451 F. Supp. at 1048, does not impose a significant burden on them.
We also recognize the difficulty of enforcing a United States judgment in
China, where the YOK defendants are located. See generally Aaron D.
Simowitz, Convergence and the Circulation of Money Judgments, 92 S. Cal. L.
Rev. 1031 (2019) (discussing the historical impediments, and recent limited
improvements, to enforcing United States judgments in China). Although
Fortune Laurel makes no allegation that the YOK defendants are seeking to
shield their assets from satisfying a potential judgment, the YOK defendants do
not claim to have alternative, permanent assets in the United States that
Fortune Laurel could use to satisfy such a judgment. Furthermore, New
Hampshire’s interests together with the general principles of comity among the
states support allowing Fortune Laurel to satisfy a judgment should it prevail
in Massachusetts. We therefore conclude that it is fair and reasonable for the
trial court to exercise jurisdiction over the attached funds.
Our decision in Travelers Indemnity Co. v. Abreem Corp., 122 N.H. 583
(1982), is unavailing to the YOK defendants. There, the plaintiff brought a
breach of contract action in Massachusetts, and the Massachusetts court
issued an attachment against the defendants’ property in Massachusetts, but
the plaintiff found that the initial attachment provided insufficient security for
its potential judgment. Id. at 584. The plaintiff then sought and obtained an
attachment of the defendants’ real estate in New Hampshire from a New
Hampshire court, upon invoking its quasi in rem jurisdiction. Id. The trial
court found that personal jurisdiction was lacking, but assumed quasi in rem
jurisdiction over “the lawsuit and the litigants.” Id. at 585. We reversed, in
part, because “New Hampshire is not related to the parties or the litigation”
and because the defendants’ attached property was unrelated to the cause of
action. Id. at 585-86. Here, on the other hand, the YOK defendants are
connected to New Hampshire through their business relationship with High
Liner USA, a New Hampshire company. The YOK defendants established that
relationship through Fortune Laurel and at least one of Fortune Laurel’s
underlying claims is based primarily on that relationship.
8
The YOK defendants argue that, under similar circumstances, courts
only permit the limited exercise of jurisdiction over attached funds when there
are extenuating circumstances, such as the “real risk that the defendant will
attempt to hide or remove assets” or that the plaintiff will be unable to recover
damages “without some immediate action.” By way of example they point to
Tsakos, 543 A.2d at 805, in which the court noted that “[a]n allegation is made
of intended effective removal of the property by way of sale and nonavailability
of assets elsewhere.” The court in Tsakos, however, focused its analysis on the
defendants’ and their property’s contacts with the forum, rather than on the
defendants’ alleged intent to remove their property. Id. at 805-06.
Furthermore, as the YOK defendants acknowledged at oral argument, their
“assets are located overseas.” See Uranex, 451 F. Supp. at 1048 (weighing that
the defendant “has no other assets within the United States” in favor of
exercising jurisdiction over attached funds). The YOK defendants note that the
trial court found that they have an ongoing business relationship with High
Liner USA which, they contend, will “likely . . . result in the presence of
attachable assets” (emphasis added) in the United States. However, the trial
court’s findings regarding their current ongoing business relationship do not
support the suggestion that the relationship will, in fact, continue until the
time a judgment is rendered in Massachusetts. Therefore, the presence in the
United States of alternative assets belonging to the YOK defendants is
speculative. The existence of extenuating circumstances, such as a party’s
intent to hide or remove assets, may increase the urgency of attaching funds.
However, we conclude that such circumstances are not a necessary predicate
to exercising jurisdiction consistent with due process in this case given the
YOK defendants’ contacts with New Hampshire and their lack of permanent
assets in the United States to secure a potential judgment.3
IV. Conclusion
For the reasons stated above, we conclude that the trial court’s exercise
of jurisdiction over the YOK defendants’ funds conforms with due process and
therefore affirm the trial court’s order maintaining the attachment of those
funds.
Affirmed.
HICKS, BASSETT, and HANTZ MARCONI, JJ., concurred.
3
The YOK defendants also argue, for the first time on appeal by way of a footnote in their brief,
that “the attachment automatically dissolved upon dismissal of the plaintiff’s claims by operation
of” RSA 511:45 (2010), which states, in part, that “when the action is . . . dismissed, the
attachment made in the action is dissolved thereby.” We will not address this argument because
the YOK defendants did not raise it before the trial court and it is insufficiently briefed for our
review. See Halifax-American Energy Co. v. Provider Power, LLC, 170 N.H. 569, 574 (2018).
9