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Dorf v. Complastik Corp.
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	1999 ME 133
Docket:	Oxf-99-80
Argued:	May 5, 1999
Decided:	August 19, 1999

Panel:WATHEN, C.J., and CLIFFORD, RUDMAN, SAUFLEY, ALEXANDER, and CALKINS,
JJ.


MICHAEL DORF v. COMPLASTIK CORPORATION et al.


CLIFFORD, J.

	[¶1]  Michael Dorf appeals from a judgment entered in the Superior
Court (Oxford County, Perkins, A.R.J.) dismissing his complaint against
Complastik Corporation and David Evans, nonresident defendants, for
insufficient service of process and lack of personal jurisdiction.  Dorf
contends that the court erred by dismissing his complaint because service of
process was sufficient, at least as to Complastik, and because his complaint
and supporting affidavit establish a prima facie case that Complastik and
Evans, through their conduct, availed themselves of jurisdiction in Maine
pursuant to its long-arm statute, 14 M.R.S.A. § 704-A (1980 & Supp. 1998). 
Although we affirm the dismissal as to Evans because he was not properly
served, we vacate the judgment as to Complastik.
	[¶2]  Dorf and Evans worked for Quadrax Corporation, a Rhode Island
corporation which manufactures and distributes thermoplastic composites. 
In 1997, the two men ceased working for Quadrax and met several times in
Massachusetts to discuss forming a company to compete with their former
employer.  In November of 1997, those negotiations resulted in an
agreement "to own and operate a business to manufacture fiber reinforced
thermoplastic composites."  Their agreement provided that Dorf and Evans
would form a Massachusetts corporation under the name Complastik, and, in
December of 1997, that company was incorporated pursuant to the laws of
Massachusetts.  Dorf was to be president and Evans vice-president and
secretary of Complastik, each owning 10,000 of the initial stock issuance of
20,000 shares.  
	[¶3]  Shortly after the incorporation of Complastik, a dispute arose
between Dorf and Evans.  Dorf filed a complaint against both Complastik and
Evans, contending that Evans:  wrongfully dismissed Dorf as an officer of the
corporation; failed to issue stock to Dorf; and threatened Dorf with legal
action for alleged infringement of Complastik's patented method of
producing thermoplastic composites, a process which Dorf contends he co-
invented.  The complaint sought damages for breach of contract, wrongful
dissolution of a partnership, breach of fiduciary duty, conversion, and a
declaration of the parties' rights with respect to the patent.{1}  Evans filed a
motion to dismiss the complaint for insufficient service of process and lack
of personal jurisdiction.  Both parties submitted affidavits concerning
Evans's and Complastik's contacts with Maine.  The Superior Court granted
the motion to dismiss for insufficient service of process and lack of personal
jurisdiction.{2}  Because Dorf conceded and we conclude that service of
process on Evans was defective, we affirm the dismissal of Evans as a
defendant.  Complastik concedes, however, that it was properly served and
we therefore vacate its dismissal as a defendant based on insufficient service
of process.
	[¶4]  As to the issue of personal jurisdiction, the affidavit submitted by
Dorf asserts as true the following facts:  Both Dorf and Evans were residents
of Massachusetts until November of 1997, when Dorf sold his home and
permanently moved to a cottage he owned in Oxford, Maine.  Prior to
moving to Maine, he and Evans met at Dorf's cottage in Oxford and engaged
in initial discussions and negotiations to enter into a joint venture.  Both
parties agreed that Complastik would conduct business from two principal
locations, Massachusetts and Maine, and that Dorf would spend one day a
week in Massachusetts and the rest of the week working from his home in
Maine.  Business conducted by Dorf on behalf of Complastik, from his home
in Maine, included:  co-inventing the process for manufacturing reinforced
thermoplastic composites; negotiating and signing a lease for office space
for Complastik in Massachusetts; purchasing office furniture for use at
Complastik's office; and obtaining commercial insurance for Complastik. 
Dorf also traveled to Texas and California on behalf of Complastik, and visited
potential customers in Maine, Vermont, and New Jersey.
	[¶5]  Dorf further asserts that, in addition to the work done by Dorf on
behalf of Complastik in Maine, Evans, on at least one occasion, conducted
Complastik business in Maine.  In June of 1998, Evans traveled to Maine to
attend a regional trade show and to negotiate a development contract with
Brunswick Technologies, Inc.  (BTI).  The negotiations lead to the signing of
a nondisclosure agreement between Complastik and BTI.  According to Dorf,
that nondisclosure agreement constitutes a continuing business relationship
in Maine.
	[¶6]  Evans and Complastik alleged a different factual scenario in two
affidavits signed by Evans and submitted in support of his motion to dismiss
for lack of personal jurisdiction.  Those affidavits assert as true the following
facts:  Complastik maintained an office and conducted business in
Massachusetts.  All phone calls, banking, and the signing of important
corporate documents and IRS statements occurred in Massachusetts. 
Moreover, Dorf barely participated in Complastik business.  Between October
and December of 1997, Dorf claimed that his severance agreement with
Quadrax prevented him from overtly involving himself with Complastik and
he therefore did not assist in developing Complastik's patented method for
producing thermoplastic composites.  Instead, Dorf spent the time
refurbishing his cottage in Maine.  In April of 1998, Dorf did state that he
planned to work at Complastik four days a week and become a full-time
participant in the company.  He never did so, however, and later told Evans
that he was seeking alternate employment.  Moreover, Evans contends that
Dorf's travel to Texas and California was associated with Dorf's search for
other employment and was not to further Complastik's business.  
	[¶7]  Evans claims to be unaware of any Complastik business
conducted in Maine.  Evans never agreed to allow Dorf to work from his
home; the corporate insurance that Dorf contends he purchased from Maine
was obtained through an insurance broker in Boxborough, Massachusetts;
and Dorf's purchase of office furniture was never authorized by the
corporation.  Evans does admit meeting with BTI to discuss a prospective
development contract.  He contends, however, that other than a
nondisclosure agreement with BTI, signed to explore the possibility of a
future business relationship, and a few telephone calls and e-mails with Dorf,
neither he nor Complastik had any contact with Maine.
	[¶8]  Dorf contends that when the court rules on a motion to dismiss
for lack of personal jurisdiction based solely on affidavits, without the benefit
of an evidentiary hearing, the plaintiff need only make a prima facie showing
of personal jurisdiction to withstand the defendant's motion to dismiss. 
	[¶9]  "The jurisdictional reach of Maine's long-arm statute . . . is
coextensive with the permissible exercise of personal jurisdiction under the
due process clause of the fourteenth amendment."  Interstate Food
Processing Corp. v. Pellerito Foods, Inc., 622 A.2d 1189, 1191 (Me. 1993)
(citing Frazier v. Bankamerica Int'l, 593 A.2d 661, 662 (Me. 1991); Caluri v.
Rypkema, 570 A.2d 830, 831 (Me. 1990)).  When applying Maine's long-arm
statute, therefore, "a court need only consider whether due process
requirements have been satisfied."  Suttie v. Sloan Sales, Inc.,
1998 ME 121, ¶ 4, 711 A.2d 1285, 1286 (citation omitted).
	[¶10]  We have stated:
[i]n order for Maine to exercise personal jurisdiction over a
nonresident defendant, due process requires that (1) Maine
have a legitimate interest in the subject matter of the litigation;
(2) the defendant, by [its] conduct, reasonably could have
anticipated litigation in Maine; and (3) the exercise of
jurisdiction by Maine's courts comports with traditional notions
of fair play and substantial justice.
Id.  (quoting Murphy v. Keenan, 667 A.2d 591, 593 (Me. 1995)).
	[¶11]  The plaintiff bears the burden of satisfying the first two of the
three prongs of the test to determine whether personal jurisdiction has
been established: that Maine has a legitimate interest in the subject matter
of the litigation; and that the defendant, by its conduct, could reasonably
have anticipated litigation in Maine.  See Murphy, 667 A.2d at 594.  "Once
the plaintiff does so, the burden then shifts to the defendant to establish
that asserting jurisdiction does not comport with traditional notions of fair
play and substantial justice."  Id. (citations omitted).  Placing the burden of
proof on the plaintiff, however, is merely the first step.  "[T]o allocate the
burden is neither to define the evidentiary showing necessary to meet it nor
to explain whether that showing varies from context to context." 
Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145
(1st Cir. 1995).  
	[¶12]  A motion to dismiss for lack of personal jurisdiction, pursuant
to Rule 12(b)(2), may be considered and decided prior to trial, unless, in
certain limited circumstances, the court, in its discretion, defers ruling on
the motion until trial.  See M.R. Civ. P. 12(d).  "Facts regarding jurisdictional
questions may be determined by reference to affidavits, by a pretrial
evidentiary hearing, or at trial when the jurisdictional issue is dependent
upon a decision on the merits."  Federal Deposit Ins. Corp. v. Oaklawn
Apartments, 959 F.2d 170, 174 (10th Cir. 1992).  The method chosen by
the trial court to decide such motions will dictate the evidentiary showing
necessary for the plaintiff to survive the defendant's motion to dismiss.  See
Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675 (1st Cir. 1992).
	[¶13]  Courts most commonly rule on a motion to dismiss for lack of
personal jurisdiction prior to trial, without holding an evidentiary hearing. 
The plaintiff's showing in opposition to the motion "must be made on
specific facts set forth in the record . . . ."  Suttie, 1998 ME 121, ¶ 5,
711 A.2d at 1286 (emphasis added).  "This means that [the] plaintiff 'must
go beyond the pleadings and make affirmative proof.'"  United Elec. Radio
and Mach. Workers of Am. v. 163 Pleasant St. Corp., 987 F.2d 39, 44
(1st Cir. 1993) (quoting Boit, 967 F.2d at 675).  This showing may be made
by affidavit or otherwise.  See Serras v. First Tennessee Bank Nat'l Assoc.,
875 F.2d 1212, 1214 (6th Cir. 1989).  
	[¶14]  When "the court proceeds only upon the pleadings and
affidavits of the parties, the plaintiff 'need only make a prima facie showing
that jurisdiction exists,' and the plaintiff's written allegations of
jurisdictional facts should be construed in its favor.  Suttie, 1998 ME 121, ¶
5, 711 A.2d at 1286; see also Electronic Media v. Pioneer Communications
of Am., Inc., 586 A.2d 1256, 1259 (Me. 1991) (citations omitted); 163
Pleasant St. Corp., 987 F.2d at 44; Kowalski v. Doherty, Wallace, Pillsbury &
Murphy, 787 F.2d 7, 8 (1st Cir. 1986).{3}  Determining personal jurisdiction
based on initial affidavits alone, without additional evidence, is a "useful
means of screening out cases in which personal jurisdiction is obviously
lacking, and those in which the jurisdictional challenge is patently bogus." 
Foster-Miller, Inc., 46 F.3d at 145.  Moreover, it prevents defendants from
defeating personal jurisdiction merely by filing a written affidavit opposing
the jurisdictional facts alleged by the plaintiff.  See Serras, 875 F.2d at 1214. 
If the facts are undisputed, the court rules as a matter of law and we review
that ruling de novo.  See 163 Pleasant St. Corp., 987 F.2d at 44. 
	[¶15]  If the facts necessary for a determination of personal
jurisdiction are disputed in the written affidavits, as they are in this case,
the court may hold a pre-trial evidentiary hearing.  See Serras, 875 F.2d at
1214 (citing Welsh v. Gibbs, 631 F.2d 436, 439 (6th Cir. 1980)); Neaves,
912 F.2d at 1064 n.1.{4}  The court has discretion to determine what
evidence is necessary to resolve the disputed facts contained in the affidavits
submitted by the parties.   The taking of oral testimony is not always
necessary and the court may decide the issue based on affidavits in addition
to those initially submitted, on deposition testimony, or documentary
evidence, as well as oral testimony.  See M.R. Civ. P. 43(e); Boit, 967 F.2d at
676. {5} When, however, the facts relating to personal jurisdiction are so
intertwined with the facts relating to the merits of the case, that it would be
difficult to decide jurisdiction prior to a full trial on the merits, a court may
be forced to postpone resolving the issue of jurisdiction until trial.  See
Serras, 875 F.2d at 1215.{6}  Regardless of the form of the evidence and
regardless of whether it resolves the issue at a pre-trial hearing or at trial,
the court itself must determine personal jurisdiction by a preponderance of
the evidence.  See Boit, 967 F.2d at 676-77 (citing Dakota Indus., Inc., 946
F.2d at 1387; Cutco Indus., 806 F.2d at 364; Ealing Corp. v. Harrods Ltd.,
790 F.2d 978, 979 n.1 (1st Cir. 1986); Data Disc, Inc. v. Systems Tech.
Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977)); see also Cutco Indus.,
806 F.2d at 364.{7}  We review the court's factual findings with deference, but
whether the facts as found by the court are sufficient to establish personal
jurisdiction is a question of law reviewed de novo.  See Cutco Indus.,
806 F.2d at 365.
	[¶16]  In this case, Dorf's affidavit submitted in opposition to the
motion to dismiss alleged that he conducted business on behalf of
Complastik from his home in Maine.  Because the court appears to have
decided the issue of personal jurisdiction based solely on Dorf's and Evans's
affidavits, we must view Dorf's allegations of jurisdictional facts as true.  See
Suttie, 1998 ME 121, ¶ 5, 711 A.2d at 1286.  We must therefore assume
that Complastik authorized Dorf to conduct its business from his home in
Maine, including:  soliciting business; co-inventing the patented process for
manufacturing reinforced thermoplastic composites; negotiating and signing
a lease for Complastik's office in Massachusetts; and purchasing corporate
insurance and office furniture for the company.  These facts are more than
sufficient to establish a prima facie case of personal jurisdiction.  See id. (by
providing plaintiff with a fax machine and authorizing him to solicit
business, defendant "essentially established an office in Maine").  See also
Harriman v. Demoulas Supermarkets, Inc., 518 A.2d 1035, 1037 (Me. 1986)
(citation omitted).
	[¶17]  Because Dorf alleged sufficient facts to establish a prima facie
case of personal jurisdiction, we must vacate the court's dismissal.  Evans,
however, is entitled to have the court resolve the factual disputes in the
affidavits and reach a final determination of the issue of personal
jurisdiction.  Whether the court determines that issue through a pre-trial
evidentiary hearing, taking additional evidence through corroborating
affidavits, deposition, or oral testimony, or postpones such a determination
until trial, is within its sound discretion.{8}
	The entry is:
Judgment affirmed as to defendant Evans. 
Judgment vacated as to defendant Complastik
Corporation.  Remanded for further
proceedings consistent with this opinion.
                                                 

Attorneys for plaintiff: James G. Goggin, Esq. Christopher B. McLaughlin, Esq., (orally) Verrill & Dana, LLP One Portland Square Portland, ME 04112-0586 Attorneys for defendants: Alan J. Perry, Esq., (orally) Theodore H. Kurtz, Esq. Kurtz & Perry P O Box J South Paris, ME 04281
FOOTNOTES******************************** {1} . Federal jurisdiction statute 28 U.S.C. § 1338(a) (1993) provides that "[t]he district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents." Jurisdiction under section 1338(a) applies to all cases in which either "'federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on a resolution of a substantial question of federal patent law.'" McArdle v. Bornhofft, 980 F. Supp. 68, 70 (D. Me. 1997) (quoting Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09 (1988)). Under this rule, whether a claim arises under patent law must be determined from what appears in the plaintiff's complaint, "'unaided by anything alleged in anticipation or avoidance of defenses which it is thought the defendant may interpose.'" Id. (quoting Christianson, 486 U.S. at 809). Dorf contends that Complastik's patent is defective because it violated 35 U.S.C. § 115 by failing "to name the true inventors . . . on the patent application." Whether a patent is invalid because of a defective patent application is a question of federal patent law, which state courts have no jurisdiction to consider. Accordingly, we remand for dismissal that portion of Dorf's complaint seeking a declaratory judgment with respect to his patent rights. The Superior Court will have to address Complastik's contention that all allegations against it arise out of patent claims and that therefore it is entitled to a full dismissal. {2} . Three months after Dorf filed his complaint in Maine, Complastik and Evans filed a complaint in Massachusetts Superior Court asserting numerous claims against Dorf arising from his relationship with Complastik and Evans. Dorf filed a motion to dismiss or stay the Massachusetts action, in deference to this action filed earlier in Maine. Dorf withdrew the motion without prejudice after the Maine Superior Court dismissed his complaint in this case because he "anticipated that the Massachusetts court would not grant his motion." {3} . Accord New Moon Shipping Co., v. Man B & W Diesel, 121 F.3d 24, 29 (2d Cir. 1997); Federal Deposit Ins., Corp., 959 F.2d at 174;Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991); Cutco Indus. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986); Metropolitan Life Ins. Co. v. Neaves, 912 F.2d 1062, 1064 n.1 (9th Cir. 1990); Nelson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983). {4} . Holding an evidentiary hearing is appropriate when the plaintiff alleges sufficient facts to defeat a motion to dismiss under the prima facie standard and the defendant challenges those facts. Most often it would be unfair to postpone addressing personal jurisdiction until trial, forcing the out-of-state defendant to incur the expense and burden of a trial on the merits. See Boit, 967 F.2d at 676. {5} . "If the written submissions raise disputed issues of fact or seem to require determinations of credibility, the court retains the power to order an evidentiary hearing . . . and to order discovery of a scope broad enough to prepare the parties for that hearing." See Serras, 875 F.2d at 1214. (citations omitted). {6} . The "trial court should not require [the] plaintiffs to mount 'proof which would, in effect, establish the validity of their claims and their right to the relief sought.'" Id. (quoting Milligan v. Anderson, 522 F.2d 1202, 1207 (10th Cir. 1975)). "Judicial resources may be more efficiently deployed if the court holds but one hearing on the contested facts." Id. (citation omitted). {7} . But see Foster-Miller, 46 F.3d at 145-46 (after concluding that determining personal jurisdiction by a preponderance of the evidence may necessitate a full-blown, cumbersome evidentiary hearing, and the factual findings of the court may have a preclusive effect, the First Circuit adopted a "likelihood standard"). {8} . Although Dorf alleges substantial contacts with Maine, most of the facts central to the merits of his claims occurred in Massachusetts. Complastik is therefore free to seek a dismissal of the complaint under the doctrine of forum non conveniens. See Alley v. Parker, 1998 ME 33, ¶ 6, 707 A.2d 77, 79; Corning v. Corning, 563 A.2d 379, 380-81 (Me. 1989).