May 8, 2020
- Whether due process allows a New Hampshire Court to maintain quasi in rem jurisdiction for an attachment of funds despite dismissal of underlying action for lack of personal jurisdiction
The Supreme Court noted the following facts as relevant. The plaintiff was a Massachusetts company which entered into contract with various foreign international companies, together known as the YOK defendants to broker the sale of fish processed by the YOK defendants to companies in the United States and Canada. Including defendant High Liner Foods Canada, which rebranded its corporate acquisition High Liner Foods USA, and moved to Portsmouth in 2014. The contractual arrangement between the parties was complex relative to procuring fish, shipping fish, inspecting fish, distributing fish, and acceptance/invoicing. Fortune Laurel received a commission from the YOK defendants based upon the amount of fish sold. A written contract between Fortune Laurel and the YOK defendants expired and these defendants continue to use Fortune Laurel to broker sales with High Liner USA until 2017, when Fortune Laurel argued it was excluded from the relationship.
In December 2017, Fortune Laurel sued High Liner and 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 its fish for resale in Massachusetts and failed to meet applicable standards and made fraudulent insurance claims negatively affecting its business. It sought damages, attorney’s fees and costs exceeding $600,000.00. Contemporaneous with the complaint, it filed a motion for an ex parte attachment of funds that High Liner USA owes the YOK defendants as payment for fish shipments, sought an attachment exceeding $500,000.00 which was granted by the trial court.
The YOK defendants moved to dismiss for lack of personal jurisdiction, which was granted, then Fortune Laurel filed a substantially similar lawsuit against the YOK defendants in Massachusetts. Despite granting the motion to dismiss for lack of personal jurisdiction, the trial court ruled that it maintained jurisdiction over the attached funds and noted the difference in magnitude between exercising jurisdiction over the merits of the case and exercising jurisdiction over the attached funds. In its decision, the trial court ruled that it found credible the argument that the YOK defendants’ international location severely limits the plaintiff’s ability to obtain a remedy in this case in the event that it prevails. The trial court ruled that due process allowed it to temporarily freeze the YOK defendants’ assets by maintaining the attachment or the merits of the underlying lawsuit are adjudicated in Massachusetts. High Liner USA moved for reconsideration. The trial court denied the motion and the YOK defendants filed this appeal.
The Court reviewed the trial court decision de novo and the court concluded that it does not need personal jurisdiction to exercise quasi in rem jurisdiction over an attachment after conducting the three-prong International Shoe analysis: (1) The defendants’ contacts with New Hampshire as related 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 a suit in New Hampshire. Five factors were considered pursuant to the third prong. In short, the Court noted that it agreed with the trial court 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.” The Court concluded that the trial court’s exercise of jurisdiction over the YOK defendants’ funds conforms with due process and it affirmed the trial court order maintaining the attachment of those funds.
Jamie Hage and Katherine Hedges, Hage Hodges, Manchester, for the plaintiff. William Gramer, Devine, Millimet & Branch, Manchester, and Emily Smith-Lee, SLN Law, Massachusetts, for the YOK defendants.