Plaintiffs Victor Posner and Security Management Corporation ("SMC") appeal the district court's order dismissing with prejudice their claims against Defendants Salem Corporation ("Salem") and Essex Insurance Company ("Essex") arising out of a bonus dispute with Salem; dismissing with prejudice their claims against Salem and Essex arising out of alleged financial mismanagement;
The complaint set out seven counts, some of which incorporated multiple claims. For clarity, we begin by setting out the correct disposition for each of the claims Plaintiffs presented:
Essex, a Bermuda insurance corporation, was at the time of the litigation 65% owned by Salem, a Pennsylvania corporation, and 35% owned by SMC, a privately held Maryland corporation with corporate offices in Florida. Victor Posner is the majority shareholder of SMC and a 49% owner of Salem.
The allegations here encompass three separate categories of conduct brought together for the purpose of this lawsuit. The first category involves four homeowner's insurance policies that Posner purchased from Essex in 1991 covering four separate properties in Florida. In 1992, those properties were damaged by Hurricane Andrew, and Posner filed claims for recovery under the policies. At the alleged request of its parent corporation, Salem, Essex denied these claims. Essex then filed a declaratory judgment action in Bermuda seeking a ruling on the validity of the insurance policies issued to Posner.
The second category of allegations involves a 1993 shareholder derivative suit brought against Salem and its directors, which resulted in a court-ordered settlement. As part of that settlement, Posner agreed to return an unspecified portion of a bonus he had received from Essex when he was an officer of the corporation. Salem eventually determined that the amount to be repaid was $155,850. Although Posner contested this figure, he contends that he sent a $150,000 check to Essex to be held in escrow pending resolution of the dispute. According to Posner, this money was not held in escrow, and neither Salem nor Essex ever made good faith efforts to resolve the dispute.
The third category of allegations arose from SMC's capital contributions to Essex in 1986 and 1993 in an amount totaling $297,500. In the following years, according to Posner, Essex's financial condition deteriorated significantly under the management of Gus Fornatoro, President of Essex and President and Chief Operating Officer of Salem. This deterioration allegedly operated to the detriment of minority shareholder SMC.
In 1996, Posner and SMC filed this lawsuit against Essex and Salem. In early 1997, Essex and Salem each moved to dismiss the complaint. Salem claimed that the district court lacked personal jurisdiction over it; Essex asserted that the international abstention doctrine compelled the court to dismiss or stay the action. In the alternative, both parties contended that Plaintiffs failed to state claims on some of the counts in the complaint.
I. Personal Jurisdiction
We consider the jurisdictional issue first.
For this reason, we consider only those portions of the Struth Affidavit that set forth specific factual declarations within the affiant's personal knowledge. To the extent such statements in the Struth Affidavit do not contradict Plaintiffs' pleadings, we accept the allegations stated in the complaint as true for purposes of resolving the jurisdictional issue under the requirements of the Florida long-arm statute and the Due Process Clause. See Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir.1990) (holding that even when a defendant submits evidence supporting his jurisdictional position, we still "accept the facts alleged in the complaint as true, to the extent they are uncontroverted by the defendant's affidavits" (citation omitted)).
The relevant portions of the long-arm statute state:
Fla. Stat. § 48.193. We discuss below whether each category of Salem's alleged conduct falls within any of these provisions.
A. The Insurance Policies
Posner has alleged facts, unrebutted by Salem, that establish a prima facie case of jurisdiction over Salem under the Florida long-arm statute. The long-arm statute extends personal jurisdiction to those who "[c]ommit a tortious act within th[e] state." Fla. Stat. § 48.193(1)(b). Here, Posner alleged facts demonstrating that, if Salem committed tortious interference, Posner's injury occurred in Florida, because the property covered by the insurance policies was in Florida. As explained in detail in Thomas Jefferson Univ. v. Romer, 710 So.2d 67, 70 (Fla. 4th Dist.Ct.App.1998) (Farmer, J., concurring and dissenting), the courts are deeply divided on the issue of whether a tortious act committed outside the state resulting in injury inside the state subjects the actor to jurisdiction in Florida under subsection (1)(b). Several of the Florida district courts of appeal have concluded that (1)(b) does not extend jurisdiction to the out-of-state defendant under these circumstances. See, e.g., Texas Guaranteed Student Loan Corp. v. Ward, 696 So.2d 930, 932 (Fla.2d Dist.Ct.App.1997) ("The occurrence of injury alone in Florida does not satisfy section 48.193(1)(b)"); McLean Fin. Corp. v. Winslow Loudermilk Corp., 509 So.2d 1373, 1374 (Fla. 5th Dist.Ct.App.1987) (no jurisdiction under (1)(b) where alleged tortious act was "making of fraudulent representations in Virginia, by telephone"); Jack Pickard Dodge, Inc. v. Yarbrough, 352 So.2d 130, 134 (Fla. 1st Dist.Ct.App.1977) (no (1)(b) jurisdiction where injury occurred in Florida but alleged tortious act was servicing, outside state, of vehicle that caused injury). Other decisions of the Florida district courts of appeal, however, have reached the opposite conclusion. See, e.g., Wood v. Wall, 666 So.2d 984, 986 (Fla.3d Dist.Ct.App.1996) (allegations of intentional tortious acts by defendants in their states of residence calculated to cause injury in Florida sufficient to create jurisdiction under (1)(b)); Allerton v. State Dep't of Ins., 635 So.2d 36, 40 (Fla. 1st Dist.Ct.App.1994) (jurisdiction proper under (1)(b) where Florida plaintiff "injured by the intentional misconduct of a nonresident corporate employee expressly aimed at him").
Throughout this longstanding conflict among the state district courts of appeal, this court consistently has applied the broader construction of subsection (1)(b). See Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 257 (11th Cir.1996) (recognizing that Florida law regarding this issue has been unclear but holding that subsection (1)(b) extends jurisdiction over defendant whom plaintiff alleged caused injury in Florida through negligent drafting and review of will that occurred out of state); Sun Bank, N.A. v. E.F. Hutton & Co., 926 F.2d 1030, 1033-34 (11th Cir.1991) (deciding, in light of split among state district courts of appeal and state Supreme Court's failure to resolve that conflict, to continue applying old Fifth Circuit interpretation that personal jurisdiction existed under (1)(b) where defendant's tortious act outside the state caused injury in Florida); see also Bangor Punta Operations, Inc. v. Universal Marine Co., 543 F.2d 1107, 1109 (5th Cir.1976); Rebozo v. Washington Post Co., 515 F.2d 1208, 1212-13 (5th Cir.1975).
Of course, if the Florida Supreme Court were to reject our construction of subsection (1)(b), we would be obliged in future cases to follow that Court's interpretation of the statute. See
Posner also alleges jurisdiction over Salem pursuant to his claim that Essex and Salem conspired to cause him harm. At least one court in Florida has adopted the following five-part test governing personal jurisdiction over a non-resident conspirator: (1) the existence of an actionable conspiracy; (2) the defendant's membership in the conspiracy; (3) the occurrence of a substantial act or substantial effect in furtherance of the conspiracy in the forum state; (4) the defendant's actual or constructive knowledge of the act in the forum state or that the act outside the state would have an effect in the state; and (5) the conspiracy conduct's direct or foreseeable cause of the act or effect. See Execu-Tech Bus. Sys., Inc. v. New Oji Paper Co., 708 So.2d 599, 600 (Fla. 4th Dist.Ct.App.), rev. granted, 718 So.2d 1233 (Fla.1998).
Posner stumbles on the first element of this test: he does not allege an actionable conspiracy. Under Florida law, "[a]n actionable conspiracy requires an actionable underlying tort or wrong." Florida Fern Growers Ass'n v. Concerned Citizens, 616 So.2d 562, 565 (Fla.Dist.Ct.App.
B. The Bonus Dispute
The district court correctly concluded that jurisdiction does not exist over Salem with respect to the bonus dispute under any of the theories Posner advances. First, Posner maintains that Salem breached an implicit contract in Florida by failing to negotiate the bonus dispute, bringing Salem within subsection (1)(g) of the long-arm statute, which covers defendants alleged to have "[b]reach[ed] a contract in this state by failing to perform acts required by the contract to be performed in this state." Fla. Stat. § 48.193(1)(g). This provision means that there must exist a duty to perform an act in Florida; a contractual duty to tender performance to a Florida resident is not in itself sufficient to satisfy the statute. See, e.g., Groome v. Feyh, 651 F.Supp. 249, 252 (S.D.Fla.1986) (no (1)(g) jurisdiction where
Posner's complaint contains no assertion that his implied contract with Salem included a duty for negotiation of the bonus dispute, or repayment to him of some portion of the $150,000, to occur in Florida. Moreover, this point is perhaps the only one to which the Struth Affidavit directly and specifically responds; it states that "SALEM has not entered into any contracts with Plaintiffs in the abovestyled action which require the performance of any act in the state of Florida"
C. Financial Mismanagement of Essex
In the final category of alleged misconduct, SMC contends that Salem, as the majority shareholder of Essex, breached its fiduciary duty to SMC, Essex's minority shareholder, by influencing Essex to deny Posner's valid insurance claims and by avoiding resolution of the bonus dispute, thereby exposing Essex to even greater financial liability and wasting corporate assets in its resistance to paying Posner's claims.
According to precedent binding on this court, subsection (1)(b) extends long-arm jurisdiction over defendants who commit a tort that results in injury in Florida.
As Allerton and International Harvester illustrate, even the broader construction of subsection (1)(b) adopted by this court does not permit the exercise of personal jurisdiction pursuant to an allegation of injury to the business interest of a Florida plaintiff where that interest is located entirely outside of Florida. The district court correctly dismissed SMC's claims regarding Salem's mismanagement of Essex.
D. Due Process Concerns
Having concluded that the long-arm statute creates jurisdiction over Salem with respect to Posner's insurance policyrelated claims, we turn to the second part of the jurisdictional inquiry: determining whether exercising jurisdiction in these circumstances comports with due process. See Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 258-59 (11th Cir.1996). Subjecting Salem to jurisdiction in Florida comports with due process so long as "minimum contacts" exist between Salem and Florida and exercising jurisdiction does not offend "traditional notions of fair play and substantial justice." Id. (internal quotation omitted).
1. Minimum Contacts
This circuit has adopted the following three-part test to decide whether the minimum contacts requirement is met:
Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1546 (11th Cir.1993) (internal quotations and punctuation omitted). Salem had the minimum contacts with Florida required by due process to be subject to jurisdiction in Florida under Posner's
2. Fair Play and Substantial Justice
Factors that this court must consider in determining whether exercising personal jurisdiction over Salem would offend notions of fair play and substantial justice include the following: the burden on Salem of defending the suit in Florida; Florida's interest in adjudicating the suit; Posner's interest in obtaining effective relief; the interests of the interstate judicial system in using resources efficiently; and the interests of the states in furthering shared substantive policies. See, e.g., Madara v. Hall, 916 F.2d 1510, 1517 (11th Cir.1990).
Florida and Posner both have a strong interest in seeing this matter resolved in Florida, as the dispute involves the alleged failure to pay claims under insurance policies issued by a foreign company to cover Florida property owned by a Florida resident. See Robinson, 74 F.3d at 259 ("The State of Florida has a significant interest in adjudicating a dispute involving services provided by out-of-state professionals to its resident, concerning assets located within its borders. The plaintiff, a Florida resident, has a great interest in the convenience of litigating in her home state."). The burden of Salem of defending the suit in Florida is mitigated by "modern methods of transportation and communication," id., as well as by the fact that Salem has admitted more than isolated contacts with Florida: one of its officers acknowledges that it has held meetings of its board of directors there two to three times per year since 1993; two of its directors were Florida residents at times relevant to this litigation; and it periodically has responded to business inquires from Florida.
II. Res Judicata
The district court erred when it dismissed claims against Salem with prejudice on jurisdictional grounds; we affirm the dismissal of those counts for which it lacked personal jurisdiction but instruct the district court to dismiss those claims without prejudice. This holding does not preclude further litigation of these claims on the merits, but it does preclude that litigation from occurring in Florida. See Arrowsmith v. United Press Int'l, 320 F.2d 219, 221 (2d Cir.1963) ("A dismissal for lack of jurisdiction . . . does not preclude a subsequent action in an appropriate forum."). In other words, a dismissal due to lack of personal jurisdiction acts as res judicata for the jurisdictional issue. See North Georgia Elec. Membership Corp. v. City of Calhoun, 989 F.2d 429, 432-33 (11th Cir.1993).
In short, the district court did not err when it denied Plaintiffs leave to amend their complaint, and Plaintiffs no longer are entitled to pursue the claims dismissed for lack of personal jurisdiction in Florida courts.
III. International Abstention
The district court weighed the three factors set out in Turner Entertainment Co. v. Degeto Film GmbH, 25 F.3d 1512 (11th Cir.1994) for determining whether a federal court should abstain from a case subject to concurrent international jurisdiction and held that, despite the existence of jurisdiction over some of Plaintiffs' claims, those claims should be dismissed on grounds of international abstention. Plaintiffs contend that the district court erred in not following the Supreme Court's more recent case, Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996), which says that "federal courts have the power to dismiss or remand cases based on abstention principles only where the relief being sought is equitable or otherwise discretionary." Id. at 730-31, 116 S.Ct. at 1728.
We agree with Defendants that we must apply the three-factor Turner analysis because Quackenbush does not reach the doctrine of international abstention. We reject Defendants' contention, however, that Turner counsels for dismissal; instead, we conclude that the present action should be stayed.
The question of Quackenbush's applicability to international abstention is one of first impression in this, as well as any other, circuit. Although we recognize that Quackenbush contains broad language concerning the inapplicability of abstention doctrines where plaintiffs assert legal claims over which a court has jurisdiction, the framework of that decision leads us to conclude that the Supreme Court did not intend that holding to extend to cases raising the abstention issue in light of concurrent international jurisdiction. The Court in Quackenbush stated that it was addressing for the first time "whether the principles underlying our abstention cases would support the remand or dismissal of
Read in the proper context, therefore, the Supreme Court's admonition that courts generally must exercise their non-discretionary authority in cases over which Congress has granted them jurisdiction can apply only to those abstention doctrines addressing the unique concerns of federalism. This circuit's characterizations of Quackenbush comport with this interpretation. See McKusick v. City of Melbourne, 96 F.3d 478, 489 (11th Cir.1996); Pompey v. Broward County, 95 F.3d 1543, 1552 n.12 (11th Cir.1996).
Because Quackenbush does not affect our analysis, we apply this court's formulation of the international abstention doctrine, set out in Turner. In that case, we stayed the district court proceedings where a substantially similar case had come to judgment in a German forum. Although this case is different from Turner in that the German dispute had come to judgment—and by contrast little progress has been made here in the Bermuda action—the same principles expressed in Turner govern here: "(1) a proper level of respect for the acts of our fellow sovereign nations—a rather vague concept referred to in American jurisprudence as international comity; (2) fairness to litigants; and
The district court here properly evaluated these issues in making its decision, concluding that they weighed in favor of abstaining. With respect to the first factor, international comity, the district court found no evidence that the Bermuda court was not competent to hear the claims or would not use fair and just proceedings in deciding the case.
We agree with the district court that the Turner factors weigh in favor of abstention, but our jurisprudence in this area does not dictate that we should dismiss cases with respect to which foreign jurisdictions are conducting parallel proceedings. In fact, Turner resulted only in a stay rather than a dismissal, even though in that case, the foreign court already had entered judgment. See Turner, 25 F.3d at 1523. Although the district court's basic reasoning was sound, therefore, we hold that the court should have stayed the claims over which it had jurisdiction, rather than dismissing them.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA
AFFIDAVIT OF DAVID D. STRUTH
BEFORE ME this day personally appeared David D. Struth who, being duly sworn, deposes and says:
1. I, David D. Struth, Secretary of SALEM CORPORATION, a named Defendant herein, make this Affidavit upon personal knowledge, and without consenting or submitting SALEM CORPORATION or SALEM GROUP, INC. to the jurisdiction of the Court.
3. SALEM GROUP, INC. is a Delaware corporation, which was incorporated in 1996 by Three Cities Research, Inc. of New York City, New York for the specific purpose of facilitating an Agreement and Plan of Merger dated June 28, 1996 under which all of the shares of SALEM CORPORATION were acquired in a cash out merger transaction. As a result of the merger, SALEM CORPORATION became a wholly-owned subsidiary of SALEM GROUP, INC. Except for holding its shares in SALEM CORPORATION, SALEM GROUP, INC. conducts no other business and acts exclusively as a holding company for the shares of SALEM CORPORATION. For record purposes, the offices of SALEM GROUP, INC. are those of Three Cities Research, Inc. in New York City, New York. Because SALEM GROUP, INC. does not conduct any independent business activities other than holding the shares of SALEM CORPORATION, in this Affidavit SALEM CORPORATION and SALEM GROUP, INC. will hereafter be referred to as "SALEM".
4. SALEM has never been registered to do business in Florida, and has never in fact done business in the state of Florida. Prior to January 4, 1994, the Plaintiff, Victor Posner, had been chairman of the board of SALEM. As a result of a court order entered by the United States District Court for the Southern District of New York, Mr. Posner was required to resign as an officer and director of SALEM. Since January 4, 1994, Mr. Posner's only relationship with SALEM has been that of a shareholder. He ceased being a shareholder in September 1996 when the merger referred to in paragraph 3 was completed. During the time that Mr. Posner was chairman of the board of SALEM, his personal offices
5. At all times material to the above-styled lawsuit, SALEM does not and has not:
7. At all times material hereto, SALEM has not advertised or otherwise directed any communications of any kind to Florida for the purpose of soliciting business.
8. SALEM'S only contacts with the state of Florida include (1) two to three board of director meetings held in Florida for each year since 1993; and (2) responses made to business inquiries from persons located in Florida on a few occasions.
9. SALEM is not a party to any agreement with Plaintiffs. Notwithstanding that fact, were it determined that SALEM breached a contract with Plaintiffs, that breach could only have occurred in Pennsylvania and not in Florida.
10. No agent or representative of SALEM has performed any actions that would lead SALEM to believe that it could be haled into a Florida court.
11. SALEM had no employees who resided in Florida. However, two directors of SALEM, Mr. Martin Posner and Mr. Marco B. Loffredo, held elected offices in the Corporation. Both of them are and were Florida residents. Mr. Martin Posner held the title of vice president of SALEM, however, any corporate duties performed by Mr. Martin Posner were performed at the corporation's offices on Arch Street Extension in Carnegie, Pennsylvania. Mr. Marco Loffredo served as secretary of the Corporation and as chairman of the board. As chairman of the board, his duties were those of convening meetings of the board of directors and of various committees of the board. Mr. Loffredo performed no executive functions for SALEM. As secretary of the Corporation, Mr. Loffredo signed
FURTHER AFFIANT SAYETH NAUGHT.
Finally, the complaint also sets out a breach of fiduciary duty claim against Salem based upon the insurance policies. SMC, rather than Posner, makes this claim, however, alleging that
R1-1, Compl., ¶ 66. As explained more thoroughly in Part I.C., infra, the alleged injury to SMC's business interest in Essex did not occur in Florida. The Florida long-arm statute, therefore, does not extend jurisdiction to SMC's claims of breach of fiduciary duty against Salem.
The complaint does not contain factual allegations adequate to support jurisdiction based on conspiracy wrongfully to deprive Posner of the bonus money. The acts that Salem and Essex allegedly undertook in furtherance of the conspiracy were "[r]epeated contact between the directors of Salem and Essex in a concerted effort ... to avoid resolution of the disputed bonus claim" and "Salem's directing Essex ... not to resolve the disputed bonus issue." R1-1, Compl., ¶ 75. These assertions, standing alone, are too general to create a prima facie case of jurisdiction based upon conspiracy. See supra pp. 1217-18 (discussing requirement that complaint allege an actionable conspiracy under Florida law to obtain personal jurisdiction over defendant with respect to conspiracy claim). With respect to Essex, we dismiss without prejudice Posner's claim of conspiracy in failing to resolve the bonus dispute for failure to state a cause of action, for the reasons discussed in note 11, supra.
Hilton v. Guyot, 159 U.S. 113, 163-64, 16 S.Ct. 139, 143, 40 L.Ed. 95 (1895).
Legal scholars also have recognized the inapplicability of Quackenbush to the doctrine of international abstention. See, e.g., Louise Ellen Teitz, Parallel Proceedings: Treading Carefully, 32 Int'l Law. 223, 227 (1998) ("[In applying Quackenbush in the international abstention context,] [t]he [District] court [for the Eastern District of Missouri, in Abdullah Sayid] failed to recognize that the various abstention doctrines [mentioned in Quackenbush were] developed in the context of state/federal relations, against a series of constitutional constraints and precedent defining that relationship. In contrast, parallel proceedings involving international litigation raise different issues, not the least of which is the potential for unrestrained and vexatious litigation in multiple countries.").