FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MAINE [Hon. D. Brock Hornby, U.S. District Judge]
J. Murphy, with whom Bernstein Shur Sawyer & Nelson was
on brief, for appellant.
L. Reichl, with whom Kyle M. Noonan and Pierce Atwood LLP
were on brief, for appellees.
Lynch, Stahl, and Thompson, Circuit Judges.
contract case raises the close question of whether the
plaintiff has failed to carry its burden of showing that
there is personal jurisdiction over the defendants in Maine,
as the district court held in a thoughtful opinion dismissing
the action. LP Sols., LLC v.
Duchossois, No. 2:18-CV-25-DBH, 2018 WL 1768037, at
*1 (D. Me. Apr. 11, 2018).
underlying dispute involves agreements about the
defendants' interests in an Illinois limited partnership,
Elm Street Plaza Venture, LLLP. LP Solutions LLC (LPS), a
Maine company, offered to buy limited partnership interests
owned by members of the Duchossois family, who are defendants
here, and who mostly reside in Illinois. LPS said that the
transaction would provide the family members with payments
and tax benefits. The family members accepted a second offer
made to them in Illinois. Under an agreement with LPS, the
family made distribution payments to LPS in Maine only three
times, once per year for three years.
March 2015, the Elm Street partnership's General Partners
sued LPS in Illinois. The thrust of the lawsuit was that LPS
could not legally obtain the limited partnership interests
from partnership interest holders like the Duchossois family
members. When the family members later refused to deliver
partnership distributions made in 2016 that LPS said were
assigned to it, LPS sued them in Maine, in a case removed to
federal district court, on the undisputed evidence, found
there was no personal jurisdiction because the Duchossois
family's contacts with Maine did not make the exercise of
personal jurisdiction foreseeable. LP Sols., 2018 WL
1768037, at *1. Although it is a close call, the context of
the family's Maine contacts, including their nature,
number, origin, and duration, leads us to agree with the
district court. We affirm.
the facts from LPS's properly documented evidentiary
proffers and from the Duchossois family's undisputed
proffers. See Copia Commc'ns, LLC v.
AM Resorts, L.P., 812 F.3d 1, 3 (1st Cir. 2016). A.
defendant Duchossois family had partnership interests in Elm
Street Plaza Venture, LLLP (a limited liability limited
partnership). The Elm Street LLLP built and owns a
residential apartment building in Chicago, Illinois. That
partnership is registered in Illinois, its partnership
agreement is governed by Illinois law, its assets are in
Illinois, and it is managed by a General Partner who resides
in Illinois. The Duchossois family members, Richard L.
Duchossois and his children Craig J. Duchossois, Kimberly T.
Duchossois, and Dayle P. Duchossois-Fortino, all live in
Illinois, except for Richard Bruce Duchossois who resided in
Florida and spent time in South Carolina before his death in
2014. Before interacting with LPS, the
Duchossois family members collectively owned a 4.54 percent
interest in the Elm Street partnership.
a Portland, Maine-based investor in the affordable housing
industry. It owns "thousands of limited partnership
interests and related interests in various limited
partnerships across the United States." Before its
dealings with the Duchossois family, LPS already owned a
13.66 percent stake in the Elm Street partnership.
September 2013, LPS sent letters to the Duchossois family
members offering to buy their interests in the Elm Street
partnership. William Gendron, an LPS agent, also called
Jennifer Hager, a Duchossois agent in Illinois, to follow up
on those letters. Hager rejected the offer without
that initial rejection, Gendron sent a new offer to Janet
Czosek, another Duchossois agent also in Illinois. Gendron
represented that the offer -- LPS's "Option
Program" -- would have tax benefits for the Duchossois
family members. It would let them "lock [in]" the
value of their partnership interests "at today's
market value, receive a significant portion of the purchase
price on a tax-deferred basis and avoid tax recapture."
LPS marketed its program to individuals whose limited
partnership interests had "significant tax
recapture." As we understand it, individuals in that
circumstance had the choice to either sell their interests in
their lifetime, with attendant negative tax consequences, or
to "wait until their estate receives the interest"
at death. LPS's program gave limited partnership holders
a third option: LPS would make an "Option Fee
payment," which is not taxable "until the final
transfer of the limited partnership interest," in return
for "partnership cash flow." Simply put, LPS gave
the limited partnership holder money up front on a
tax-deferred basis in return for a portion of the
September 2013, LPS sent agreements embodying the advertised
proposal to each member of the Duchossois family. Those
agreements had two main parts: an Option agreement and an
Assignment. Both parts were fully drafted and signed by LPS
and had the sales price filled in. They both defined LPS as
"a Maine limited liability company with a principal
place of business" in Portland, Maine.
Option agreement gave LPS a twenty-year option to purchase
the Duchossois family member's partnership interest for a
specified amount (the purchase price). There was, apart from
the twenty years over which LPS could exercise the option, no
term of years to the agreement. LPS said it would spread
payment of the purchase price over a series of payments:
First, LPS would pay half the purchase price to the family in
Illinois on execution of the agreement. Next, LPS would make
payments in two installments, each of about ten percent of
the purchase price, in November 2014 and November 2015,
respectively. LPS would not, however, pay the balance of the
purchase price unless it exercised the option, a choice left
to its discretion. If LPS exercised the option before the
death of a family member, it would pay to that family member,
"as additional sales proceeds, the cost of the tax
recapture of the limited partner's negative capital
return, under the Option agreement, if the partnership made a
"cash flow distribution," the Duchossois family
members would then give LPS part of that distribution, equal
to the proportion LPS had paid to that date of the
agreement's purchase price. Put more simply, if LPS had
paid fifty percent of the purchase price to a particular
family member, LPS would be entitled to fifty percent of the
partnership's cash flow distributions to that family
member. The record contains no evidence that any Duchossois
family member had authority to cause the Elm Street LLLP or
its General Partners to make or not to make distributions on
behalf of the partnership.
Duchossois family members also agreed not to alienate or
encumber their Elm Street partnership interests and to vote
their interests as directed by LPS. They would send
"[a]ll notices, demands, and other communications"
to LPS in Maine. The agreements do not say where distribution
payments to LPS were to be made.
Assignment required the Duchossois family members to
"irrevocably and unconditionally sell, assign and
transfer" their partnership interests to LPS
if LPS exercised its option, as LPS later sought to
do. LPS, importantly, "assume[d] all risk" for
"any transfer restrictions contained in the
Partnership's partnership agreement." The family
members assumed no such obligations. (Later, in the lead-up
to litigation Elm Street brought against LPS in Illinois, the
Elm Street General Partners did object to any such transfer
to LPS by any limited partners, including the Duchossois
Option agreement states that it is "governed exclusively
by the laws of the State of Maine" under a choice-of-law
provision. The Assignment, however, is governed by "the
laws of the state where the Partnership is domiciled,"
that is, Illinois. Neither agreement contains a
return to the chronology of events. In September 2013, having
received and reviewed LPS's proposal, Hager and Czosek
emailed LPS to say that the proposed agreements were
acceptable to the family. They did not negotiate price or any
other terms with LPS. The two agents collected signatures
from the Duchossois family members in Illinois and South
Carolina. In early October 2013, Hager and Czosek sent the
executed agreements to LPS in Maine. An LPS employee
responded that the agreements lacked witness signatures, so
Hager and Czosek sent new, witnessed signature pages to LPS
Performance, Exercise of ...