CONNECTICUT NATIONAL BANK vs. HOOVER TREATED WOOD PRODUCTS, INC.

GILLERMAN, J. We must decide whether the Superior Court may properly exercise jurisdiction over the defendant under the Massachusetts long-arm statute, G. L. c. 223A, Section 3. Confining the analysis to the plaintiff's assertion that its claim arose out of the business transacted by the defendant with P.F. O'Connor, Inc. (O'Connor), see Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. 1, 10 n.17 (1979), we

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conclude that the Superior Court has jurisdiction of this controversy, and the defendant's motion to dismiss under Mass.R.Civ.P. 12 (b)(2), 365 Mass. 755 (1974), should have been denied. Accordingly we reverse and remand the case to the Superior Court for further proceedings.

The material facts, which are drawn from the written submissions of the parties, are not in dispute. In exchange for a loan made to O'Connor, [Note 1] a Massachusetts company in the wholesale and retail lumber business in Massachusetts, the plaintiff (the bank), which has a principal place of business in Boston, [Note 2] acquired a perfected security interest in O'Connor's existing and after-acquired inventory. The underlying security agreement prohibited O'Connor from disposing of its inventory other than in the ordinary course of its business. [Note 3]

The defendant (Hoover), a Delaware corporation with its principal place of business in Atlanta, Georgia, ships wood products to retailers and distributors in Massachusetts and elsewhere; among its customers was O'Connor. O'Connor, in financial difficulty, telephoned Hoover in the fall of 1990 to arrange the delivery of certain lumber in exchange for credit against an antecedent debt O'Connor owed Hoover. After a series of phone calls and correspondence between Hoover and O'Connor, it was agreed that the lumber would be delivered to Hoover in exchange for a credit memo to O'Connor in the amount of $45,766.12. The inventory was transported to Hoover in early November, 1990 -- a disposition of O'Connor's inventory that the bank claims violated the security

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agreement. The bank demanded the return of the lumber; Hoover refused. [Note 4] The bank responded by bringing suit in the Superior Court setting up the claim that Hoover was a converter of goods rightly belonging to the bank. [Note 5]

The exercise of personal jurisdiction over a foreign defendant is proper only when (i) the terms of the Massachusetts long-arm statute, G. L. c. 223A, Section 3, are met and (ii) the constitutional requirements of due process are satisfied. See Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. at 5-6. It is the plaintiff who has the burden of proving that the court has jurisdiction over the defendant. See, e.g., Droukas v. Divers Training Academy, Inc., 375 Mass. 149, 151 (1978); Kleinerman v. Morse, 26 Mass. App. Ct. 819, 820 (1989). We accept as true the uncontroverted facts that appear in the materials presented to the Superior Court. See, e.g., Heins v. Wilhelm Loh Wetzlar Optical Mach. GmbH Co. KG, 26 Mass. App. Ct. 14, 16 (1988); Maker v. Bermingham, 32 Mass. App. Ct. 971, 972 (1992).

We turn to the question whether Hoover was transacting business in Massachusetts. Section 3(a) of G. L. c. 223A, as amended by St. 1969, c. 623, grants jurisdiction "over a person . . . as to a cause of action in law or equity arising from the person's . . . transacting any business in this commonwealth." [Note 6]

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The Supreme Judicial Court has read the "transacting any business" language of Section 3(a) broadly, "in keeping with our view that the Massachusetts long-arm statute `functions as "an assertion of jurisdiction over the person to the limits allowed by the Constitution of the United States."'" Tatro v. Manor Care, Inc., 416 Mass. 763, 771 (1994), quoting from Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. at 6. "Although an isolated (and minor) transaction with a Massachusetts resident may be insufficient, generally the purposeful and successful solicitation of business from residents of the Commonwealth . . . will suffice to satisfy [the "transacting any business"] requirement." Tatro v. Manor Care, Inc., supra at 767.

Hoover emphasizes that it has no office, agents, or assets in Massachusetts, and there is no allegation or evidence it advertised here. What Hoover overlooks is the substantial volume of business it did with O'Connor in Massachusetts. The exhibits filed by the bank in opposition to the motion to dismiss show that, from April through August of 1990, Hoover, in more than thirty separate transactions, shipped lumber to O'Connor in Massachusetts. The aggregate sales price of those shipments was more than $375,000. Hoover's business with O'Connor was hardly an "isolated transaction." Contrast Droukas v. Divers Training Academy, Inc., 375 Mass. at 154. To the contrary, this volume of business reveals a "purposeful and successful solicitation of business from residents of the Commonwealth . . .," Tatro v. Manor Care, Inc., supra at 767, and, contrary to the judge's ruling, satisfies the "transacting any business" requirement.

We turn to the "arising from" clause in Section 3(a): whether the alleged conversion arose from Hoover's transaction of business in the Commonwealth. In Tatro v. Manor Care, Inc., 416 Mass. at 770-771, the Supreme Judicial Court held that the "arising from" language in G. L. c. 223A, Section 3 "should be interpreted as creating a `but for' test." Rejecting the analysis in Marino v. Hyatt Corp., 793 F.2d 427, 428-430

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(1st Cir. 1986), and Pizarro v. Hoteles Concorde Intl., C.A., 907 F.2d 1256 (1st Cir. 1990) (the issue is whether the business transacted "can be said to be the legal, or proximate cause of the injuries suffered by a plaintiff"), the court followed the cases decided in the Fifth, Sixth, and Ninth Circuits.

Adopting the language of Lanier v. American Bd. of Endodontics, 843 F.2d 901, 909 (6th Cir.), cert. denied, 488 U.S. 926 (1988), the court said "a claim arises from a defendant's transaction of business in the forum State if the claim was made possible by, or lies in the wake of, the transaction of business in the forum State." Tatro v. Manor Care, Inc., supra at 771. The fact that the claim sounds in tort and that the business transacted is contractual in character is not determinative, for "the contractual contact is a `but for' causative factor for the tort since it brought the parties within tortious `striking distance' of each other." Id. at 770, quoting from Prejean v. Sonatrach, Inc., 652 F.2d 1260, 1270 n.21 (5th Cir. 1981).

Here, the return of the lumber by O'Connor, and the subsequent alleged conversion by Hoover, would not have occurred but for Hoover's substantial volume of sales of lumber to O'Connor in Massachusetts. Thus, it can fairly be said that the bank's claim against Hoover for conversion was "made possible by, or lies in the wake of," Hoover's transacting business in Massachusetts. Asserting jurisdiction in this case, as we do, is consistent with the well established view that the long-arm statute is an assertion of jurisdiction to the limits allowed by the Constitution of the United States. Tatro v. Manor Care, Inc., supra at 771.

The fact that the bank was not a party to Hoover's lumber sales in Massachusetts is of no consequence; what matters is that Hoover regularly sold and delivered substantial quantities of lumber to O'Connor in Massachusetts, and but for the ongoing contractual arrangements between Hoover and O'Connor and the ensuing transfer of lumber from O'Connor's inventory the bank would not have suffered any injury. Further, the bank's filed financing statements disclosed

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to any interested party the bank's interest in O'Connor's inventory. [Note 7] The fact that Hoover was aware of O'Connor's pressing financial difficulties only emphasizes the point.

Finally, we consider whether requiring Hoover to defend itself in Massachusetts comports with due process. The issue is "whether there was some minimum contact with the Commonwealth which resulted from an affirmative, intentional act of the defendant, such that it is fair and reasonable to require the defendant to come into the State to defend the action." Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. at 7. We conclude that Hoover's due process rights will not be offended by requiring it to defend itself in Massachusetts.

As we have previously noted, Hoover's contacts with Massachusetts were not isolated or random events. Cf. "Automatic" Sprinkler Corp. of America v. Seneca Foods Corp., 361 Mass. 441 (1972) (purchase of single item from Massachusetts company, accompanied by partial payment, held insufficient to confer long-arm jurisdiction where it had little impact on Massachusetts commerce); Droukas v. Divers Training Academy, Inc., 375 Mass. at 153-154 (isolated transaction where defendant's only business within Commonwealth was the single sale and shipment of two engines). Like the defendant in Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. at 9, the defendant here had "engaged in an enterprise of substantial dimension and duration with a party whose business headquarters . . . were . . . in Massachusetts." As noted, its regular shipments of lumber to O'Connor alone [Note 8] amounted to more than $375,000 in a four-month

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period. "Had . . . [Hoover] not desired to expose itself to a claim of Massachusetts jurisdiction, it was within its power to refuse to deal" with O'Connor. Id. at 12.

In view of the result we reach, we need not consider the bank's appeal from the denial of its second motion for relief from judgment.

The judgment is reversed, and the case is remanded for further proceedings.

So ordered.