Background: The Law firm Piazza & Grace ('P&G'), is a boutique firm specializing in plaintiffs' civil litigation located in Bethesda, Maryland. The second law firm, The Legal Defense Team ('TLDT') is a boutique law firm specializing in representing defendants in civil litigation matters. This firm is located in Rockville, MD. 

 

In working for the firm TLDT to represent a defendant my primary assignment will focus on a breach of contract case involving Tom and Maureen Mulvaney. The Mulvaneys own an independent "mom & pop" ice cream store, 'Sweet Licks & Bites' (SL&B) in Rockville Maryland. They sold the store to Leonard Jones in January 2021. That sales contract is now the focus of a dispute. The Mulvaneys have sought the legal services of TLDT, and Mr. Jones has sought the legal services of P&K. Both parties have retained their respective counsel to represent them in a potential breach of contract case arising out of the sale of the store.  Assisting with this Breach of Contract case will require you to conduct interviews, properly investigate, research case and statutory law, and file appropriate pleadings based upon the party you represent.   In addition, you will be involved with discovery, settlement negotiations, and, if necessary, trial.

 

Facts and Background of the Breach of Contract (BOC) case:

The Mulvaneys purchased the SL&B Ice Cream store in May of 2014. They have operated the store successfully since that time. The store is located in a busy shopping center on Rockville Pike (Montgomery County, Maryland) which also houses a 10-screen movie theatre and a bowling alley. Tom Mulvaney also has a full-time job as a mail carrier. Maureen Mulvaney focuses her attention on the operation of Sweet Licks & Bites. The Mulvaneys originally purchased the store for $250,000 which included all of the furniture, fixtures, equipment, the name, & an assignment of the real estate lease. They obtained a loan of $200,000 at 3.5% amortized over 10 years with monthly payments of $1,978. As of November 2020, when they decided to put the store on the market for sale, they still owed $79,816 on the loan principle.  In the six years since 2014, the Mulvaneys had seen a steady increase in their sales by increasing their hours of operations and adding additional offerings on their menu. 

They advertised SL&B in local papers and engaged a business broker, Steven Singer to help them sell their business. They agreed to pay Mr. Singer 10% of the gross sales price for the successful sale of the business. All parties offered the business for sale at the price of $475,000.

 

In December 2020, Mr. Jones was looking for a business opportunity. He was  referred to Mr. Singer. After reviewing several businesses with Mr. Singer, Jones indicated his interest in SL&B. 

On December 15, 2020, Mr. Singer introduced Leonard Jones to the Mulvaneys. At the time Tom Mulvaney explained that because of the cash nature of the business, he maintained two ledgers for sales in the business. The first ledger included all of the sales of the business, including cash receipts. This ledger was maintained so that the Mulvaneys could actually track their sales. The second ledger only contained credit card receipts and some minimal cash receipts. This is the ledger that the Mulvaneys shared with their accountants and used in preparing their taxes. The Mulvaneys insisted that Leonard Jones use the second ledger as the basis for their offer on the business. Leonard reviewed all the available materials with Mr. Singer. He then prepared an offer to buy the business for $400,000. He would put a deposit down of $80,000, take over the existing loan, and the remainder of the purchase price would be held by the Mulvaneys as a note and purchase money chattel mortgage on the business in the amount of approximately $240,000 at 4% over 10 years.  The Mulvaneys accepted the offer. As a part of the contract, the Mulvaneys agreed to work with the Jones for 6 weeks post-closing. Both parties were represented by counsel at the closing. Mr. Jones, only showed on the ledger with all of the receipts to the attorney representing him at closing. The sale was finalized at SL&B in Rockville, Maryland on February 1, 2021.  

 

The store is located in Rockville Maryland which is in Montgomery County. Maryland, Leonard Jones lives in Annapolis Maryland which is in Anne Arundel County Maryland. The Mulvaneys live in Fairfax Virginia, which is located in Fairfax County Virginia.

 

The contract contained Seller and Buyer Warranties.

 

Seller Warranties:

1. The Seller has provided all of the records to the Buyer necessary for the Buyer to make an informed choice on the purchase of the business. 
2. The Business is organized and duly incorporated under the laws of the state of Maryland.
3. Seller has the authority to sell the business
4. Seller has prepared accurately and timely filed all tax returns on behalf of the business.
5. Seller has provided Buyer with accurate payroll records of the business.
6. There has been no act or omission by the Seller which would give rise to a claim of any kind.
7. The Seller will not compete in a similar business to that being sold with the Buyer for a period of three years within the Washington, Maryland, Virginia area.

Buyer Warranties

1. The Buyer has the financial resources to complete the transaction.
2. The Buyer is satisfied with the documents presented and the representations made by the Seller with regard to the business.
3. Buyer acknowledges that they are experienced business operators and have a complete understanding of the operation of the SL&B.

The Buyers and Sellers closed on the sale of SL&B on February 1, 2021. By July 2021, Leonard Jones realized that not only wasn't he making the amount of money claimed under Ledger 1, he wasn't even making the amount of money claimed in ledger 2. At this time, Mr. Jones decided to stop making payments to the Mulvaneys on the purchase money chattel mortgage. Leonard Jones  contacted P&G in September 2021 after they attempted to resolve the matter directly with the Mulvaneys. The Mulvaneys contacted the TLDT in September 2021 when they realized there was an issue and that the Mulvaneys were seeking legal counsel.

 

My firm, TLDT is focused on personal jurisdiction. The supervising attorney wish me as the paralegal  to review the concepts and ensure that they have a good understanding of how personal jurisdiction is obtained.

 

They have prepared several hypothetical scenarios regarding personal jurisdiction to better prepare for making a final recommendation to Attorney Gonzalez regarding proper parties, subject matter jurisdiction, and venue for the Breach of Contract (BOC) case between Mr. Jones and the Mulvaneys. The firm wants the Mulvaneys to understand the choices that can be made when selecting a jurisdiction for filing the lawsuit arising out of the BOC.

 

Part 1

 

The questions relate to minimum contacts when a court may take personal jurisdiction in a civil case. I will need to present each scenario to my colleagues in the office as a refresher on personal jurisdiction. The conclusions presented, but be supported by properly cited statutes, court rules, or case law.

 

Scenario 1:

 The plaintiff is a business located in California. The defendant is a business located in Arizona.  The parties have entered into a contract whereby the California Company is going to provide goods to a customer of the Arizona company in Montana. The contract was entered into over the internet. The goods are delivered on time by the California business to the customer in Montana, but the Arizona company fails to pay for the goods.

 

A. Can the California company sue the defendant in Arizona?

 

     If so, how so; if not, why not?

 

B. Can the California company sue the defendant in California?

 

    If so, how so; if not, why not?

 

C. Can the California company sue the defendant in Montana?

 

    If so, how so; if not, why not?

 

Scenario 2

 

Now assuming that "SL&B" is a franchised store.  Sweet Licks & Bites, LLC, the franchisor, is incorporated in Delaware and with their principal place of business located in Illinois. A customer of SL&B in Rockville suffers food poisoning after ingesting ice cream from the Rockville store. The plaintiff wishes to sue both the parent corporation Sweet Licks and Bites, LLC as well as the SL&B and files suit in Delaware. The Mulvaneys, who operate the Rockville SL&B franchise, are in Delaware attending a franchise meeting. They are only there for one day. While they are there, they are served with the lawsuit involving the injury to their customer in Rockville, MD.

 

• Does the state court in Delaware have proper jurisdiction over SL&B?
• Does the state court in Delaware have jurisdiction over SL&B, LLC in Delaware?
• Assuming the plaintiff filed suit in Maryland, does the state court in Maryland have jurisdiction over SL&B? 
• How about SL&B, LLC?
• Assume the plaintiff filed suit in Illinois, does the state court in Illinois have jurisdiction over SL&B, LLC? 
• How about SL&B?
• Could the plaintiff sue SL&B in a state court in Virginia?
• If the plaintiff wanted to sue in federal court, which federal court has jurisdiction? (For purposes of this question, I am assuming that the $75,000 threshold can be met by the plaintiff.)