Evans Cabinet Corp. v. Kitchen Intern., Inc.

593 F.3d 135

EVANS CABINET CORPORATION, Plaintiff, Appellant, v. KITCHEN INTERNATIONAL, INC., Defendant, Appellee.

No. 08-2579.

United States Court of Appeals, First Circuit.

Heard September 10, 2009.

Decided February 3, 2010.

Charles K. Reed, with whom P. Michael Freed, McKenna Long & Aldridge, LLP, Alex C. Gianacoplos, and Duggan & Caccavaro, were on brief, for appellant.

Edward J. Fallman, for appellee.

Before LYNCH, Chief Judge, TORRUELLA and RIPPLE,^* Circuit Judges.

RIPPLE, Circuit Judge.

Evans Cabinet Corporation ("Evans") instituted this diversity action in the United States District Court for the District of Massachusetts against Kitchen International, Inc. for breach of contract and quantum meruit.¹ Kitchen International filed a motion to dismiss based on res judicata. It claimed that the action was foreclosed because of an earlier judgment entered by the Superior Court of Québec. After a hearing on the motion to dismiss, the district court determined that the arguments went beyond the pleadings. After allowing limited discovery and converting the motion to one for summary judgment, the court entered judgment for Kitchen International. Evans filed a timely appeal to this court.²

For the reasons set forth in the following opinion, we reverse the judgment of the district court and remand for proceedings consistent with this opinion.

I BACKGROUND

According to the allegations of the complaint, Kitchen International and Evans entered into a contract in 2004.³ Evans agreed to supply Kitchen International with manufactured cabinetry for several residential construction sites on the East Coast of the United States. Kitchen International placed these orders from its headquarters in Montreal with the Georgia offices of Evans. The materials were shipped directly to the construction sites.

According to Kitchen International, in 2004, the two parties also agreed that they would create a products showroom at Kitchen International's office in Montreal. Kitchen International claims that Paul Gatti of Evans approved the design and layout of the showroom. According to Kitchen International, later that year, Evans manufactured and shipped cabinetry, related products and sales and promotional materials to Québec for use in the showroom. Evans denies the existence of such an agreement; it claims that it never authorized Kitchen International to build a showroom and that it did not supply products to Kitchen International for that purpose.

Various issues arose about the quality and conformity of the products that Evans had shipped to the East Coast projects. Consequently, in May 2006, Kitchen International engaged a Canadian attorney to file suit against Evans in the Superior Court of Québec for breach of contract arising from the materials supplied by Evans. Evans was served with process and given notice of this proceeding. Evans did not answer or otherwise respond to the action, and, consequently, on May 31, 2007, the Superior Court of Québec entered a default judgment against Evans in the amount of $149,354.74.

On April 23, 2007, Evans instituted this action for breach of contract and quantum meruit in the United States District Court for the District of Massachusetts. Kitchen International filed a motion to dismiss on the ground that the action was barred by res judicata by virtue of the Canadian judgment against Evans. Evans opposed the motion on the ground that the Superior Court of Québec had lacked jurisdiction over it, and, therefore, the Québec judgment could not be recognized by the district court.

During a hearing on Kitchen International's motion to dismiss, the district court realized that the issues being argued went beyond the pleadings. It therefore stated that the motion should be converted to one for summary judgment and allowed the parties ninety days to conduct limited discovery on the issue of the Superior Court of Québec's jurisdiction over Evans. On March 4, 2008, the district court resumed the hearing. The only additional documents supplied by either party were affidavits from their principals. On November 4, 2008, the district court converted Kitchen International's motion to a motion for summary judgment and dismissed the case. The court first determined that, because it was sitting in diversity, it should apply Massachusetts's version of the Uniform Foreign Money-Judgments Recognition Act ("Recognition Act") to determine whether it should enforce the Québec judgment.⁴ In order to enforce a judgment under the Recognition Act, the court continued, the Québec court must have been able to exercise personal jurisdiction over Evans.

At the beginning of its analysis, the district court observed that "jurisdictions have split over whether to apply the personal jurisdiction law of the rendering country, the forum state, or both." Evans Cabinet Corp. v. Kitchen Int'l, Inc., 584 F.Supp.2d 410, 414 (D.Mass.2008). Because the Supreme Judicial Court of Massachusetts had not chosen between these views, the district court decided that it would scrutinize the jurisdiction of the Québec court under both the law of Québec and the law of Massachusetts. Turning first to the law of Québec, the district court noted that Kitchen International had attached the affidavit of its Canadian attorney to establish that Québec's exercise of jurisdiction was appropriate. The district court determined that the affidavit clearly established that Kitchen International had the right to institute a lawsuit in Québec. However, it found the affidavit deficient on the issue of "whether the Quebec Superior Court properly exercised personal jurisdiction over [Evans] pursuant to article 3136 of the Civil Code of Quebec." Id. at 415. It noted, however, that the United States District Court for the Southern District of New York had determined that the Québec court could exercise personal jurisdiction over a defendant if the contract at issue had been "`concluded in Quebec or if the cause of action arose in Quebec.'" Id. (quoting Canadian Imperial Bank of Commerce v. Saxony Carpet Co., 899 F.Supp. 1248, 1253 (S.D.N.Y.1995) (emphasis in original)). Based on that authority, the district court concluded that the Superior Court of Québec properly had exercised personal jurisdiction over Evans pursuant to the law of Québec.

The district court then turned to the law of Massachusetts. The court first noted that Massachusetts courts had interpreted the Commonwealth's long-arm statute "as an assertion of jurisdiction over the person to the limits allowed by the Constitution of the United States." Id. (internal quotation marks omitted). The district court then held:

The Quebec Superior Court's exercise of personal jurisdiction over Plaintiff did not contravene traditional notions of fair play and substantial justice. Plaintiff had several contacts with Quebec. All the orders, communications, payments, correspondence and dealings between [the] Parties occurred through Defendant's Montreal office. Moreover, Parties agreed to create a product showroom at Defendant's Montreal office, which was ultimately constructed. The purpose of this showroom was to display Plaintiff's products to potential customers and sales agents from Canada and New England. Because under either Quebec or Massachusetts law the Quebec Superior Court properly exercised personal jurisdiction over Plaintiff, Plaintiff's argument that the Quebec default judgment is not conclusive fails.

Id. at 416 (internal quotation marks omitted).

The court then turned to the question of whether Evans's claims were barred by the Québec judgment. The district court determined that, although Massachusetts supplies the applicable res judicata law, "a Massachusetts court must give a prior judgment the same finality it would receive in the rendering jurisdiction." Id. at 417. Consequently, the court employed Québec rules of res judicata to determine whether the default judgment should be given preclusive effect. Id. (citing Québec civil code and a Supreme Court of Canada decision). The court then concluded that Evans's suit was barred by these rules:

Here, the Quebec default judgment precludes the relitigation of Plaintiff's claim. Because a default judgment is a final judgment under the Recognition Act, the Quebec default judgment qualifies for res judicata treatment. First, this action involves the same cause of action—breach of contract—as the Quebec proceeding. Second, as both Parties stipulated in open court, this action involves the same construction projects as were at issue in the Quebec proceeding. Third, the parties to this action were the same parties to the Quebec proceeding, with the only difference being that Plaintiff here was the defendant in Quebec.

Id. The district court, therefore, held that res judicata precluded the present action and entered summary judgment for Kitchen International.

II DISCUSSION

A. Contentions of the Parties

Evans submits that the district court erred in holding that its claim for damages for breach of contract or in quantum meruit were barred because of the prior default judgment entered against it by the Superior Court of Québec. In Evans's view, the Superior Court of Québec lacked personal jurisdiction over it, and, consequently, the default judgment was unenforceable and not subject to recognition by the district court. Noting that the district court applied a summary judgment standard in determining whether the Québec court properly exercised jurisdiction, Evans submits that there are significant unresolved factual questions concerning the nature of Evans's relevant contacts with the Province of Québec. Evans contends that, if the district court had taken the facts in the light most favorable to its position, as the district court must do in the context of summary judgment, there would be no basis for concluding that the Québec court could exercise personal jurisdiction over it.

Kitchen International takes a decidedly different view....