Beverage v. Pullman & Comley, LLC
232 Ariz. 414
Ariz. Ct. App.2013Background
- Arizona resident Beverage invested in a Chenery tax shelter promoted by Chenery Associates and sought a favorable tax opinion letter from Connecticut firm Pullman & Comley for $50,000.
- Pullman drafted and issued a 58-page opinion letter in Connecticut addressed to Beverage in Arizona, based on an attorney-client relationship formed via Arizona-based communications.
- The opinion letter, prepared for use in Beverage’s Arizona tax return, led Beverage to claim large tax losses on federal taxes.
- IRS audited Beverage; the IRS disallowed the losses and Beverage incurred substantial legal fees; damages exceeded $3,000,000.
- Beverage and his wife sued Pullman and Fitzpatrick’s firm in Arizona for multiple claims; the superior court dismissed for lack of personal jurisdiction.
- This appeal seeks reversal of that dismissal based on Arizona-specific personal jurisdiction finding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Arizona have specific personal jurisdiction over Pullman? | Beverage: contacts, including calls, promotions, and tailored Arizona letter, target Arizona. | Pullman: no ongoing forum-directed relationship just from client’s home state involvement. | Yes; contacts aggregate to target Arizona for arising claims. |
| Are Pullman’s Arizona-directed activities sufficient to satisfy the nexus requirement? | Beverage relied on the Arizona-directed opinion letter for tax filings in Arizona. | Pullman argues no direct nexus to the Beverages’ claims beyond general conduct. | Sufficient nexus between forum contacts and claims. |
| Is the exercise of jurisdiction reasonable given burdens and interests of states? | Arizona has substantial interest; defendant cannot show a compelling burden to defeat jurisdiction. | Connecticut impact or burden could render jurisdiction unreasonable. | Jurisdiction reasonable; not outweighed by burdens. |
| Did the court need an evidentiary hearing to resolve jurisdictional facts? | Facts viewed in Beverages’ favor; no evidentiary hearing required at this stage. | An evidentiary hearing would be necessary to resolve disputed facts. | No evidentiary hearing required; de novo review appropriate. |
Key Cases Cited
- Planning Group of Scottsdale, L.L.C. v. Lake Mathews Mineral Props., Ltd., 226 Ariz. 262 (2011) (supersedes mere unilateral contact; analyzes aggregate contacts for jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment standard for jurisdiction)
- Trierweiler v. Croxton and Trench Holding Corp., 90 F.3d 1523 (10th Cir. 1996) (letter to client forwarded to forum state does not automatically establish jurisdiction)
- Nash Finch Co. v. Preston, 867 F. Supp. 866 (D. Minn. 1994) (warns against broad, across-the-board jurisdiction for lawyers issuing letters)
- Vig v. Indianapolis Life Insurance Co., 384 F. Supp. 2d 975 (S.D. Miss. 2005) (jurisdiction when advice targets forum resident via letters)
- Mirotznick v. Sensney Davis & McCormick, 658 F. Supp. 932 (W.D. Wash. 1986) (out-of-state law firms issuing letters to be delivered to parties in forum state can create jurisdiction)
- Olson v. Jenkens & Gilchrist, 461 F. Supp. 2d 710 (N.D. Ill. 2006) (jurisdiction over in-state communications with out-of-state firm involved in federal tax work)
- Resolution Trust Corp. v. Farmer, 836 F. Supp. 1123 (E.D. Pa. 1993) (out-of-state opinion letters directed to lender can create jurisdiction)
- Wallace v. Frank, 662 F. Supp. 876 (E.D. Mich. 1987) (jurisdiction considerations for professionals providing documents to forum actors)
- Hanson v. Denckla, 357 U.S. 235 (1958) (purposeful availment principle for due process)