Picus v. Kushner Carlson
1 CA-CV 17-0053
Ariz. Ct. App.Dec 5, 2017Background
- Picus (Arizona resident) and Frazier (California resident) formed Trilogy Imaging Partners, an Arizona LLC with 50/50 membership and principal place of business in Maricopa County.
- Frazier retained California law firm Kushner Carlson PC (KCPC) to draft Trilogy’s operating agreement and later a retainer agreement; the retainer was signed only by Frazier on behalf of Trilogy.
- KCPC drafted Trilogy’s Arizona-governed operating agreement and advised restructuring to make the LLC manager-managed (favoring Frazier); KCPC also prepared a buyout proposal and sent a demand letter to Picus in Arizona, identifying KCPC as Trilogy’s general corporate counsel.
- Picus sued KCPC (and initially Frazier) in Arizona for aiding and abetting, breach of fiduciary duty, and malpractice; Frazier was later dismissed by settlement.
- The superior court dismissed KCPC for lack of personal jurisdiction; Picus appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Arizona has specific personal jurisdiction over an out-of-state law firm | KCPC purposefully directed activities to Arizona by drafting an Arizona LLC’s operating agreement, entering a retainer for Trilogy, advising on Arizona-law restructuring, and sending a demand letter to Picus in Arizona | KCPC had insufficient contacts with Arizona (no office or Arizona-licensed lawyers); its work was performed in California and primarily on behalf of Frazier | Reversed: KCPC’s aggregate contacts with Arizona satisfy purposeful availment and support specific jurisdiction |
| Whether the claims arise out of KCPC’s Arizona-directed activities | Picus contends his claims (aiding and abetting, breach of fiduciary duty, malpractice) flow from KCPC’s representation of Trilogy and its Arizona-directed acts | KCPC implies the acts were not sufficiently connected to Arizona to support the claims | Held: Picus’s claims arise from KCPC’s activities directed at an Arizona LLC and a managing member in Arizona |
| Whether exercising jurisdiction would be reasonable | Picus argues reasonableness follows from KCPC’s purposeful contacts and claims arising from those contacts | KCPC did not show other considerations making jurisdiction unreasonable | Held: Exercise of jurisdiction is reasonable; KCPC offered no compelling contrary evidence |
| Burden of proof on prima facie showing | Picus must allege facts supporting jurisdiction; the court resolves factual conflicts in plaintiff’s favor at this stage | KCPC bears the burden to rebut once plaintiff makes a prima facie showing | Held: On de novo review, the complaint’s allegations suffice to make a prima facie showing of jurisdiction |
Key Cases Cited
- Planning Grp. of Scottsdale, LLC v. Lake Mathews Mineral Properties, Ltd., 226 Ariz. 262 (Ariz. 2011) (framework for purposeful availment and aggregate-contact analysis)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (U.S. 1980) (minimum contacts requirement for specific jurisdiction)
- Beverage v. Pullman & Comley, LLC, 232 Ariz. 414 (App. 2013) (Arizona exercised jurisdiction over out-of-state law firm that provided an opinion and directed representation to an Arizona client)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (reasonableness inquiry for specific jurisdiction; defendant must show compelling reasons jurisdiction is unfair)
- Austin v. CrystalTech Web Hosting, 211 Ariz. 569 (App. 2005) (three-part test for minimum contacts in Arizona)