Beverage v. Pullman & Comley (CA1 4/25/13)

                                  THE SUPREME COURT HAS AFFIRMED THIS OPINION

This jurisdiction case offers about as slender a basis for it as you’ll find.

Beverage’s accountant, Fitzpatrick, wanted him to invest in a tax shelter. Fitzpatrick called Pullman, a Connecticut law firm, to get an opinion letter on the shelter. Pullman sent Fitzpatrick its brochure and a fee agreement for Beverage to sign. It had two phone calls with him to  discuss the facts. It then issued an opinion letter favorable to the shelter. When the IRS later disallowed the shelter Beverage sued various defendants including Pullman. Pullman moved to dismiss for lack of jurisdiction. The trial court granted the motion.

The Court of Appeals reverses. Why? Pullman “accepted a telephone call” from Arizona, sent “promotional materials” (the brochure), “affirmatively agreed to represent Beverage knowing he lived in Arizona (one wonders what the court thinks “affirmatively” adds to its analysis, as opposed to its rhetoric), made two phone calls to get information, then sent the opinion letter “knowing that Beverage would rely on the letter in filing his federal income tax return from Arizona” (though the letter expressly did not cover state tax issues). These acts are about the least you can do for a client who calls you from another state but the court tells us that they are “purposeful contacts targeting Arizona.”

This purports to be “guided by” Planning Group of Scottsdale but in fact relies on out-of-state-lawyer cases from out of state. Its hard not to conclude that it also rests on the fact – mentioned in the first sentence and four more times in the opinion – that Pullman charged $50,000. But nobody else seemed to complain that that was excessive or out of the ordinary for this multi-million dollar deal. Why does the court go out of its way to leave the impression that the result might have been different had Pullman charged 3800 bucks? Some courts are shocked, shocked by fees they are no longer able to charge.

Its also hard to square this with some of the products-liability jurisdiction cases. In any event, the moral for out-of-state firms is apparently not to accept calls from Arizona.

(link to opinion)