Nancy McLEAN and John McLean, Her Son, Plaintiffs,
v.
The CHURCH OF SCIENTOLOGY OF CALIFORNIA, et al., Defendants.
No. 81-174 Civ. T-K.
United States District Court, M. D. Florida, Tampa Division.
March 16, 1982.
Nonresidents moved to quash or dismiss the effect of constructive service upon
them in diversity action for malicious prosecution, abuse of prosecution, and
invasion of privacy. The District Court, Krentzman, Chief Judge, held that
plaintiffs had met burden of alleging and sufficiently establishing material
facts to support constructive service of process under Florida long-arm
statute, and defendants had failed to present clear and convincing proof that
service was invalid.
Ordered accordingly.
[1] FEDERAL COURTS
A plaintiff must state sufficient facts in complaint to support reasonable
inference that defendant can be subjected to jurisdiction within the state.
[2] FEDERAL CIVIL PROCEDURE
If allegations of jurisdictional facts are challenged with affidavits or other
evidence, plaintiff must then establish by opposing affidavit, testimony or
documents, those material facts supporting allegations which would
justify service of process under long-arm statutes. West's F.S.A. s 48.181.
[3] FEDERAL CIVIL PROCEDURE
A defendant must show invalidity of service of process by clear and convincing
proof before being entitled to order granting motion to quash.
[4] CONSTITUTIONAL LAW
In order for state to subject nonresident to its jurisdiction, nonresident must
have certain minimum contacts with it such that maintenance of suit does not
offend traditional notions of fair play and substantial justice.
U.S.C.A.Const.Amend. 14.
[4] FEDERAL COURTS
In order for state to subject nonresident to its jurisdiction, nonresident must
have certain minimum contacts with it such that maintenance of suit does not
offend traditional notions of fair play and substantial justice.
U.S.C.A.Const.Amend. 14.
[5] FEDERAL CIVIL PROCEDURE
Plaintiffs who, in diversity action against church and others for malicious
prosecution, abuse of prosecution, and invasion of privacy, alleged that church
was agent of nonresidents rather than that nonresidents were merely nonresident
officers of resident corporate church, and who submitted affidavits and
documents refuting nonresidents' official status in church, were not required
to establish personal involvement by nonresidents as officers to support
service of process upon nonresidents under Florida long-arm statute. West's
F.S.A. s 48.181.
[6] FEDERAL COURTS
Evidence was sufficient to indicate "concealment" within meaning of Florida
statute providing that acceptance of privilege of engaging in business in State
by person who is resident of state and who subsequently becomes nonresident or
conceals his whereabouts constitutes appointment of Secretary of State as agent
for service of process, in view of significant evidence that nonresidents were
once residents, certified mailings to various known addresses of nonresidents,
organized effort on part of persons within church alleged to be nonresidents'
agent to hide whereabouts of key personnel and key documents, and church's
employment of nonresidents' attorney to assert nonresidents' right to privacy
and seclusion. West's F.S.A. s 48.181.
See publication Words and Phrases for other judicial constructions and
definitions.
[7] FEDERAL COURTS
Inquiry as to whether nonresident has accepted privilege to engage in business
in state to support service of process under state's long-arm statute concerns
nature, not extent, of a defendant's activities in state. West's F.S.A. s
48.181.
[8] FEDERAL COURTS
Continuous and systematic activities provide reasonable basis for assertion of
jurisdiction under Florida long-arm statute. West's F.S.A. s 48.181.
[9] FEDERAL COURTS
Commercial transaction for pecuniary benefit is not necessarily required for
assertion of jurisdiction under Florida long-arm statute. West's F.S.A. s
48.181.
[10] FEDERAL COURTS
In diversity action for malicious prosecution, abuse of prosecution, and
invasion of privacy against church and others, plaintiffs had met burden of
alleging and sufficiently establishing material facts to support constructive
service of process upon nonresidents under Florida long-arm statute, and
nonresidents had failed to present clear and convincing proof that service was
invalid, where file was replete with support for allegations that resident
corporate church and nonresidents were closely connected, file supported
allegations that nonresidents were concealing themselves, exhibits and
deposition indicated substantial business in state, including purchasing of
property, underlying suit by church against plaintiffs was in state and sought
pecuniary award of $300,000, and it concerned statements plaintiffs made in
state about church's operations in state. West's F.S.A. s 48.181.
*546 Walt Logan, St. Petersburg, Fla., and Tony Cunningham, Tampa, Fla.,
for plaintiffs.
*547 Bennie Lazzara, Jr., P.A., Tampa, Fla., for P. Lisa.
Howard J. Stechel, A. Thomas Hunt, Taylor & Roth, Los Angeles, Cal., Gary S.
Brooks, Williams, Salomon, Kanner, Damian, Weissler & Brooks, Miami, Fla.,
Lawrence E. Fuentes, Fuentes & Kreischer, P.A., Tampa, Fla., for Church of
Scientology.
Michael L. Kinney, Tampa, Fla., for M. Wolfe.
Alan Goldfarb, Miami, Fla., for L. Ron and Mary Sue Hubbard.
Carl E. Kohlweck, Grey & Kohlweck, Santa Monica, Cal., for P. Lisa.
Barrett S. Litt, Los Angeles, Cal., for Mary Sue Hubbard.
ORDER
KRENTZMAN, Chief Judge.
This cause came on for hearing on January 7, 1982 upon the motion of
defendants L. Ron Hubbard and Mary Sue Hubbard to quash or dismiss the effect
of constructive service upon them. The Court has considered the pleadings, the
matters in the file, memoranda and argument of the respective counsel, the
relevant Florida statute and relevant caselaw, and upon the findings
hereinafter made, is of the opinion that the motion to quash should be denied
and that plaintiffs have obtained effective service of process upon said
defendants.
This is a diversity suit for malicious prosecution, abuse of prosecution, and
invasion of privacy. The law of Florida is applicable. The other defendants,
including the Church, for purposes of this motion, have been served. On
September 8, 1981 plaintiffs filed an affidavit of compliance with Florida
Statute 48.181, which in relevant part is as follows:
48.181 Service on nonresident engaging in business in state
(1) The acceptance by any person or persons individually, or associated
together as a copartnership or any other form or type of association, who are
residents of any other state or country, and all foreign corporations, and any
person who is a resident of the state and who subsequently becomes a
nonresident of the state or conceals his whereabouts, of the privilege extended
by law to nonresidents and others to operate, conduct, engage in, or to carry
on a business or business venture in the state, or to have an office agency in
the state, constitutes an appointment by the persons and foreign corporations
of the secretary of state of the state as their agent on whom all process in
any action or proceeding against them, or any of them, arising out of any
transaction or operation connected with or incidental to the business or
business venture may be served. The acceptance of the privilege is
signification of the agreement of the persons and foreign corporations that the
process against them which is so served is of the same validity as if served
personally on the persons or foreign corporations.
[1][2][3] A plaintiff must state sufficient facts in the complaint to
support a reasonable inference that the defendant can be subjected to
jurisdiction within the state. Wright & Miller, s 1068 p. 250. If the
allegations of jurisdictional facts are challenged with affidavits or other
evidence, the plaintiff must then establish by opposing affidavit, testimony or
documents, those material facts supporting the allegations which would justify
service of process under the long-arm statutes. McNutt v. General Motors
Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); International
Graphics, Inc. v. MTA-Travel Ways, Inc., 71 F.R.D. 598 (S.D.Fla.1976);
Underwood v. University of Kentucky, 390 So.2d 433 (Fla. 3 DCA 1980). A
defendant must show invalidity of service by clear and convincing proof before
being entitled to an order granting a motion to quash. Travelers Insurance
Co. v. Davis, 371 So.2d 702 (Fla. 3 DCA 1979).
Plaintiffs allege, in summary, that the Hubbards controlled the Guardian's
Office of the Church of Scientology of California, and that it took the alleged
actions against plaintiffs in Florida for the purpose of realizing *548 a
pecuniary benefit. They allege the Hubbards were residents of Florida in late
1975 and early 1976, during which time the actions complained of arose, and
that the Hubbards have become non-residents and are concealing their
whereabouts. It is clear that such allegations support a reasonable inference
of jurisdiction over the Hubbards.
Defendants, however, challenge these allegations with an unsworn statement
indicating the Hubbards' independence of the Church of Scientology of Florida,
an affidavit stating their similar independence of the Church of Scientology of
Boston, two affidavits which tie the Hubbards to Florida as of early 1976 and
confirm their leaving Florida thereafter, and an affidavit by the President of
the Church of Scientology of California disclaiming any connection by Ron
Hubbard with the Church other than as Founder and Author since 1966. No
personal affidavits of the Hubbards were submitted.
The plaintiffs respond with exhibits and deposition excerpts supporting
jurisdiction. The issue for the Court is whether plaintiffs' evidence
sufficiently establishes those material facts supporting jurisdictional
allegations in order to overcome defendants' counter evidence and to justify
service of process under Florida's constructive service statute.
Construction of the Florida long-arm statutes
[4] The constitutional standard set by the U.S. Supreme Court for
enforcement of state long-arm statutes is that in order for a state to subject
a non-resident to its jurisdiction, the nonresident must have certain "minimum
contacts with it such that the maintenance of the suit does not offend
traditional notions of fair play and substantial justice." International
Shoe Co. v. Washington, 326 U.S. 310, 315, 66 S.Ct. 154, 158, 90 L.Ed. 95
(1945). Above this threshold due process standard, states vary in the extent
to which they allow long-arm jurisdiction to extend. The Fifth Circuit has
noted varying trends in Florida courts' construction of the statutes. While it
applied a liberal interpretation of the state's statute in Rebozo v.
Washington Post Co., 515 F.2d 1208 (5th Cir. 1975), on other occasions it has
held that the statute should be strictly construed. See, e.g., Spencer Boat
Co., Inc. v. Liutermoza, 498 F.2d 332 (5th Cir. 1974); Costin v. Olen, 449
F.2d 129 (5th Cir. 1971). Even if the statute is strictly construed, the Court
finds that plaintiffs' evidence supporting allegations of jurisdiction herein
outweighs defendants' counter evidence and justifies constructive service in
Florida pursuant to Fla.Stat. 48.181.
Persons associated together
The first issue is whether plaintiffs' allegations that the Hubbards are "any
person or persons individually, or associated together as a copartnership or
any other form or type of association" are sufficiently supported.
Significantly, plaintiffs allege that the Church was agent of the Hubbards,
rather than that the Hubbards were merely non-resident officers of the resident
corporate Church. Defendants submit affidavits and documents refuting the
Hubbards' official status subsequent to 1966.
[5] Thus plaintiffs are not required to establish personal involvement by
the Hubbards as officers. See Wright & Miller, Sec. 1068; Escude Cruz v.
Ortho Pharmaceutical Corp., 619 F.2d 902 (1st Cir. 1980).
The file is replete, however, with support for the allegation that the Church
and the Hubbards are closely connected, including the following:
Plaintiff's allegations that the Hubbards controlled the Guardian's Office of
the Church is corroborated by the findings in (U.S. v. Heldt ) United States
v. Hubbard, et al, 668 F.2d 1238 (C.A.D.C.1981). (Exhibit B to plaintiff's
opposition to defendant Lisa's motion for protective order filed October 15,
1981. The indictment there covers the same general time span as this case.)
The Court of Appeals found the Hubbards to be the first and second highest
officials in the Scientology organization. Id. at 1243.
*549 Defendant Lisa was with the Guardian's Office for the Church in
Florida for thirteen years. His deposition, taken October 20, 1981 and
submitted as an exhibit, reveals that Mary Sue Hubbard supervised the
Guardian's Office as Commodore Staff Guardian (CSG) and, as such, was sent
reports as late as 1981 (pp. 17-20). Numerous documents attached to the
deposition show a copy sent to CSG.
L. Ron Hubbard received mail addressed to him through the Church's office in
Florida, according to the Church's Standing Order No. 1, in effect until
January 21, 1981. He still receives gifts via the Church according to revised
Standing Order No. 1 of the Church, and messages from him are printed regularly
in Church publications.
The fact that the Church has paid for the representation of the Hubbards'
attorney is corroborative of an association between Hubbards and the Church.
(See e.g., Goldfarb deposition, p. 19).
There is significant evidence that the Hubbards were once residents and are
now non-residents. Defendants themselves submitted affidavits by Vickie Mead
and Kenneth Urquhart stating that Mary Sue and L. Ron Hubbard were in Florida
between December, 1975, and June and February, 1976, respectively. Both
affidavits state they have not been in Florida since. The numerous efforts to
serve the Hubbards at the best address known to plaintiffs indicate that the
Hubbards are no longer residents of this state.
Further, the file as a whole supports the allegations that the Hubbards are
concealing themselves. The file is full of certified mailings to various known
addresses of the Hubbards, including that given by the Church representative
returned as non-deliverable. The same is true of attempts at service of the
Hubbards in 80-501 Civ T-K (hereinafter referred to as the "Burden" case) which
is another case pending before this court with similar defendants, and counsel
on both sides.
The Court of Appeals opinion confirms such projects as "red box", an organized
effort on the part of persons within the Church to hide the whereabouts of key
personnel and key documents. Exhibit 3 to Lisa's deposition is "Operation
Bulldozer Leak", the stated purpose of which is to spread the rumor that L. Ron
Hubbard has no control of the Church and no legal liability for it. To the
extent that the Church is shown to be Hubbard's agents, these are efforts of
concealment attributable to him.
Relative to the deposition in this case of Hubbards' attorney, plaintiffs in
the Burden case filed a motion to compel on October 27, 1981. In the Church's
response to that motion, the Church represented that one of the major
objectives of the employment of Hubbards' attorney is to "assert his
(Hubbard's) right to privacy and seclusion". Moreover, the Hubbards' attorney
has refused to answer questions concerning the Hubbards' whereabouts or
representatives' contacts with him, claiming such information was given to him
in confidence, in spite of this Court's ruling elsewhere in this case and in
the Burden case that such information is not protected by the attorney-client
privilege.
[6] These comprise corroborative and supportive evidence of the Hubbards'
efforts and intent to conceal themselves. Accordingly, the file herein
presents a showing sufficient to indicate concealment under Florida law.
Cortez v. N.Y. Capital Group, Inc., 401 So.2d 1163 (Fla. 3 DCA 1981).
Carrying on a business venture in Florida
The Court is of the opinion that the plaintiffs have adequately supported
their allegation that the Hubbards, through their agent the Church, accepted
"the privilege to operate, conduct, engage in or carry on a business or
business venture in Florida, or to have an office or agency in the state."
[7][8][9] The inquiry concerns the nature, not extent, of a defendant's
activities in the state. Florida courts have shown a willingness to liberally
construe "business venture" under Fla.Stat. 48.181. Continuous and
systematic activities provide a reasonable basis for the assertion of
jurisdiction. Ford Motor Co. v. Atwood Vacuum Machine *550 Co., 392
So.2d 1305 (Fla.1981). A commercial transaction for pecuniary benefit is not
necessarily required. Participating in the proceeds of an uncle's estate has
been held to be a business venture, McCarthy v. Little River Bank & Trust
Co., 224 So.2d 338 (Fla. 3 DCA 1969), as has contracting with an in-state
hospital for services. Maryland Casualty Co. v. Hartford et al, 264 So.2d
842 (Fla. 1 DCA 1972).
The file contains numerous documents and articles as to the extent of the
activities of the Church of Scientology of California in Florida and the effect
thereof. The exhibits attached to the defendant Church's motion for change of
venue, and the Lisa deposition and its exhibits indicate substantial business
in the state, including the purchasing of property. In addition, the
underlying suit by the Church against the plaintiffs which gave rise to the
instant complaint was in Florida and sought a pecuniary award of $300,000.
Arises out of the business venture in Florida
Finally, the plaintiffs have met the burden of adequately alleging and praying
that this suit arises "out of (a) transaction or operation connected with or
incidental to the business or business venture." The underlying suit
complained of was brought by defendants against plaintiffs in Florida. It
concerned statements plaintiffs made in Florida about the Church of Scientology
of California's operations in Florida.
[10] Upon consideration of the file as a whole, including but not limited to
the particular evidence reviewed above, the Court is convinced that plaintiffs
have met the burden of alleging and sufficiently establishing those material
facts which support constructive service of process in Florida pursuant to
Fla.Stat. 48.181. The requirements of the statute having been met,
plaintiffs' constructive service of L. Ron Hubbard and Mary Sue Hubbard through
the Secretary of State of Florida has been accomplished. Further, defendants
have failed to present clear and convincing proof that the service is invalid.
Accordingly, defendants' motion to quash is DENIED.
At hearing, defendants moved for certification of the Court's order pursuant
to 28 U.S.C. s 1292(b). That motion was, and is, GRANTED. The Court is of
the opinion that this order involves a controlling question of law as to which
there is substantial ground for difference of opinion, of which an immediate
appeal would materially advance the case.
Subsequent to the hearing, but prior to this order, the Hubbards each filed a
motion to dismiss and for reconsideration on January 27, 1982, to which
plaintiffs have responded. The Hubbards have joined in each others motion, and
ask the Court to reconsider its denial of the motions to quash at hearing,
explained herein. The argument by defendants is essentially that presented
previously on the motion to quash. The motions are DENIED for the reasons
given herein.
Defendants raise the new argument, however, that plaintiffs failed to allege
diversity jurisdiction in that the citizenship of the Hubbards is not alleged.
Plaintiffs allege that the Hubbards were once Florida residents, have become
non-residents of Florida, and are concealing their whereabouts.
The diversity statute provides for jurisdiction between "citizens of a State
and foreign states or citizens or subjects thereof." 28 U.S.C. s
1332(a)(2). Plaintiffs are Canadian citizens.
The Court hereby waives the Local Rule requirement of filing a complete,
amended pleading, and grants leave to plaintiff to file an amendment to the
amended complaint with jurisdictional allegation within 10 days of this
order. 28 U.S.C. s 1653.