Felland v. Clifton, 2012 U.S. App. LEXIS 11380 (7th Cir. June 6, 2012):

While vacationing in Arizona, Robert and Linda Felland entered into a contract to purchase a condominium unit in a planned beachfront development in Puerto Peñasco, Mexico. The project was managed by a real-estate development firm owned by Patrick Clifton, an Arizona resident. Robert Felland signed an agreement that required the couple to make a down payment in three installments. After making the first installment payment, the Fellands became concerned about the financing and timeliness of the project and sought reassurance from Clifton that the unit would be delivered on schedule. Clifton sent several communications--emails, phone calls, and letters--to the Fellands at their home in Wisconsin assuring them the project was properly financed and would be completed on time, and encouraging the Fellands to pay the additional installments on the down payment. Relying on these assurances, they made the payments. Clifton sent additional communications describing the project's progress, but did not deliver the unit by the contractual deadline. Further inquiry by the Fellands' attorney revealed that the project did not have financing; instead, advance sales of condominium units were funding the development.

Robert Felland sued Clifton in Wisconsin state court alleging intentional misrepresentation and seeking rescission and damages. Clifton removed the case to federal district court and moved to dismiss for lack of personal jurisdiction. The district court granted the motion, finding that Clifton's communications to the Fellands in Wisconsin did not satisfy the due-process minimum-contacts requirement for personal jurisdiction. Felland appealed.

We reverse. Felland's complaint alleges that Clifton's repeated communications to his Wisconsin home were part of a deliberate attempt to lull him into a false sense of security and to induce him to make the installment payments. While these communications might not be directly relevant to a simple breach-of-contract claim, they are critical to Felland's claim of intentional misrepresentation. Clifton was aware that Felland lived in Wisconsin, directed multiple communications to him there, and knew that the harm would be felt in Wisconsin. These allegations are sufficient to establish the minimum contacts necessary to satisfy the due-process requirements for jurisdiction over Clifton in Wisconsin. We also conclude that Clifton's communications satisfy the "local act or omission" provision of the Wisconsin long-arm statute.***

Under Wisconsin law a claim of intentional misrepresentation has the following three elements: (1) the defendant made a false representation of fact; (2) the false representation was made with the intent to defraud and for the purpose of inducing another to act on it; and (3) the plaintiff relied on the representation to his or her detriment. Korhumel Steel Corp. v. Wandler, 600 N.W.2d 592, 596 (Wis. Ct. App. 1999) (citing Lundin v. Shimanski, 368 N.W.2d 676, 680-81 (Wis. 1985)). The district court characterized Felland's decision to bring a fraud claim instead of a contract claim as a "tactical maneuver," but tactical or not, the tort-vs.-contract distinction is highly significant to the personal-jurisdiction analysis. Where a plaintiff's claim is for an intentional tort, "the inquiry focuses on whether the conduct underlying the claim[] was purposely directed at the forum state." Tamburo, 601 F.3d at 702 (citing Dudnikov, 514 F.3d at 1071).

We explained in Tamburo that the Supreme Court's important decision in Calder v. Jones, 465 U.S. 783 (1984), provides useful contours in conducting the purposeful-direction analysis in a tort case. In Calder the Court held that a California court could exercise personal jurisdiction over a reporter and editor for the National Enquirer, Florida residents who had written and edited an allegedly libelous article concerning an actress who was a California resident. Id. at 785-86. The Court turned aside the defendants' arguments that they were not responsible for the tabloid's distribution in California and had no stake in its publication there, holding instead that their intentional and allegedly tortious actions were expressly aimed at California. Id. at 789. Our opinion in Tamburo distilled three requirements from Calder for determining whether conduct was "purposefully directed" at the forum state: "(1) intentional conduct (or 'intentional and allegedly tortious' conduct); (2) expressly aimed at the forum state; (3) with the defendant's knowledge that the effects would be felt--that is, the plaintiff would be injured--in the forum state." 601 F.3d at 703. If the plaintiff makes these three showings, he has established that the defendant "purposefully directed" his activity at the forum state.

The first and third requirements of Calder are fairly easily met in this case. As alleged in the complaint, Clifton's communications were intentional misrepresentations under Wisconsin law, which suffices to establish "intentional and allegedly tortious conduct2." Likewise, there is no doubt that Clifton knew the alleged harm would be felt in Wisconsin. Clifton and his associates knew from the beginning that the Fellands were Wisconsin residents; their Wisconsin residency was noted in various documents possessed and signed by Clifton, and Clifton directed multiple communications via several different media to the Fellands' Wisconsin home.

Footnote 2. We explained in Tamburo that the circuits are divided on whether Calder's "express aiming" inquiry includes all of the defendant's jurisdictionally relevant intentional acts or only those intentional acts that are also alleged to be tortious or otherwise wrongful — in essence, "intentional" vs. "intentional and allegedly tortious" acts. Tamburo v. Dworkin, 601 F.3d 693, 704 (7th Cir. 2010) (citing cases). We did not need to take sides in the split in Tamburo, and the same is true here. Felland's allegations are sufficient even under the narrower formula focusing only on the defendant's "intentional and allegedly tortious" acts.

***

Even where a defendant's conduct is purposefully directed at the forum state, the plaintiff must also show that his injury "arises out of" or "relates to" the conduct that comprises the defendant's contacts. See Tamburo, 601 F.3d at 708 (citing Burger King, 471 U.S. at 472). We noted in Tamburo that the Supreme Court has not elaborated on the details of this requirement, and the circuits have split on how close the causal connection must be; more specifically, the circuits disagree about whether the defendant's contacts must have been the factual cause of the plaintiff's injury, the factual and proximate cause, or perhaps some intermediate standard between the two. See id. at 708-09 (citing cases); see also Dudnikov, 514 F.3d at 1078 (outlining this conflict). We have suggested in passing that a mere "but for" causal relationship is insufficient to establish the required nexus between a defendant's contacts and the underlying cause of action, see GCIU-Emp'r Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1025 (7th Cir. 2009) (citing O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 322 (3d Cir. 2007)), but we have declined to definitively resolve the question, Tamburo, 601 F.3d at 709.