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UNITED STATES DISTRICT COURT DISTRICT OF MAINE

MAINE RUBBER INTERNATIONAL, ) P LAINTIFF ) ) v. ) ) ENVIRONMENTAL MANAGEMENT GROUP, INC., ET AL., ) ) DEFENDANTS )

)

CIVIL NO. 02-226-P-H )

AMENDED ORDER AFFIRMING IN PART AND REJECTING IN PART RECOMMENDED DECISIONS OF THE MAGISTRATE JUDGE

The United States Magistrate Judge filed with the court on August 6, 2003, with copies to counsel, his Memorandum Decision on Motion to Strike and Recommended Decision on Defendant Environmental Management Group's Motion for Partial Summary Judgment. The defendant Environmental

Management Group, Inc. ("EMG") filed an objection to the Recommended Decision on August 14, 2003. On October 10, 2003, the Magistrate Judge filed his Recommended Decision on Defendants David Maglietta's and Felicia Pfeffer's Motion to Dismiss. The plaintiff filed an objection to that Recommended Decision on October 27, 2003.

I have reviewed and considered the Recommended Decisions, together with the entire record; I have made a de novo determination of all matters adjudicated by the Recommended Decisions; and I affirm in part and reject in part the recommendations of the Magistrate Judge as discussed below. Maine Rubber International ("Maine Rubber") contracted to buy real estate in Portland. It hired EMG, a Maryland engineering firm, to perform an EMG employees

environmental site assessment before it closed the deal.

Maglietta and Pfeffer issued Maine Rubber a favorable report on behalf of EMG.1 Maine Rubber asserts no personal injuries or property damage, but claims unexpected expenses, and shutdown and relocation costs because of numerous environmental problems on the site not uncovered by Maglietta and Pfeffer. Maine Rubber has sued EMG, Maglietta and Pfeffer for negligence and negligent misrepresentation, and EMG alone for breach of contract. Jurisdiction is based upon diversity of citizenship and Maine law applies. The Magistrate Judge concluded that the District of Maine lacks personal jurisdiction over the two individuals--Maglietta for lack of substantial contacts, and Pfeffer because of the so-called fiduciary shield rule, inasmuch as all her

________________________________________________ 1 In my previous order dated December 18, 2003 (and which I now amend), I stated that Maine Rubber had proceeded to purchase the real estate. That was an unwarranted inference. In fact, Maine Rubber terminated its purchase and sale contract to buy the DuraStone property prior to the scheduled closing. Letter from Def.'s Counsel Sigmund D. Schultz of 12/24/03 (Docket No. 73), accord Pl.'s Memo. in Opposition to Def.'s Motion to Exclude, at 2 (Docket No. 51). My earlier misstatement, however, does not affe ct the analysis. 2

Maine contacts were on behalf of her employer, EMG. As for EMG, the Magistrate Judge concluded that the Maine Law Court would extend the prohibition it has announced on tort-based economic loss recovery for the sale of goods (the socalled economic loss doctrine) to service contracts. But he concluded that the Law Court would exempt from the doctrine professional services contracts like that here. He also concluded that negligent misrepresentation is an independent tort and exempt from the economic loss doctrine. He therefore denied EMG's motion for summary judgment on both tort claims. (No motion was made on the breach of contract claims.) I accept some parts of the Magistrate Judge's R ecommended Decisions and reject other parts. Specifically, on personal jurisdiction it is not for this federal court to apply the fiduciary shield exemption to narrow the broad scope of personal jurisdiction Maine law asserts. On economic loss, I disagree that

negligent misrepresentation is exempt from the doctrine in Maine. Although there is no guidance from the Law Court, I do agree with the Magistrate Judge that the Maine Law Court probably would apply the doctrine to service contracts. I disagree that the Law Court would exempt an environmental engineering services contract like that here. P ERSONAL JURISDICTION I A FFIRM the Magistrate Judge's recommendation on the defendant Maglietta and G RANT his motion to dismiss on personal jurisdiction grounds for
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insufficient contacts with the State of Maine. I R EJECT the Magistrate Judge's recommendation to dismiss the defendant Pfeffer for lack of personal jurisdiction. Pfeffer clearly had the requisite minimum contacts with the State of Maine. But she asserts that she had those contacts only in her capacity as an employee of EMG, not for any personal reasons. The so-called fiduciary shield doctrine, adopted by a number of courts, "generally precludes a court from exercising personal jurisdiction over a non-resident corporate agent for acts performed on behalf of his employer." LaVallee v. ParrotIce Drink Prods. of Am., Ltd., 193 F. Supp.2d 296, 301 (D. Mass. 2002). From the first creation of the fiduciary shield doctrine, however, it has been recognized as based upon equitable principles, not constitutional requirements. See id.;

Columbia Briargate Co. v. First Nat'l Bank in Dallas, 713 F.2d 1052, 1056 (4th Cir. 1983); Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 902 n.3 (2d Cir. 1981); United States v. Montreal Trust Co., 358 F.2d 239, 242-43 (2d Cir. 1966). In this diversity case, I am governed by Maine law of personal jurisdiction, as limited by the United States Constitution. Maine has stated in its statutes:
[T]o insure maximum protection to citizens of this State, [this section] shall be applied so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause of the United States Constitution, 14th amendment.

14 M.R.S.A.

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