Title: Ex parte Gregory S. Bentley et al. PETITION FOR WRIT OF MANDAMUS:CIVIL (In re: Intergraph Corporation and Cobalt BSI Holding, L.L.C. v. Gregory S. Bentley et al.)

State: alabama

Issuer: Alabama Supreme Court

Document:

REL:05/21/10
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2009-2010
____________________
1081083
____________________
Ex parte Gregory S. Bentley et al.
PETITION FOR WRIT OF MANDAMUS
(In re: Intergraph Corporation and Cobalt BSI Holding,
L.L.C.
v.
Gregory S. Bentley et al.)
(Madison Circuit Court, CV-08-1729)
COBB, Chief Justice.
Bentley 
Systems 
Incorporated 
("BSI"), 
a 
Delaware
corporation based in Pennsylvania, and Gregory S. Bentley,
1081083
2
Keith A. Bentley, Barry J. Bentley, Raymond B. Bentley, and
Richard P. "Scott" Bentley ("the Bentley brothers"), residents
of Pennsylvania and the defendants in the underlying action,
petition this Court for a writ of mandamus instructing the
Madison Circuit Court to vacate its order denying their motion
to dismiss the action or, in the alternative, to stay the
proceedings in the underlying action or to enter an order
dismissing the action without prejudice.  The plaintiffs in
the underlying action, Cobalt BSI Holding, L.L.C. ("Cobalt"),
a Delaware limited-liability company based in Nevada, and
Intergraph Corporation ("Intergraph"), a Delaware corporation
based in Alabama, sued the defendants in the Madison Circuit
Court on November 26, 2008, both directly and derivatively as
shareholders of BSI.  The action challenged an incentive-
compensation plan between the plaintiffs and the defendants
and alleged, among other things, that the Bentley brothers
were operating BSI as their corporate "alter ego."  The relief
sought  includes the permanent removal of the Bentley brothers
from any managerial or directorial position at BSI.  On the
same day the underlying action was filed in Alabama, Cobalt
filed a complaint against BSI and the Bentley brothers in the
1081083
3
Delaware 
Chancery 
Court 
asserting 
similar 
claims 
and
allegations and seeking similar relief; the Delaware action
also sought an inspection of BSI's corporate books and records
under Delaware business law.  
On January 16, 2009, the plaintiffs filed a motion in the
Alabama action seeking a preliminary injunction enjoining any
further distribution of profits of BSI to the Bentley
brothers.  Also on January 16, BSI and the Bentley brothers
filed an action in Delaware seeking a judgment declaring the
law as to the same issues raised in the Alabama action.  In
light of their Delaware action, BSI and the Bentley brothers
subsequently filed a motion to dismiss the Alabama action
pursuant to Ala. Code 1975, § 6-5-430, on the ground that
Delaware was a more appropriate forum.  Section 6-5-430
states:
"Whenever, either by common law or the statutes
of another state or of the United States, a claim,
either upon contract or in tort has arisen outside
this state against any person or corporation, such
claim may be enforceable in the courts of this state
in any county in which jurisdiction of the defendant
can be legally obtained in the same manner in which
jurisdiction could have been obtained if the claim
had arisen in this state; provided, however, the
courts of this state shall apply the doctrine of
forum non conveniens in determining whether to
accept or decline to take jurisdiction of an action
1081083
4
based upon such claim originating outside this
state; and provided further that, if upon motion of
any defendant it is shown that there exists a more
appropriate forum outside this state, taking into
account the location where the acts giving rise to
the action occurred, the convenience of the parties
and witnesses, and the interests of justice, the
court must dismiss the action without prejudice.
Such dismissal may be conditioned upon the defendant
or defendants filing with the court a consent (i) to
submit to jurisdiction in the identified forum, or
(ii) to waive any defense based upon a statute of
limitations if an action on the same cause of action
is commenced in the identified forum within 60 days
of the dismissal."
The Bentley brothers also asserted that they should be
dismissed as defendants in the Alabama action because, they
say, the Alabama court lacked personal jurisdiction over them.
The genesis of the underlying action was Intergraph's
1987 acquisition of a 50% interest in BSI by way of a stock-
purchase agreement.  Keith, Barry, Raymond, and Scott Bentley
transferred one-half of BSI's then extant stock to Intergraph
in exchange for Intergraph stock worth $3 million. At least a
portion of that transaction took place in Alabama.  Intergraph
subsequently 
transferred 
its 
BSI 
stock 
to 
Intergraph
Properties Company in 2002, and Cobalt, also an Intergraph
affiliate, acquired that stock in 2006.  Cobalt remains the
1081083
  The term "Bentley" as used in both Bentley I and Bentley
1
II referred to BSI and Bentley Systems Europe B.V.
5
largest single shareholder of BSI stock.  Intergraph
Properties merged with Intergraph in 2008.  
In addition to the stock-purchase agreement, Intergraph
and BSI entered into contracts for the sale and licensing of
software products that have already resulted in two earlier
opinions by this Court: Bentley Systems, Inc. v. Intergraph
Corp., 922 So. 2d 61 (Ala. 2005)("Bentley I"), and Intergraph
Corp. v. Bentley Systems, Inc., [Ms. 1080300, March 12, 2010]
___ So. 3d ___ (Ala. 2010)("Bentley II").  Although all the
facts of those complex cases are not relevant to the issues
presented here, a brief review of those facts provides some
insight into the relationships of the parties.  In Bentley I,
the Court noted that Intergraph had sold, by way of an asset-
purchase agreement, engineering-design software products to
Bentley  for Bentley to develop and market to engineering,
1
architectural, 
and 
design 
companies; 
the 
agreement
encompassed the conveyance of various software products and
the associated maintenance agreements.  Disputes over the
contractual responsibilities and liabilities of the parties
resulted in Intergraph's filing a declaratory-judgment action
1081083
6
against Bentley in the Madison Circuit Court, following which
Bentley filed a counterclaim against Intergraph.  After a
review of the voluminous evidentiary submissions, the trial
court eventually entered a judgment declaring that Intergraph
was owed in excess of $7.5 million on the contractual
agreements and denying Bentley the relief it sought in its
counterclaim.  Bentley appealed, and Intergraph cross-
appealed.  This Court reversed the trial court's judgment,
holding, among other things, that the many factual disputes in
the case were not subject to resolution by evidentiary
submissions without live testimony and remanding the cause to
the trial court for further proceedings.  
In Bentley II, this Court summarized the proceedings in
the trial court on remand:
"On remand, the trial court referred all
disputed issues to a special master. The special
master conducted proceedings in three separate
phases and heard live testimony from a number of
witnesses. The special master submitted a report in
which he concluded that the principal value of the
promissory note ('the note') should be adjusted to
$22,295,456; counting payments already made and cash
adjustments awarded to Intergraph, the special
master determined that Bentley owed Intergraph an
additional 
$1,539,744, 
including 
$500,000 
in
retroactive interest, on the note. The special
master 
awarded 
Bentley 
$2,226,486 
on 
its
breach-of-contract counterclaim for lost profits. He
1081083
7
concluded 
that 
Intergraph 
was 
entitled 
to
indemnification from Bentley for legal expenses
totaling $6,636,144.20; he concluded that Bentley
was entitled to indemnification from Intergraph for
legal expenses totaling $5,731,077.98. The net
result of all the special master's rulings was that,
on balance, Bentley must pay Intergraph $279,733."
___ So. 3d at ___.  The trial court entered an order adopting
the special master's findings; Intergraph appealed and Bentley
cross-appealed.  After an extensive analysis of the facts and
legal issues governing the contractual agreements between
Intergraph and Bentley, the Court held:
"We find that the trial court erred in accepting
the 
special 
master's 
calculation 
of 
damages
regarding 
Bentley's 
counterclaim 
because 
that
calculation failed to include the cost of the
increased 
value 
of 
the 
note 
in 
establishing
Bentley's lost-profits damages, and we reverse the
judgment in that respect. We also reverse the trial
court's judgment insofar as it fails to award
Bentley lost-profits damages for years two through
five. In all other respects, the judgment of the
trial court is due to be affirmed. We remand the
case to the trial court for it, either with or
without the assistance of the special master, to
hear argument from the parties and to enter a
judgment consistent with this opinion."
___ So. 3d at ___.  Thus, litigation between Intergraph and
BSI continues on the contracts involving the purchase of
Intergraph's software products.  
1081083
BSI's revenue is approximately $400 million annually.
2
8
The claims underlying this petition are Intergraph's
assertions that after the software licenses that granted
Intergraph a license to distribute BSI's "Microstation"
software product expired in 1995 -- and with them the "Royalty
Payment Bonus Plan" that resulted in a 20% payment of
Intergraph's royalty payments directly to the Bentley brothers
as incentive compensation -- the Bentley brothers wrongfully
began distributing 20% of BSI's pre-tax profits among
themselves.  Intergraph and Cobalt assert that the effect of
this action by the Bentley brothers has been to remove from
BSI approximately $59.5 million in profits that were due to be
divided among all BSI shareholders.   Thus, the plaintiffs
2
assert that the Bentley brothers breached their fiduciary
duties to BSI's corporate shareholders and fraudulently
suppressed information about their "bonus" plan.  The
plaintiffs further assert that the Bentley brothers operate
BSI as their "alter ego," without regard to the corporate
board of directors or the rights of the other shareholders. 
On May 6, 2009, the trial court denied the defendants'
motion to dismiss, after considering voluminous evidentiary
1081083
The 
parties 
produced 
more 
than 
41,000 
pages 
of
3
documentary 
evidence 
in discovery directed toward the
questions of jurisdiction and the appropriateness of the
forum.
9
materials  and briefings as well as conducting hearings on the
3
issues of forum non conveniens and personal jurisdiction; that
order does not supply a rationale for its denial.  BSI and the
Bentley brothers ("the petitioners") assert that they are
entitled to a writ of mandamus requiring the dismissal of
Cobalt and Intergraph's action in this state on three
different grounds: (1) that the doctrine of forum non
conveniens favors maintaining such an action in Delaware, (2)
that an Alabama court may not interfere with the internal
affairs of a Delaware corporation, and (3) that the Alabama
court has no personal jurisdiction over the Bentley brothers.
Each of these arguments must be considered in light of
the overarching standard of review:
"A writ of mandamus is an extraordinary remedy,
and it will be 'issued only when there is: 1) a
clear legal right in the petitioner to the order
sought; 2) an imperative duty upon the respondent to
perform, accompanied by a refusal to do so; 3) the
lack of another adequate remedy; and 4) properly
invoked jurisdiction of the court.' Ex parte United
Serv. Stations, Inc., 628 So. 2d 501, 503 (Ala.
1993). A writ of mandamus will issue only in
situations where other relief is unavailable or is
inadequate, and it cannot be used as a substitute
1081083
10
for appeal. Ex parte Drill Parts & Serv. Co., 590
So. 2d 252 (Ala. 1991). It is well settled that 'a
writ of mandamus will not issue to review the merits
of an order denying a motion for a summary
judgment.' Ex parte Central Bank of the South, 675
So. 2d 403, 406 (Ala. 1996)."
Ex parte Empire Fire & Marine Ins. Co., 720 So. 2d 893, 894
(Ala. 1998).  See also Ex parte Synovus Trust Co., [Ms.
1080100, Dec. 30, 2009] ___ So. 3d ___ (Ala. 2009).
I.  Forum Non Conveniens
The petitioners first argue that the trial court exceeded
its discretion in denying their motion to dismiss because,
they say, Ala. Code 1975, § 6-5-430, requires the dismissal of
the Alabama action under the doctrine of forum non conveniens.
This Court recently discussed the general considerations that
govern when the doctrine of forum non conveniens applies in a
case involving an out-of-state party:
"'The purpose of the doctrine of forum non
conveniens is to "prevent the waste of time, energy,
and money and also to protect witnesses, litigants,
and the public against unnecessary expense and
inconvenience."' Ex parte Perfection Siding, Inc.,
882 So. 2d 307, 312 (Ala. 2003) (quoting Ex parte
New England Mut. Life Ins. Co., 663 So. 2d 952, 956
(Ala. 1995)). Under § 6-5-430 a trial court must
dismiss an action without prejudice 'if, upon motion
of a defendant, it is shown that there exists a more
appropriate forum outside the state, taking into
account the location where the acts giving rise to
the action occurred, the convenience of the parties
1081083
11
and witnesses, and the interest of justice....' Ex
parte Prudential Ins. Co. of America, 721 So. 2d
1135, 1138 (Ala. 1998)."
Ex parte DaimlerChrysler Corp., 952 So. 2d 1082, 1087 (Ala.
2006).  In DaimlerChrysler the Court considered the claim of
the administrator of a decedent's estate who sought wrongful-
death damages under Utah law as the result of an automobile
accident that had occurred in Utah.  The only connection to
Alabama was the fact that the vehicle had been purchased in
this State.  After considering all the circumstances of the
case, including the availability of witnesses who had seen the
accident and who had treated the decedent's injuries, the
Court concluded that the doctrine of forum non conveniens
required the dismissal of the action.  In its analysis, the
Court noted a feature of the doctrine of forum non conveniens
under § 6-5-430 that is particularly applicable to the instant
situation.  That is, the Court in DaimlerChrysler approved the
parties' concession that in order for the doctrine of forum
non conveniens to apply, all the plaintiff's claims in the
underlying lawsuit must meet the forum non conveniens criteria
of § 6-5-430.
1081083
12
A second consideration in the application of the doctrine
of forum non conveniens is that factual determinations are
generally left to the sound discretion of the trial court.
See, e.g., Vulcan Materials Co. v. Alabama Ins. Guar. Ass'n ,
985 So. 2d 376, 381 (Ala. 2007)("'The determination of the
situs of the claim--either inside or outside the State of
Alabama--is a factual determination left to the sound
discretion of the trial court.'" (quoting Ex parte Ford Motor
Credit Co., 561 So. 2d 244, 246 (Ala. Civ. App. 1990)); Malsch
v. Bell Helicopter Textron, Inc., 916 So. 2d 600 (Ala.
2005)(trial court acted within its discretion in determining,
under the facts of that case, that the plaintiffs-crewmembers'
action was not barred by the expiration of the limitations
period); and Donald v. Transport Life Ins. Co., 595 So. 2d 865
(Ala. 1992)(the decision whether to dismiss an action on the
basis of the doctrine of forum non conveniens is within the
trial court' s discretion).  The principle that this Court
will defer to the trial court's discretion with regard to
factual 
determinations has particular weight when the
petitioners are seeking mandamus relief and must establish a
1081083
13
"clear legal right" to that relief in order to prevail.
Empire Fire & Marine Ins. Co., supra.
Intergraph 
and 
Cobalt's 
evidentiary 
submissions
demonstrate that BSI maintains a large office in Alabama that
employs over 120 people and that more than 130 BSI
shareholders reside in Alabama.  Intergraph and Cobalt have
also provided submissions to show that BSI has held board
meetings in Alabama and that at those meetings Intergraph
representatives asked about the incentive-bonus plan that is
one of the issues in the underlying action.  Intergraph and
Cobalt also show that the petitioners distributed financial
statements 
to 
Intergraph 
in 
Alabama 
that, 
they 
say,
misrepresented material facts about BSI's stock and suppressed
information about the incentive-bonus plan.  In addition to
their claims of shareholder oppression, Intergraph and Cobalt
contend that the petitioners violated the Alabama Securities
Act, § 8-6-1 et seq., Ala. Code 1975, in their representations
concerning BSI stock.  
With respect to the statutory forum non conveniens
factors of § 6-5-430 ("the location where the acts giving rise
to the action occurred, the convenience of the parties and
1081083
14
witnesses, and the interests of justice"), Intergraph and
Cobalt also call this Court's attention to the history of
litigation in this State involving BSI. The facts also show
that Intergraph is based in Alabama and has its home office
here and that the vice president and general counsel of Cobalt
resides in Madison County, Alabama. In response, the
petitioners assert that Delaware is the more appropriate forum
for the adjudication of this dispute because all the corporate
parties to the dispute are incorporated under Delaware law.
We note, however, that there is no evidence to support an
inference that any of the acts that gave rise to this dispute
occurred in Delaware, and there is no indication that any
party or witness in this litigation is a resident of Delaware.
In addition to the history of transactions between the parties
reflected in the earlier cases involving Intergraph and BSI,
Intergraph and Cobalt presented evidence indicating that the
Bentley brothers control BSI and distribute the profits of BSI
solely among themselves and that BSI makes no distribution of
profits to any other minority shareholders.  We conclude that
the trial court could reasonably have concluded that one or
more of Intergraph and Cobalt's claims against the petitioners
1081083
15
arose in this State.  Such a conclusion would dictate that §
6-5-430 would not apply to this case.  DaimlerChrysler, supra.
Moreover, a review of the applicable statutory factors
persuades us that the petitioners have not demonstrated a
clear legal right to have the underlying action dismissed on
the ground of forum non conveniens, nor have they shown that
the trial court exceeded its discretion in denying their
motion to dismiss.
II.  The Internal-Affairs Doctrine
The "internal-affairs doctrine" is the long-recognized
principle that "'[t]he courts of one state have no visitorial
power over the corporations of another state in matters of
vital concern to internal policy and management ....'" Ellis
v. Mutual Life Ins. Co. of New York, 237 Ala. 492, 504, 187
So. 434, 444 (1939)(quoting Hoglan v. Moore, 219 Ala. 497,
501, 122 So. 824, 828 (1929)).  Thus, the Court in Ellis held
that an action seeking a judgment declaring the manner in
which Mutual Life Insurance Company of New York, a New York
corporation, was to distribute its dividends was not
appropriate for adjudication by an Alabama court.  In more
recent precedent, the internal-affairs doctrine has come to
1081083
16
imply that litigation in Alabama concerning some aspect of
corporate governance must defer to the law of the state of
incorporation.  For example, in Massey v. Disc Manufacturing,
Inc., 601 So. 2d 449 (Ala. 1992), this Court considered claims
of the usurpation of corporate opportunity.  The Court quoted
as a basis for its analysis the "established rule of conflicts
law" that "'the internal corporate relationship is governed by
the law of the state of incorporation.'" 601 So. 2d at 454
(quoting P. John Kozyris, Corporate War and Choice of Law,
1985 Duke L.J. 1, 15). The Court implied that it was
appropriate for an Alabama court to adjudicate the fiduciary
duties of the directors in question so long as the court
applied the law of the state of incorporation.  However, in
Massey, the Court determined that the complainants –- the
minority shareholders -- had failed to meet the contractual
prerequisites for bringing their claim of breach of fiduciary
duty and so reversed the judgment of the trial court.  
Although not a state-law case, the bankruptcy case of In
re Chalk Line Manufacturing, Inc., (Bankr. No. 93-42773, Adv.
No. 94-40003, July 26, 1994) (Bankr. N.D. Ala. 1994)(not
published in Bankruptcy Reporter), considered an analogous
1081083
17
factual context regarding minority-shareholder complaints of
oppression and breach of fiduciary duty and provided a
scholarly discussion of the state of Alabama law concerning
the internal-affairs doctrine in an analogous factual context.
Judge James S. Sledge, writing for the United States
Bankruptcy Court, stated:
"In 
Alabama, 
the 
law 
of 
the 
state 
of
incorporation 
governs 
the 
internal 
corporate
relationship. Massey v. Disc Mfg., Inc., 601 So. 2d
449 (Ala. 1992). The Alabama Code authorizes and
regulates foreign corporations doing business within
the state. Ala. Code § 10-2A-225, et seq. (Michie
1975). 
The 
statute 
specifically 
refuses 
any
authority to Alabama 'to regulate the organization
or the internal affairs of' a foreign corporation.
Ala. Code § 10-2A-226 (Michie 1975). The plaintiffs
and defendants hold shares in Chalk Line, Inc., a
Delaware 
corporation[;] 
therefore, 
Delaware
corporate law governs the resolution of their
dispute.
"Alabama courts have long adhered to the
internal 
affairs 
doctrine 
in 
choosing 
the
appropriate state's law. In Boyette v. Preston
Motors Corporation, 206 Ala. 240, 89 So. 746 (1921),
the court held that the laws of Delaware regulated
the relationship among stockholders in a corporation
formed under the laws of that state. The court
concluded that a stockholder subjects himself to the
laws of the state of incorporation upon assuming the
relations of a stockholder. Boyette, 206 Ala. at
244.
"The Alabama court 
defined 
'internal 
affairs' 
in
Ellis v. Mutual Life Ins. Co., 237 Ala. 492, 187 So.
434 (1939), as follows:
1081083
18
"'where the act complained of affects the
complainant solely in his capacity as a
member of the corporation, whether it be as
stockholder, director, president, or other
officer, and is the act of the corporation,
whether acting in stockholder's meeting, or
through its agent, the board of directors,
that then such action is the management of
the internal affairs of the corporation.'
"Ellis, 237 Ala. at 502. The Alabama court has
applied the internal affairs doctrine on numerous
occasion[s] since it decided Ellis, but has not
undertaken further definition of the rule. Other
courts, however, have elaborated on the scope of
'internal 
affairs.' For example, in McDermott
Incorporated v. Lewis a Delaware court stated that
'this 
doctrine 
governs 
the 
choice 
of 
law
determinations 
involving 
matters 
peculiar 
to
corporations, that is, those activities concerning
the relationships inter se of the corporation, its
directors, officers and shareholders.' 531 A.2d 206,
214 (Del. 1987).
"Although 
Alabama 
precedent 
establishes 
that 
the
internal 
affairs 
doctrine 
is 
the 
rule 
on
choice-of-law in Alabama, the Alabama courts have
never specifically addressed whether the doctrine
applies to a majority shareholder's breach of duty
to the minority. Two case[s] in which the Alabama
court might have decided the issue fail to provide
a clear answer, and in fact, suggest contradictory
results: Stroud v. John M. Cockerham & Assoc., 620
So. 2d 643 (Ala. 1993), and Galbreath v. Scott, 433
So. 2d 454 (1983).
"Arguably, the Alabama courts have indicated an
intent to apply the internal affairs doctrine in
determining the liability of majority shareholders.
In Stroud v. John M. Cockerham & Assoc., 620 So. 2d
643 
(Ala. 
1993), 
the 
plaintiffs, 
minority
1081083
19
shareholders in a Virginia corporation with its
principal place of business in Huntsville, Alabama,
sued the majority shareholders. The plaintiffs
alleged, among other things, that the majority
shareholders 
breached their fiduciary duty in
conspiring 
to 
'squeeze 
out' 
the 
minority
shareholders. Id. at 646. The alleged 'squeeze out'
involved a transfer of shares from one group of
shareholders to another. Id. The plaintiffs claimed
that the transaction involved a wrongful issue of
treasury shares. Id. The court concluded, however,
that the undisputed evidence showed that the
purchase of shares did not involve corporate funds
and that the corporation merely served as a conduit.
Id. at 648.
"The Stroud court cited only Virginia law in its
opinion after determining that Ala. Code § 10-2A-226
required that Virginia law govern the corporation's
internal affairs. Id. at 647 (citing Ala. Code §
10-2A-226 (Michie 1975)). The court did not,
however, specifically address the issue of whether
the internal affairs doctrine applied to claims for
breach of fiduciary duty. The court applied a
Virginia statute defining the authority of a
corporation to purchase its shares, but concluded
that the corporation did not purchase any shares.
Id. at 648. The Stroud court's application of
Virginia law in this case suggests that the court
would have resolved the issue of fiduciary breach
with reference to Virginia law if the plaintiff had
established evidence to support its allegations. As
the court did not reach the issue of breach,
however, 
the 
case 
provides 
only 
suggestive
authority.
"Galbreath v. Scott, 433 So. 2d 454 (1983),
suggests, 
but 
again 
does 
not 
authoritatively
prescribe, an opposite result. In Galbreath, the
minority shareholder in a Florida corporation sued
the majority shareholder. Although the Galbreath
court denied the minority shareholder individual
1081083
20
recovery on grounds that the complaint stated claims
which could only be asserted derivatively, the court
discussed the trend in Alabama toward drawing
distinctions 
between 
closely 
and 
widely-held
corporations 
in 
the 
treatment 
of 
minority
shareholder's claims of fiduciary breach by the
majority. Id. at 457 (citing Burt v. Burt Boiler
Works, Inc., 360 So. 2d 327 (Ala. 1978)[)]. The
court did not discuss choice-of-law. The Galbreath
decision suggests that the Alabama court might apply
Alabama law in determining the liability of a
majority shareholder to the minority. But again, the
court has not definitively answered the question.
"Although the Alabama courts have not yet
analyzed 
whether 
the 
law 
of 
the 
state 
of
incorporation applies to the determination of the
duty majority shareholder's [sic] owed the minority,
this Court believes that the Alabama court would
follow the Restatement (Second) of Conflict of Laws
as 
that 
court 
has 
applied 
the 
Restatement's
choice-of-law rules in similar situations involving
corporations. See International Insurance Co. v.
Johns, 874 F.2d 1447, 1458, n. 19 (11th Cir. 1989)
(holding that where Florida state court had not
addressed 
choice-of-law issues with regard to
director's liability, federal court could presume
that Florida court would follow the Restatement
(Second) of Conflict of Laws based on the Florida
court's past reliance on the treatise).
"In Massey v. Disc Mfg., Inc., 601 So. 2d 449
(Ala. 1992), the court cited Restatement (Second) of
Conflict of Laws § 309 (1971), in concluding that
Delaware law should determine the extent of a
director's liability to a Delaware corporation. The
Restatement 
likewise 
provides 
the 
rule 
for
determining 
choice-of-law 
issues 
involving 
the
liability of majority shareholders to minority
shareholders 
and 
the 
corporation. 
Restatement
(Second) of Conflict of Laws § 306 (1971) provides:
1081083
21
"'The obligations owed by a majority
shareholder to the corporation and to the
minority shareholders will be determined by
the 
local 
law 
of 
the 
state 
of
incorporation, except in the unusual case
where, with respect to the particular
issue, 
some 
other 
state 
has 
a 
more
significant 
relationship 
under 
the
principles stated in § 6 to the parties and
the corporation, in which event the local
law of the other state will be applied.'
"The court in Massey cited to comment (c) to §
309 which states:
"'Issues relating to the validity of such
acts, and to any resulting liability on the
part of the directors and officers, cannot
practicably be determined differently in
different 
states. 
It 
would 
be
impracticable, for example, for a share
issue or declaration of dividends to be
valid in one state and invalid in another.
In the absence of a statute to the
contrary, the local law of the state of
incorporation will be applied in the great
majority of instances to determine issues
of this sort. The local law of some state
other than that of incorporation should not
be applied to determine such issues unless
this other state has an interest that is
superior to that of all other states in the
issue to be decided or unless, for reasons
explained in Comment g of § 302, its local
law rule is the same as that prevailing in
many of the other states in which the
corporation 
does 
business 
or 
has
shareholders. The local law of some state
other than the state of incorporation is
most likely to be applied to determine
issues of this sort in a situation where
the corporation does all, or nearly all, of
1081083
22
its 
business 
and 
has 
most 
of 
its
shareholders in this other state and has
little contact, apart from the fact of its
incorporation, 
with 
the 
state 
of
incorporation.'
"Within the second category fall acts, such as
seizing a corporate opportunity or causing the
making of a contract or the commission of a tort.
Issues relating to the liability of the directors
and officers for acts such as these can practicably
be decided differently in different states. It would
be practicable, for example, for a director to be
held liable for a given act in one state and to be
held not liable for an identical act in another
state. Nevertheless, in the absence of an applicable
local statute, the local law of the state of
incorporation has usually been applied to determine
the liability of the directors or officers for acts
such as these to the corporation, its creditors and
shareholders. This law has usually been applied even
in a situation where it might be thought that some
other state had a greater interest than the state of
incorporation in the issue to be determined. The
local law rule of a state other than the state of
incorporation is most likely to be applied in a
situation where this rule embodies an important
policy of the other state and where the corporation
has 
little 
contact 
with 
the 
state 
of 
its
incorporation.
"601 So. 2d 449, 454-55 (Ala. 1992).
"The court's adoption of the Restatement's
rationale that a director should not be held liable
for an act in one state that would not create
liability in another state, indicates that the court
would adopt the similar rationale cited in comment
(c) to § 306 applicable to determining the liability
of majority shareholders.
1081083
23
"'In the absence of an applicable local
statute, the local law of the state of
incorporation will be applied in the great
majority of instances to determine issues
covered by the present rule. This is partly
for the reason that these issues are of the
sort 
which 
cannot 
satisfactorily 
be
determined 
differently 
in 
different 
states.
It would seem wrong, for example, to hold
that 
a 
majority 
shareholder 
owes 
a
fiduciary obligation to one shareholder
under the local law of state X but does not
owe such an obligation to a shareholder of
the same class under the local law of state
Y. As a result, the local law of some state
other than the state of incorporation
should not be applied to determine such
issues unless this other state has an
interest that is clearly superior to that
of all other states in the issue to be
decided or unless, for reasons explained in
Comment g of § 302, its local law rule is
the same as that prevailing in many of the
other states in which the corporation does
business or has shareholders. The local law
of some state other than the state of
incorporation is most likely to be applied
in a situation where the corporation does
all, or nearly all, of its business and has
most of its shareholders in that other
state and has little contact, apart from
the fact of its incorporation, with the
state of incorporation.'
"Restatement (Second) of Conflict of Laws § 306 cmt.
c (1971).
"Although the Restatement would under some
circumstances allow a court to apply the law of a
state other than the state of incorporation, the
comments suggest that this exception to the general
rule is narrowly drawn and would not apply to a
1081083
24
corporation doing business in many states and
abroad. Id. The plaintiffs have presented the Court
with no persuasive arguments for abandoning a
general rule which is consistent with long-standing
Alabama case law, the United States Constitution,
and public policy."
(Footnote omitted.)
Although we note with approval the Bankruptcy Court's
discussion in Chalk Line, we need not go so far as to adopt
its entire rationale.  Rather, in the context of this case, we
hold that the "internal-affairs doctrine" as applied in this
State does not deprive the trial court of jurisdiction over
the claims in the underlying action, nor does it require the
trial court to dismiss the instant action in deference to
litigating those claims in Delaware.   Thus, the internal-
affairs doctrine cannot serve as the basis for a clear legal
right for the writ of mandamus sought by BSI and the Bentley
brothers. Rather, where the underlying claims implicate issues
of corporate governance, the trial court will be constrained
to apply the corporate law of Delaware.  Further, we believe
that the discussion from Chalk Line will provide a useful
reference for the application of Alabama law to claims that
may not implicate corporate governance, such as suppression.
III.  Personal Jurisdiction
1081083
25
The Bentley brothers further assert that they have a
clear legal right to a writ of mandamus ordering the dismissal
of the underlying action as to them, because, they say, the
trial court lacks personal jurisdiction over them.  Generally,
the question whether a trial court has properly denied a
motion to dismiss on grounds of lack of personal jurisdiction
presents a question of law to be considered de novo by the
appellate courts.  Leithead v. Banyan Corp., 926 So. 2d 1025
(Ala. 2005).
"'"A physical presence in Alabama is not a
prerequisite 
to 
personal 
jurisdiction 
over 
a
nonresident." Sieber v. Campbell, 810 So. 2d 641,
644 (Ala. 2001). What is required, however, is that
the defendant have such contacts with Alabama that
it "'should reasonably anticipate being haled into
court [here].'" Dillon Equities v. Palmer & Cay,
Inc., 501 So. 2d 459, 462 (Ala. 1986) (quoting
World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297, 100 S. Ct. 559, 62 L.Ed.2d 490 (1980)).
"'Depending on the quality and quantity of the
contacts, jurisdiction may be either general or
specific. Leventhal v. Harrelson, 723 So. 2d 566,
569 (Ala. 1998). "General jurisdiction applies where
a defendant's activities in the forum state are
'substantial' 
or 
'continuous 
and 
systematic,'
regardless of whether those activities gave rise to
the lawsuit....
"'But regardless of whether jurisdiction is
alleged to be general or specific, the nexus between
the defendant and the forum state must arise out of
"'an action of the defendant [that was] purposefully
1081083
26
directed toward the forum State.'" Elliott [v. Van
Kleef, 830 So. 2d 726, 731 (Ala. 2002)] (quoting
Asahi Metal Indus. Co. v. Superior Court of
California, 480 U.S. 102, 112, 107 S. Ct. 1026, 94
L.Ed.2d 
92 
(1987)). 
"This 
purposeful-availment
requirement assures that a defendant will not be
haled into a jurisdiction as a result of '"the
unilateral activity of another person or a third
person."'" Elliott, 830 So. 2d at 731 (quoting
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475,
105 S. Ct. 2174, 85 L.Ed.2d 528 (1985)).'"
Leithead, 926 So. 2d at 1030-31 (quoting Ex parte Dill, Dill,
Carr, Stonbraker & Hutchings, P.C., 866 So. 2d 519, 525-26
(Ala. 2003)). 
The Bentley brothers assert that they do not reside in
Alabama and that their previous business dealings in this
State are stale because such activities as the drafting of the
business agreements with Intergraph occurred more than 10
years before the filing of the underlying action.  The Bentley
brothers also assert that their contacts with this State are
only intermittent and occasional and do not qualify as the
sort of "continuous or systematic" contact that would support
the exercise of personal jurisdiction over them by a court in
Alabama.  In reply, Intergraph and Cobalt note the evidence
presented to the trial court indicating that the Bentley
brothers have sent many thousand written and electronic
1081083
27
communications to Alabama in the furtherance of their
interests in BSI; that they have made numerous telephone calls
to and participated in telephone conferences in this State;
and that they have traveled to this State on many occasions.
Moreover, it is also apparent that the Bentley brothers
have been substantially involved in the prior litigation
concerning BSI and Intergraph in this State, including the
litigation concerning the software-purchase agreement between
BSI and Intergraph that originally involved some $3 million in
company stock.  As is evident from the litigation history
detailed in Bentley II, supra, that stock transaction remains
the basis of ongoing litigation as well as being a significant
factor in the claim in the underlying case.  That is, the
ownership of BSI stock by the Bentley brothers retained as a
result of the original stock-purchase agreement discussed in
Bentley I constituted the ownership interest that Intergraph
and Cobalt claim resulted in the Bentley brothers' wrongful
activities.  Among the instances when the Bentley brothers
personally traveled to Alabama were the various user
conferences 
held 
by 
Intergraph 
for 
the 
purpose 
of
demonstrating and developing the various software products
1081083
28
relevant to Intergraph and BSI's business pursuits.  Further,
the materials before the Court reveal that BSI's second
largest office is located in Madison County, Alabama, and in
2007 that office employed more than 120 individuals with an
annual payroll in excess of $11 million; the record contains
evidence from which the trial court could have reasonably
inferred that the Bentley brothers personally exercised
significant direct control over the operations of that office.
 Under all the circumstances, we conclude that the Bentley
brothers had such contacts with Alabama that they "should
reasonably 
anticipate being haled into court [here]."
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
(1980).   
We conclude that the Bentley brothers have failed to show
the requisite clear legal right to a dismissal based on the
lack of personal jurisdiction.  Empire Fire & Marine Ins. Co.,
supra.  Accordingly, the petition for the writ of mandamus is
denied.
PETITION DENIED.
Lyons, Woodall, Stuart, Smith, Bolin, Parker, and Shaw,
JJ., concur.  
Murdock, J., concurs in the result.