This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
IN COURT OF APPEALS
Forensic Associates, Inc.,
David E. Fries,
Hennepin County District Court
File No. 01013276
J. Poage Anderson, Diane M. Odeen, Nichols, Kaster & Anderson PLLP, 4644 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondent)
John R. Thomas, Thomas Law Office, P.O. Box 489, Mound, MN 55364 (for appellant)
Considered and decided by Minge, Presiding Judge, Halbrooks, Judge, and Parker, Judge.*
In October 1996, appellant David Fries, owner of Fries & Associates, which is located in Florida, met Richard Jensen, president of respondent Forensic Associates, Inc., which is located in Minnesota, at a breathalyzer seminar in Atlanta, Georgia. Both appellant and Jensen are forensic experts who provide DUI/DWI consulting services. Jensen asked appellant at the seminar if he would agree to accept referral business from respondent in exchange for a portion of the consultation fee. After negotiations via the telephone and facsimile, appellant signed a contract in July 1997 and mailed it to Jensen in Minnesota. The contract provided that the parties agreed to be bound by Minnesota law and that respondent had the authority to collect consulting fees for appellant. Appellant alleges that during the negotiations, he asked Jensen what the choice-of-law provision meant and explained that he did not want to be sued in Minnesota “in the event things went ‘sour.’” Appellant contends that Jensen said “he understood” and that he signed the contract based on Jensen’s explanation and assurance.
Shortly after appellant signed the contract, Jensen asked appellant to visit the company office in Minneapolis. Appellant contends that the sole reason for the visit was to meet everyone; respondent contends that the meeting included training on new caselaw and testing procedures. Respondent paid for all of appellant’s costs associated with this visit.
When appellant received referrals from respondent pursuant to the 1997 contract, Jensen would contact appellant and advise him that a defense attorney was seeking a consultant; appellant would then perform the consulting work and forward his bill to the Minneapolis office. Respondent would bill defense counsel, receive payment, and pay appellant his share. Most of the referrals were for cases in the southeastern part of the United States. It does not appear any were for Minnesota cases. Appellant used respondent’s personalized letterhead, which included appellant’s name, and appellant used business cards with respondent’s Minneapolis address. Sometime in 1998, however, Jensen asked appellant to stop using the letterhead and business cards because it gave the appearance that appellant provided laboratory services, which he did not. Respondent provided appellant with updated letterhead but did not resupply him with business cards.
After the 1997 contract expired, appellant and respondent entered into an oral contract where the parties agreed respondent would receive the same referral fee on any referrals. During this period, respondent had less and less direct involvement in billing and collection of fees. Appellant did this for himself. Appellant would ask clients if respondent referred their case to him and would only pay referral fees on those clients who told him they were referrals from respondent. Appellant paid the fees directly to respondent. In 1999, Jensen sent appellant a letter asking him to recommit to respondent. Appellant agreed, and Jensen mailed a new contract to appellant in September 1999. In October 1999, the parties’ business relationship became strained. Respondent alleged that appellant failed to respond to numerous requests for a financial accounting of the fees that he collected directly from the referred clients. On October 20, 1999, Jensen sent appellant a letter outlining the problems with their relationship but assured him that respondent is willing to do “anything we can * * * to ensure your financial success and stability” and asked him to sign the contract that he received in September.
In November 1999, appellant attended another meeting in Minneapolis. Appellant signed the contract at this Minnesota meeting, but he contends that no negotiations occurred. The parties reviewed updated caselaw materials, and appellant provided an accounting of the referral fees that he owed to respondent. Following this meeting, appellant continued to receive referrals. Also during this time period, respondent sent appellant breath testing instruments and offered to provide training. Appellant, however, did not participate in any training and returned the equipment. Appellant again failed to provide an accounting of consulting fees owed to respondent, and respondent terminated the relationship on July 31, 2000, and demanded payment of all monies due.
When appellant refused, respondent sued for unpaid consulting fees. Appellant moved to dismiss the suit for lack of personal jurisdiction. The district court denied appellant’s motion, finding that it had personal specific jurisdiction over appellant. This appeal followed.
The existence of personal jurisdiction is a question of law reviewed de novo. Marshall v. Inn on Madeline Island, 610 N.W.2d 670, 673 (Minn. App. 2000). The plaintiff, or the party asserting that personal jurisdiction exists, “bears the burden of proving a prima facie case supporting jurisdiction.” TRWL Fin. Establishment v. Select Int’l, Inc., 527 N.W.2d 573, 575 (Minn. App. 1995) (citing Hardrives, Inc. v. City of LaCrosse, 307 Minn. 290, 293, 240 N.W.2d 814, 816 (1976)). On appellate review, the plaintiff’s alleged facts, including facts derived from the complaint and other supporting documents, are taken as true. Id.
Minnesota courts can exercise personal jurisdiction over a nonresident if two criteria are met: first, the requirements of Minnesota’s long-arm statute must be satisfied; and second, minimum contacts must exist between the defendant and the forum state to satisfy due process. See Minn. Stat. § 543.19 (2000) (Minnesota’s long-arm statute); Rostad v. On-Deck, Inc., 372 N.W.2d 717, 719 (Minn. 1985) (stating defendant must have minimum contacts before personal jurisdiction will attach). The long-arm statute and the federal Due Process Clause are co-extensive: if the personal jurisdiction requirements of the federal constitution are met, the requirements of the long-arm statute are also met. Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410-11 (Minn. 1992). Therefore, “Minnesota courts may simply apply the federal case law.” Id. at 411.
The Due Process Clause of the United States Constitution requires that a defendant have “minimum contacts with [the forum state] such that maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945) (citation omitted). Jurisdiction may be either specific or general. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8, 9, 104 S. Ct. 1868, 1872 n.8, 9 (1984) (comparing specific and general jurisdiction). Specific jurisdiction, which respondent alleged here, exists when the cause of action arises out of or is related to the defendant’s contacts with the forum state. Id. at 414 n.8, 104 S. Ct. at n.8. The minimum-contacts inquiry for specific jurisdiction focuses on the “relationship among the defendant, the forum, and the litigation.” Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775, 104 S. Ct. 1473, 1478 (1984) (citation omitted).
Minnesota courts consistently use a five-factor test to determine whether the exercise of personal jurisdiction is proper:
(1) The quantity of the contacts with the forum state,
(2) The nature and quality of the contacts,
(3) The source and connection of the cause of action with these contacts,
(4) The interest of the state providing a forum,
(5) The convenience of the parties.
Vikse v. Flaby, 316 N.W.2d 276, 282 (Minn. 1982) (adopting the five-factor test expressed in Aftanase v. Econ. Baler Co., 343 F.2d 187 (8th Cir. 1965)). Minnesota has deemed the first three factors primary, while the factors of state interest and convenience of the parties require lesser consideration. Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904, 907 (Minn. 1983). “[I]n doubtful cases, the courts should lean toward finding jurisdiction.” Nat’l City Bank of Minneapolis v. Ceresota Mill Ltd. P’ship, 488 N.W.2d 248, 252 (Minn. 1992) (citation omitted).
Appellant argues that he had insufficient minimum contacts with Minnesota to justify personal jurisdiction. Specifically, appellant argues that (1) he never provided consultation services in Minnesota; (2) the two visits to Minnesota were at respondent’s request, no negotiations occurred, and the subject matter discussed did not relate to respondent’s suit for nonpayment of fees; (3) his use of respondent’s letterhead and business cards were at respondent’s request; and (4) respondent sent the breathalizer equipment on its own initiative.
Although these contacts individually may be insufficient, they are sufficient when taken together to justify personal jurisdiction, especially in light of the other circumstances surrounding the parties’ business relationship. Appellant voluntarily entered into a business relationship with respondent, a Minnesota corporation doing business in Minnesota. During the course of their relationship, appellant (1) frequently communicated with respondent’s associates in Minnesota by way of telephone, facsimile, email, and mail; (2) traveled to Minneapolis twice to meet with respondent; (3) executed his 1999 contract in Minneapolis; (4) used respondent’s letterhead with a Minneapolis address, which showed him to be an associate; (5) used respondent’s business cards that contained the Minneapolis address; (6) accepted referrals and fees directly from the Minneapolis office; (7) from time to time did billing and collection of fees through the Minneapolis office; and (8) received training and equipment from respondent. Furthermore, because a single contact can establish personal jurisdiction if it is closely related to the cause of action, and because most of the contacts relate to respondent’s action for failure to pay consulting fees, this factor supports a finding of personal jurisdiction. At a minimum, appellant’s contacts with Minnesota relating to the 1999 contract is closely related to respondent’s action for failure to pay fees from the 1999 contract.
B. Nature and Quality of Contacts
In evaluating the nature and quality of the contacts, a court must determine whether the defendant has purposefully availed himself of the benefits and protection of Minnesota law. Dent-Air, 332 N.W.2d at 907. The question is whether the defendant had “fair warning” of being sued in Minnesota. Real Props., Inc. v. Mission Ins. Co., 427 N.W.2d 665, 668 (Minn. 1988) (citation omitted).
A contract between parties of different states does not, by itself, establish sufficient minimum contacts such that jurisdiction may be exercised in either party’s home state. Burger King v. Rudzewicz, 471 U.S. 462, 478, 105 S. Ct. 2174, 2185 (1985). When a contract claim has a substantial connection with the forum state, specific jurisdiction exists. McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223, 78 S. Ct. 199, 201 (1957). In determining whether a substantial connection exists between the contract and the forum state, a court must evaluate the parties’ “prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing.” Burger King, 471 U.S. at 479, 105 S. Ct. at 2185.
Appellant argues that the district court failed to consider the parties’ negotiations surrounding the 1997 contract where Jensen allegedly assured appellant that respondent would not sue appellant in Minnesota. Specifically, appellant asks this court to find that Jensen’s alleged response of “I understand” constitutes an oral promise not to sue appellant in Minnesota. Assuming it was made, the statement was ambiguous. At best it is a promise not to sue. At worst, from appellant’s perspective, it is an expression that respondent “heard” appellant without any meeting of the minds. Certainly many of the customers, who received billings from and sent payment to Minnesota and dealt with appellant when he used respondent’s Minnesota letterhead, would justifiably assume they could sue appellant in Minnesota. Appellant contends that the court erred by ignoring the fact that appellant anticipated suit in Minnesota and negotiated to avoid that from occurring. But appellant’s reliance on respondent’s vague assurance in 1997 not to sue is unreasonable because it was not incorporated into either the 1997 or the 1999 contract governing their business relationship. The assurance just hung out there in the bliss of confusion that so often characterizes parties’ dealings.
Moreover, the court properly focused on whether appellant could have reasonably anticipated suit in Minnesota. Appellant chose to continue this business relationship for four years and to accept economic benefits from a Minnesota corporation. See Burger King, 471 U.S. at 475-76, 105 S. Ct. at 2184 (providing that a defendant who has deliberately engaged in significant activities within a state and who has derived benefits and protections of the forum’s laws should reasonably expect the burdens of litigation in that state). Appellant’s ongoing business relationship with respondent indicates that he had fair warning that he could be sued in Minnesota.
Appellant next argues that the contract terms do not support a finding of jurisdiction. When a choice-of-law provision is not negotiated and is part of a standard contract, appellant argues that it cannot confer jurisdiction on a nonresident. Although a choice-of-law provision standing alone would be insufficient to confer jurisdiction, when it is combined with other contacts it can reinforce the defendant’s “deliberate affiliation with the forum State and the reasonable foreseeability of possible litigation there.” Burger King, 471 U. S. at 482, 105 S. Ct. at 2187.
Appellant also argues that the provision authorizing respondent to commence litigation to collect fees owed does not support personal jurisdiction because appellant never provided consulting services in Minnesota. Appellant, however, conceded at oral argument that Minnesota would have personal jurisdiction over him if respondent pursued collection fees against a referred client. Yet, appellant attempts to escape Minnesota personal jurisdiction in this context. Appellant cannot only claim the protections afforded by jurisdiction in Minnesota, but must also bear the consequences that arise from transacting business there. See id. at 474, 105 S. Ct. at 2183 (stating that “the Due Process Clause may not readily be wielded as a territorial shield to avoid interstate obligations that have been voluntarily assumed”). Again, this provision in concert with appellant’s other contacts in Minnesota is sufficient to find personal jurisdiction. Thus, this factor also favors personal jurisdiction.
C. Nexus Between the Cause of Action and the Contacts
The third factor also supports a finding of personal jurisdiction. Here, respondent’s cause of action is for appellant’s failure to pay referral fees to respondent pursuant to the parties’ 1999 contract. Among other things, the 1999 contract defines appellant’s business relationship with a Minnesota corporation and the parties’ fee arrangement. Thus, respondent’s cause of action based on the 1999 contract clearly arises from appellant’s contacts with Minnesota.
D. Minnesota’s Interest in Providing a Forum and the Convenience of the Parties
The last two factors are less significant. Dent-Air, Inc., 332 N.W.2d at 907. “A State generally has a ‘manifest interest’ in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors.” See Burger King, 471 U.S. at 473, 105 S. Ct. at 2182 (citation omitted). Furthermore, when individuals “purposefully derive benefit from their interstate activities,” it is unfair to allow them to escape consequences in the states their transactions arise from. Id. at 473-74; 105 S. Ct. at 2183. Minnesota has an interest in providing a forum here because appellant, a nonresident, allegedly breached a contract with a Minnesota corporation. Furthermore, appellant has purposefully derived benefit from his business relationship with respondent and has held himself out as doing business in Minnesota through the use of respondent’s business cards and letterhead. Because appellant has derived an economic benefit from his association with respondent, he should be accountable in this state for the consequences of his alleged breach of contract.
Finally, because “modern transportation and communication have made it much less burdensome for a party sued to defend himself in a state where he engages in economic activity,” it is not unfair to expect him to do so when the litigation relates to that activity. McGee, 355 U.S. at 223, 78 S. Ct. at 201. Because inconvenience of the party is not dispositive and because of the relative ease of modern transportation, this factor favors personal jurisdiction as well.
Application of the five-factor test establishes that appellant’s contacts with Minnesota are sufficient to establish specific personal jurisdiction over appellant. The defendant has the burden to present “a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” Burger King, 471 U.S. at 477, 105 S. Ct. at 2185. Appellant did not brief this issue on appeal and therefore, fails to rebut the presumption of reasonableness. Thus, we conclude that subjecting appellant to specific personal jurisdiction in Minnesota comports with traditional notions of fair play and substantial justice.
Appellant argues that the court failed to consider his supplemental affidavit, which provides details regarding the 1997 contract negotiations, his use of respondent’s letterhead, and respondent’s right to collect fees. Appellant, however, conceded that the court considered some of the facts in the affidavit because they are contained in the court’s memorandum. Thus, appellant essentially argues that the court failed to consider Jensen’s alleged assurance that respondent would not sue appellant in Minnesota. The district court, however, has broad discretion to determine the weight and credibility of evidence. See Straus v. Straus, 254 Minn. 234, 235, 94 N.W.2d 679, 680 (1959) (providing that the rule on appeal that evidence must be viewed in the light most favorable to the prevailing party applies to evidence presented by affidavit and that any conflicts in evidence are to be resolved by the trial court even when presented by affidavit); Varner v. Varner, 400 N.W.2d 117, 121 (Minn. App. 1987) (stating that a district court is not required to believe even uncontradicted testimony if there are reasonable grounds to doubt its credibility). As noted earlier, appellant’s affidavit does not compel a finding that Jensen promised not to sue appellant in Minnesota. Therefore, the district court did not abuse its discretion in excluding Jensen’s alleged assurance not to sue from its memorandum.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. Art. VI, § 10.