This opinion will be unpublished and
may not be cited except as
Minn. Stat. § 480A.08, subd.
STATE OF MINNESOTA
IN COURT OF APPEALS
Jack Feller, et al.,
Breeze Yacht Services,
Filed June 21, 2005
County District Court
Gerald S. Weinrich, Suite 301W, 421 First Avenue Southwest, Rochester, MN 55902
Kathryn K. Moe, 1530 Greenview Drive Southwest, Suite 212,
Rochester, MN 55902
(for respondents Feller, et al.)
Nicholas Maslonka, 1520 Camden, Ferndale,
MI 48220 (pro se respondent)
Gulf Breeze Yacht Services,
1520 Camden, Ferndale, MI 48220
and decided by Hudson, Presiding Judge; Stoneburner, Judge; and Dietzen, Judge.
U N P U B L
I S H E D O P I N I O N
challenges the decision of the district court dismissing his action for lack of
personal jurisdiction. Because the
district court properly ruled that Minnesota
courts do not have personal jurisdiction over the nonresident respondents, we
Appellant Darin Jensen is a Minnesota resident who desired
to purchase a luxury yacht. He discovered
respondents Nicholas Maslonka and Gulf Breeze Yacht Services (Gulf Breeze), through
third parties and advertisements posted on the Internet. Maslonka and Gulf Breeze are located in Michigan and market used
luxury boats. Respondent P. Jack
Feller, a resident of Utah,
and Marjac Investments (Marjac) owned the yacht that appellant purchased.
Appellant had an unspecified number
of contacts with Maslonka via e-mail, telephone, and fax transmissions, and
Maslonka ordered an independent survey of the boat’s condition for
appellant. Appellant also had at least
one telephone conversation with Feller.
In August 2003, appellant, Feller,
and Marjac entered into a purchase agreement for the yacht with a price of $184,500
to be made in 48 monthly payments. The
contract contained a clause providing for arbitration in the case of any
controversy or claim. Appellant paid a
$10,000 commission to Maslonka and Gulf Breeze, which guaranteed appellant’s
payments to Feller. The yacht was
delivered to appellant in Minnesota.
Appellant sued Feller, Marjac, and
Maslonka, alleging breach of contract, tender of defective goods, and violation
of the consumer-fraud act, Minn. Stat. § 325F.69 (2002). Appellant later moved to amend his complaint
to include Gulf Breeze and to assert a claim for common-law fraud. Respondents moved to dismiss for lack of
personal jurisdiction or, in the alternative, to require appellant to proceed
through arbitration as provided in the purchase agreement. Appellant argued that the exercise of
personal jurisdiction over respondents is consistent with federal due process
long-arm statute, Minn. Stat. § 543.19 (2002), and that the arbitration clause
in the parties’ contract did not preclude jurisdiction because an arbitration
clause does not bar an action based on fraud.
The district court granted both appellant’s
motion to amend and respondents’ motion to dismiss for lack of personal
jurisdiction. The court also ruled that
pursuant to the contract, claims were to be resolved by arbitration in the
State of Utah, as construed under Utah law and the
commercial arbitration rules of the American Arbitration Association. The court also stated that in the event fraud
was not a recognized claim in arbitration as a basis for rescission, the court
would entertain a motion by appellant to reopen the matter in Minnesota.
This appeal followed.
D E C I S I
Whether personal jurisdiction exists
is a question of law. V.H. v. Estate of Birnbaum, 543 N.W.2d
649, 653 (Minn.
1996). When a defendant moves to dismiss
for lack of personal jurisdiction under Minn. R. Civ. P. 12.02(b), the
plaintiff has the “burden of proving that sufficient contacts exist with the
forum state to support personal jurisdiction.”
V.H., 543 N.W.2d at 653. If materials outside the pleadings are
considered, the motion will be treated as one for summary judgment. Minn.
R. Civ. P. 12.02. To determine whether
plaintiff has made a prima facie case, the allegations of the complaint, along
with any supporting evidence, will be viewed as true. V.H.,
543 N.W.2d at 653. “Doubt should be
resolved in favor of retention of jurisdiction.” Id.
courts may “assert personal jurisdiction over defendants to the full extent of
federal due process” under Minnesota’s
long-arm statute, Minn. Stat. § 543.19 (2002). Juelich
v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565, 570 (Minn. 2004).
“[D]ue process requires” that the defendant “have certain minimum
contacts with [the forum state] such that the 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) (citations omitted); accord Juelich, 682
N.W.2d at 570. “[T]he defendant must
have purposefully availed itself of the privilege of conducting activities
within the jurisdiction.” V.H., 543 N.W.2d at 656. The contacts must be “such that he should
reasonably anticipate being haled into court there.” Id. at 656-57
Personal jurisdiction may be general
or specific. Juelich, 682 N.W.2d at 570 n.3.
“General personal jurisdiction exists when a nonresident defendant’s
contacts with the forum state are so substantial and are of such a nature
(continuous and systematic) that the state may assert jurisdiction over the
defendant even for causes of action unrelated to the defendant’s contact with
the forum state.” Id. In contrast, specific jurisdiction may exist
when the defendant has limited contacts with the forum state, but these
contacts are “connected with the plaintiff’s claim such that the claim arises
out of or relates to the defendant’s contacts with the forum.” Id. It is undisputed that specific, not general,
personal jurisdiction is at issue here.
When a nonresident defendant has limited
contacts with the state, a five-factor test is used to
determine whether the exercise of personal jurisdiction over that defendant
comports with due process. Id.
at 570. This test requires the court to assess:
(1) the quantity of contacts with the forum state;
(2) the nature and quality of those contacts;
(3) the connection of the cause of action
with these contacts;
(4) the interest of the state providing a forum; and
(5) the convenience of the parties.
Id. The first three factors are used to assess
whether the requisite minimum contacts exist, and the last two are used to “determine
whether the exercise of jurisdiction is reasonable according to traditional
notions of fair play and substantial justice.”
In addition, the fourth factor is not considered a “contact” and the
fifth is irrelevant unless sufficient contacts are established. Sherburne County
Soc. Servs. v. Kennedy, 426 N.W.2d 866, 868
A single, isolated transaction may
be sufficient to confer personal jurisdiction on an out-of-state defendant if
the cause of action arose out of that contact.
Marquette Nat’l Bank of Minneapolis
v. Norris, 270 N.W.2d 290, 295-96 (Minn.
1978). In such a case, it is not
necessary to “artificially count[ ] the number of telephone or mail exchanges
required to complete the transaction.” Id.
at 295. Instead, the “nature and quality
of contact becomes dispositive.” Id. (emphasis omitted).
had an unspecified number of e-mail, telephone, and fax contacts with Maslonka. He had one telephone call with Feller. Appellant contracted to purchase the boat
from respondents Feller and Marjac on a 48-month installment contract, and Gulf
Breeze guaranteed the payments. Appellant
also made a $10,000 payment to Gulf Breeze as the agent. These facts show that the cause of action
arose out of respondents contacts within the state. Consequently, we turn to an analysis of the
nature and quality of the contact. Norris, 270 N.W.2d at 295.
and quality of contacts
To address the nature and quality of
contacts, we seek to ascertain whether the nonresident defendants purposefully
availed themselves of the benefits and protections of Minnesota law. Dent-Air,
Inc. v. Beech Moutain Air Serv., Inc., 332 N.W.2d 904, 907 (Minn. 1983). Respondents will be considered to have “fair
warning” of being sued in Minnesota
if they “purposefully directed” their actions to the residents of the
state. TRWL Fin. Establishment v. Select Int’l, Inc., 527 N.W.2d 573, 576
first argues that the nature and quality of the contacts are sufficient to
subject respondents to personal jurisdiction because respondents acted together
to market the yacht in the stream of commerce.
A state can assert personal jurisdiction over a business that “delivers
its products into the stream of commerce with the expectation that they will be
purchased by consumers in the forum
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98, 100 S. Ct. 559,
567 (1980); accord Juelich, 682
N.W.2d at 571. Thus, when a
manufacturer, who through intermediaries and distributors marketed a product in
the nature and quality weighed in favor of jurisdiction. Rostad
v. On-Deck, Inc., 372 N.W.2d 717, 722 (Minn. 1985).
In contrast, where a manufacturer’s website was passive and its actions
fell short of affirmative efforts to serve the market for its product in the U.S., the
factors did not weigh in favor of jurisdiction.
Juelich, 682 N.W.2d at 574.
Here, appellant does not assert that
respondents are manufacturers who sought to distribute their products in Minnesota. Further, there is no evidence that
respondents purposefully directed marketing efforts toward Minnesota.
Instead, appellant learned of Maslonka and Gulf Breeze through third
parties and advertisements on the Internet.
There is no showing that Feller or Marjac engaged in any marketing
activities within the state. Appellant
has not shown that Minnesota courts acquired
personal jurisdiction over respondents under a stream-of-commerce theory
because respondents are not manufacturers, and they did not purposefully direct
their marketing efforts toward Minnesota.
argues that the nature and quality of the contacts are sufficient to subject
respondents to personal jurisdiction because they solicited and negotiated the
sales to a Minnesota resident, knowing that
the goods (the yacht) would be delivered to and used in Minnesota.
In the case of a single sales transaction, the courts will examine the
presence of the nonresident defendants in the state, such as whether they
conducted business activities, engaged in advertising or distribution,
maintained an office, or had employees or agents in the state, to determine
whether these factors support the exercise of jurisdiction over the defendants. Bellboy
Seafood Corp. v. Kent
Trading Corp., 484 N.W.2d 796, 796 (Minn.
1992). In this case, there is no claim
that any of the respondents conducted any activities within Minnesota, apart from the sales transaction
The court will also consider whether
the nonresident defendants were brought into contact incidentally through the
unilateral activity of the plaintiff or whether either party was the aggressor
in the action. Dent-Air, 332 N.W.2d at 907-08.
But notwithstanding which party was the aggressor initially, if there
are “subsequent interstate communications by [the] nonresident seller demonstrate[ing]
an eagerness to enter a business transaction,” this will be considered “equivalent
to acting as the aggressor.” Viking Eng’g & Dev., Inc. v. R.S.B.
Enterprises, Inc., 608 N.W.2d 166, 170 (Minn. App. 2000), review denied (Minn. May 23, 2000). According to appellant, he contacted Maslonka
and Gulf Breeze as a result of contacts he had with third parties as well as
advertisements that were posted on the Internet. Appellant learned that Feller’s boat was for
sale from Maslonka, and he paid a $10,000 commission to Maslonka at the time of
the sale. After the initial contact by
appellant, there were unspecified communications by e-mail, telephone, and fax,
primarily between appellant and Maslonka, as well as one telephone call to
Feller. These facts do not show that the
nonresident respondents were the aggressors such that personal jurisdiction may
be asserted over them.
also notes that he was to pay Feller in 48 monthly installments, and that his
payments were guaranteed by Gulf Breeze to show that the nature and quality of
the contacts are sufficient to establish personal jurisdiction. Personal jurisdiction was found over a
nonresident based on a single transaction in which the defendant signed a
guaranty in Illinois of a loan made in Minnesota to a Minnesota
resident. Northwestern Nat’l Bank of St. Paul v.
Kratt, 303 Minn.
256, 257-58, 226 N.W.2d 910, 911-12 (1975).
But there, the defendant also discussed the mortgage on the phone with
bank officials and attended meetings in Minnesota. Id. at 257,
226 N.W.2d at 912. Here, as discussed
above, the contacts with the state are minimal.
Where a nonresident participated in a “single, isolated loan renewal
transaction,” the court cited the “element of active inducement of a Minnesota resident to enter a transaction to its
detriment” that justified subjecting them to personal jurisdiction in Minnesota. Norris,
270 N.W.2d at 295, 297. In contrast, the
“element of active inducement” has not been shown here.
appellant contends that the nature and quality of the contacts support personal
jurisdiction because in the event that he defaulted and respondents obtained a
judgment against him in Utah, they would
ultimately have to seek relief in a Minnesota
court to enforce the judgment. He
contends they cannot deny this same right to him. Appellant has not cited legal support for
this theory and it does not demonstrate that the nature and quality of contacts
are such that Minnesota
courts may assert personal jurisdiction over respondents.
Source and connection of those contacts to
cause of action
The third factor in determining
whether the requisite minimum contacts exist is “the connection of the cause of
action with these contacts.” Juehlich, 682 N.W.2d at 570. In this case, the contacts led to the
contract, which was the basis for this action, and show a proper connection. Dent-Air,
332 N.W.2d at 908.
Applying the five-factor test to the
record before us supports the determination of the district court. See
Juelich, 682 N.W.2d at 570. First, appellant
had a minimal number of contacts with Maslonka connected to the cause of
action, including an unspecified number of contacts via e-mail, telephone, and
fax transmissions. He had only one
telephone call with Feller. He signed
the contract, paid a commission to Maslonka and Gulf Breeze, and accepted
delivery of the yacht. Second, the
nature and quality of contacts were limited; respondents did not purposefully
direct marketing efforts toward Minnesota, they did not enter the state, they did
not have an office or employees here, and there was no evidence that respondents
acted as agressors in the sale. Third,
the cause of action was connected to the contacts. Fourth, the interest of the state in
providing a forum, is not considered a “contact,” and fifth, the convenience of
the parties does not become relevant unless sufficient contacts are
established. Sherburne County,
426 N.W.2d at 868. Respondents did not
avail themselves of the benefits and protections of Minnesota
law, and there are insufficient minimum contacts for Minnesota courts to assert personal
jurisdiction over them. In light of our
decision, we do not reach the issue of whether arbitration is required under
affirm the district court’s decision dismissing the action for lack of personal
jurisdiction over the nonresident respondents.