This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
a Delaware limited liability company, et al.,
Darryl Payne, a/k/a
Filed March 21, 2006
File No. DJ-04-11661
Scott A. Lifson, George E. Warner, Jr., Bernick and Lifson,
P.A., 5500 Wayzata Boulevard, The Colonnade, Suite 1200, Minneapolis, MN 55416
Charles K. Maier, Julie L. Boehmke, Gray, Plant, Mooty,
Mooty & Bennett, P.A., 500 IDS Center, 80 South Eighth Street, Minneapolis,
MN 55402-3796 (for appellant)
Considered and decided by Dietzen, Presiding Judge; Wright,
Judge; and Worke, Judge.
U N P U B L I S H E D O P I N I O N
challenges the district court’s denial of his motion to dismiss for lack of
personal jurisdiction, arguing that he lacked sufficient minimum contacts with Minnesota to justify the
exercise of personal jurisdiction.
Because we conclude that appellant had sufficient minimum contacts to
establish personal jurisdiction in this state, we affirm.
Payne is the founder and president of Classic World Productions, Inc. (CWP), a
music-distribution corporation with its principal place of business in Aurora, Illinois. Respondent Advanced Duplication Services
(ADS) is a manufacturer of compact discs (CDs) with its principal place of
business in Plymouth, Minnesota.
In August 2003,
appellant traveled to Canada
to meet with Kai Voigt, president of Provac Disc Media Corporation (Provac), respondent’s
wholly owned subsidiary, to discuss a potential arrangement whereby Provac
would duplicate CDs for appellant to be sold to a third party for distribution. Prior to respondent’s acquisition of Provac
in July 2003, Provac had occasionally performed “encrypting and authoring”
services for appellant. At the meeting,
Voigt informed appellant that Provac did not have the capabilities to duplicate
CDs, but that duplication services could be provided by respondent at its Minnesota facility. During the meeting, Voigt repeatedly advised
appellant that he was negotiating on behalf of respondent. The record does not indicate that the parties
entered into a written contract at this time.
began sending packing lists and “art disks” relating to its orders directly to
respondent in Minnesota. Appellant also submitted new and revised
purchase orders to respondent. The
parties had telephone, mail, e-mail and facsimile communications regarding appellant’s
orders and account. The written
communications prominently displayed Provac’s affiliation with respondent and respondent’s
Minnesota address and telephone number; and respondent’s employees made it
clear in their contacts with appellant that they were located in Minnesota and
acting on behalf of respondent.
manufactured and shipped the specialized orders from its facility in Minnesota to
appellant. Appellant failed to make
payments after receiving shipments and invoices, and respondent eventually requested
that appellant complete its credit application.
Appellant completed and returned the credit application, and sent a $3,000
check written directly to respondent.
Despite repeated collection
attempts by respondent’s credit department, appellant’s failure to make
payments continued. In June 2004,
respondent filed a lawsuit against appellant on theories of breach of contract,
unjust enrichment, and account stated.
The complaint alleged that appellant failed to pay respondent for
specially duplicated CDs that respondent manufactured and shipped to CWP. Appellant moved to dismiss respondent’s
complaint for lack of personal jurisdiction pursuant to Minn. R. Civ. P.
12.02(b), arguing that he did not have sufficient contacts with Minnesota to warrant
personal jurisdiction. The district
court denied the motion to dismiss. This
D E C I S I O N
Appellant argues that
he did not have sufficient minimum contacts with Minnesota to justify the exercise of
personal jurisdiction. An order denying
a pretrial motion for dismissal for lack of personal jurisdiction is appealable
as a matter of right. In re State & Regents Bldg. Asbestos
Cases, 435 N.W.2d 521, 522 (Minn.
1989). The existence of personal
jurisdiction is a question of law, which we review de novo. Nw.
Airlines, Inc. v. Friday, 617 N.W.2d 590, 592 (Minn. App. 2000). “When a defendant challenges jurisdiction,
the burden is on the plaintiff to prove the minimum contacts necessary to
satisfy due process. At the pretrial
stage, however, the plaintiff need only make a prima facie showing of
sufficient Minnesota-related activities through the complaint and supporting
evidence, which will be taken as true.” Hardrives, Inc. v. City of LaCrosse, Wis.,
307 Minn. 290, 293, 240 N.W.2d 814, 816 (Minn. 1976) (citation
omitted). Thus, on review of a denial of
defendant’s motion to dismiss for lack of personal jurisdiction, we accept the
allegations contained in plaintiff’s complaint and supporting affidavits as
true. Id. A plaintiff may satisfy its burden and make a
prima facie showing of personal jurisdiction even if the district court believes
a more developed record might reveal that a basis for such jurisdiction is
lacking. Dever v. Hentzen Coatings, Inc., 380 F.3d
1070, 1076 (8th Cir. 2004). In
close cases, “doubts should be resolved in favor of retention of
jurisdiction.” Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411-12 (Minn. 1992).
courts may exercise personal jurisdiction over a nonresident defendant if the
plaintiff meets the requirements of Minnesota’s
long-arm statute, Minn. Stat. § 543.19 (2004), as well as the requirements
of due process. Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 29 (Minn. 1995). The Minnesota
long-arm statute is coextensive with the constitutional limits of due
process. Valspar, 495 N.W.2d at 410. A
plaintiff satisfies due process by showing that the nonresident defendant
established “minimum contacts” with the forum state that comport with
“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).
contacts requirement may be satisfied in two different ways: general personal
jurisdiction or specific personal jurisdiction.
Domtar, 533 N.W.2d at 30. Respondent argues that the principles of
specific personal jurisdiction apply. “Specific personal jurisdiction exists when
the defendant’s contacts with the forum state are limited, yet connected with
the plaintiff’s claim such that the claim arises out of or relates to the
defendant’s contacts with the forum.” Id. “When a claim arises out of a contract that
has a ‘substantial connection’ with the forum state, specific jurisdiction
at 31 (citation omitted).
Minnesota courts utilize a five-factor test
to ascertain when sufficient contacts give rise to specific personal
jurisdiction over a nonresident defendant.
Hardrives, 307 Minn. at 294, 240 N.W.2d
at 817. The five factors are: (1) the
quantity of contacts with Minnesota; (2) the
nature and quality of the defendant’s contacts with Minnesota;
(3) the connection between the cause of action and the defendant’s contacts;
interest in providing a forum; and (5) the convenience of the parties. Dent-Air,
Inc. v. Beech Mountain
Air Serv., Inc., 332 N.W.2d 904, 907 (Minn. 1983).
“The first three factors determine whether minimum contacts exist and
the last two factors determine whether the exercise of jurisdiction is
reasonable according to traditional notions of fair play and substantial
justice.” Juelich v. Yamazaki Optonics Corp., 682 N.W.2d 565, 570 (Minn. 2004). The first three factors carry the most weight
in the court’s overall personal-jurisdiction determination. Dent-Air,
332 N.W.2d at 907.
sustain jurisdiction, the quantity of contacts must have been “numerous and
fairly frequent or regular in occurrence.”
NFD, Inc. v. Stratford
Leasing Co., 433 N.W.2d 905, 908 (Minn.
App. 1988). Here, the quantity of
appellant’s contacts was somewhat limited, but occurred throughout the
performance of the contract. The
contacts included sending items relating to manufacturing to respondent; multiple
communications via telephone, e-mail, facsimile, and mail regarding orders and
accounts payable; placing and revising purchase orders; completing a new credit
application; and sending payments.
that these contacts cannot be attributed to him because they were made in his
capacity as president of CWP, and he is not personally responsible for the acts
of the corporation. Respondent argues
that CWP was involuntarily dissolved during the time period in question, and
therefore, appellant, as the “alter ego” of CWP, was acting in an individual
capacity. But the question before us is whether
should exercise personal jurisdiction over appellant, and not whether appellant
will be personally liable for claims asserted in the lawsuit. Personal jurisdiction may be exercised over
corporate officers based on the nature and quality of their individual contacts
and course of dealings with the forum state.
See, e.g., Trident Enter. Int’l,
Inc. v. Kemp & George, Inc., 502 N.W.2d 411, 416 (Minn. App. 1993)
(affirming district court’s denial of corporate officer’s motion to dismiss the
complaint against him for lack of personal jurisdiction because officer had
sufficient minimum contacts to support personal jurisdiction); see also Minn. Mining & Mfg. Co. v. Rauh Rubber, Inc., 943 F. Supp.
1117, 1124 (D. Minn. 1996) (corporate officer established sufficient deliberate
contacts with Minnesota in order to conduct business in the state to justify
being sued there).
argues that the contacts are not attributable to him because they were made by
other employees at CWP. But activities
carried out on behalf of a nonresident party may be attributed to the party for
purposes of personal jurisdiction when the party is a “primary participan[t] in
the enterprise and has acted purposefully in directing those activities[.]” Burger
King Corp. v. Rudzewicz, 471 U.S.
462, 480, 105 S. Ct. 2174, 2186 n.22
(1985) (citation omitted). Appellant’s
position as president and CEO of CWP created an agency relationship whereby
appellant necessarily controlled and directed the administrative and clerical
acts of employees. Cf. Curry v. McIntosh, 389
N.W.2d 224, 228 (Minn. App. 1986), review denied (Minn. Aug. 20, 1986) (failure to show a
party’s ability to control the actions of another precludes finding of agency
had more than isolated or minimal contacts with Minnesota, the quantity of contacts weighs
in favor of the exercise of personal jurisdiction. Here, the quantity of contacts is not
extensive, so the nature and quality of the contacts becomes dispositive. Marquette Nat’l
Bank of Mpls. v. Norris, 270 N.W.2d 290, 295 (Minn. 1978).
or Quality of Contacts
In reviewing the
nature and quality of the contacts, we attempt to ascertain whether appellant
purposefully availed himself of the privilege of conducting activities in this
state, including the benefits and protections of Minnesota law. Dent-Air,
332 N.W.2d at 907. “When a defendant
deliberately engages in significant activities in a state or creates continuing
obligations between itself and residents of the state, the defendant
purposefully avails itself of the protections of the law, as required to
support the exercise of personal jurisdiction under the Due Process
Clause.” Marshall v. Inn on Madeline Island, 610 N.W.2d 670, 675-76 (Minn. App. 2000). Jurisdiction is proper when “the contacts
proximately result from actions by the defendant himself that create a substantial connection with the forum State.” Burger
King, 471 U.S. at 475,
105 S. Ct. at 2183-84 (emphasis in original)
(quotation omitted). The fact that a
nonresident defendant was never physically present in the state in the course
of their transaction, which was accomplished entirely by telephone, mail, and
facsimile, is of no significant consequence.
Marquette, 270 N.W.2d at 295.
respondent’s complaint and supporting affidavits as true, the evidence supports
the conclusion that appellant was aware from the outset that any duplication or
manufacturing services would be performed by respondent in Minnesota, and
appellant deliberately engaged in activities in this state by subsequently
placing duplication and manufacturing orders.
And appellant applied for and received a line of credit with
respondent. Unlike the cases cited by
appellant, appellant could reasonably expect to be “haled into court” in
Minnesota because he was fully aware that the bulk of the transactions, i.e.,
the receipt and processing of orders, and manufacturing and shipment of specialized
goods, occurred in Minnesota. Cf. Walker Mgmt. v. FHC Enters, 446
N.W.2d 913, 915 (Minn. App. 1989) (defendant could not reasonably have expected
to be haled into Minnesota court by sellers of
services when all services were to be performed outside of Minnesota), review denied (Minn. Dec. 15, 1989). Thus, the nature and quality of appellant’s
contacts with Minnesota
support the exercise of personal jurisdiction over him in this state.
between Contacts and Cause of Action
Specific personal jurisdiction
requires that there be a connection between the cause of action and the
defendant’s contacts with the forum state.
Marshall, 610 N.W.2d at 676.“When a claim arises out of a contract
that has a substantial connection with the forum state, specific jurisdiction
exists.” Domtar Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 31 (Minn. 1995) (quotation
omitted). But “[m]erely entering into a
contract with a forum resident does not provide the requisite contacts between
a [nonresident] defendant and a forum state.”
S.B. Schmidt Paper Co. v. A to Z
Paper Co., 452 N.W.2d 485, 488 (Minn.
that there is no connection between the causes of action, i.e., breach of
contract, unjust enrichment, and account stated, on the one hand, and the
contacts, because the “contract” underlying the lawsuit was executed in Canada and
involved entities not affiliated with Minnesota. But taking respondent’s evidence as true, the
negotiations in Canada resulted in an offer by respondent, communicated through
Provac’s president, to provide appellant’s duplication and manufacturing needs
at its facility in Minnesota. And acceptance
of the offer occurred when appellant began placing duplication and
manufacturing orders. Thus, the formation
of the contract has significant connection to Minnesota.
Further, a substantial part of the performance of the contract, i.e.,
receipt, manufacturing, and shipment of appellant’s orders, occurred in Minnesota. Cf. id.,
452 N.W.2d at 489 (finding no substantial connection when no part of the
performance of the contract occurred in Minnesota). And respondent’s performance triggered appellant’s
payment obligations, the non-performance of which resulted in this
litigation. Therefore, a connection exists between
appellant’s contacts and the causes of action, which supports the exercise of specific
of Forum State
factor alone cannot establish jurisdiction, Minnesota does have an interest in providing
a forum for its residents who allegedly have been wronged. NFD, 433
N.W.2d at 909. This is particularly true
when, as here, the nature and quality of appellant’s contacts with Minnesota, the source of
the cause of action, and the connection of the cause of action with the
contacts support the exercise of personal jurisdiction.
of the Parties
minimum contacts are present jurisdiction should be exercised unless the court
finds that Minnesota
jurisdiction is improper on forum non conveniens grounds.” Dent-Air,
332 N.W.2d at 909. There is a strong
presumption in favor of the plaintiff’s choice of forum. Bergquist
v. Medtronic, Inc., 379 N.W.2d 508, 511 (Minn. 1986).
“And because modern transportation and communications have made it much
less burdensome for a party sued to defend himself in a State where he engages
in economic activity, it usually will not be unfair to subject him to the
burdens of litigating in another forum for disputes relating to such activity.” Burger
King, 471 U.S. at 474,
105 S. Ct. at 2183 (quotation omitted).
that Minnesota is an inconvenient forum
because witnesses with knowledge are located outside of the state, and
litigation in Minnesota
would unduly burden these witnesses. But
respondent, its employees who dealt directly with appellant regarding account
and credit management, and the majority of relevant documents are located in Minnesota. And any inconvenience to appellant is not
sufficiently extensive to prevent the exercise of personal jurisdiction,
particularly given the fact that the record reflects appellant’s ability to
travel for business opportunities. Thus,
this factor does not weigh against a finding of personal jurisdiction.