Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Ultimate Data Systems,
Aero Controls, Inc.,
A Washington corporation, et al.,
Filed December 9, 1997
Hennepin County District Court
File No. 974075
Jonathan M. Bye, Lindquist & Vennum PLLP, 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for appellants)
Considered and decided by Huspeni, Presiding Judge, Klaphake, Judge, and Harten, Judge.
Respondent Ultimate Data Systems, a Minnesota corporation (Ultimate), brought this breach of contract action against appellants Aero Controls, Incorporated, a Washington corporation (Aero Controls), and Aero Systems Aviation Corporation, a Florida corporation (ASA). Ultimate alleged ASA wrongfully refused shipment of a business computer system ASA had ordered from Ultimate. It sought damages from ASA and Aero Controls, which it alleged to be ASA's parent company.
The Aero companies appeal from the district court's denial of their motion to dismiss for lack of personal jurisdiction under Minn. R. Civ. P. 12.02(b). Because Ultimate failed to meet its burden to prove that sufficient "minimum contacts" existed to confer personal jurisdiction over the Aero companies, we reverse.
The determination of whether personal jurisdiction exists is a question of law which this court reviews de novo. TRWL Financial Establishment v. Select Int'l, Inc., 527 N.W.2d 573, 575 (Minn. App. 1995). The plaintiff, or the party asserting that personal jurisdiction exists over a defendant, bears the burden of proving a prima facie case supporting jurisdiction. Id. At this stage, the plaintiff's alleged facts, including facts derived from the complaint and other supporting documents, are to be taken as true. Id.
Because Ultimate asserts jurisdiction based on a single transaction directly related to its cause of action, its claim is for "specific" personal jurisdiction, on which `"the nature and quality of the contacts [are] dispositive.'" See id. at 576 (quoting Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411 (Minn. 1992)). When evaluating the nature and quality of contacts between a buyer and seller, a court will determine which party was the aggressor or the dominant party in pursuing the transaction. Id. The critical question is whether the nonresident has purposefully availed itself of the benefits and protections of Minnesota law or whether the nonresident had "fair warning" of being sued in Minnesota. Id.
Ultimate claims that ASA was the dominant party because it contacted Ultimate out of numerous potential suppliers. However, a mere inquiry by a prospective buyer or seller does not make the inquirer the aggressor. Id. at 577. As ASA notes, Ultimate initiated contact by distributing advertising to it in Florida. Although ASA took the next step and contacted Ultimate, the record does not indicate which party initiated subsequent contacts. The record is also silent on details such as whether ASA demanded modifications to suit its needs, requested special finance terms, and required Ultimate to forward the down payment to the supplier. Under the evidence presented, Ultimate's conduct constituted that of a typical seller interested in completing a sale: it modified the computer system, completed the necessary paperwork to secure financing for ASA through Indiana-based IBM credit, and even forwarded the down payment to Supply Net, its supplier in Indiana. Because the alleged facts do not demonstrate that ASA was the aggressor, Ultimate failed to meet its burden of proving specific personal jurisdiction.
Other facts also weigh against finding personal jurisdiction in this case: no part of the contract was performed in Minnesota; negotiations took place by fax and telephone; although Ultimate brought in two third parties to assist in the transaction, Supply Net and IBM Credit, those parties were located in Indiana, not Minnesota; and the goods never entered Minnesota and were shipped directly from Indiana to Florida. Merely entering into a contract with a Minnesota resident does not confer personal jurisdiction over a nonresident, even if the resident expends resources in reliance on that contract. See, e.g., Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651, 655 (8th Cir. 1982) (no minimum contacts even though nonresident telephoned resident manufacturer and marketer of animal feed for price information; nonresident placed three orders for feed; nonresident provided irrevocable letters of credit presented through resident bank; and feed was apparently shipped from resident state); Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904, 907 (Minn. 1983) (no jurisdiction over nonresident who had three lease contracts with Minnesota resident, even though resident actually delivered three planes to nonresident); Leoni v. Wells, 264 N.W.2d 646, 647 (Minn. 1978) ("isolated purchase of goods from a Minnesota seller will not by itself subject the buyer to the jurisdiction of Minnesota courts"); TRWL, 527 N.W.2d at 574 (no jurisdiction over
nonresident who contracted with Minnesota resident, even though resident paid nonresident for allegedly defective pajamas); S.B. Schmidt Paper Co. v. A to Z Paper Co., 452 N.W.2d 485, 489 (Minn. App. 1990) (no minimum contacts even though nonresident contacted resident "on numerous occasions" inquiring about purchasing papers products; nonresident placed four orders; resident shipped paper to nonresident and filled one-third of order from Minnesota and two-thirds from Mexico; and nonresident sent check for partial payment to Minnesota, but stopped payment on it).
In support of the exercise of personal jurisdiction, respondent cites Trident Enters. Int'l, Inc. v. Kemp & George, Inc., 502 N.W.2d 411, 416 (Minn. App. 1993) (personal jurisdiction existed over nonresident who contacted Minnesota company for help in expediting shipping order and whose contacts induced Minnesota company to enter into transaction with third party in Minnesota). Because the record fails to establish that ASA was the aggressor or otherwise "induced" Ultimate into entering into transactions with third parties Supply Net and IBM Credit, this case is not analogous to Trident. In addition, the third parties in this case are Indiana residents, not Minnesota residents. Unlike the transaction in Trident, the transaction here was not completed or performed in Minnesota, and it did not create any additional economic effects in Minnesota, other than the loss sustained by Ultimate.
Under these circumstances, the district court erred in concluding that sufficient minimum contacts existed to confer jurisdiction on ASA and Aero Controls. The court's denial of the motion to dismiss the complaint for lack of personal jurisdiction is reversed.