Unpublished Disposition, 889 F.2d 1095 (9th Cir. 1989)

MEMORANDUM^** 

Appellants Marmis, Steiniger, and Sonenblick ("appellants"), who are Arizona residents, filed an action in federal district court in Arizona seeking declaratory judgment against appellee Sunbelt Savings Association ("Sunbelt"), which is a Texas banking institution. This action arises out of financing arrangements between the appellants and Sunbelt for the development of an apartment complex in Texas. The district court granted Sunbelt's motion to dismiss for lack of personal jurisdiction. Appellants now appeal from the district court's judgment. Because the jurisdictional facts are not disputed, we review the district court's determination of personal jurisdiction de novo. Haisten v. Grass Valley Medical Reimbursement Fund Ltd., 784 F.2d 1392, 1396 (9th Cir. 1986).

* To establish personal jurisdiction, the plaintiff must show that the law of the forum state confers jurisdiction and that the forum state's exercise of jurisdiction would not be inconsistent with federal due process. Hirsch v. Blue Cross, Blue Shield of Kansas City, 800 F.2d 1474, 1477 (9th Cir. 1986).

Arizona's long-arm rule confers personal jurisdiction to the extent permitted by the due process clause of the United States Constitution. Batton v. Tennessee Farmers Mut. Ins. Co., 153 Ariz. 268, 270, 736 P.2d 2, 4 (1987) (citing 16 Ariz.Rev.Stat.Rule 4(e) (2)). Therefore, we need determine only whether personal jurisdiction in this case would meet the requirements of due process.

Due process requires that non-resident defendants have minimum contacts with the forum so that maintenance of the suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). This court applies a three-prong test to determine if limited jurisdiction exists over a non-resident defendant:

(1) The non-resident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its law.

(2) The claim must be one which arises out of or results from the defendant's forum-related activities.

(3) The exercise of jurisdiction must be reasonable.

Haisten, 784 F.2d at 1397.

The purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random or attenuated contacts or as a result of another party's unilateral activities. Id. However, the purposeful availment prong is satisfied when the defendant himself takes deliberate action within the forum state or creates continuing obligations to forum residents. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985). Although appellants and Sunbelt communicated primarily over the phone and through the mail, jurisdiction cannot be avoided because the defendant did not physically enter the forum state. See id. ("So long as commercial actor's efforts are 'purposefully directed' toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there") (citations omitted). Here, Sunbelt sent an agent to Arizona; the partnership agreement, the loan agreement and the appellants' guarantees all demonstrates that a continuing obligation exists between Sunbelt and the appellants. Furthermore, the resulting partnership's primary place of business is Tucson, Arizona. In this case, therefore, the purposeful availment prong is satisfied.

The second prong requires that the plaintiff's claims arise out of the defendants' forum-related contact. Where the claim arises out of a contract which substantially constitutes the contact with the forum, the second prong is satisfied. See, e.g., Haisten, 784 F.2d at 1400. Here, appellants' claims arose out of the modification agreement to the guarantees and the amendment to the loan agreement. Because these agreements constitute Sunbelt's continuing contacts with Arizona the second prong is satisfied.

Finally, the third prong requires ascertaining the reasonableness of subjecting the defendant to jurisdiction of the forum state. Jurisdiction may be reasonably exercised if " 'under the totality of the circumstances the defendant could reasonably anticipate being called upon to present a defense in a distant forum.' " FDIC v. British American Ins. Co., Ltd., 828 F.2d 1439, 1442 (9th Cir. 1987).

In determining the reasonableness of the jurisdiction, this court considers factors including:

the extent of the defendant's purposeful interjection into the forum state's affairs; the burdens on the defendant; the forum State's interest in adjudicating the dispute; the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several states in furthering fundamental substantive social policies.

Hirsch, 800 F.2d at 1481. Moreover, once purposeful direction is demonstrated, there exists a presumption of reasonableness, which the defendant may rebut only by showing compelling reasons why assertion of jurisdiction would be unreasonable. See Burger King, 471 U.S. at 477; Haisten, 784 F.2d at 1400.

Application of these factors indicates that Sunbelt has not met its burden of showing compelling reason why assertion of jurisdiction would be unreasonable. Sunbelt argues that all of their business transactions with appellants expressly provide that Texas law governs the agreements. However, a choice of law provision alone is not sufficient to defeat jurisdiction. See Burger King, 471 U.S. at 481. The burden on Sunbelt to litigate in Arizona is not excessive given the conveniences of modern transportation. Cf. McGee v. International Life Ins. Co., 355 U.S. 220, 223 (1957) ("modern transportation and communication have made it much less burdensome for a party sued to defend himself in a [distant] State"). Although Texas clearly has an interest, Arizona also has an 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. After choosing to engage in business with Arizona residents, Sunbelt cannot now claim it could not reasonably anticipate being called upon to defend this action in Arizona.

REVERSED.