DAVID M CLAPPER V FREEMAN MARINE EQUIPMENT INC
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STATE OF MICHIGAN
COURT OF APPEALS
DAVID M. CLAPPER and FORTHRIGHT II, INC.,
UNPUBLISHED
June 16, 2000
Plaintiffs-Appellees,
v
No. 211139
Wayne Circuit Court
LC No. 97-737513-CK
FREEMAN MARINE EQUIPMENT, INC.,
Defendant-Appellant.
Before: Talbot, P.J., and Neff and Saad, JJ.
PER CURIAM.
Defendant appeals by leave granted the trial court’s order denying its motion for summary
disposition based on lack of personal jurisdiction. We reverse.
I
This case arises from a 1993 contract between James Allen and the Burger Boat Company of
Wisconsin for the construction and sale of a yacht. Plaintiffs David M. Clapper, an Oakland County
resident, and Forthright II, Inc., a Delaware corporation doing business in Michigan, assumed Allen’s
rights under the contract in 1995.1 In their complaint, plaintiffs allege that defendant Freeman Marine,
an Oregon corporation doing business in Oregon, provided defective doors, hatches, and other
components to Burger for use in the construction of the yacht. They filed this action seeking damages
from Freeman under a variety of theories and/or cancellation of the contract. Plaintiffs maintain that
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We are unable to ascertain the exact nature of the relationship between Clapper and Forthright or their
respective rights under the contract. Clapper assumed Allen’s rights under the contract in 1995, and
Forthright later assumed Clapper’s rights, but Clapper has apparently remained involved in the
transaction. Clapper appears to be affiliated with Forthright because he closed on the sale and took
delivery of the yacht in Windsor, Canada. According to the transcript, Clapper kept the boat in Detroit
for a short time and then moved it down to Florida. The boat was later sold but he and/or Forthright
retained some sort of interest in it. Defendant has not challenged either Clapper’s or Forthright’s status
as the real party in interest here, so the exact nature of the relationship is unimportant to this appeal.
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defendant conducted business in Wayne County and is therefore subject to the jurisdiction of Michigan
courts.
In lieu of an answer, Freeman moved for summary disposition pursuant to MCR 2.116(C)(1),
lack of personal jurisdiction. Freeman asserted that it did not conduct sufficient business in Michigan to
give the state’s courts general or limited personal jurisdiction over it. Freeman maintained that it
does not carry on a continuous or systematic part of its general business within the State
of Michigan. It is not qualified to do business in Michigan. It has no sales tax number
and has not paid taxes or manufactured any product in Michigan. Freeman Marine
operates no facilities in Michigan, has no office in Michigan, has no employees in
Michigan, and does not maintain any bank accounts or property in Michigan. Freeman
Marine does not advertise in Michigan, is not listed in any Michigan telephone book,
and does not avail itself of any Michigan services.
Freeman stated that its sole contact with the state in 1997 was the sale of $7,155 worth of goods to
Michigan companies and another $711 worth of goods to a Florida company for shipment to that
company’s Michigan facility—sales solicited by the buyers, not by Freeman. The $7,866 worth of
goods shipped to Michigan constituted “less than .02% (two one-hundredths of one percent) of
Freeman Marine’s 1997 total sales.”
In response, plaintiffs contended that Freeman could have foreseen that its products would be
used in Michigan: Freeman sold products to Burger, a Wisconsin company situated on the western
shore of Lake Michigan, which should have alerted Freeman to the likelihood that boats built by Burger
would be sailed on Michigan territorial waters after leaving Wisconsin. In addition to its sales of $7,866
to Michigan companies, defendant sold another $6,327 worth of goods to a Florida company for use in
its Michigan facility. Defendant advertised in national magazines that are circulated in Michigan and
maintained an Internet Web site that Michigan residents could access, although plaintiffs have not
alleged or proved that anyone associated with the manufacture, sale or delivery of the boat accessed or
was even aware of the existence of the Web site or that the Web site resulted in any Michigan sales for
defendant. Plaintiffs maintained that such contacts were more than sufficient to confer personal
jurisdiction on the court.
Plaintiffs also cited examples of Freeman’s direct contacts with plaintiffs as a basis for asserting
personal jurisdiction. After Clapper advised Freeman of his problems with Freeman’s products, the
company wrote to him at his Michigan address. In one letter, it offered to provide field service for
products under warranty. Freeman advised Clapper that one problem with a door was caused by a
damaged gasket and offered to ship a replacement gasket “immediately upon your instructions.”
After hearing oral arguments and strongly encouraging the parties to settle the case because of
the modest amount in controversy, the trial judge described the dispute as a “close issue” because
Freeman’s advertisements in national magazines, its maintenance of a Web site, and its sales to
Michigan residents were barely sufficient to confer jurisdiction. The trial judge denied defendant’s
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motion, but acknowledged that she had doubts that this was the correct ruling. We granted defendant
leave for interlocutory appeal and stayed proceedings pending appeal.
II
A. Personal Jurisdiction
We review jurisdictional rulings de novo on appeal. Jeffrey v Rapid American Corp, 448
Mich 178, 184; 529 NW2d 644 (1995). “The plaintiff bears the burden of establishing jurisdiction
over the defendant but need only make a prima facie showing of jurisdiction to defeat a motion for
summary disposition. The affidavits, together with any other documentary evidence submitted by the
parties, must be considered by the court. All factual disputes for the purpose of deciding the motion are
resolved in the plaintiff’s (nonmovant’s) favor.” Id.
Personal jurisdiction is governed by both state statute and by the United States Constitution. A
court’s exercise of personal jurisdiction must satisfy two requirements: (1) it must be authorized by one
of Michigan’s long-arm jurisdictional statutes; and (2) it must be consistent with the requirements of the
Due Process Clause of the Fourteenth Amendment.” Aaronson v Lindsay & Hauer Int’l Ltd, 235
Mich App 259, 262; 597 NW2d 227 (1999); see also Green v Wilson, 455 Mich 342, 349-350; 565
NW2d 813 (1997). To comply with the statutory requirement, the plaintiff must establish that personal
jurisdiction over a corporate defendant is a
uthorized by either the general jurisdiction statute, MCL
600.711; MSA 27A.711, or the limited/specific jurisdiction statute, MCL 600.715; MSA 27A.715.
The constitutional inquiry involves a determination whether the defendant “purposefully established
‘minimum contacts’—a sufficient nexus with Michigan—so that requiring [it] to defend itself in a suit in
Michigan does not offend traditional notions of ‘fair play and substantial justice.’” Comm’r of Ins v
Albino, 225 Mich App 547, 559; 572 NW2d 27 (1997), quoting Int’l Shoe, supra 320. In
accordance with this two-stage inquiry, Green, supra, we first consider whether either long-arm statute
allows exercise of jurisdiction.
B. Limited or Specific Jurisdiction
The limited or specific jurisdiction statute provides as follows:
The existence of any of the following relationships between a corporation or its
agent and the state shall constitute a sufficient basis of jurisdiction to enable the courts of
record of this state to exercise limited personal jurisdiction over such corporation and to
enable such courts to render personal judgments against such corporation arising out
of the act or acts which create any of the following relationships:
(1) The transaction of any business within the state.
(2) The doing or causing any act to be done, or consequences to occur, in the state resulting in an
action for tort.
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(3) The ownership, use, or possession of any real or tangible personal property situated within the
state.
(4) Contracting to insure any person, property, or risk located within this state at the time of
contracting.
(5) Entering into a contract for services to be performed or for materials to be furnished in the state
by the defendant. [MCL 600.715; MSA 27A.715, emphasis added.]
Succinctly stated, the courts may exercise personal jurisdiction over a foreign corporation where
the claim being litigated arises out of an act or acts creating one of the five relationships specified in the
statute. Neagos v Valmet-Appleton, Inc, 791 F Supp 682, 687 (ED Mich, 1992); LAK, Inc v Deer
Creek Enterprises, 885 F2d 1293, 1298 (CA 6, 1989).
Here, plaintiffs have focused on Freeman’s minimum contacts without addressing the threshold
question of whether their suit arises out of one of the five specified relationships and they do not allege
that any of their claims arise from defendant’s Internet activity. This omission could be construed as
plaintiffs’ implicit concession that the limited jurisdiction statute does not apply here, and that they seek
jurisdiction under the general jurisdiction statute.
In any event, limited jurisdiction is not warranted under MCL 600.715; MSA 27A.715 on the
facts of this case: defendant did not contract to provide goods or services for plaintiffs here in Michigan,
is not an insurance company and did not undertake to insure plaintiffs against any risk, and plaintiffs’
claim is not based on any allegation regarding property defendant might have owned in the state.
This leaves subsection (1), the transaction of business within the state, as the only possible basis
for jurisdiction, but subsection (1) does not apply here. None of the allegations in plaintiffs’ claim arises
from any business defendant conducted in the state. Defendant’s sale of component parts to a
Wisconsin ship manufacturer does not constitute doing business in Michigan. A defendant’s mere
awareness that its products could reach the forum state in the stream of commerce does not establish a
sufficient contact for personal jurisdiction if the defendant did not purposefully direct its actions toward
the forum state. Witbeck v Bill Cody’s Ranch Inn, 428 Mich 659, 677-678; 411 NW2d 439 (1987),
citing Asahi Metal Industry Co, Ltd v Superior Court of California, 480 US 102, 112; 107 S Ct
1026; 94 L Ed 2d 92 (1987). The fortuitous circumstance that plaintiffs in Michigan bought a product
from Wisconsin that incorporated defendant’s component parts does not establish the transaction of
business in Michigan.
Plaintiffs argue that defendant conducted business in Michigan when it corresponded with
plaintiffs in order to attempt to rectify the problem with the doors or hatches. However, these
communications do not constitute the transaction of business within the state for purposes of § 715(1).
Our Supreme Court held in Witbeck, supra, that “a nonresident defendant’s contacts with the forum
state must exist at the time the cause of action arose or, at the very least, before or at the time of
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commencement of the action.” Id., 680. Here, plaintiffs’ cause of action arose either when the boat
was delivered with allegedly faulty doors and hatches or when plaintiffs first had notice that the doors
and hatches were unsatisfactory, before defendant made efforts to resolve the problem. Were we to
say that defendant transacted business in Michigan when it made these efforts, we still could not say that
plaintiffs’ claim “arose from” this business as required by the statute. Having failed to establish that their
claims arose from one of the five relationships specified in the statute, plaintiffs have not met their burden
of proving limited jurisdiction under the long-arm statute.
C. General Jurisdiction
The general jurisdiction statute provides as follows:
The existence of any of the following relationships between a corporation and
the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of
this state to exercise general personal jurisdiction over the corporation and to enable
such courts to render personal judgments against the corporation.
(1) Incorporation under the laws of this state.
(2) Consent, to the extent authorized by the consent and subject to the limitations provided in
section 745.
(3) The carrying on of a continuous and systematic part of its general business within the state.
[MCL 600.711; MSA 27A.711.]
Clearly, the first two provisions do not apply here. The parties agree that defendant is not a
Michigan corporation. Plaintiffs have not identified any written agreement by which Freeman consented
to submit to the jurisdiction of Michigan’s courts. MCL 600.745; MSA 27A.745. Therefore, we must
determine if defendant carried on “a continuous and systematic part of its general business within the
state.” If it did, “the state may exercise personal jurisdiction over the defendant even if the action is
unrelated to the defendant’s contacts with the state without violating due process because the
defendant’s contacts with the forum state are ‘continuous and systematic.’” Neagos, supra, 791 Fed
Supp at 686.
It is proper to consult dictionary definitions to ascertain the plain and ordinary meaning of words
used in a statute. People v Hack, 219 Mich App 299, 305; 556 NW2d 187 (1996). The word
“continuous” is defined as “[u]ninterrupted; unbroken; not intermittent or occasional; so persistently
repeated at short intervals as to constitute virtually an unbroken series. Connected, extended, or
prolonged without cessation or interruption of sequence.” Black’s Law Dictionary (5th ed). The word
“systematic” is defined as “having, showing, or involving a system, method, or plan” or “given to or
using a system or method; methodical.” Random House Webster’s College Dictionary (1997). The
examples cited above showed that the defendants in those cases had a general plan for selling their
goods in Michigan that was carried out on a regular basis. Thus, the courts of this state would have
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general jurisdiction over defendant if it had a general plan for selling marine hatches, windows, doors,
portlights, and related parts on a regular basis within the state.
What constitutes “a continuous and systematic part” of a corporation’s general business can be
determined only on case-by-case evaluations. Here, defendant’s activities in Michigan do not constitute
a continuous and systematic part of its general business. Although Freeman’s products have sometimes
been incorporated in boats that are taken to Michigan or sold to Michigan residents, these facts do not
establish that Freeman is carrying on a continuous and systematic part of its general business in the
state. As this Court stated in Kircos v Lola Cars Ltd, 97 Mich App 379, 386-387; 296 NW2d 32
(1980):
A corporation is not “present” merely because goods that it has manufactured
and sold are within a jurisdiction, absent an incident creating a limited jurisdiction under
RJA [Revised Judicature Act] § 715. The fact that the corporation knows that
purchasers of its products will be continuously selling its products within a jurisdiction
does not mean that it is carrying on a continuous and systematic part of its general
business within the state, as required by RJA § 711.
Although the facts of Kircos v Lola Cars are not strictly analogous to the facts here, we nonetheless
conclude that defendant’s knowledge or constructive knowledge that the buyers of boat components
would be continuously selling the finished boats in Michigan does not constitute a continuous and
systematic operation of business in Michigan.
Additionally, it is well established that advertising in national publications does not constitute a
minimum contact with the state absent evidence that the advertisements actually generate sufficient
business in the state. Witbeck, supra, 671; Sears Roebuck & Co v Sears, 744 F Supp 1289, 1297
(D Del, 1990); Wines v Lake Havasu Boat Mfg, Inc, 846 F2d 40, 43 (CA 8, 1988). Accordingly,
defendant’s advertising cannot constitute the carrying on of a continuous and systematic part of the
business within the state.
Likewise, simply maintaining a Web site does not constitute a minimum contact with the state
absent some evidence that it actually generated sufficient business in the state. As noted, plaintiffs have
made no claim that defendant’s Web site generated any business in Michigan. The only evidence
produced by plaintiffs on this matter consisted of an affidavit of an employee who accessed the site after
the litigation was begun. The affidavit indicates that the Web site lists the products offered by defendant
and includes a section for catalog requests. There is no allegation that the Web site can be used to
place orders for defendant’s products. The affidavit actually supports the conclusion that the posting of
defendant’s Web site—like an advertisement in a national publication—is merely an attempt to create
contacts within the forum state. Unless some contacts actually take place, jurisdiction is not warranted.
Although the Internet allows the viewer to communicate with the Web site operator, this still is nothing
more than a potential for communication to take place.
Our concurring colleague, in a scholarly dissertation, urges us to use this case to venture far
beyond the limited facts of this case to establish broad, sweeping principles of law relating to Internet e
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commerce and the maintenance of Web sites vis-à-vis traditional notions of jurisdiction. We decline his
invitation to take this approach because, as noted above, there is no evidence on the record before us
that the Web site in question played any role in the transactions that are claimed to establish jurisdiction,
and plaintiffs do not argue that it did. Plaintiffs’ brief on appeal merely mentions that defendant
maintains a home page on which a catalog can be requested and which includes phone and fax numbers.
Any ruling on the Internet issue would therefore be based only on hypothetical fact situations and would
constitute pure dicta unlikely to be of any benefit to the bench and bar.
Defendant has conducted some business in the state. It made four sales to Michigan companies
in 1997, totaling $7,866. Defendant did not solicit the business; rather, its customers contacted
defendant.2 Those sales totaled just under $7,900 or less than two one-hundredths of one percent of
defendant’s gross sales. Plaintiffs offered evidence showing that a Florida company buying goods for its
Michigan facility placed three orders totaling approximately $6,400 with defendant in 1994. Eight sales
generating less than $15,000 over a four-year period (with no sales at all for two years straight) does
not demonstrate that defendant had a general plan for transacting business on a regular basis within the
state; thus, defendant did not carry on a continuous and systematic part of its business within the state.
In sum, defendant’s contacts with Michigan consist of national advertising not specifically
targeted at Michigan, maintenance of an Internet Web site providing product information and the means
to obtain catalogs, sales of component parts to companies that sold their finished products in Michigan,
and a modest volume of sales directly to Michigan. In their totality, these do not establish the
continuous and systematic business activity necessary to establish jurisdiction under Michigan’s long
arm statute for general jurisdiction.
Reversed.
/s/ Janet T. Neff
/s/ Michael J. Talbot
2
The record does not show if the customers were responding to defendant’s advertisements.
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