EBENEZER SARFO V MCLAREN REGIONAL MEDICAL CENTER
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STATE OF MICHIGAN
COURT OF APPEALS
EBENEZER SARFO,
UNPUBLISHED
July 19, 2002
Plaintiff-Appellee,
v
No. 230992
Genesee Circuit Court
LC No. 00-67255-CL
ST. ELIZABETH HOSPITAL, a foreign
corporation,
Defendant-Appellant,
and
McLAREN REGIONAL MEDICAL CENTER,
Defendant,
and
PAUL LAZAR,
Defendant.
Before: Kelly, P.J., and Murphy and Murray, JJ.
Murray, J. (dissenting).
The dispositive issue in this case is whether the courts of the State of Michigan may
constitutionally exercise personal jurisdiction over a non-resident corporation based upon that
corporation sending to Michigan, at the instruction of a Michigan resident, a contract of
employment (to be performed out of state), a few correspondence, and the making of a few
phone calls. The majority holds that such contacts with the state allow the exercise of
jurisdiction by our courts. Because I believe the exercise of jurisdiction under the facts of this
case does not comport with the requirements of the Due Process Clause of the Fourteenth
Amendment to the United States Constitution, I respectfully dissent.
The trial court’s jurisdictional ruling is reviewed de novo on appeal, as it presents a
question of law. Oberlies v Searchmont Resort, 246 Mich App 424, 427; 633 NW2d 408 (2001).
Moreover, plaintiff has the burden of establishing jurisdiction over the defendant. Jeffrey v
Rapid American Corp, 448 Mich 178, 184; 529 NW2d 644 (1995); Vargas v Hong Jin Corp, 247
Mich App 278, 282; 636 NW2d 291 (2001).
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Assuming that the majority has correctly applied the broad provisions of Michigan’s
long-arm statute, MCL 600.715, to the facts of this case, it has nonetheless erred in determining
that the exercise of such jurisdiction comports with due process.
In Starbrite Distributing, Inc v Excelda Mfg Co, 454 Mich 302, 308; 562 NW2d 640
(1997), our Supreme Court, quoting Witbeck v Bill Cody’s Ranch Inn, 428 Mich 659, 666; 411
NW2d 439 (1987), reiterated the well-known constitutional principle that “[t]he Due Process
Clause of the Fourteenth Amendment ‘does not contemplate that a state may make binding a
judgment in personam against an individual or a corporate defendant with which the state has no
contacts, ties or relations.’” To determine whether sufficient contacts, ties or relations exist
between the forum state and the non-resident defendant such that personal jurisdiction is
properly exercised, we must decide “whether the defendant purposefully established ‘minimum
contacts’ in the forum state ‘such that the maintenance of the suit does not offend traditional
notions of fair play and substantial justice.’” Starbrite, supra at 308-308, quoting Witbeck, supra
at 666, quoting International Shoe Co v Washington, 326 US 310, 319; 66 S Ct 154; 90 L Ed 95;
161 ALR 1057 (1945).1
“Courts apply a three-part test to determine whether a defendant has ‘minimum contacts’
with Michigan to the extent that limited personal jurisdiction may be exercised in accordance
with due process.” Oberlies, supra at 433. That three-part test was set forth in Jeffrey, supra at
186, as follows:
First, the defendant must have purposefully availed himself of the privilege of
conducting activities in Michigan, thus invoking the benefits and protections of
this state’s laws. Second, the cause of action must arise from the Defendant’s
activities in the state. Third, the defendant’s activities must be substantially
connected with Michigan to make the exercise of jurisdiction over the defendant
reasonable.
These factors are to be determined on a case-by-case basis, Oberlies, supra at 433-434, with the
primary focus being on the “reasonableness” and “fairness” of exercising jurisdiction. Jeffrey,
supra at 186.
In the present case, the evidence reveals upon de novo review that defendant did not
purposefully avail itself of the privilege of conducting activities in Michigan. This is so because,
as this Court held in Vargas, supra at 285:
The defendant must deliberately engage in significant activities within a state, or
create “continuing obligations’ between himself and residents of the forum” to the
extent that “it is presumptively not unreasonable to require him to submit to the
burdens of litigation in that forum as well.” Burger King Corp v Rudzewicz, 471
US 462, 476; 105 S Ct 2174; 85 L Ed 2d 528 (1985). This requirement “ensures
that a defendant will not be haled into a jurisdiction solely as a result of
1
In Kerry Steel, Inc v Paragon Industries, Inc, 106 F3d 147, 149-150 (CA6, 1997), the United
States Court of Appeals for the Sixth Circuit pointed out that at the time the Fourteenth
Amendment was adopted, a state court could only exercise jurisdiction over a non-resident
defendant if that defendant consented or was present in the state so as to be amenable to service
of process. According to the Kerry Steel Court, International Shoe put to an end the consent and
presence requirements of personal jurisdiction.
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“random,” “fortuitous,” or “attenuated” contacts . . .” Albino, supra at 561, 572
NW2d 21, quoting Starbrite, supra at 310, 562 NW 2d 640, quoting Burger King,
supra at 475, 105 S Ct 2174 (citations omitted).
In determining whether a defendant has purposefully availed itself towards a forum state,
it is vitally important to remember that the defendant’s efforts must be “purposefully directed
towards residents of another state.” Burger King, supra at 476 (emphasis added). With respect
to contractual obligations, the United States Supreme Court has held that only those parties who
“reach out” to citizens of another state can be subject to that state’s jurisdiction. Id. at 473. The
Court earlier had emphasized how “essential” to the proper excuse of jurisdiction it was to find
that the defendant took some act on which the defendant purposefully avails itself of the
privilege of conducting activities within the forum state, thus invoking the benefits and
protections of its laws. Hanson v Denckla, 357 US 235, 253 ; 78 S Ct 1228, 1239-1240; 2 L Ed
2d 1283 (1958). Because it is defendant’s actions which control this inquiry, whether a
defendant “purposefully availed” itself of the forum states benefits and laws cannot be premised
upon “the unilateral activity of another party or a third person”. Burger King, supra at 475,
quoting Helicopteros Nacionales de Colombia SA v Hall, 466 US 408, 417; 104 S Ct 1868,
1873; 80 L Ed 2d 404 (1984). See also Vargas, supra at 286 (“The defendant’s contacts with the
forum state must be analyzed in terms of the defendant’s own actions rather than the unilateral
activity of another party or a third person”).
Our courts have consistently held that when a non-resident defendant has only random
contact with the state there can be no “purposeful availment,” and thus, no personal jurisdiction
consistent with due process. See, e.g., Witbeck, supra at 672-673 (finding no jurisdictional
connection between non-resident defendant and state for due process purposes despite defendant
placing advertisement in national AAA magazine that would reach Michigan residents); Mozdy v
Lopez, 197 Mich App 356, 359-360; 494 NW2d 866 (1992) (holding that a single advertisement
in a Detroit newspaper did not establish that non-resident purposefully availed itself of Michigan
protections and laws). Other courts, however, have found sufficient contacts with the state and
its residents based upon multiple business transactions or advertisements within Michigan. See
Oberlies, supra at 434 (defendant’s widespread advertising to Michigan residents was sufficient
for purposeful availment test); Aaronson v Lindsay & Hauer International Ltd, 235 Mich App
259, 266; 597 NW2d 227 (1999) (defendant, over a 16-month period, shipped gemstones valued
at over $125,000 to a Michigan resident, as well as sales literature); Starbrite, supra at 310-311
(finding purposeful availment based upon repeated sales calls and ultimate contract to sell teak
oil to Michigan resident, with delivery occurring over several months).
Unlike Aaaronson, Oberlies and Starbrite, in the instant case, the undisputed evidence
revealed that there was no action initiated by defendant towards any Michigan resident.
Additionally, defendant has never conducted business in Michigan, has no holding or properties
in Michigan, has no agents or employees in Michigan, and has never sent any agent or employee
into Michigan for any reason, let alone a business reason. Moreover, defendant took no action
directing itself specifically towards Michigan residents. Instead, it contacted a national phone
bank in St. Louis which ran the listing for defendant. The only in-person interview took place in
Illinois, as did the preparation of the contact. The evidence is also undisputed in that, under the
contract, plaintiff was to work in Illinois for at least one year and potentially three years.
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Recognizing these undisputed facts, the majority has in support of its ruling instead relied
on the few isolated phone calls and mailings which occurred between plaintiff and defendant
during at most a two-month period in the summer of 1999. Specifically, plaintiff’s affidavit
indicates that during this short time frame he had no more than four calls from defendant
regarding his potential position. Plaintiff also states that he sent one correspondence to
defendant in Illinois and defendant sent three correspondence to him – one a contract, one
containing an application for an Illinois medical license, and the third, a lab coat, work schedule,
keys, and parking pass. These relatively few contacts with plaintiff by phone and mail in
Michigan, which all occurred after plaintiff responded to an out-of-state listing by defendant that
was not specifically directed to any Michigan resident, are exactly the type of “random” or
“attenuated” contacts that cannot form the basis for the exercise of personal jurisdiction
consistent with the United States Constitution.
Indeed, one need only review some of the closely analogous decisions from the federal
courts to see that the contacts defendant has with plaintiff in Michigan do not satisfy the due
process requirements. For example, in LAK, Inc v Deer Creek Enterprises, 885 F2d 1293 (CA6,
1989), defendant, an Indiana general partnership, transacted no business in Michigan, had no
employees or agents in Michigan, and had no property or other holdings in Michigan. However,
its Florida representative was contacted by plaintiff, a Michigan limited partnership, regarding
the purchase of Florida property owned by defendant.2 Thereafter, negotiations took place over
the phone between plaintiff in Michigan and Defendant in Illinois, Florida and elsewhere.
Plaintiff’s Michigan lawyer conducted “a number” of contract language negotiations over the
phone with counsel in Indiana, including sending back and forth between Michigan and Indiana
three draft contracts. The contract was ultimately signed in Indiana, but the $275,078.50 earnest
money was drawn on a check from a Michigan bank. Eventually problems arose, which resulted
in more phone calls between Michigan and Indiana, and ultimately a lawsuit was filed in Detroit.
The district court entered judgment on a jury verdict for plaintiff, but the Sixth Circuit
reversed, holding that the court could not exercise personal jurisdiction over defendant consistent
with due process. In particular, the court held that the contacts between defendant and Michigan,
consisting of phone calls and mailings during contract negotiations, were not sufficient to
establish that defendant purposefully availed itself of Michigan:
The telephone calls and letters on which the plaintiff’s claim of jurisdiction
primarily depends strike us as precisely the sort of “random,” “fortuitous” and
“attenuated” contacts that the Burger King Court rejected as a basis for haling
non-resident defendants into foreign jurisdictions.
A numerical count of the calls and letters has no talismanic significance: “The
quality of the contacts as demonstrating purposeful availment is the issue, not
their number or their status as pre- or post-agreement communications.” Stuart v
Spademan, 772 F2d 1185, 1194 (5th Cir, 1985). And the majority of the lawyers’
telephone calls between Detroit and Indianapolis, for whatever that datum may be
2
Defendant did not advertise the sale of property in Michigan.
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worth, were originated not by the defendant’s lawyer, Mr. Backer, but by Mr.
Mehr, the lawyer for Beznos Realty.
***
Mr. Backer did, to be sure, originate some calls to Mr. Mehr, and he did send
three draft contracts to Mr. Mehr in Detroit. (Deer Creek’s refusal to adjust the
purchase price was also confirmed by letter to Mr. Mehr, but that has little or no
significance in this context.) On the facts of this case, however, we do not find
these communications sufficient to establish “purposeful availment.” Cf. Scullin
Steel Co v National Railway Utilization Corp, 676 F2d 309, 314 (8th Cir, 1982)
(The use of interstate facilities such as the telephone and the mail is a “secondary
or ancillary” factor and “cannot alone provide the ‘minimum contacts’ required
by due process”). See also Hydrokinetics, Inc v Alaska Mechanical, Inc, 700 F2d
1026, 1029 (5th Cir, 1983), cert denied, 466 US 962, 104 S Ct 2180, 80 L Ed 2d
561 (1984) (“As for the exchange of communications [by telex, telephone and
letter] between Texas and Alaska in the development of the contract, that in itself
is also insufficient to be characterized as purposeful activity invoking the benefits
and protections of the forum state’s laws”). On the record before us, to borrow
from this court’s language in Weller v Cromwell Oil Co, 504 F2d 927, 931 (6th
Cir, 1974), there is no reason to suppose that either Mr. Hasten, the general
partner, or Mr. Backer, the lawyer, intended to lay himself open to liability “in
every state of the union whenever [he made] telephone calls or wrote letters to a
customer who [might subsequently claim] that they constitute[d]
misrepresentations.” [Id., at 1301.]
The Sixth Circuit adhered to its holding in LAK in the more recent decision of Kerry
Steel, Inc v Paragon Industries, Inc, 106 F3d 147, 149-150 (CA6, 1997). In that case, a
Michigan corporation sued an Oklahoma corporation in the Eastern District of Michigan. The
suit was over a contract which was negotiated between Michigan and Oklahoma by means of
telephone and facsimile. The purchase order was sent to Michigan. The federal district court
granted defendant’s motion to dismiss on the basis of no personal jurisdiction. The Sixth Circuit
affirmed.
In affirming, the court of appeals held that the entry of a contract with a Michigan
resident is alone insufficient to show that the defendant “purposefully availed itself of the
‘benefits and protections’ of Michigan law:”
The mere fact that Paragon entered into a contract with a Michigan corporation
does not mean that Paragon purposefully availed itself of the “benefits and
protections” of Michigan law. As the Court explained in Burger King, 471 US at
478, 105 S Ct at 2185, “an individual’s contract with an out-of-state party alone”
cannot “automatically establish minimum contacts.” See also CompuServe, 89
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F3d at 1265 (“merely entering into a contract . . . would not, without more,
establish sufficient minimum contacts”). [Id., at 151.3]
The court then concluded that the telephone calls and facsimiles which comprised the contract
negotiations were too random and attenuated to establish the purposeful availment test:
It is immaterial that Paragon placed telephone calls and sent faxes to Kerry Steel
in Michigan. To borrow language employed by this court in LAK, 885 F2d at
1301, “[t]he telephone calls and letters on which the plaintiff’s claim of
jurisdiction primarily depends strike us as precisely the sort of ‘random,’
‘fortuitous’ and ‘attenuated’ contacts that the Burger King Court rejected as a
basis for haling non-resident defendants into foreign jurisdictions.” Id. at 1300.
See also Scullin Steel Co v National Ry. Utilization Corp., 676 F2d 309, 314 (8th
Cir, 1982) (“The use of interstate facilities (telephone, the mail), the making of
payments in the forum state, and the provision for delivery within the forum state
are secondary or ancillary factors and cannot alone provide the ‘minimum
contacts’ required by due process”). Id.
Not surprisingly, other courts have reached the same conclusion as the Kerry and LAK
courts. See IMC Industries, Inc v Kiekert AG, 155 F3d 254, 259 n 3 (CA3, 1998); Brady v Burtt,
979 F Supp 524, 529-530 (ED Mich, 1997) (“contract negotiations entailing telephone calls and
mailings to the forum state, if random, fortuitous, and attenuated, are an insufficient basis for
exercising personal jurisdiction over a defendant”); Piper v Kassel, 817 F Supp 802, 805-806
(ED MO, 1993); and Whittaker v Medical Mutual of Ohio, 96 F Supp 2d 1197, 1200-1201 (D
Kan, 2000).
As in the foregoing cases, there was insufficient evidence in this case that defendant took
action directed towards Michigan such that it could be said to have “purposefully availed” itself
of the protections and benefits of Michigan law. Neither entering into a contract with a
Michigan resident, nor a few isolated mailings and phone calls into Michigan, can support a
finding of personal jurisdiction over this defendant which is consistent with due process.
3
See also Calphalon Corp. v Rowlette, 228 F2d 718, 722 (CA6, 2000).
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Accordingly, I would reverse the circuit court’s order.4
/s/ Christopher M. Murray
4
Although unnecessary to a proper disposition of this appeal, I further note that the circuit court
incorrectly found that this state has an interest in having the case litigated in Michigan. Indeed,
Michigan law does not even afford its own courts with subject matter jurisdiction to review
contract and tort claims brought by medical professionals who are subject to the bylaws of a
private hospital. Long v Chelsea Community Hospital, 219 Mich App 578, 586; 557 NW2d 157
(1996); Samuel v Herrick Memorial Hospital, 201 F2d 839, 834-835 (CA6, 2000). Furthermore,
the circuit court improperly relied on plaintiff’s case against the co-defendants as a basis for
finding jurisdiction against this defendant, for personal jurisdiction cannot be established under
the due process clause based on the acts of third parties or persons. Vargas, supra at 286.
Hence, even if one could find that defendant somehow did purposely avail itself of the
protections of Michigan law, plaintiff still has not established the other two tests under Jeffrey,
supra.
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