Darin Jensen, Appellant, vs. P. Jack Feller, et al., Respondents, Nicholas Maslonka, Respondent, Gulf Breeze Yacht Services, Respondent.

Darin Jensen, Appellant, vs. P. Jack Feller, et al., Respondents, Nicholas Maslonka, Respondent, Gulf Breeze Yacht Services, Respondent. A04-2038, Court of Appeals Unpublished, June 21, 2005.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-2038

 

Darin Jensen,

Appellant,

 

vs.

 

P. Jack Feller, et al.,

Respondents,

 

Nicholas Maslonka,

Respondent,

 

Gulf Breeze Yacht Services,

Respondent.

 

Filed June 21, 2005

Affirmed

Dietzen, Judge

 

Olmsted County District Court

File No. C2-04-990

 

Gerald S. Weinrich, Suite 301W, 421 First Avenue Southwest, Rochester, MN  55902 (for appellant)

 

Kathryn K. Moe, 1530 Greenview Drive Southwest, Suite 212, Rochester, MN  55902 (for respondents Feller, et al.)

 

Nicholas Maslonka, 1520 Camden, Ferndale, MI  48220 (pro se respondent)

 

Gulf Breeze Yacht Services, 1520 Camden, Ferndale, MI  48220 (respondent)

 

 

            Considered and decided by Hudson, Presiding Judge; Stoneburner, Judge; and Dietzen, Judge.

U N P U B L I S H E D   O P I N I O N

DIETZEN, Judge

            Appellant challenges the decision of the district court dismissing his action for lack of personal jurisdiction.  Because the district court properly ruled that Minnesota courts do not have personal jurisdiction over the nonresident respondents, we affirm.

FACTS

            Appellant Darin Jensen is a Minnesota resident who desired to purchase a luxury yacht.  He discovered respondents Nicholas Maslonka and Gulf Breeze Yacht Services (Gulf Breeze), through third parties and advertisements posted on the Internet.  Maslonka and Gulf Breeze are located in Michigan and market used luxury boats.  Respondent P. Jack Feller, a resident of Utah, and Marjac Investments (Marjac) owned the yacht that appellant purchased.

            Appellant had an unspecified number of contacts with Maslonka via e-mail, telephone, and fax transmissions, and Maslonka ordered an independent survey of the boat's condition for appellant.  Appellant also had at least one telephone conversation with Feller.

            In August 2003, appellant, Feller, and Marjac entered into a purchase agreement for the yacht with a price of $184,500 to be made in 48 monthly payments.  The contract contained a clause providing for arbitration in the case of any controversy or claim.  Appellant paid a $10,000 commission to Maslonka and Gulf Breeze, which guaranteed appellant's payments to Feller.  The yacht was delivered to appellant in Minnesota.

            Appellant sued Feller, Marjac, and Maslonka, alleging breach of contract, tender of defective goods, and violation of the consumer-fraud act, Minn. Stat. § 325 F. 69 (2002).  Appellant later moved to amend his complaint to include Gulf Breeze and to assert a claim for common-law fraud.  Respondents moved to dismiss for lack of personal jurisdiction or, in the alternative, to require appellant to proceed through arbitration as provided in the purchase agreement.  Appellant argued that the exercise of personal jurisdiction over respondents is consistent with federal due process and Minnesota's long-arm statute, Minn. Stat. § 543.19 (2002), and that the arbitration clause in the parties' contract did not preclude jurisdiction because an arbitration clause does not bar an action based on fraud.

            The district court granted both appellant's motion to amend and respondents' motion to dismiss for lack of personal jurisdiction.  The court also ruled that pursuant to the contract, claims were to be resolved by arbitration in the State of Utah, as construed under Utah law and the commercial arbitration rules of the American Arbitration Association.  The court also stated that in the event fraud was not a recognized claim in arbitration as a basis for rescission, the court would entertain a motion by appellant to reopen the matter in Minnesota.  This appeal followed.[1] 

D E C I S I O N

            Whether personal jurisdiction exists in Minnesota is a question of law.  V.H. v. Estate of Birnbaum, 543 N.W.2d 649, 653 (Minn. 1996).  When a defendant moves to dismiss for lack of personal jurisdiction under Minn. R. Civ. P. 12.02(b), the plaintiff has the "burden of proving that sufficient contacts exist with the forum state to support personal jurisdiction."  V.H., 543 N.W.2d at 653.  If materials outside the pleadings are considered, the motion will be treated as one for summary judgment.  Minn. R. Civ. P. 12.02.  To determine whether plaintiff has made a prima facie case, the allegations of the complaint, along with any supporting evidence, will be viewed as true.  V.H., 543 N.W.2d at 653.  "Doubt should be resolved in favor of retention of jurisdiction."  Id.

            Minnesota courts may "assert personal jurisdiction over defendants to the full extent of federal due process" under Minnesota's long-arm statute, Minn. Stat. § 543.19 (2002).  Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565, 570 (Minn. 2004).  "[D]ue process requires" that the defendant "have certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘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) (citations omitted); accord Juelich, 682 N.W.2d at 570.  "[T]he defendant must have purposefully availed itself of the privilege of conducting activities within the jurisdiction."  V.H., 543 N.W.2d at 656.  The contacts must be "such that he should reasonably anticipate being haled into court there."  Id. at 656-57 (quotation omitted).

            Personal jurisdiction may be general or specific.  Juelich, 682 N.W.2d at 570 n.3.  "General personal jurisdiction exists when a nonresident defendant's contacts with the forum state are so substantial and are of such a nature (continuous and systematic) that the state may assert jurisdiction over the defendant even for causes of action unrelated to the defendant's contact with the forum state."  Id.  In contrast, specific jurisdiction may exist when the defendant has limited contacts with the forum state, but these contacts are "connected with the plaintiff's claim such that the claim arises out of or relates to the defendant's contacts with the forum."  Id.  It is undisputed that specific, not general, personal jurisdiction is at issue here.

            When a nonresident defendant has limited contacts with the state, a five-factor test is used to determine whether the exercise of personal jurisdiction over that defendant comports with due process.  Id. at 570.  This test requires the court to assess:

                                    (1)       the quantity of contacts with the forum state;

                                    (2)       the nature and quality of those contacts;

(3)       the connection of the cause of action with these contacts;

                                    (4)       the interest of the state providing a forum; and

                                    (5)       the convenience of the parties.

 

Id.  The first three factors are used to assess whether the requisite minimum contacts exist, and the last two are used to "determine whether the exercise of jurisdiction is reasonable according to traditional notions of fair play and substantial justice."  Id.  In addition, the fourth factor is not considered a "contact" and the fifth is irrelevant unless sufficient contacts are established.  Sherburne County Soc. Servs. v. Kennedy, 426 N.W.2d 866, 868 (Minn. 1988).

            Quantity of contacts

            A single, isolated transaction may be sufficient to confer personal jurisdiction on an out-of-state defendant if the cause of action arose out of that contact.  Marquette Nat'l Bank of Minneapolis v. Norris, 270 N.W.2d 290, 295-96 (Minn. 1978).  In such a case, it is not necessary to "artificially count[ ] the number of telephone or mail exchanges required to complete the transaction."  Id. at 295.  Instead, the "nature and quality of contact becomes dispositive."  Id. (emphasis omitted).

Here, appellant had an unspecified number of e-mail, telephone, and fax contacts with Maslonka.  He had one telephone call with Feller.  Appellant contracted to purchase the boat from respondents Feller and Marjac on a 48-month installment contract, and Gulf Breeze guaranteed the payments.  Appellant also made a $10,000 payment to Gulf Breeze as the agent.  These facts show that the cause of action arose out of respondents contacts within the state.  Consequently, we turn to an analysis of the nature and quality of the contact.  Norris, 270 N.W.2d at 295. 

            Nature and quality of contacts

            To address the nature and quality of contacts, we seek to ascertain whether the nonresident defendants purposefully availed themselves of the benefits and protections of Minnesota law.  Dent-Air, Inc. v. Beech Moutain Air Serv., Inc., 332 N.W.2d 904, 907 (Minn. 1983).  Respondents will be considered to have "fair warning" of being sued in Minnesota if they "purposefully directed" their actions to the residents of the state.  TRWL Fin. Establishment v. Select Int'l, Inc., 527 N.W.2d 573, 576 (Minn. App. 1995).

Appellant first argues that the nature and quality of the contacts are sufficient to subject respondents to personal jurisdiction because respondents acted together to market the yacht in the stream of commerce.  A state can assert personal jurisdiction over a business that "delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State."  World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98, 100 S. Ct. 559, 567 (1980); accord Juelich, 682 N.W.2d at 571.  Thus, when a manufacturer, who through intermediaries and distributors marketed a product in Minnesota, the nature and quality weighed in favor of jurisdiction.  Rostad v. On-Deck, Inc., 372 N.W.2d 717, 722 (Minn. 1985).  In contrast, where a manufacturer's website was passive and its actions fell short of affirmative efforts to serve the market for its product in the U.S., the factors did not weigh in favor of jurisdiction.  Juelich, 682 N.W.2d at 574.

            Here, appellant does not assert that respondents are manufacturers who sought to distribute their products in Minnesota.  Further, there is no evidence that respondents purposefully directed marketing efforts toward Minnesota.  Instead, appellant learned of Maslonka and Gulf Breeze through third parties and advertisements on the Internet.  There is no showing that Feller or Marjac engaged in any marketing activities within the state.  Appellant has not shown that Minnesota courts acquired personal jurisdiction over respondents under a stream-of-commerce theory because respondents are not manufacturers, and they did not purposefully direct their marketing efforts toward Minnesota.

Next, appellant argues that the nature and quality of the contacts are sufficient to subject respondents to personal jurisdiction because they solicited and negotiated the sales to a Minnesota resident, knowing that the goods (the yacht) would be delivered to and used in Minnesota.  In the case of a single sales transaction, the courts will examine the presence of the nonresident defendants in the state, such as whether they conducted business activities, engaged in advertising or distribution, maintained an office, or had employees or agents in the state, to determine whether these factors support the exercise of jurisdiction over the defendants.  Bellboy Seafood Corp. v. Kent Trading Corp., 484 N.W.2d 796, 796 (Minn. 1992).  In this case, there is no claim that any of the respondents conducted any activities within Minnesota, apart from the sales transaction at issue.

            The court will also consider whether the nonresident defendants were brought into contact incidentally through the unilateral activity of the plaintiff or whether either party was the aggressor in the action.  Dent-Air, 332 N.W.2d at 907-08.  But notwithstanding which party was the aggressor initially, if there are "subsequent interstate communications by [the] nonresident seller demonstrate[ing] an eagerness to enter a business transaction," this will be considered "equivalent to acting as the aggressor."  Viking Eng'g & Dev., Inc. v. R.S.B. Enterprises, Inc., 608 N.W.2d 166, 170 (Minn. App. 2000), review denied (Minn. May 23, 2000).  According to appellant, he contacted Maslonka and Gulf Breeze as a result of contacts he had with third parties as well as advertisements that were posted on the Internet.  Appellant learned that Feller's boat was for sale from Maslonka, and he paid a $10,000 commission to Maslonka at the time of the sale.  After the initial contact by appellant, there were unspecified communications by e-mail, telephone, and fax, primarily between appellant and Maslonka, as well as one telephone call to Feller.  These facts do not show that the nonresident respondents were the aggressors such that personal jurisdiction may be asserted over them.

Appellant also notes that he was to pay Feller in 48 monthly installments, and that his payments were guaranteed by Gulf Breeze to show that the nature and quality of the contacts are sufficient to establish personal jurisdiction.  Personal jurisdiction was found over a nonresident based on a single transaction in which the defendant signed a guaranty in Illinois of a loan made in Minnesota to a Minnesota resident.  Northwestern Nat'l Bank of St. Paul v. Kratt, 303 Minn. 256, 257-58, 226 N.W.2d 910, 911-12 (1975).  But there, the defendant also discussed the mortgage on the phone with bank officials and attended meetings in Minnesota.  Id. at 257, 226 N.W.2d at 912.  Here, as discussed above, the contacts with the state are minimal.  Where a nonresident participated in a "single, isolated loan renewal transaction," the court cited the "element of active inducement of a Minnesota resident to enter a transaction to its detriment" that justified subjecting them to personal jurisdiction in Minnesota.  Norris, 270 N.W.2d at 295, 297.  In contrast, the "element of active inducement" has not been shown here.

Finally, appellant contends that the nature and quality of the contacts support personal jurisdiction because in the event that he defaulted and respondents obtained a judgment against him in Utah, they would ultimately have to seek relief in a Minnesota court to enforce the judgment.  He contends they cannot deny this same right to him.  Appellant has not cited legal support for this theory and it does not demonstrate that the nature and quality of contacts are such that Minnesota courts may assert personal jurisdiction over respondents.

Source and connection of those contacts to cause of action

            The third factor in determining whether the requisite minimum contacts exist is "the connection of the cause of action with these contacts."  Juehlich, 682 N.W.2d at 570.  In this case, the contacts led to the contract, which was the basis for this action, and show a proper connection.  Dent-Air, 332 N.W.2d at 908.

            Summary

            Applying the five-factor test to the record before us supports the determination of the district court.  See Juelich, 682 N.W.2d at 570.  First, appellant had a minimal number of contacts with Maslonka connected to the cause of action, including an unspecified number of contacts via e-mail, telephone, and fax transmissions.  He had only one telephone call with Feller.  He signed the contract, paid a commission to Maslonka and Gulf Breeze, and accepted delivery of the yacht.  Second, the nature and quality of contacts were limited; respondents did not purposefully direct marketing efforts toward Minnesota, they did not enter the state, they did not have an office or employees here, and there was no evidence that respondents acted as agressors in the sale.  Third, the cause of action was connected to the contacts.  Fourth, the interest of the state in providing a forum, is not considered a "contact," and fifth, the convenience of the parties does not become relevant unless sufficient contacts are established.  Sherburne County, 426 N.W.2d at 868.  Respondents did not avail themselves of the benefits and protections of Minnesota law, and there are insufficient minimum contacts for Minnesota courts to assert personal jurisdiction over them.  In light of our decision, we do not reach the issue of whether arbitration is required under the contract.

We affirm the district court's decision dismissing the action for lack of personal jurisdiction over the nonresident respondents.

            Affirmed.

[1] Respondents Maslonka and Gulf Breeze did not file a brief, but this matter will be decided on the merits pursuant to Minn. R. Civ. App. P. 142.03 as to these respondents.