Sunnarborg Well Drilling, Inc., Appellant, vs. Thompson's Well Pump & Drilling, Inc., Respondent.

Sunnarborg Well Drilling, Inc., Appellant, vs. Thompson's Well Pump & Drilling, Inc., Respondent. A04-2159, Court of Appeals Unpublished, June 7, 2005.

This opinion will be unpublished and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

A04-2159

 

Sunnarborg Well Drilling, Inc.,

Appellant,

 

vs.

 

Thompson's Well Pump & Drilling, Inc.,

Respondent.

 

Filed June 7, 2005

Affirmed

Stoneburner, Judge

 

Carlton County District Court

File No. C404508

 

Lara R.M. Nygaard, Maki & Overom, Chtd., Suite 402, 31 West Superior Street, Duluth MN 55802 (for appellant)

 

Frederick A. Dudderar, Jr., Kenneth A. Kimber, Hanft Fride, P.A., 1000 U.S. Bank Place, 130 West Superior Street, Duluth, MN 55802-2094 (for respondent)

 

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

U N P U B L I S H E D  O P I N I O N

 

STONEBURNER, Judge

 

            Appellant Sunnarborg Well Drilling, Inc. challenges the district court's dismissal of its action against respondent Thompson's Well Pump & Drilling, Inc. for lack of personal jurisdiction.  Because the district court did not err in determining that Minnesota does not have personal jurisdiction over Thompson, we affirm.

FACTS

 

Appellant Sunnarborg Well Drilling, Inc. (Sunnarborg) is a Minnesota corporation with its principal place of business in Esko, Minnesota.  Respondent Thompson's Well & Drilling, Inc. (Thompson) is a Georgia corporation with its principal place of business in Whitesburg, Georgia.  Thompson drills wells and installs water pumps in Georgia and northeast Alabama.  Thompson has never conducted business, advertised its business activities, maintained offices, agents, or employees, or held assets in Minnesota. 

            In April 2003, Craig Sunnarborg, president of Sunnarborg Well Drilling, Inc., received, by mail, a copy of the National Driller, a free national publication mailed to the well-drilling industry and also available on the Internet at http://www.drilleronline.com.  That issue of the National Driller contained an advertisement placed by Thompson in the classified section that read:

1978 T-64 Schramm Drill Rig Retrofit in 1992, 700/350 Sullair, 8V92 Detroit, compressor has less than 200 hrs., has new chains, sprockets, rotation head, both rotation head motors, main pump, derrick cylinders replaced and sealed. Mtd. on 1978 GMC x/6V53 Detroit, 13 speed trans. 95% tires, new brakes on truck.  New clutch, PP, T.O. bearing. 200' drill rods . . . Asking $55,000 OBO.  770-942-1829

 

Sunnarborg read Thompson's advertisement in the publication and also viewed the advertisement on the Internet at the drilleronline.com website.  Sunnarborg then telephoned Thompson to inquire about the drill rig.  Sunnarborg alleges that during the telephone conversation, Thompson, through its agent, J. Wayne Thompson, informed Sunnarborg that the drill rig "could be DOT'd in Minnesota upon delivery" and further represented that if Sunnarborg repaired or replaced the diesel motor, the drill rig would be ready for drilling.  Thompson sent Sunnarborg some photographs of the drill rig via   e-mail.[1]  Ultimately, Sunnarborg decided to purchase the drill rig.     

            Thompson faxed Sunnarborg a bill of sale, which Sunnarborg signed and return-faxed to Thompson.  Sunnarborg wired $42,000 to Thompson's bank account in Georgia.  Thompson then return-faxed the bill of sale, which included hand-written language that Sunnarborg had "paid in full by wiring money to my account."  Sunnarborg picked up the drill rig in Georgia.  The bill of sale, which is attached to Sunnarborg's complaint, contains the following hand-written notation: "Rig and Truck sold as is with no warranty for the amount of $42,000.00."

            On inspection of the drill rig in Minnesota, Sunnarborg discovered a number of problems and determined that the drill rig would not meet Department of Transportation standards and would not be ready for drilling by merely replacing a motor.  Sunnarborg sued Thompson in Carlton County District Court in Minnesota.  Thompson moved to dismiss for lack of personal jurisdiction, and the district court granted Thompson's motion.  This appeal followed.

D E C I S I O N

Whether personal jurisdiction exists is a question of law.  V.H. v. Estate of Birnbaum, 543 N.W.2d 649, 653 (Minn. 1996).  "When a defendant challenges jurisdiction, the burden is on the plaintiff to prove the minimum contacts necessary to satisfy due process.  At the pretrial stage, . . . the plaintiff need only make a prima facie showing of sufficient . . . activities through the complaint and supporting evidence, which will be taken as true."  Hardrives, Inc. v. City of LaCrosse, Wisconsin, 240 N.W.2d 814, 816 (Minn. 1976) (citation omitted). 

Minnesota courts may exercise personal jurisdiction over a nonresident defendant if the plaintiff meets the requirements of Minnesota's long-arm statute, Minn. Stat.

§ 543.19 (2004), as well as the requirements of due process.  Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 29 (Minn. 1995).  The Minnesota long-arm statute is coextensive with the constitutional limits of due process.  Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410-11 (Minn. 1992).  A plaintiff satisfies due process by showing that the nonresident defendant established "minimum contacts" with the forum state.  Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945).  To establish that Minnesota has personal jurisdiction over a nonresident defendant, therefore, the plaintiff must show that the nonresident defendant has established minimum contacts with Minnesota such that an exercise of jurisdiction comports with "traditional notions of fair play and substantial justice."  Valspar, 495 N.W.2d at 410; Int'l Shoe, 326 U.S. at 316, 66 S. Ct. at 158.

Minnesota courts consider five factors when determining whether a defendant has established minimum contacts with Minnesota:  (1) the quantity of contacts with Minnesota; (2) the nature and quality of the defendant's contacts with Minnesota; (3) the connection between the cause of action and the defendant's contacts; (4) Minnesota's interest in providing a forum; and (5) the convenience of the parties.  Rostad v. On-Deck, Inc., 372 N.W.2d 717, 719-20 (Minn. 1985).  "The first three factors determine whether minimum contacts exist and the last two factors determine whether the exercise of jurisdiction is reasonable according to traditional notions of fair play and substantial justice."  Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565, 570 (Minn. 2004).  The first three factors carry the most weight in the court's overall personal-jurisdiction determination.  Dent-Air, Inc. v. Beech Mountain Air Service, Inc., 332 N.W.2d 904, 907 (Minn. 1983). 

For purposes of establishing personal jurisdiction, a plaintiff may satisfy the minimum-contacts requirement in two contexts: general or specific.  Id.  Sunnarborg concedes that this case relates to specific personal jurisdiction.  "Specific personal jurisdiction exists when the defendant's contacts with the forum state are limited, yet connected with the plaintiff's claim such that the claim arises out of or relates to the defendant's contacts with the forum."  Domtar, 533 N.W.2d at 30.

The district court granted Thompson's motion to dismiss for lack of personal jurisdiction, concluding that "given the nature of the pre-contractual activities of the parties, the location where the sales contract was formed, and the place where the contract was performed, . . . [Thompson] did not ‘purposefully avail itself of the benefits and protection of Minnesota law.'"  The district court further concluded that "the parties' contract for the sale of used equipment [did not] have any substantial connection with the State of Minnesota."

Sunnarborg argues that Thompson "purposefully established minimum contacts with Minnesota by advertising in Minnesota and by transacting business with a Minnesota resident, and by making representations regarding Minnesota law."  Sunnarborg relies on State by Humphrey v. Granite Gate Resorts, Inc., 568 N.W.2d 715 (Minn. App. 1997), review granted (Minn. Oct. 31, 1997) and affirmed 576 N.W.2d 747 (Minn. 1998).  In Granite Gate, we noted that advertising contacts justify the exercise of personal jurisdiction where unlawful or misleading advertisements are the basis of the plaintiff's claims.  Id. at 720.  In that case, the state sued Granite Gate for making false statements in its advertisements and engaging in fraud, misrepresentation, or deceptive practices based on an alleged misrepresentation regarding the legality of the services offered by Granite Gate in Minnesota.  Id.at 717.  We held that, based on the specific facts involved in the case, Granite Gate was "subject to personal jurisdiction in Minnesota because, through their Internet activities they purposefully availed themselves of the privilege of doing business in Minnesota to the extent that the maintenance of an action based on consumer protection statutes does not offend traditional notions of fair play and substantial justice."  Id. at 721.  As discussed below, we conclude that the facts of the case before us are distinguishable from the facts involved in Granite Gate, and Granite Gate does not mandate an exercise of personal jurisdiction in this case.  We now turn to an analysis of the relevant factors in light of the facts of the case before us.

Quantity of Contacts

Sunnarborg does not dispute the fact that the only contact Thompson had with Minnesota prior to selling the drill rig to Sunnarborg consisted of placing an advertisement for the drill rig in a nationally circulated trade magazine and that the advertisement appeared also in the magazine's online edition.  But Sunnarborg relies on Granite Gate to argue that by advertising online, Thompson "solicit[ed] business across the country including in the State of Minnesota" and that "one successful solicitation based on this advertising . . . meets the quantity standard for personal jurisdiction. . ." 

In Granite Gate, however, we determined that the quantity of contacts supported exercising personal jurisdiction in that case because

during a two-week period . . . at least 248 Minnesota computers accessed and received transmissions from [the non-resident party's] websites, . . . computers located in Minnesota are among the 500 computers that most often accessed [the non-resident party's] websites, . . . persons located throughout the United States, including persons in Minnesota, called [the non-resident party] at the numbers advertised on its websites, and . . . [the non-resident party's] mailing list includes the name and address of at least one Minnesota resident.

 

Id. at 718-19.  In the case before us, there is no evidence Thompson established its own website, or that anyone from Minnesota other than Sunnarborg accessed or responded to Thompson's online advertisement that appeared in the magazine's website.  At the hearing on Thompson's motion to dismiss, Sunnarborg described the contacts between Sunnarborg and Thompson as "one overarching transaction" and, as noted above, has conceded that specific personal jurisdiction is the basis of his claim.  We conclude that the quantity of Thompson's contacts is insufficient to favor specific personal jurisdiction.

Nature and Quality of Contacts

  "Where personal jurisdiction is asserted based on a single, isolated transaction, ‘the nature and quality of the contact becomes dispositive.'"  TRWL Fin. Establishment v. Select Int'l, Inc., 527 N.W.2d 573, 576 (Minn. App. 1995) (quoting Marquette Nat'l Bank v. Norris, 270 N.W.2d 290, 295 (Minn. 1978)).  When considering the nature and quality of the contact, courts attempt to determine whether the nonresident defendant availed itself of the benefits and protection of Minnesota law.  Dent-Air, 332 N.W.2d at 907.  A nonresident defendant has "fair warning [of being sued in Minnesota] if it purposefully directed its activities at residents of this state."  TRWL, 527 N.W.2d at 576 (quotation omitted).  But "[i]ncidental contacts as a result of unilateral activity by another party will not satisfy due process."  Id. (citing Dent-Air for the proposition that Minnesota cannot exercise personal jurisdiction over a nonresident defendant-seller where plaintiff-buyer was the aggressor in the transaction at issue).

In Now Foods Corp. v. Madison Equipment Co., Inc., we rejected the proposition that placement of an advertisement in nationally distributed trade publications weighed in favor of exercising personal jurisdiction where the advertising did not appear to have been designed to purposefully avail the advertising party of the benefits and protections of Minnesota law.  386 N.W.2d 363, 367 (Minn. App. 1986).  We find that reasoning applicable to this case and conclude that a single advertisement of a piece of used equipment for sale in a national trade magazine does not indicate any purpose by Thompson to avail itself of the benefits and protections of Minnesota law.

But Sunnarborg cites Granite Gate, 568 N.W.2d at 719, for the proposition that "Minnesota courts have concluded that defendants who know their message will be broadcast in this state are subject to suit here" and asserts that Thompson was the "aggressor" in the transaction.  In Granite Gate, we determined that Granite Gate made a "clear effort to reach and seek potential profit from Minnesota consumers" on the basis of, among other facts, that Granite Gate's online gambling site was "open to International markets" and advertised its "services with a toll-free number."  Id. at 720.  But, as noted above, there is nothing in Thompson's advertisement that is purposefully directed at Minnesota consumers.  The advertisement did not feature a toll-free number but instead listed Thompson's local number in Whitesberg, Georgia.  And "[t]he traditional notion that a seller solicits customers, advertises, or otherwise initiates business activities does not translate into the notion that, for jurisdictional purposes, a seller is automatically presumed to be the aggressor in every business transaction."  Viking Eng'g & Dev., Inc. v. R.S.B. Enters. Inc., 608 N.W.2d 166, 169 (Minn. App. 2000), review denied (Minn. May 23, 2000).  And we have previously noted that "[a]n isolated sale is especially unlikely to create personal jurisdiction if the nonresident has not targeted the forum state in a marketing campaign . . . and has not placed its goods in the stream of commerce in a manner that makes sales in the forum state foreseeable."  KSTP-FM, LLC v. Specialized Communications, Inc. 602 N.W.2d 919, 924 (Minn. App. 1999) (quotation omitted).

            Other jurisdictions have explored the relationship between internet commerce and specific personal jurisdiction.  For example, Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997), set out what has come to be known as "the Zippo test," which many courts, including the Eighth Circuit, have adopted.  See Lakin v. Prudential Sec., Inc., 348 F.3d 704, 710-711 (8th Cir. 2003).  The test provides that

[a]t one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper.  At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise [of] personal jurisdiction. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site.

 

Id. (quoting Zippo Mfg. Co., 952 F. Supp. at 1124) (emphasis added). 

Thompson's advertisement in the classified section of the trade magazine's online edition is the type of passive posting that is not grounds for the exercise of personal jurisdiction under the Zippo test.  Although Minnesota has not yet adopted the Zippo test, we find the distinction enunciated significant and useful to distinguish the actions of Granite Gate and Thompson.  We conclude that the nature and quality of Thompson's contacts with Minnesota in this case do not weigh in favor of an exercise of specific personal jurisdiction.

Connection Between Cause of Action and Contacts

Sunnarborg asserts that Thompson's misrepresentations and fraudulent statements are the basis for Sunnarborg's claims and cites Granite Gate for the proposition that "[a]dvertising contacts justify the exercise of personal jurisdiction where unlawful or misleading advertisements are the basis of the plaintiff's claims."  568 N.W.2d at 720.  "Advertising contacts can justify the exercise of specific jurisdiction but only where unlawful or misleading advertisements are the basis of the plaintiff's claims."  Marshall v. Inn on Madeline Island, 610 N.W.2d 670, 676 (Minn. App. 2000). 

In Granite Gate, the causes of actiondeceptive trade practices, false advertising, and consumer fraudarose "out of the information that [Granite Gate] posted on their website inviting Internet users to use the on-line gambling service."  568 N.W.2d at 720.  Among other things, that information suggested that Granite Gate's service "will provide sports fans with a legal way to bet on sporting events from anywhere in the world."  Id. at 717.  In the case before us, Sunnarborg's claims of fraudulent misrepresentation and breach of express warranty were not contained in Thompson's advertisement, but allegedly occurred during a telephone conversation initiated by Sunnarborg.  Sunnarborg's cause of action does not arise out of misleading advertising but arises out of pre-contract negotiations initiated by Sunnarborg by telephoning Thompson in Georgia. 

 

The State's Interest

Sunnarborg claims that "Minnesota has an interest in providing a forum for this case as [Thompson] invoked Minnesota law when it warranted that the . . . Drill Rig would meet Minnesota DOT standards."   Sunnarborg again cites Granite Gate for support.  Id. 

In discussing the state's interest in providing a forum in Granite Gate, however, we stated only that Minnesota has a general "interest in providing a forum to enforce its consumer protection laws," which may "support the exercise of jurisdiction over a nonresident defendant when viewed in light of the first three factors."  568 N.W.2d at 721.  But we have also stated that Minnesota's "interest in providing a forum for its residents who have allegedly been wronged" is an interest that "has been de-emphasized in an attempt to slow the inexorable expansion of jurisdiction in state courts."  S.B. Schmidt Paper Co. v. A to Z Paper Co., Inc., 452 N.W.2d 485, 489 (Minn. App. 1990) (citation and quotation omitted).  And as a secondary factor in the overall analysis, the state's interest in providing a forum merits less consideration and must always be considered in light of the first three factors.  TRWL, 527 N.W.2d at 576; Granite Gate, 568 N.W.2d at 721.  Under the facts of this case, Minnesota does not have an interest in providing a forum that overrides the first three factors.

The Convenience of the Parties

Sunnarborg claims that if Thompson "cannot be brought into Minnesota to defend its representations, [Thompson] will not be held accountable for its representations unless a buyer can afford to go to Georgia to institute a cause of action and also bring the equipment back to Georgia."  Again, Sunnarborg claims that "Minnesota is the appropriate forum to litigate this matter as Minnesota Department of Transportation standards are brought into issue."  But Sunnarborg cites no legal authority in support of these claims. 

We may decline to address allegations unsupported by legal analysis or citation.  Ganguli v. University of Minnesota, 512 N.W.2d 918, 919 n.1 (Minn. App. 1994).  And the fact that the interest in providing a forum and convenience weigh in favor of an exercise of jurisdiction is not sufficient to establish personal jurisdiction over a nonresident defendant.  TRWL, 527 N.W.2d at 578.  The United States Supreme Court announced almost 50 years ago that technological advances have made communication and transportation less burdensome with respect to litigating a matter in a foreign tribunal.  Hanson v. Denckla, 357 U.S. 235, 250-51, 78 S. Ct. 1228, 1238 (1958).  Surely, this proposition is as true now as it was then.  Sunnarborg can bring this action in Georgia and is not foreclosed from addressing the alleged wrongs.  And as Thompson points out in its brief, "based on the location of witnesses and evidence, litigating the matter in Minnesota is equally as inconvenient for [Thompson] as it would be for [Sunnarborg] to litigate this matter in Georgia."

Other Matters

            Finally, Sunnarborg claims that the district court improperly reached "the ultimate issues by noting [Thompson's] argument regarding their ‘as is' provision of the contract," arguing that because the district court "must take [Sunnarborg's] allegations as being true, it must find that such clause does not apply, and cannot use the clause as a basis for denying personal jurisdiction." 

We conclude that the district court did not reach the ultimate issues of the case.  In its order, the district court explicitly stated that Thompson merely "claims that they communicated to [Sunnarborg] that they would accept the discounted purchase price with the understanding that the equipment would be sold ‘as is' and with no warranties of any kind and that [Sunnarborg] would arrange and pay for the transportation costs."  Further, the district explicitly stated that Thompson "claims that it was further agreed that no deal would be final until [Sunnarborg] signed and delivered to [Thompson] a written bill of sale and wire-transferred the purchase price to [Thompson's]  account in Georgia."  By stating as much, the district court merely noted [Thompson's] argument regarding their ‘as is' provision of the contract, as Sunnarborg itself has pointed out in its brief on appeal.  There is no indication from the order that the district court based its decision on Thompson's allegations.  The district court merely stated that "given the nature of the pre-contractual activities of the parties . . . [Thompson] did not purposefully avail itself of the benefits and protection of Minnesota law." 

Moreover, where the cause of action arises out of a single transaction and involves a dispute around a contract, the district court, in making its personal-jurisdiction determination, must necessarily address on some level the nature of the contract and the dispute involved.  See Domtar, 533 N.W.2d at 31-32; Marshall, 610 N.W.2d at 676 .  Indeed, the third essential factor in the personal-jurisdiction analysis requires courts to consider the connection between the cause of action and the nonresident defendant's contacts with the forum state.  Rostad, 372 N.W.2d at 719.  Here, the cause of action involves a contract dispute, and it would be difficult for any court to make an adequate determination regarding personal jurisdiction without considering on some level the nature of the pre-contractual activities of the parties. 

            Affirmed.

[1] The parties dispute whether Sunnarborg requested additional photographs.