B.T. Metal Works v. United Die & Manufacturing Co. , 323 Mont. 308 ( 2004 )

No. 03-287
IN THE SUPREME COURT OF THE STATE OF MONTANA
2004 MT 286B.T. METAL WORKS and DARYL BOYD, D.B.A.,
Plaintiff and Appellant,
v.
UNITED DIE and MANUFACTURING CO.,
Respondent and Respondent.
APPEAL FROM: District Court of the Fifteenth Judicial District,
In and for the County of Roosevelt, Cause No. DV 2002-46
The Honorable Richard A. Simonton, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Terrance L. Toavs, Attorney at Law, Wolf Point, Montana; John Fredericks
III, Attorney at Law, Louisville, Colorado
For Respondent:
Laura Christoffersen, Christoffersen & Knierim, Culbertson, Montana
Submitted on Briefs: September 18, 2003
Decided: October 19, 2004
Filed:
__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.
¶1 Daryl Boyd, d/b/a B.T. Metalworks (“Boyd”), appeals from an Order of the Montana
Fifteenth Judicial District Court, Roosevelt County, in which the court dismissed his lawsuit
against United Die and Manufacturing Company (“United Die”) for lack of personal
jurisdiction. Boyd, a Montana resident, filed a complaint against United Die, an Ohio
corporation, alleging that United Die intentionally interfered with a business relationship;
breached its fiduciary duty to maintain confidentiality of cost information and drawings; and
misappropriated Boyd’s trade secrets, including cost information, drawings, and product
designs. The District Court concluded that, under Rule 4B, M.R.Civ.P., it did not have
general or specific jurisdiction over United Die. We reverse and remand.
ISSUES
¶2 1. Did the District Court err when it concluded that United Die was not subject to the
general jurisdiction of the Montana courts?
¶3 2. Did the District Court err when it concluded that United Die was not subject to
specific jurisdiction under Montana’s long-arm statute?
¶4 Because we have concluded that Issue Two is dispositive, we do not address Issue
One.
FACTUAL AND PROCEDURAL BACKGROUND
¶5 Since 1989, Boyd has entered into various contracts with A&S Tribal Industries
(“A&S”), a corporation chartered under the laws of the Assiniboine and Sioux Tribes of the
Fort Peck Reservation with a principal place of business in Poplar, Montana, on the Fort
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Peck Reservation. Under the contracts, Boyd supplied A&S with metal latches for medical
chests which A&S manufactures.
¶6 Boyd was located in Tennessee at the time he began his relationship with A&S. He
contracted with United Die to produce the latches in accordance with drawings and other
technical information which Boyd supplied to United Die, and from which United Die tooled
three dies at Boyd’s direction for the manufacture of the latches. Boyd paid United Die
approximately $22,000 for the tooling and dies, which were owned by Boyd but kept at
United Die’s manufacturing facility in Ohio. United Die shipped the latch parts to Boyd,
who assembled the latches before forwarding them to A&S.
¶7 In 1993, Boyd relocated to Helena, Montana. In 1996, Boyd entered into a new
contract with A&S, and Boyd changed his arrangement with United Die. United Die began
to assemble the latches and ship them directly to A&S. Under this arrangement, United Die
sent its invoices to Boyd and the latches to A&S. From 1996 until 2001, United Die fulfilled
twenty similar purchase orders for Boyd.
¶8 Boyd alleges that in 1997, United Die included a copy of its invoice in a shipment to
A&S. The invoice set forth Boyd’s cost information and enabled A&S to calculate Boyd’s
profit margin. Soon after this incident, a United Die representative called Boyd and offered
to buy his latch tooling, and pay Boyd a commission on further latch sales to A&S. Boyd
refused, and his business relationship with United Die continued in the same manner as it
had been conducted since 1996.
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¶9 In early 2001, Boyd removed his tooling and dies from United Die’s plant and
contracted with another manufacturer for production of the latches. On April 19, 2001,
United Die allegedly contacted A&S and stated its intention to bid on A&S’s next latch
manufacturing contract. A&S requested a formal quote; United Die submitted one that
afternoon. In October 2001, A&S contacted United Die to inquire if its price quote from
April still applied. United Die stated that it would honor the price it quoted in April. A&S
also contacted Boyd and requested a price quote. A&S ultimately awarded the new contract
to United Die because of its lower quoted price.
¶10 Boyd alleges that United Die wrongfully retained copies of the drawings which he had
submitted to them for the construction of his tooling and dies, and that United Die used those
drawings to construct new tooling and dies to manufacture latches for A&S. He filed a
Complaint in the Fifteenth Judicial District Court, Roosevelt County, alleging Intentional
Interference with a Business Relationship, Breach of Fiduciary Duty to Maintain Confidence,
and Misappropriation of Trade Secrets.
¶11 United Die filed a Motion to Dismiss and Brief in Support citing lack of personal and
subject matter jurisdiction. Pursuant to Rule 4B, M.R.Civ.P., it claimed that general
jurisdiction did not exist because United Die did not have continuous and systematic contacts
with Montana; and that specific jurisdiction did not exist because Boyd initiated contact with
United Die at United Die’s place of business in Ohio.
¶12 The District Court concluded that general jurisdiction did not exist over United Die
because the company was not “found within” Montana, and that United Die had insufficient
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contacts with Montana for the state to exercise specific jurisdiction under its long-arm
provisions. In reaching this conclusion, the District Court found that Boyd’s relationship
with United Die began when Boyd was a Tennessee resident, that Boyd provided United Die
with the drawings necessary for the tooling in Ohio, that the manufacturing process was
begun and completed in Ohio, and that if United Die has wrongfully retained Boyd’s
drawings, it has done so in Ohio.
¶13 The District Court concluded that it had neither general nor specific jurisdiction over
United Die. From this Order, Boyd timely appeals.
STANDARD OF REVIEW
¶14 We review a district court’s findings of fact to ascertain whether they are clearly
erroneous. Seal v. Hart, 2002 MT 149, ¶ 13, 310 Mont. 307, ¶ 13, 50 P.3d 522, ¶ 13
(citation omitted). A finding is clearly erroneous if it is not supported by substantial
evidence, if the trial court misapprehended the effect of the evidence, or if our review of the
record convinces us that the district court made a mistake. Seal, ¶ 13 (citation omitted). A
district court’s determination that it lacks jurisdiction is a conclusion of law which we review
to determine whether the court’s interpretation of the law is correct. Seal, ¶ 13 (citation
omitted).
DISCUSSION
¶15 Did the District Court err when it concluded that United Die was not subject to
specific jurisdiction under Montana’s long-arm statute?
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¶16 Boyd argues that United Die is subject to specific jurisdiction under one or more of
the provisions of Montana’s long-arm statute, found at Rule 4B(1), M.R.Civ.P. That Rule
provides:
All persons found within the state of Montana are subject to the jurisdiction
of the courts of this state. In addition, any person is subject to the jurisdiction
of the courts of this state as to any claim for relief arising from the doing
personally, through an employee, or through an agent, of any of the following
acts:
(a) the transaction of any business within this state;
(b) the commission of any act which results in accrual within this state of a tort
action; [or]
...
(e) entering into a contract for services to be rendered or for materials to be
furnished in this state. . . .
For a Montana court to exercise jurisdiction over a nonresident defendant, two questions
must be considered. (1) Does the nonresident defendant come within the provisions of
Montana’s long-arm jurisdiction statute; and (2) would exercise of long-arm jurisdiction over
the nonresident comport with traditional notions of fair play and substantial justice?
Simmons v. State (1983), 206 Mont. 264, 271, 670 P.2d 1372, 1376 (citations omitted). If
we conclude, as a matter of statutory construction, that the nonresident did not engage in any
of the several activities enumerated in our long-arm statute, our analysis ends and we must
decline jurisdiction. However, if the non-resident has done something which potentially
confers jurisdiction, we will advance to the due process component which is ultimately
determinative of the jurisdictional question. Simmons, 206 Mont. at 272, 670 P.2d at 1376.
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Long-Arm Jurisdiction
¶17 Boyd first claims that United Die “transacted business” within the meaning of Rule
4B(1)(a), M.R.Civ.P., and that the District Court erred when it concluded otherwise. Boyd
claims that United Die’s contacts within Montana were understated in the District Court’s
Order, and emphasizes that United Die sold latches to Boyd in Montana under numerous
purchase orders over a span of eight years and later initiated and entered into a contractual
relationship with A&S, another Montana resident.
¶18 United Die responds that it did not transact sufficient business within Montana to have
availed itself of specific jurisdiction under Rule 4B(1)(a), M.R.Civ.P., and that it is entitled
to sue and be sued in it own jurisdiction. United Die claims that its position is supported by
our case law, and cites Edsall Const. Co., Inc. v. Robinson (1991), 246 Mont. 378, 382-83,
804 P.2d 1039, 1042, for the proposition that “interstate communication” in the form of a
telephone call to submit a bid is not sufficient for jurisdiction to attach. United Die further
argues that its situation is factually similar to that which was before this Court in Cimmaron
Corp. v. Smith, 2003 MT 73, 315 Mont. 1, 67 P.3d 258, in which we found that a respondent
collection agency located in Pennsylvania did not have sufficient contacts with Montana to
be subject to specific jurisdiction.
¶19 In its Order, the District Court found that United Die supplied the latches to A&S for
Boyd’s benefit, but that copies of United Die’s pricing were sent to A&S with a shipment
of latches. It also found that United Die contacted A&S to solicit its business and that A&S
later contacted United Die and Boyd to request bids. The District Court further found that
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United Die bid on and was ultimately awarded the contract with A&S, and that the
information supplied by Boyd which United Die allegedly misappropriated was supplied
while Boyd was a Tennessee resident.
¶20 Relying on Threlkeld v. Colorado, 2000 MT 369, ¶ 25, 303 Mont. 432, ¶ 25, 16 P.3d
359, ¶ 25, the District Court concluded that “interstate communication” by itself was not
sufficient contact to cause United Die to be subject to jurisdiction in Montana under Rule
4B(1)(a), M.R.Civ.P. The District Court distinguished the cases on which Boyd relied on
the grounds that the cases he cited were product liability or breach of warranty cases.
¶21 Boyd notes in his Brief that the District Court made these distinctions without
providing an explanation as to how those differences would warrant a separate jurisdictional
analysis. In arguing for specific jurisdiction under Rule 4B(1)(a), M.R.Civ.P., Boyd relied
on Nelson v. San Joaquin Helicopters (1987), 228 Mont. 267, 742 P.2d 447, among other
cases. The District Court distinguished Nelson on the grounds that it was a “bad debt” case,
and further noted that, “it involved a close relationship between a California company and
a Montana company.” As Boyd points out, several key factors for finding jurisdiction in
Nelson are also present here. Nelson, 228 Mont at 269, 742 P.2d at 448. Nelson transported
a broken helicopter to a Montana company, which referred him in turn to a California
company to which Nelson ultimately delivered the helicopter for repair. Nelson, 228 Mont.
at 268-69, 742 P.2d at 448. The repair cost was prohibitive, and a somewhat complicated
trade ensued, in which the California company agreed to purchase the helicopter, but instead
of paying Nelson outright, it transferred a promissory note to him payable by the Montana
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company where he had initially taken the helicopter for repair. Nelson, 228 Mont. at 269,
742 P.2d at 448. The Montana company became insolvent before paying off the note in full,
and Nelson filed suit against the California company which had transferred the note to him.
Nelson, 228 Mont. at 269, 742 P.2d at 448.
¶22 We determined specific jurisdiction existed over the California company, pursuant
to Rule 4B(1)(a), M.R.Civ.P., noting that the defendant’s activities were more extensive than
“a few phone calls back and forth between the parties” and that these activities--which
included two years’ worth of attempts collect a debt against the Montana helicopter repair
company, followed by negotiations with Nelson until Nelson agreed to accept the promissory
note as payment for his helicopter--were sufficient contacts with Montana. Nelson, 228
Mont. at 272, 742 P.2d at 450. In determining jurisdiction, we considered the Montana
relationships the California company had with both Nelson and the Montana helicopter
repair company. Nelson, 228 Mont. at 272, 742 P.2d at 450.
¶23 In Nelson, the fact that the plaintiff initiated a business relationship with the out-of-
state defendant was not ultimately determinative of the jurisdiction question. Here, Boyd’s
relationship with United Die spanned many years and multiple transactions, and United Die
subsequently allegedly interjected itself into an ongoing business relationship between Boyd
and A&S in Montana. Moreover, Boyd’s relationship with United Die is more extensive
than Nelson’s relationship with the California helicopter repair company, which
encompassed only a single transaction. Nelson, 228 Mont. at 272, 742 P.2d at 450. Also,
the California company’s relationship with one Montana resident or another spanned two
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years, Nelson, 228 Mont. at 272, 742 P.2d at 450, while in United Die’s case, it spanned at
least eight years and a series of negotiated contracts and fulfilled purchase orders.
¶24 However, United Die argues that the situation at hand is less similar to Nelson than
it is to Cimmaron and Edsall, two cases in which we found that Montana did not have
specific jurisdiction over the non-resident defendants. Cimmaron, ¶ 20; Edsall, 246 Mont.
at 383, 804 P.2d at 1043. In Edsall, we held that telephone calls initiated by a Montana
company soliciting a bid from a Utah company to install tile in Utah, were insufficient to
extend specific jurisdiction over the Utah company. We noted that the defendant Utah
company’s only tie to Montana was that it was the home state of the plaintiff; without more,
that did not justify specific jurisdiction in Montana. Edsall, 246 Mont. at 382-83, 804 P.2d
at 1042.
¶25 Edsall is readily distinguishable from the situation at hand. In Edsall, the Utah
company did not deliver goods or services to Montana. Edsall, 246 Mont. at 383, 804 P.2d
at 1042. Its only connection with Montana was a request from a Montana resident that the
Utah company bid on a single job to be performed entirely within Utah. Edsall, 246 Mont.
at 383, 804 P.2d at 1042. In the case at hand, at least twenty requests were made from a
Montana resident for United Die to manufacture latches. United Die initiated contact with
another Montana resident on at least one occasion and submitted a price quote, and later, a
bid to that Montana resident. United Die shipped its product into Montana on approximately
twenty-two separate occasions. To suggest that United Die’s only contact with Montana is
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that plaintiff Boyd is a Montana resident is inconsistent with the facts of this case. Thus,
Edsall is inapposite.
¶26 In Cimmaron, Budget, a Pennsylvania corporation, entered into a collection agreement
with Cimmaron, a Montana corporation. Cimmaron, ¶ 4. In determining whether specific
jurisdiction over Budget was to be had in Montana, the District Court found that: Budget’s
only contact with Montana was its agreements with Cimmaron; the services Budget was to
perform for Cimmaron were to be performed in Pennsylvania; Cimmaron sent its account
information to Pennsylvania in order for Budget to perform its services there; and, all of the
claims made by Cimmaron in its Complaint pertained to actions Budget took, or failed to
take, in Pennsylvania. Cimmaron, ¶ 15.
¶27 Boyd argues that Cimmaron is distinguishable because it involved a contract for
services to be performed in another state, while the situation at hand involves a contract--or
multiple contracts--for goods to be manufactured for and delivered to a Montana resident.
United Die asserts that it rendered “services” in Ohio. However, United Die overlooks the
fact that in Cimmaron, Budget provided a service--debt collection--which occurred entirely
within Pennsylvania, whereas United Die provided a product--latches--which were
specifically manufactured for and shipped to Montana residents. Thus, we conclude
Cimmaron is less factually similar to this case than is Nelson.
¶28 Finally, relying on Spectrum Pool Products, Inc. v. MW Golden, Inc., 1998 MT 283,
291 Mont. 439, 968 P.2d 728, United Die argues that an out-of-state company must make
the initial contact with a Montana resident to do business for jurisdiction to attach, and
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transaction of unsolicited business does not give rise to jurisdiction. It claims that since
Boyd initially contacted United Die, Ohio is the proper jurisdiction. While in Spectrum
Pool, it is true that the out-of-state company did make the initial contact, we did not hold that
the initial contact is determinative of jurisdiction. Spectrum Pool, ¶ 21. Furthermore,
whether Ohio may be a proper jurisdiction for this action has no bearing on whether
jurisdiction may also be had in Montana. See Spectrum Pool, ¶ 20 (determining forum to be
proper in Montana does not mean another state would not also be a proper forum).
¶29 In the case before us, we determine that United Die’s contacts with Montana were
more extensive than the contacts held by the defendants in Edsall and Cimmaron, and are
closer qualitatively and quantitatively to the contacts which we found sufficient to grant
jurisdiction in Nelson. Thus, we conclude that United Die had sufficient contacts with
Montana for it to be subject to specific jurisdiction pursuant to Rule 4B(1)(a), M.R.Civ.P.
¶30 Boyd further argues that United Die’s actions resulted in the accrual of a tort action
in Montana, and thus Montana has specific jurisdiction over United Die pursuant to Rule
4B(1)(b), M.R.Civ.P. He points out that his Complaint alleged Intentional Interference with
a Business Relationship, Breach of Fiduciary Duty to Maintain Confidence, and
Misappropriation of Trade Secrets, and that these claims are all torts arising out of United
Die’s ongoing contractual relationships in Montana with Boyd and A&S.
¶31 He also argues that United Die is subject to specific jurisdiction under Rule 4B(1)(e),
M.R.Civ.P., in that it entered, “into a contract for services to be rendered or for materials to
be furnished in this state.” Arguably, both Rule 4B(1)(b) and (e), M.R.Civ.P., would have
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application here, given the facts before us. However, there is no need for us to reach these
arguments, as the determination of jurisdiction under one of the several grounds for long-arm
jurisdiction set forth in the statute is all that is needed for a determination of specific
jurisdiction. See Rule 4B(1), M.R.Civ.P.
Due Process
¶32 Having determined that the necessary components exist for Montana to exercise
specific jurisdiction over United Die through the long-arm provisions of Rule 4B(1),
M.R.Civ.P., we now must determine whether exercising specific jurisdiction over United Die
comports with traditional notions of fair play and substantial justice as embodied in the due
process clause. Simmons, 206 Mont. at 274, 670 P.2d at 1377 (citations omitted).
¶33 Boyd argues that United Die has engaged in numerous activities within this forum
which have availed it of jurisdiction in Montana, citing United Die’s participation in an
ongoing business relationship with Boyd, its delivery of goods to both Boyd and A&S, its
numerous contracts with Boyd and A&S, and the revenue which United Die generated from
these Montana contracts.
¶34 In Simmons, we explained that the Due Process Clause of the Fourteenth Amendment
to the United States Constitution limits the power of a state court to render a valid personal
judgment against a non-resident defendant, and that a state may exercise personal jurisdiction
over a non-resident only if minimum contacts between the defendant and the forum state
exist. Simmons, 206 Mont. at 272-73, 670 P.2d 1376-77 (citations omitted). We adopted
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the Ninth Circuit test for determining whether the exercise of jurisdiction comports with due
process:
(1) The nonresident 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 its laws.
(2) The claim must be one which arises out of or results from the defendant’s
forum-related activities.
(3) Exercise of jurisdiction must be reasonable.
Simmons, 206 Mont. at 276, 670 P.2d at 1378 (citing Data Disc, Inc. v. Systems Tech.
Assoc., Inc. (9th Cir. 1977), 557 F.2d 1280, 1287). We have further held that a plaintiff need
not demonstrate each of the three elements to establish jurisdiction; once the plaintiff
demonstrates that a defendant has purposefully availed itself of the privilege of conducting
activities in Montana, a presumption of reasonableness arises, which a defendant can
overcome only by presenting a compelling case that jurisdiction would be unreasonable.
Simmons Oil Corp. v. Holly Corp. (1990), 244 Mont. 75, 85, 796 P.2d 189, 195 (citation
omitted). Jurisdiction may also be established where a defendant has created sufficient
contacts to allow the state to exercise personal jurisdiction, if such exercise is sufficiently
reasonable. Simmons Oil, 244 Mont. at 86, 796 P.2d at 195.
¶35 A nonresident defendant purposefully avails itself of the benefits and protections of
the laws of the forum state when it takes voluntary action designed to have an effect in the
forum. Conversely, a defendant does not purposefully avail itself of the forum’s laws when
its only contacts with the forum are random, fortuitous, attenuated, or due to the unilateral
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activity of a third party. Simmons Oil, 244 Mont. at 86, 795 P.2d at 195. The defendant that
invokes the laws of the forum state by purposefully availing itself of the privilege of
conducting activities within the forum should reasonably anticipate being haled into court
in the forum state, and the exercise of jurisdiction over such a defendant is fundamentally
fair. Simmons Oil, 244 Mont. at 86, 795 P.2d at 195.
¶36 In the situation at hand, we cannot agree that United Die’s entry into Montana was
minimal. United Die knowingly shipped its product to Montana on a number of occasions.
It negotiated purchase orders with both Boyd and A&S and it initiated a business relationship
with A&S by calling A&S in Montana and offering A&S a price quote for latches. Given
the many years of its relationship with Boyd after Boyd moved to Montana and the
affirmative steps that United Die took to initiate a business relationship with A&S, we
conclude that United Die purposefully availed itself of the privilege of conducting activities
within this state.
¶37 Taking into account the extent of United Die’s dealings within Montana, the chain of
events which led up to Boyd’s filing this lawsuit, and the test of whether it would be
reasonable for United Die to have to defend itself as a result of this transaction in Montana,
we conclude that exercising specific jurisdiction over United Die through the long-arm
provisions of Rule 4B(1), M.R.Civ.P., would not offend traditional notions of fair play and
substantial justice as embodied in the due process clause. As noted above, a plaintiff need
demonstrate only that a defendant has purposefully availed itself of such privilege for a
presumption of reasonableness to arise. Boyd having met this burden, we need not address
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the remaining elements in determining whether the exercise of jurisdiction comports with due
process. See Simmons Oil, 244 Mont. at 85, 796 P.2d at 195.
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CONCLUSION
¶38 For the foregoing reasons, we reverse and remand to the District Court for further
proceedings not inconsistent with this Opinion.
/S/ PATRICIA O. COTTER
We Concur:
/S/ KARLA M. GRAY
/S/ JAMES C. NELSON
/S/ JOHN WARNER
/S/ JIM RICE
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