Gray Line Tours v. Reynolds Electrical & Engineering Co.

• Decision Date: 05 June 1987
• Citation: 193 Cal.App.3d 190,238 Cal.Rptr. 419
• Court: California Court of Appeals Court of Appeals
• Parties: GRAY LINE TOURS OF SOUTHERN NEVADA, a corporation, Plaintiff and Appellant, v. REYNOLDS ELECTRICAL AND ENGINEERING COMPANY, INC., a corporation, Defendant and Respondent. B023439.

Page 419

238 Cal.Rptr. 419

193 Cal.App.3d 190

GRAY LINE TOURS OF SOUTHERN NEVADA, a corporation, Plaintiff and Appellant, v. REYNOLDS ELECTRICAL AND ENGINEERING COMPANY, INC., a corporation, Defendant and Respondent.

B023439.

Court of Appeal, Second District, Division 2, California.

June 5, 1987.

Latham & Watkins, Robert A. Long and Barbara M. Scheper, Los Angeles, for plaintiff and appellant.

Arthur L. Williams, Jr., Los Angeles, for defendant and respondent.

GATES, Associate Justice.

Plaintiff Gray Line Tours of Southern Nevada (Gray Line) appeals from the trial court's order quashing service of summons on defendant Reynolds Electrical and Engineering Company, Inc. (Reynolds).

In its complaint of March 5, 1986, Gray Line alleged Reynolds was guilty of negligent and intentional misrepresentations and breach of implied contract in connection with its issuance of a request for proposal and award of a subcontract to a carrier other than Gray Line to " 'operate and maintain an uninterrupted commuter bus transportation system between Las Vegas, Nevada; Pahrump, Nevada; and points within the Nevada Test Site and charters within the state of Nevada or elsewhere.' "

The determinative facts are not disputed. Reynolds is a Texas corporation whose principal place of business is in Nevada. It operates as a support contractor for the Department of Energy at the Nevada Test Site and the Tonopah Test Range in Nevada and "has responsibility for multifaceted functions including construction, maintenance, radiological science, medical services, housing, motor pool operations and area ancillary functions." It also participates in drilling and mining. Each of these activities is conducted within the state of Nevada and all of Reynolds' more than 5,000 employees work in that state.

Pursuant to its contract with the Department of Energy, Reynolds issued a request for proposal on April 5, 1985, to procure bus transportation services for the employees of the Nevada Test Site. These services were to be performed wholly within the State of Nevada. One of the proposals evaluated by Reynolds' Source Evaluation Board (SEB) was submitted by Gray Line, a Nevada corporation headquartered in Las Vegas. The proposal was received in Nevada and all the SEB's inspections, evaluations and discussions concerning Gray Line's proposal took place in Nevada. Although Gray Line's correspondence indicated its parent company stood "ready to commit its financial resources to enable Gray Line to purchase [the necessary buses]," ¹ no "member of the SEB visited California for the inspection of equipment, facilities, accounting records, administrative offices or sources related to the proposal of Gray Line...."

Reynolds has been qualified to do intrastate business in California since October 29, 1951. Beginning in approximately 1970, however, its contacts with this state have been extremely limited. It occasionally employs structural ironworkers to fulfill its contractual obligations at the Tonopah Test Range. The union hall which has jurisdiction over these workers is located in Fresno, California, and the union's rules require that all employees be hired through the California Local, whether they are California or Nevada residents.

After our Supreme Court in 1966 determined that California workers' compensation laws were applicable to those ironworkers who are California residents (Reynolds Elec. etc. Co. v. Workmen's Comp. App. Bd. (1966) 65 Cal.2d 429, 55 Cal.Rptr. 248, 421 P.2d 96; Reynolds Elec. etc. Co. v. Workmen's Comp. App. Bd. (1966) 65 Cal.2d 438, 55 Cal.Rptr. 254, 421 P.2d 102), Reynolds sought certification as a self-insurer. In order to receive such certification, it was required to provide proof of its authority to engage in the transaction of intrastate business in this state, to maintain a business license and to name an agent for service of process in Workers' Compensation matters. It designated the C.T. Corporation of Los Angeles in this capacity.

A California court may exercise jurisdiction over nonresidents on any basis not inconsistent with the federal or state Constitutions. (Code Civ.Proc., § 410.10.) In determining whether a particular exercise of jurisdiction is consistent with due process, "the inquiry must focus on 'the relationship among the defendant, the forum, and the litigation.' [Citation.]" (Rush v. Savchuk (1980) 444 U.S. 320, 327, 100 S.Ct. 571, 577, 62 L.Ed.2d 516.) If a nonresident corporation's activities are sufficiently wide-ranging, systematic and continuous, it may be subject to jurisdiction within the state on all causes of action asserted against it. (Internat. Shoe Co. v. Washington (1945) 326 U.S. 310, 318, 66 S.Ct. 154, 159, 90 L.Ed. 95; Secrest Machine Corp. v. Superior Court (1983) 33 Cal.3d 664, 669, 190 Cal.Rptr. 175, 660 P.2d 399; Buckeye Boiler Co. v. Superior Court (1969) 71 Cal.2d 893, 898-899, 80 Cal.Rptr. 113, 458 P.2d 57.) On the other hand, where the activity is less extensive, the cause of action "must arise out of or be connected with the defendant's forum-related activity." (Buckeye Boiler, supra, 71 Cal.2d at p. 899, 80 Cal.Rptr. 113, 458 P.2d 57; Secrest, supra, 33 Cal.3d at p. 669, 190 Cal.Rptr. 175, 660 P.2d 399.)

In the instant case neither of the parties are residents of California. Though Reynolds has conducted business here over a long period of time, its activities since 1970 certainly cannot be characterized as pervasive. Moreover, the events which gave rise to Gray Line's cause of action occurred exclusively in Nevada and were completely unrelated to Reynolds' forum-related contacts. Under these circumstances, there is no justification for exercising even limited jurisdiction over the company.

Gray Line urges, however, that Reynolds' designation of an agent for service of process and its qualification to do business in California are alone sufficient to permit an exercise of general jurisdiction. ² In support of this position Gray Line points out that the Judicial Council in its comment to Code of Civil Procedure section 410.10 declared: "A state has power to exercise judicial jurisdiction over a foreign corporation which has authorized...