495 N.W.2d 408 (Minn. 1992), C0-91-1015, Valspar Corp. v. Lukken Color Corp.

Docket Nº:C0-91-1015.
Citation:495 N.W.2d 408
Opinion Judge:The opinion of the court was delivered by: Tomljanovich
Party Name:VALSPAR CORPORATION, a Delaware corporation, Petitioner, Appellant, v. LUKKEN COLOR CORPORATION, a Delaware corporation, Respondent.
Attorney:Kent G. Harbison, Richard D. Snyder, Fredrikson & Byron, P.a., 1100 International Centre, 900 2nd Avenue South, Minneapolis, MN 55402, for Appellant.
Case Date:December 24, 1992
Court:Supreme Court of Minnesota
 
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495 N.W.2d 408 (Minn. 1992)

VALSPAR CORPORATION, a Delaware corporation, Petitioner, Appellant,

v.

LUKKEN COLOR CORPORATION, a Delaware corporation, Respondent.

No. C0-91-1015.

Supreme Court of Minnesota.

December 24, 1992

Rehearing Denied March 2, 1993.

Syllabus by the Court

1. Personal jurisdiction pursuant to the Minnesota long-arm statute extends as far as the Due Process Clause of the United States Constitution allows, and Minn.Stat. § 543.19, subd. 3, does not place more restrictive limits on the exercise of personal jurisdiction over nonresident defendants by Minnesota courts than those of the United States Constitution.

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2. If a court has personal jurisdiction over a nonresident for purposes of one contract, it also has jurisdiction over the nonresident for purposes of related contracts.

3. In a close case, trial courts should resolve doubts in favor of retention of personal jurisdiction.

Kent G. Harbison, Richard D. Snyder, Fredrikson & Byron, P.A., Minneapolis, for petitioner, appellant.

Edward J. Pluimer, Dorsey & Whitney, Minneapolis, and John Timbers, Stamford, CT, for respondent.

Heard and decided by the court en banc.

TOMLJANOVICH, Justice.

We are asked to decide the reach of the Minnesota long-arm statute, Minn.Stat. § 543.19 (1990). Specifically, we must decide whether Minn.Stat. § 543.19, subd. 3 curtails the power of Minnesota courts to exercise personal jurisdiction over nonresident defendants to a greater extent than the restrictions placed on its exercise by the Due Process Clause of the United States Constitution. We hold that it does not.

Appellant Valspar Corporation ("Valspar") is a Delaware corporation with its headquarters in Minneapolis. It manufactures paint and other coating and staining products. Respondent Lukken Color Corporation ("Lukken") is a Delaware corporation with its principal place of business in Greenwich, Connecticut.

In September 1988, Lukken approached the McCloskey Corporation ("McCloskey") in hopes that McCloskey could be persuaded to license its water-based wood stain formula. McCloskey is a Pennsylvania corporation with headquarters in Philadelphia; it sells paints, stains and other products. McCloskey expressed interest in marketing Lukken's formula. Lukken agreed to disclose the formula to McCloskey if McCloskey signed a confidentiality agreement in which it promised it would not use the information Lukken disclosed to it for any reason other than technical or marketing evaluation. This confidentiality agreement had a five year term. In November 1988, Lukken and McCloskey entered into an option agreement that incorporated the prior confidentiality agreement. For purposes of this opinion, we refer to this agreement incorporating the prior confidentiality agreement as the "McCloskey-Lukken agreement." This agreement contained a clause requiring that any disputes pursuant to it be arbitrated in Connecticut.

In January 1989, McCloskey informed Lukken that the negotiations regarding licensure of the woodstaining formula would have to stop because Valspar might be purchasing McCloskey. In addition, McCloskey told Lukken that it had already disclosed some of Lukken's confidential information to Valspar as a potential asset.

Lukken quickly wrote Valspar's St. Paul headquarters to inquire if Valspar might be interested in licensing Lukken's woodstaining formula. Along with the letter, Lukken sent a confidentiality agreement for Valspar's signature. Valspar eventually did sign a confidentiality agreement with Lukken, but not until August 1989 (the "Valspar-Lukken agreement"). The signed agreement is similar to the McCloskey-Lukken agreement; a notable difference is that, unlike the McCloskey-Lukken agreement, it does not contain an arbitration clause.

In the summer of 1989, Valspar purchased McCloskey's assets as contemplated. In July 1989, Lukken representatives traveled to Minneapolis to present Lukken's formula and licensing proposal to Valspar officials. After the sales presentation, Valspar executives informed the Lukken representatives that Valspar was no longer interested in licensing the formula.

In 1990, Valspar began marketing a new line of water-based stains. Lukken contacted Valspar, claiming that the new line was based on Lukken's confidential formula. Lukken threatened to sue Valspar, unless Valspar agreed to pay Lukken for the use of the formula. In response to the threat of litigation, Valspar brought these declaratory judgment actions, asking the

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trial court to declare that Valspar had neither misappropriated Lukken's formula nor breached the McCloskey-Lukken or Valspar-Lukken agreements.

Lukken mounted a two-pronged defense. It demanded that the matter be arbitrated in Connecticut, pursuant to the provision in the McCloskey-Lukken agreement, requesting both injunctive relief and damages against Valspar. Lukken also brought a motion pursuant to Rule 12.02(b) of the Minnesota Rules of Civil Procedure requesting that both declaratory judgment actions be dismissed for lack of personal jurisdiction. In the alternative, Lukken asked the court to issue an order compelling the Connecticut arbitration.

The trial court denied Lukken's motion to dismiss Valspar's declaratory judgment action regarding Valspar-Lukken agreement. It reasoned that, in negotiating the agreement, Lukken officials had contacted Valspar's headquarters in Minnesota. Later, Lukken officials had traveled to...

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