Aaronson v. Lindsay & Hauer Intern. Ltd.

• Citation: 597 N.W.2d 227,235 Mich.App. 259
• Decision Date: 16 April 1999
• Docket Number: Docket No. 203776
• Parties: , Blue Sky L. Rep. P 74,182 Susan AARONSON, Plaintiff-Appellant, v. LINDSAY & HAUER INTERNATIONAL LTD, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 227

597 N.W.2d 227

235 Mich.App. 259, Blue Sky L. Rep. P 74,182

Susan AARONSON, Plaintiff-Appellant, v. LINDSAY & HAUER INTERNATIONAL LTD, Defendant-Appellee.

Docket No. 203776.

Court of Appeals of Michigan.

Submitted Oct. 6, 1998, at Detroit.

Decided April 16, 1999, at 9:00 a.m.

Released for Publication July 27, 1999.

Marc A. Goldman & Associates, P.C. (by Marc A. Goldman), Farmington Hills, for the plaintiff.

Weisman, Trogan, Young & Schloss, P.C. (by Martin C. Weisman), Bingham Farms, for the defendant.

Before: MICHAEL J. KELLY, P.J., and HOLBROOK, JR., and MURPHY, JJ.

HOLBROOK, JR., J.

Plaintiff appeals as of right from two trial court orders granting summary disposition to defendant. We reverse and remand.

I. Background Facts and Procedural History

Defendant is a Canadian corporation, with offices located in Toronto, Ontario, and New York City, New York. Plaintiff is the widow of Gilbert Aaronson (hereafter Aaronson). In April 1991, Aaronson, who was a Michigan resident, contacted defendant's Arizona agent and requested that defendant's sales literature be mailed to him. Shortly thereafter, Aaronson initiated direct contact with defendant by telephoning defendant's Toronto office. Subsequent communications between Aaronson and defendant were initiated by both parties. Additional sales literature was also mailed to Aaronson from defendant's Toronto office.

From June 1991 to October 1992, Aaronson purchased a total of eighteen gemstones from defendant. The total cost of the gemstones, minus shipping and handling, was stipulated by plaintiff and defendant as being in excess of $125,000. The gemstones were shipped to Aaronson from Toronto in ten separate shipments. Each shipment was paid for separately by Aaronson. During this time, defendant did not maintain an office in Michigan, and no employee, salesperson, agent, officer, or shareholder of defendant visited Michigan for the purpose of conducting business with Aaronson.

Plaintiff filed this action seeking rescission of all the gemstone sales. In her complaint, plaintiff alleged that defendant violated both the Michigan Uniform Securities Act (MUSA), M.C.L. § 451.501 et seq.; M.S.A. § 19.776(101) et seq. (count I), and the Michigan Consumer Protection Act, M.C.L. § 445.901 et seq.; M.S.A. § 19.418(1) et seq. (count III). Plaintiff also alleged that defendant had committed a common-law fraud (count II). In lieu of answering the complaint, defendant filed a motion for summary disposition, claiming (1) that the trial court's exercise of limited personal jurisdiction violated due process and (2) that the MUSA is inapplicable, given that because the gemstones were not commodities, the parties never entered into a commodities contract. The trial court agreed, and in two separate orders granted defendant summary disposition with regard to all counts.

II. Limited Personal Jurisdiction

This Court employs a two-step analysis when examining whether the state of Michigan may exercise limited personal jurisdiction over a defendant. First, we ascertain if jurisdiction is authorized by M.C.L. § 600.715; M.S.A. § 27A.715 (Michigan's long-arm statute). Second, we determine if the exercise of jurisdiction is consistent with the requirements of the Due Process Clause of the Fourteenth Amendment. Starbrite Distributing, Inc. v. Excelda Mfg. Co., 454 Mich. 302, 304, 562 N.W.2d 640 (1997); Jeffrey v. Rapid American Corp., 448 Mich. 178, 185, 529 N.W.2d 644 (1995).

A. The long-arm statute

Michigan's long-arm statute states:

The existence of any of the following relationships between a corporation or its agent and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise limited personal jurisdiction over such corporation and to enable such courts to render personal judgments against such corporation arising out of the act or acts which create any of the following relationships:

(1) The transaction of any business within the state.

(2) The doing or causing any act to be done, or consequences to occur, in the state resulting in an action for tort.

(3) The ownership, use, or possession of any real or tangible personal property situated within the state.

(4) Contracting to insure any person, property, or risk located within this state at the time of contracting.

(5) Entering into a contract for services to be performed or for materials to be furnished in the state by the defendant. [M.C.L. § 600.715; M.S.A. § 27A.715.]

Plaintiff alleges that the acts engaged in by defendant are sufficient for the state to invoke its authority to exercise limited personal jurisdiction under M.C.L. § 600.715(1), (2); M.S.A. § 27A.715(1), (2). We agree. In Sifers v. Horen, 385 Mich. 195, 188 N.W.2d 623 (1971), the Michigan Supreme Court observed that as used in subsection 1 of the long-arm statute, the term " 'any' means just what it says. It includes 'each' and 'every' [business transaction]." Id. at 199, n. 2, 188 N.W.2d 623. "Thus," this Court has noted, "the Supreme Court interpreted [the long-arm statute] to its full potential." Kiefer v. May, 46 Mich.App. 566, 571, 208 N.W.2d 539 (1973). We conclude that the communications that took place between Aaronson and defendant, and the shipment of the gemstones into Michigan satisfy the requirements of the long-arm statute. ¹ Id at 570-571, 208 N.W.2d 539; Evans Tempcon, Inc. v. Index Industries, Inc., 778 F.Supp. 371, 375 (W.D.Mich., 1990).

B. Due process

We next turn to the question whether the exercise of limited personal jurisdiction over defendant is consistent with the requirements of due process. In the seminal case of Int'l Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the United States Supreme Court stated that "due process requires only that in order to subject a defendant to a judgment in personam, if he not be present within the territory of the forum,[ ²] he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " Id. at 316, 66 S.Ct. 154, quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940). Accord Asahi Metal Industry Co., Ltd. v. Superior Court of California, Solano Co., 480 U.S. 102, 113, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987); Starbrite, supra at 308, 562 N.W.2d 640.

When determining whether such minimum contacts exist, we apply a three-pronged test:

First, the defendant must have purposefully availed itself of the privilege of conducting activities in Michigan, thus invoking the benefits and protections of this state's laws. Second, the cause of action must arise from the defendant's activities in the state. Third, the defendant's activities must be so substantially connected with Michigan to make the exercise of jurisdiction over the defendant reasonable. [Mozdy v. Lopez, 197 Mich.App. 356, 359, 494 N.W.2d 866 (1992).]

Accord Starbrite, supra at 309, 562 N.W.2d 640; Jeffrey, supra at 186, 529 N.W.2d 644.

1. Purposeful availment

" '[P]urposeful availment' is something akin either to a deliberate undertaking to do or cause an act or thing to be done in Michigan or conduct which can be properly regarded as a prime generating cause of the effects resulting in Michigan...." Khalaf v. Bankers & Shippers Ins. Co., 404 Mich. 134, 153, 273 N.W.2d 811 (1978). Accord Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); Jeffrey, supra at 187-188, 529 N.W.2d 644. "When a corporation 'purposefully avails itself of the privilege of conducting activities within the forum State,' Hanson v. Denckla, 357 U.S. at 253, 78 S.Ct. 1228, it has clear notice that it is subject to suit there...." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). In other words, the " 'purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random,' 'fortuitous,' or 'attenuated' contacts, or of the 'unilateral activity' of another party or a third person." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (citations omitted).

We believe that defendant's contacts with the state were not " 'random,' 'fortuitous,' or 'attenuated.' " Id. While Aaronson may have initiated the first contact with defendant, defendant's active participation in the ensuing business relationship dispels the notion that defendant was somehow the passive recipient of "unilateral activity" on the part of Aaronson. Starbrite, supra at 310-311, 562 N.W.2d 640. Over a sixteen-month period, defendant arranged for the shipment to Aaronson of gemstones priced in excess of $125,000. If defendant wanted to avoid the prospect of being brought into court in Michigan, it could have declined to send the gemstones into the state. Id. at 311, n. 10, 562 N.W.2d 640. Additionally, throughout this period Aaronson and defendant communicated by mail and telephone. Defendant concedes that this continuing pattern of communication was initiated by both parties. Further, some of the material mailed to Aaronson is acknowledged to have been sales literature. See Burger King, supra at 476, 105 S.Ct. 2174 (observing that "it is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications"); see also Quill Corp. v. North Dakota, 504 U.S. 298, 308, 112 S.Ct. 1904, 119 L.Ed.2d 91 (1992).

We conclude, therefore, that defendant availed itself of the opportunity to do business in Michigan. As a result, defendant should have anticipated the possibility that it could be subject to suit in the state. See id. at 313, 112 S.Ct. 1904 (observing that in due process jurisprudence, minimum contacts serve as a "proxy for notice").

2. Did the cause of action arise from defendant's contacts

with the state?

As previously mentioned, plaintiff's complaint alleged: ...