Decker Coal Co. v. Commonwealth Edison Co.
| Decision Date | 01 December 1986 |
| Docket Number | No. 84-4035,84-4035 |
| Citation | 805 F.2d 834 |
| Parties | DECKER COAL COMPANY, Plaintiff-Appellee, v. COMMONWEALTH EDISON COMPANY, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Donald S. Young, Dykema, Gossett, Spencer, Goodnow & Trigg, Detroit, Mich., for plaintiff-appellee.
Paul W. Schroeder, James K. Meguerian, Isham, Lincoln & Beale, Chicago, Ill., for defendant-appellant.
Appeal from the United States District Court for the District of Montana.
Before CHOY, ANDERSON and TANG, Circuit Judges.
In early 1984, Decker Coal Company filed suit against Commonwealth Edison Company in the United States District Court for Montana alleging breach of contract. In the course of that action, the district court enjoined the prosecution of a substantially similar action Edison had filed in Illinois shortly after Decker filed its action in Montana. Edison appeals the injunction and also appeals the district court's denial of Edison's motion to dismiss Decker's complaint for lack of capacity to sue, lack of personal jurisdiction and improper venue, or in the alternative, to transfer the action to the Northern District of Illinois. 1 We determined that the question of capacity to sue under Montana law may be dispositive of the appeal, and certified the following question to the Montana Supreme Court: Does Decker Coal Company, as a joint venture between two out-of-state corporations, have capacity to bring suit as a plaintiff against a corporation under Montana law? The Montana Supreme Court answered the question in the affirmative. The appeal was then resubmitted and we affirm.
Decker Coal Company is a joint venture between Wytana, Inc., a Delaware corporation, and Western Minerals, Inc., an Oregon corporation. It is engaged in the surface mining of low sulfur coal and operates its plant in Decker, Montana. Commonwealth Edison Company is an Illinois corporation. In 1974, Decker Coal and Edison entered a long-term contract under which Decker agreed to supply coal to Edison in quantities between minimum and maximum tonnages from 1978 to 1997.
Although the contract expressly required Decker to supply Montana coal, it apparently was amended in 1983 to allow Decker to supply Wyoming coal in satisfaction of its obligation to supply coal from its mine in Decker, Montana. Article XI of the contract contained a force majeure provision which allowed performance to be deferred or excused upon certain events. Such events included "fire, flood, explosion, strikes, labor disputes, sabotage, riots, civil commotion, ... major equipment failures, unavailability of major transportation facilities or acts of the other party." The contract called for delivery F.O.B. the Montana mine. The coal would then be shipped by railroad to Edison plants in Illinois and Indiana.
Edison invoked the force majeure provision to defer or terminate coal purchase obligations in May, June and July, 1983. Edison claimed that structural damage to its plant in Illinois and a cracked turbine rotor at its Indiana plant justified invocation of the force majeure provision.
On January 4, 1984, Decker filed a complaint in the District of Montana seeking a Several days later, Edison filed an action in the Northern District of Illinois seeking a declaration that it properly invoked the force majeure provision of the contract.
declaration that the problems at the Edison plants did not qualify as force majeure events. Decker also sought damages for breach of contract, claiming that Edison failed to take sufficient measures to prevent damage to its generating plants thereby breaching an alleged contractual duty to mitigate damage.
On February 3, Decker filed a motion in the Montana action to enjoin further prosecution of the Illinois case. On February 8, Edison filed a motion to dismiss the Montana complaint for lack of capacity to sue, lack of personal jurisdiction and improper venue. It also sought transfer of the case to the Northern District of Illinois.
The district court, Chief Judge Battin, ruled that jurisdiction was properly asserted, that venue was proper in Montana because the alleged contract breach occurred in Montana, and that Decker had capacity to sue as a partnership entity. The motion to transfer was denied, and the motion to enjoin the Illinois proceeding was granted.
We heard oral argument on this appeal on February 4, 1985. Submission of the cause was deferred until February 15, 1985 to permit counsel to address jurisdictional questions. On March 21, 1985, we ordered further proceedings in this court stayed pending determination by the Montana Supreme Court of the capacity to sue question. On February 20, 1986, the Montana Supreme Court issued its decision holding that, under Montana law, Decker Coal Company does have capacity to bring suit in its own name against Edison. Decker Coal Co. v. Commonwealth Edison Co., 714 P.2d 155 (Mont.1986). On March 31, 1986 we ordered the stay of proceedings in our court lifted, and the case submitted.
The assertion of personal jurisdiction must first comply with the requirements of Montana's long-arm statute; second, it must not offend due process. Colonial Leasing Co. v. Pugh Brothers Garage, 735 F.2d 380, 383 (9th Cir.1984).
The district court concluded that jurisdiction was proper under the terms of the Montana long-arm statute. This court reviews the district court's interpretation of state law de novo. Matter of McLinn, 739 F.2d 1395, 1403 (9th Cir.1984) (en banc).
Mont.R.Civ.Pro. 4B(1) 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....
Commonwealth Edison argues that the district court incorrectly found that Mont.R.Civ.Pro. 4B(1)(a) applied. It contends that its activities within Montana are too limited to qualify as "the transaction of any business within" Montana.
The Montana cases interpreting 4B(1)(a) do not offer precise guidelines for the statute's interpretation. They do, however, suggest a rather generous approach in defining its reach. The cases Parker Brothers Farms, Inc. v. Burgess, 197 Mont. 293, 642 P.2d 1063 (Mont.1982), and Prentice Lumber Co. v. Spahn, 156 Mont. 68, 474 P.2d 141 (Mont.1970) are instructive. In Parker Brothers Farms, an Idaho defendant initiated telephone conversations with a Montana potato seller and together they negotiated a sale and distribution agreement. Shipments were sent and accepted. A disagreement as to whether a later shipment was sold to the defendant or merely consigned led to an action against the Idaho defendant in Montana court. On appeal, the Montana Supreme Court affirmed the lower court's assertion of jurisdiction over the nonresident defendant, stating "it requires no discussion to conclude that the defendant transacted business within this state." 197 Mont. 293, 642 P.2d at 1065. In Prentice Lumber, a Montana lumber seller sued a Wisconsin buyer. In sixteen transactions between the two parties, only one was a direct order placed with the Montana seller. All other transactions were made through a sales representative working in Wisconsin on behalf of the Montana seller. The buyer paid the Montana seller directly until the Wisconsin sales representative instructed the buyer to make payments to him. The Montana Supreme Court held that the Wisconsin buyer transacted business within the state and was therefore properly within the reach of the long-arm statute. The court supported its conclusion by noting a "prevailing trend toward expanding the permissible scope of state jurisdiction over the person of nonresident defendants," and by noting that the assertion of jurisdiction complied with federal due process. 156 Mont. 68, 474 P.2d at 145.
Under the contract, the coal is shipped F.O.B. the Montana mine. Commonwealth Edison had accepted delivery of Decker's coal in Montana for five years prior to Edison's invocation of the force majeure provisions of the purchase agreement. The finding that Edison transacted business within the state and the assertion of jurisdiction under Mont.R.Civ.Pro. 4B(1)(a) comports with the Montana Supreme Court's reading of the long-arm statute.
Federal due process requires that a nonresident defendant have minimum contacts with the forum state such that the exercise of personal jurisdiction does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). The plaintiff bears the burden of showing by a preponderance of evidence that jurisdiction is proper. Colonial Leasing Co. v. Pugh Brothers Garage, 735 F.2d 380, 383 (9th Cir.1984); Data Disc, Inc. v. Systems Technology Associates, 557 F.2d 1280, 1285 (9th Cir.1977). The constitutional test may be satisfied in either of two ways. If the defendant has "substantial" or "continuous and systematic" contacts with the forum state, general jurisdiction may be proper even if the cause of action is unrelated to the defendant's forum activities. Data Disc, Inc., 557 F.2d at 1287 (citing Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 446-47, 72 S.Ct. 413, 418-19, 96 L.Ed. 485 (1952)); see also Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781, 104 S.Ct. 1473, 1482, 79 L.Ed.2d 790 (1984). In the absence of such continuous or substantial activity, jurisdiction may nonetheless be proper as an assertion of limited jurisdiction if there is a strong relationship between...
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